Policy

Notes Payable and Long-Term Debt

Our notes payable and long-term debt are subject to various restrictive requirements for maintenance of minimum consolidated net worth and other financial ratios. We were in compliance with our debt covenants as of August 31, 2013.

Notes Payable

Notes payable as of August 31, 2013 and 2012, consisted of the following:



	Weighted-average Interest Rate
	2013	2012	2013		2012
			(Dollars in thousands)
Notes payable (a)	2.00%	2.58%	$	521,864	$	269,783
CHS Capital notes payable (b)	1.23%	1.68%	367,448		533,839
Total notes payable			$	889,312	$	803,622

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(a)

Our primary committed line of credit is a $2.5 billion five-year revolving credit facility expiring in June 2018, with a syndication of domestic and international banks, with no amounts outstanding as of August 31, 2013. We have a committed revolving credit facility dedicated to NCRA in the amount of $15.0 million that expires in December 2014, with no amounts outstanding as of August 31, 2013. We also have a committed revolving credit facility dedicated to CHS Europe S.A. in the amount of $80.0 million that expires in September 2018, with no amounts outstanding as of August 31, 2013.

Our wholly-owned subsidiaries, CHS Europe S.A. and CHS Agronegocio Industria e Comercio Ltda (CHS Agronegocio), have uncommitted lines of credit to finance their normal trading activities with $420.1 million outstanding as of August 31, 2013. These lines are collateralized by certain inventories and receivables. In addition, other international subsidiaries had lines of credit totaling $99.3 million outstanding as of August 31, 2013, of which $60.8 million was collateralized.

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

Miscellaneous short-term notes payable totaled $2.5 million as of August 31, 2013.

(b)

Cofina Funding, LLC (Cofina Funding), a wholly-owned subsidiary of CHS Capital, has available credit totaling $300.0 million as of August 31, 2013, under note purchase agreements with various purchasers, through the issuance of short-term notes payable. CHS Capital sells eligible commercial loans receivable it has originated to Cofina Funding, which are then pledged as collateral under the note purchase agreements. The notes payable issued by Cofina Funding bear interest at variable rates based on commercial paper. There were no borrowings by Cofina Funding utilizing the issuance of commercial paper under the note purchase agreements as of August 31, 2013.

CHS Capital has available credit under master participation agreements with numerous counterparties. Borrowings under these agreements are accounted for as secured borrowings and bear interest at variable rates ranging from 1.96% to 2.69% as of August 31, 2013. As of August 31, 2013, the total funding commitment under these agreements was $223.8 million, of which $30.8 million was borrowed.

CHS Capital sells loan commitments it has originated to ProPartners Financial (ProPartners) on a recourse basis. The total capacity for commitments under the ProPartners program is $300.0 million. The total outstanding commitments under the program totaled $68.1 million as of August 31, 2013, of which $45.7 million was borrowed under these commitments with an interest rate of 1.60%.

CHS Capital borrows funds under short-term notes issued as part of a surplus funds program. Borrowings under this program are unsecured and bear interest at variable rates ranging from 0.80% to 1.10% as of August 31, 2013, and are due upon demand. Borrowings under these notes totaled $290.9 million as of August 31, 2013.

In October 2013, we entered into a three-year $250.0 million committed revolving credit facility for CHS Agronegocio to provide financing for its working capital needs arising from its purchases and sales of grains, fertilizers and other agricultural products.

Long-Term Debt

Long-term debt as of August 31, 2013 and 2012 consisted of the following:




	2013		2012
	(Dollars in thousands)
5.59% unsecured revolving term loans from cooperative and other banks, due in equal installments beginning in 2013 through 2018	$	135,000	$	150,000
6.18% unsecured notes $400 million face amount, due in equal installments beginning in 2014 through 2018	400,000		400,000
6.81% unsecured notes $225 million face amount, due in equal installments beginning in 1998 through 2013			37,500
5.60% unsecured notes $60 million face amount, due in equal installments beginning in 2012 through 2018	41,539		59,615
5.25% unsecured notes $125 million face amount, due in equal installments beginning in 2011 through 2015	50,000		75,000
5.78% unsecured notes $50 million face amount, due in equal installments beginning in 2014 through 2018	50,000		50,000
4.00% unsecured notes $100 million face amount, due in equal installments beginning in 2017 through 2021	100,000		100,000
4.08% unsecured notes $130 million face amount, due in 2019	130,000		130,000
4.52% unsecured notes $160 million face amount, due in 2021	160,000		160,000
4.67% unsecured notes $130 million face amount, due in 2023	130,000		130,000
3.85% unsecured notes $80 million face amount, due in 2025	80,000
3.80% unsecured notes $100 million face amount, due in 2025	100,000
4.82% unsecured notes $80 million face amount, due in 2026	80,000		80,000
4.71% unsecured notes $100 million face amount, due in 2033	100,000
Other notes and contracts with interest rates from 2.25% to 15.75% (a)	50,493		68,238
Total long-term debt	1,607,032		1,440,353
Less current portion	156,612		108,211
Long-term portion	$	1,450,420	$	1,332,142

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(a)	Other notes and contracts payable of $16.5 million were collateralized on August 31, 2013.

As of August 31, 2013, the carrying value of our long-term debt approximated its fair value, based on quoted market prices of similar debt (a Level 2 classification in the fair value hierarchy).

Long-term debt outstanding as of August 31, 2013 has aggregate maturities as follows:



	(Dollars in thousands)
2014	$	156,612
2015	164,022
2016	130,219
2017	149,832
2018	162,103
Thereafter	844,244
	$	1,607,032

Interest, net for the years ended August 31, 2013, 2012 and 2011 was as follows:



	2013			2012			2011
	(Dollars in thousands)
Interest expense	$	99,271		$	94,090		$	83,044
Interest - purchase of NCRA noncontrolling interests	149,087			113,184
Capitalized interest	(10,579		)	(8,882		)	(5,487		)
Interest income	(6,212		)	(5,129		)	(2,722		)
Interest, net	$	231,567		$	193,263		$	74,835

CHS INC | 2013 | FY |

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