##### 









SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





Form 10-K





|   |  |                                                                                             
|-- |  | --------------------------------------------------------------------------------------------
|þ  |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934    
|  
|   |  | For the fiscal year ended August 31, 2005                                                   
|  
|or
|  
|o  |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934
|  
|   |  | For the transition period
    from           to          .                                  

Commission file number: 0-50150





CHS Inc.


(Exact name of registrant as specified in its charter)


|                                                                   |  |                                                         
|------------------------------------------------------------------ |  | --------------------------------------------------------
|Minnesota                                                          |  | 41-0251095                                              
|(State or other jurisdiction of
    incorporation or organization) |  | (I.R.S. Employer
    Identification Number)             
|                                                                  
|5500 Cenex Drive
    Inver Grove Heights, Minnesota 55077          |  | (651) 355-6000                                          
|(Address of principal executive office,
    including zip code)    |  | (Registrants Telephone number,
    including area code)




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


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


8% Cumulative Redeemable Preferred Stock


(Title of Class)







YES þ NO o


o




YES o NO þ




YES o NO þ








DOCUMENTS INCORPORATED BY REFERENCE












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##### 












INDEX


|                         |  |                                                                                                                      |    |      |    | 
|------------------------ |  | -------------------------------------------------------------------------------------------------------------------- | -- | ---- | -- | 
|                         |  |                                                                                                                      |    | Page |   
|                         |  |                                                                                                                      |    | No.  |   
|                         |  |                                                                                                                      |    |      |   
|PART I.                 
|Item 1.                  |  | Business                                                                                                             |    |      | 1  | 
|                         |  | Cautionary Statement                                                                                                 |    |      | 1  | 
|                         |  | The Company                                                                                                          |    |      | 4  | 
|                         |  | Energy                                                                                                               |    |      | 6  | 
|                         |  | Ag Business                                                                                                          |    |      | 8  | 
|                         |  | Processing                                                                                                           |    |      | 13 | 
|                         |  | Corporate and Other                                                                                                  |    |      | 16 | 
|                         |  | Price Risk and Hedging                                                                                               |    |      | 17 | 
|                         |  | Employees                                                                                                            |    |      | 17 | 
|                         |  | Membership in the Company and Authorized
    Capital                                                                 |    |      | 18 | 
|Item 2.                  |  | Properties                                                                                                           |    |      | 21 | 
|Item 3.                  |  | Legal Proceedings                                                                                                    |    |      | 22 | 
|Item 4.                  |  | Submission of Matters to a Vote of Security
    Holders                                                              |    |      | 23 | 
|PART II.                
|Item 5.                  |  | Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities |    |      | 23 | 
|Item 6.                  |  | Selected Financial Data                                                                                              |    |      | 24 | 
|Item 7.                  |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations                            |    |      | 26 | 
|Item 7A.                 |  | Quantitative and Qualitative Disclosures
    about Market Risk                                                       |    |      | 47 | 
|Item 8.                  |  | Financial Statements and Supplementary
    Data                                                                      |    |      | 48 | 
|Item 9.                  |  | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure                             |    |      | 48 | 
|Item 9A.                 |  | Controls and Procedures                                                                                              |    |      | 48 | 
|Item 9B.                 |  | Other Information                                                                                                    |    |      | 49 | 
|PART III.               
|Item 10.                 |  | Directors and Executive Officers of the
    Registrant                                                               |    |      | 49 | 
|                         |  | Board of Directors                                                                                                   |    |      | 49 | 
|                         |  | Executive Officers                                                                                                   |    |      | 53 | 
|                         |  | Section 16(a) Beneficial Ownership
    Reporting Compliance                                                          |    |      | 54 | 
|                         |  | Code of Ethics                                                                                                       |    |      | 55 | 
|                         |  | Audit Committee Matters                                                                                              |    |      | 55 | 
|Item 11.                 |  | Executive Compensation                                                                                               |    |      | 55 | 
|Item 12.                 |  | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters                   |    |      | 64 | 
|Item 13.                 |  | Certain Relationships and Related
    Transactions                                                                   |    |      | 64 | 
|PART IV.                
|Item 14.                 |  | Principal Accountant Fees and Services                                                                               |    |      | 65 | 
|Item 15.                 |  | Exhibits and Financial Statements                                                                                    |    |      | 66 | 
|SUPPLEMENTAL INFORMATION |  |                                                                                                                      | 71 |     
|SIGNATURES               |  |                                                                                                                      | 72 |     



---



##### 






PART I.







|        |         
|------- | --------
|ITEM 1. | BUSINESS




CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR
PROVISIONS


OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995


The information in this Annual Report on Form 10-K for
the year ended August 31, 2005, includes
forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 with respect to
the Company. In addition, the Company and its representatives
and agents may from time to time make other written or oral
forward-looking statements, including statements contained in
its filings with the Securities and Exchange Commission and its
reports to its members and securityholders. Words and phrases
such as will likely result, are expected
to, is anticipated, estimate,
project and similar expressions identify
forward-looking statements. We wish to caution readers not to
place undue reliance on any forward-looking statements, which
speak only as of the date made.


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


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


We undertake no obligation to revise any forward-looking
statements to reflect future events or circumstances.


OUR REVENUES AND OPERATING RESULTS COULD BE ADVERSELY
AFFECTED BY CHANGES IN COMMODITY PRICES.






| |   |                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------
| |  | levels of worldwide and domestic supplies;                                                                                                        
|
| |  | capacities of domestic and foreign refineries;                                                                                                    
|
| |  | the ability of the members of OPEC to agree to and maintain oil
    price and production controls, and the price and level of
    foreign imports;

1



---



##### 





| |   |                                                                  
| | - | -----------------------------------------------------------------
| |  | disruption in supply;                                            
|
| |  | political instability or armed conflict in oil-producing regions;
|
| |  | the level of consumer demand;                                    
|
| |  | the price and availability of alternative fuels;                 
|
| |  | the availability of pipeline capacity; and                       
|
| |  | domestic and foreign governmental regulations and taxes.         



OUR OPERATING RESULTS COULD BE ADVERSELY AFFECTED IF OUR
MEMBERS WERE TO DO BUSINESS WITH OTHERS RATHER THAN WITH US.


WE PARTICIPATE IN HIGHLY COMPETITIVE BUSINESS MARKETS IN
WHICH WE MAY NOT BE ABLE TO CONTINUE TO COMPETE
SUCCESSFULLY.


CHANGES IN FEDERAL INCOME TAX LAWS OR IN OUR TAX STATUS COULD
INCREASE OUR TAX LIABILITY AND REDUCE OUR NET INCOME.


WE INCUR SIGNIFICANT COSTS IN COMPLYING WITH APPLICABLE LAWS
AND REGULATIONS. ANY FAILURE TO MAKE THE CAPITAL INVESTMENTS
NECESSARY TO COMPLY WITH THESE LAWS AND REGULATIONS COULD EXPOSE
US TO FINANCIAL LIABILITY.




2



---



##### 





ENVIRONMENTAL LIABILITIES COULD ADVERSELY AFFECT OUR RESULTS
AND FINANCIAL CONDITION.


ACTUAL OR PERCEIVED QUALITY, SAFETY OR HEALTH RISKS
ASSOCIATED WITH OUR PRODUCTS COULD SUBJECT US TO LIABILITY AND
DAMAGE OUR BUSINESS AND REPUTATION.


OUR OPERATIONS ARE SUBJECT TO BUSINESS INTERRUPTIONS AND
CASUALTY LOSSES; WE DO NOT INSURE AGAINST ALL POTENTIAL LOSSES
AND COULD BE SERIOUSLY HARMED BY UNEXPECTED LIABILITIES.




| |   |                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our oil refineries and other facilities are potential targets
    for terrorist attacks that could halt or discontinue production;                                           
|
| |  | our inability to negotiate acceptable contracts with unionized
    workers in our operations could result in strikes or work
    stoppages; and                              
|
| |  | the significant inventories that we carry or the facilities we
    own could be damaged or destroyed by catastrophic events,
    extreme weather conditions or contamination.



OUR COOPERATIVE STRUCTURE LIMITS OUR ABILITY TO ACCESS EQUITY
CAPITAL.


3



---



##### 



CONSOLIDATION AMONG THE PRODUCERS OF PRODUCTS WE PURCHASE AND
CUSTOMERS FOR PRODUCTS WE SELL COULD ADVERSELY AFFECT OUR
REVENUES AND OPERATING RESULTS.




IF OUR CUSTOMERS CHOSE ALTERNATIVES TO OUR REFINED PETROLEUM
PRODUCTS OUR REVENUES AND PROFITS MAY DECLINE.


OPERATING RESULTS FROM OUR AGRONOMY BUSINESS COULD BE
VOLATILE AND ARE DEPENDENT UPON CERTAIN FACTORS OUTSIDE OF OUR
CONTROL.


TECHNOLOGICAL IMPROVEMENTS IN AGRICULTURE COULD DECREASE THE
DEMAND FOR OUR AGRONOMY AND ENERGY PRODUCTS.


WE OPERATE SOME OF OUR BUSINESS THROUGH JOINT VENTURES IN
WHICH OUR RIGHTS TO CONTROL BUSINESS DECISIONS ARE LIMITED.





THE COMPANY




4



---



##### 

















5



---



##### 






ENERGY


Overview




Operations


Laurel Refinery.




McPherson Refinery.




Other Energy Operations.


Products and Services




6



---



##### 



Sales and Marketing; Customers




Industry; Competition


Regulation.








7



---



##### 





Summary Operating Results




|                                      |                |                        |           |           |      |   |           |           |  |   |           |           | 
|------------------------------------- | -------------- | ---------------------- | --------- | --------- | ---- | - | --------- | --------- |  | - | --------- | --------- | 
|                                      |                | 2005                   |           |           | 2004 |   |           | 2003      | 
|                                      |                |                        |           |           |      |   |           |           | 
|                                      |                | (Dollars in thousands) |          
|Revenues:                             |                |                        |           |           |      |   |           |           |  |   |           |          
|                                      | Net sales      |                        | $         | 5,782,948 |      |   | $         | 4,028,248 |  |   | $         | 3,648,093 | 
|                                      | Other revenues |                        |           | 10,085    |      |   |           | 9,193     |  |   |           | 5,655     | 
|                                      |                |                        |           |           |      |   |           |           | 
|                                      |                |                        | 5,793,033 |           |      |   | 4,037,441 |           |  |   | 3,653,748 |          
|Cost of goods sold                    |                |                        | 5,489,425 |           |      |   | 3,784,260 |           |  |   | 3,470,726 |          
|Marketing, general and administrative |                |                        | 62,077    |           |      |   | 66,493    |           |  |   | 63,740    |          
|                                      |                |                        |           |           |      |   |           |           | 
|Operating earnings                    |                |                        | 241,531   |           |      |   | 186,688   |           |  |   | 119,282   |          
|Gain on sale of investments           |                |                        | (862      | )         |      |   | (14,666   | )         |  |   |           |          
|Interest                              |                |                        | 13,947    |           |      |   | 13,819    |           |  |   | 16,401    |          
|Equity income from investments        |                |                        | (3,478    | )         |      |   | (1,399    | )         |  |   | (1,353    | )        
|Minority interests                    |                |                        | 46,741    |           |      |   | 32,507    |           |  |   | 20,782    |          
|                                      |                |                        |           |           |      |   |           |           | 
|Income before income taxes            |                | $                      | 185,183   |           |      | $ | 156,427   |           |  | $ | 83,452    |          
|                                      |                |                        |           |           |      |   |           |           | 
|Intersegment sales                    |                | $                      | (170,642  | )         |      | $ | (121,199  | )         |  | $ | (94,209   | )        
|                                      |                |                        |           |           |      |   |           |           | 
|Total identifiable assets  August 31 |                | $                      | 2,238,614 |           |      | $ | 1,591,254 |           |  | $ | 1,449,652 |          
|                                      |                |                        |           |           |      |   |           |           | 




AG BUSINESS




Agronomy




| |         
| | --------
| | Overview







8



---



##### 





| |           
| | ----------
| | Operations











| |                      
| | ---------------------
| | Products and Services





| |                               
| | ------------------------------
| | Sales and Marketing; Customers





| |                      
| | ---------------------
| | Industry; Competition

Regulation.


9



---



##### 









Country Operations




| |         
| | --------
| | Overview





| |                      
| | ---------------------
| | Products and Services

Grain Purchasing.


Other Products.


Fin-Ag, Inc.


10



---



##### 





| |                      
| | ---------------------
| | Industry; Competition

Regulation.


Competition.


Grain Marketing




| |         
| | --------
| | Overview





| |           
| | ----------
| | Operations





11



---



##### 









| |                      
| | ---------------------
| | Products and Services





| |                               
| | ------------------------------
| | Sales and Marketing; Customers





| |                      
| | ---------------------
| | Industry; Competition

Regulation.


Competition.




12



---



##### 









| |                          
| | -------------------------
| | Summary Operating Results



|                                      |                |                        |           |           |      |   |           |           |  |   |           |           | 
|------------------------------------- | -------------- | ---------------------- | --------- | --------- | ---- | - | --------- | --------- |  | - | --------- | --------- | 
|                                      |                | 2005                   |           |           | 2004 |   |           | 2003      | 
|                                      |                |                        |           |           |      |   |           |           | 
|                                      |                | (Dollars in thousands) |          
|Revenues:                             |                |                        |           |           |      |   |           |           |  |   |           |          
|                                      | Net sales      |                        | $         | 5,556,923 |      |   | $         | 6,219,917 |  |   | $         | 5,228,267 | 
|                                      | Other revenues |                        |           | 119,782   |      |   |           | 92,662    |  |   |           | 85,256    | 
|                                      |                |                        |           |           |      |   |           |           | 
|                                      |                |                        | 5,676,705 |           |      |   | 6,312,579 |           |  |   | 5,313,523 |          
|Cost of goods sold                    |                |                        | 5,545,373 |           |      |   | 6,192,528 |           |  |   | 5,213,704 |          
|Marketing, general and administrative |                |                        | 85,570    |           |      |   | 86,202    |           |  |   | 70,193    |          
|                                      |                |                        |           |           |      |   |           |           | 
|Operating earnings                    |                |                        | 45,762    |           |      |   | 33,849    |           |  |   | 29,626    |          
|Gain on sale of investments           |                |                        | (11,358   | )         |      |   |           |           |  |   |           |          
|Gain on legal settlements             |                |                        |           |           |      |   | (692      | )         |  |   | (10,867   | )        
|Interest                              |                |                        | 20,535    |           |      |   | 18,812    |           |  |   | 16,343    |          
|Equity income from investments        |                |                        | (55,473   | )         |      |   | (47,488   | )         |  |   | (19,681   | )        
|Minority interests                    |                |                        | (41       | )         |      |   | (24       | )         |  |   | (27       | )        
|                                      |                |                        |           |           |      |   |           |           | 
|Income before income taxes            |                | $                      | 92,099    |           |      | $ | 63,241    |           |  | $ | 43,858    |          
|                                      |                |                        |           |           |      |   |           |           | 
|Intersegment sales                    |                | $                      | (9,640    | )         |      | $ | (18,372   | )         |  | $ | (2,650    | )        
|                                      |                |                        |           |           |      |   |           |           | 
|Total identifiable assets  August 31 |                | $                      | 1,604,571 |           |      | $ | 1,590,337 |           |  | $ | 1,529,211 |          
|                                      |                |                        |           |           |      |   |           |           | 




PROCESSING




| |         
| | --------
| | Overview



13



---



##### 



Regulation.


Oilseed Processing














14



---



##### 



Wheat Milling




Foods












15



---



##### 





| |                          
| | -------------------------
| | Summary Operating Results



|                                      |                |                        |         |         |      |   |         |         |  |   |         |         | 
|------------------------------------- | -------------- | ---------------------- | ------- | ------- | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|                                      |                | 2005                   |         |         | 2004 |   |         | 2003    | 
|                                      |                |                        |         |         |      |   |         |         | 
|                                      |                | (Dollars in thousands) |        
|Revenues:                             |                |                        |         |         |      |   |         |         |  |   |         |        
|                                      | Net sales*     |                        | $       | 610,006 |      |   | $       | 731,311 |  |   | $       | 417,863 | 
|                                      | Other revenues |                        |         | 1,522   |      |   |         | 2,698   |  |   |         | 2,306   | 
|                                      |                |                        |         |         |      |   |         |         | 
|                                      |                |                        | 611,528 |         |      |   | 734,009 |         |  |   | 420,169 |        
|Cost of goods sold                    |                |                        | 604,418 |         |      |   | 703,344 |         |  |   | 407,823 |        
|Marketing, general and administrative |                |                        | 18,292  |         |      |   | 19,166  |         |  |   | 15,256  |        
|                                      |                |                        |         |         |      |   |         |         | 
|Operating (losses) earnings           |                |                        | (11,182 | )       |      |   | 11,499  |         |  |   | (2,910  | )      
|Gain on sale of investments           |                |                        | (457    | )       |      |   |         |         |  |   |         |        
|Interest                              |                |                        | 12,287  |         |      |   | 12,399  |         |  |   | 10,427  |        
|Equity income from investments        |                |                        | (36,202 | )       |      |   | (29,966 | )       |  |   | (26,056 | )      
|                                      |                |                        |         |         |      |   |         |         | 
|Income before income taxes            |                | $                      | 13,190  |         |      | $ | 29,066  |         |  | $ | 12,719  |        
|                                      |                |                        |         |         |      |   |         |         | 
|Intersegment sales                    |                | $                      | (502    | )       |      | $ | (1,363  | )       |  | $ | (698    | )      
|                                      |                |                        |         |         |      |   |         |         | 
|Total identifiable assets  August 31 |                | $                      | 420,373 |         |      | $ | 415,761 |         |  | $ | 440,122 |        
|                                      |                |                        |         |         |      |   |         |         | 



| |   |                                                                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | * | The 2004 net sales increase from 2003 is primarily due to
    the additional crushing capacity of our Fairmont, Minnesota
    facility which began operation in our first quarter of fiscal
    year 2004.

CORPORATE AND OTHER


Services


Financial Services.




16



---



##### 



Country Hedging, Inc.


Ag States Agency, LLC.





PRICE RISK AND HEDGING













EMPLOYEES




17



---



##### 










MEMBERSHIP IN THE COMPANY AND AUTHORIZED CAPITAL


Introduction




Distribution of Net Income; Patronage Dividends






Patrons Equities




18



---



##### 







Governance




Membership






Voting Rights








19



---



##### 



Debt and Equity Instruments




Distribution of Assets upon Dissolution; Merger and
Consolidation




Certain Antitakeover Measures






Tax Treatment










20



---



##### 








|        |           
|------- | ----------
|ITEM 2. | PROPERTIES



Energy




|                                                  |                           |                                                                                                                                              |                                       
|------------------------------------------------- | ------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------
|Refinery                                          |                           | Laurel, Montana                                                                                                                             
|Propane terminal                                  |                           | Glenwood, Minnesota                                                                                                                         
|Transportation terminals/ repair facilities       |                           | 12 locations in Iowa, Kansas, Minnesota, Montana, North
    Dakota, South Dakota, Texas, Washington and Wisconsin, 3 of
    which are leased
|Petroleum & asphalt terminals/ storage facilities |                           | 9 locations in Montana, North Dakota and Wisconsin                                                                                          
|Pump stations                                     |                           | 11 locations in Montana and North Dakota                                                                                                    
|Pipelines:                                        |                           |                                                                                                                                             
|                                                  | Cenex Pipeline, LLC       |                                                                                                                                              | Laurel, Montana to Fargo, North Dakota
|                                                  | Front Range Pipeline, LLC |                                                                                                                                              | Canadian border to Laurel, Montana    
|Convenience stores/ gas stations                  |                           | 41 locations in Iowa, Minnesota, Montana, North Dakota,
    South Dakota and Wyoming, 11 of which are leased                                
|Lubricant plants/ warehouses                      |                           | 3 locations in Minnesota, Ohio and Texas, 1 of which is leased                                                                              



|                             |  |                                                       
|---------------------------- |  | ------------------------------------------------------
|Refinery                     |  | McPherson, Kansas                                     
|Petroleum terminals/ storage |  | 2 locations in Iowa and Kansas                        
|Pipeline                     |  | McPherson, Kansas to Council Bluffs, Iowa             
|Jayhawk Pipeline, LLC        |  | Throughout Kansas, with branches in Oklahoma and Texas
|Jayhawk stations             |  | 40 locations located in Kansas and Oklahoma           

Ag Business






| |                   
| | ------------------
| | Country Operations



21



---



##### 





| |                
| | ---------------
| | Grain Marketing





| |                                      
| | -------------------------------------
| | Collins, Mississippi (owned)         
| | Davenport, Iowa (2 owned)            
| | Friona, Texas (owned)                
| | Kalama, Washington (leased)          
| | Minneapolis, Minnesota (owned, idle) 
| | Myrtle Grove, Louisiana (owned)      
| | Savage, Minnesota (owned)            
| | Spokane, Washington (owned)          
| | Superior, Wisconsin (owned)          
| | Winona, Minnesota (1 owned, 1 leased)

Processing






| |                   
| | ------------------
| | Oilseed Processing





| |              
| | -------------
| | Wheat Milling





| |                           
| | --------------------------
| | Rush City, Minnesota      
| | Kenosha, Wisconsin        
| | Houston, Texas            
| | Mount Pocono, Pennsylvania
| | Fairmount, North Dakota   

Corporate Headquarters











|        |                  
|------- | -----------------
|ITEM 3. | LEGAL PROCEEDINGS





22



---



##### 










|        |                                                    
|------- | ---------------------------------------------------
|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS






PART II.







|        |                                                                                                                     
|------- | --------------------------------------------------------------------------------------------------------------------
|ITEM 5. | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED
    STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
    SECURITIES









23



---



##### 








|        |                        
|------- | -----------------------
|ITEM 6. | SELECTED FINANCIAL DATA



Summary Consolidated Financial Data


|                                                      |                |                                              |            |            |           |   |            |            |           |   |           |           |           |      |           |           |           |   |           |           |           | 
|----------------------------------------------------- | -------------- | -------------------------------------------- | ---------- | ---------- | --------- | - | ---------- | ---------- | --------- | - | --------- | --------- | --------- | ---- | --------- | --------- | --------- | - | --------- | --------- | --------- | 
|                                                      |                | 2005                                         |            |            | 2004      |   |            | 2003       |           |   | 2002      |           |           | 2001 |          
|                                                      |                |                                              |            |            |           |   |            |            |           |   |           |           |           |      |          
|                                                      |                | (Dollars in thousands)                       |           
|Income Statement Data:                                |                |                                              |            |            |           |   |            |            |           |   |           |           |           |      |           |           |           |   |           |          
|Revenues:                                             |                |                                              |            |            |           |   |            |            |           |   |           |           |           |      |           |           |           |   |           |          
|                                                      | Net sales      |                                              | $          | 11,769,093 |           |   | $          | 10,838,542 |           |   | $         | 9,196,666 |           |      | $         | 7,086,470 |           |   | $         | 7,407,883 |          
|                                                      | Other revenues |                                              |            | 171,963    |           |   |            | 141,165    |           |   |           | 122,473   |           |      |           | 107,351   |           |   |           | 117,378   |          
|                                                      |                |                                              |            |            |           |   |            |            |           |   |           |           |           |      |          
|                                                      |                |                                              | 11,941,056 |            |           |   | 10,979,707 |            |           |   | 9,319,139 |           |           |      | 7,193,821 |           |           |   | 7,525,261 |          
|Cost of goods sold                                    |                |                                              | 11,458,432 |            |           |   | 10,539,198 |            |           |   | 8,994,696 |           |           |      | 6,885,450 |           |           |   | 7,136,013 |          
|Marketing, general and administrative                 |                |                                              | 191,246    |            |           |   | 195,639    |            |           |   | 169,298   |           |           |      | 165,359   |           |           |   | 168,161   |          
|                                                      |                |                                              |            |            |           |   |            |            |           |   |           |           |           |      |          
|Operating earnings                                    |                |                                              | 291,378    |            |           |   | 244,870    |            |           |   | 155,145   |           |           |      | 143,012   |           |           |   | 221,087   |          
|Gain on sale of investments                           |                |                                              | (13,013    | )          |           |   | (14,666    | )          |           |   |           |           |           |      |           |           |           |   |           |          
|Gain on legal settlements                             |                |                                              |            |            |           |   | (692       | )          |           |   | (10,867   | )         |           |      | (2,970    | )         |           |   |           |          
|Interest                                              |                |                                              | 55,137     |            |           |   | 48,717     |            |           |   | 46,257    |           |           |      | 40,852    |           |           |   | 59,237    |          
|Equity income from investments                        |                |                                              | (95,742    | )          |           |   | (79,022    | )          |           |   | (47,299   | )         |           |      | (58,133   | )         |           |   | (28,494   | )        
|Minority interests                                    |                |                                              | 47,736     |            |           |   | 33,830     |            |           |   | 21,950    |           |           |      | 15,390    |           |           |   | 35,098    |          
|                                                      |                |                                              |            |            |           |   |            |            |           |   |           |           |           |      |          
|Income from continuing operations before income taxes |                |                                              | 297,260    |            |           |   | 256,703    |            |           |   | 145,104   |           |           |      | 147,873   |           |           |   | 155,246   |          
|Income taxes                                          |                |                                              | 30,434     |            |           |   | 29,462     |            |           |   | 16,031    |           |           |      | 19,881    |           |           |   | (24,708   | )        
|                                                      |                |                                              |            |            |           |   |            |            |           |   |           |           |           |      |          
|Income from continuing operations                     |                |                                              | 266,826    |            |           |   | 227,241    |            |           |   | 129,073   |           |           |      | 127,992   |           |           |   | 179,954   |          
|Loss on discontinued operations, net of taxes         |                |                                              | 16,810     |            |           |   | 5,909      |            |           |   | 5,232     |           |           |      | 1,854     |           |           |   | 1,400     |          
|                                                      |                |                                              |            |            |           |   |            |            |           |   |           |           |           |      |          
|Net income                                            |                | $                                            | 250,016    |            |           | $ | 221,332    |            |           | $ | 123,841   |           |           | $    | 126,138   |           |           | $ | 178,554   |          
|                                                      |                |                                              |            |            |           |   |            |            |           |   |           |           |           |      |          
|Balance Sheet Data (August 31):                       |                |                                              |            |            |           |   |            |            |           |   |           |           |           |      |           |           |           |   |           |          
|                                                      |                | Working capital                              |            | $          | 758,703   |   |            | $          | 493,440   |   |           | $         | 458,738   |      |           | $         | 249,115   |   |           | $         | 305,280   | 
|                                                      |                | Net property, plant and equipment            |            |            | 1,359,535 |   |            |            | 1,249,655 |   |           |           | 1,122,982 |      |           |           | 1,057,421 |   |           |           | 1,023,872 | 
|                                                      |                | Total assets                                 |            |            | 4,726,937 |   |            |            | 4,031,292 |   |           |           | 3,807,968 |      |           |           | 3,481,727 |   |           |           | 3,057,319 | 
|                                                      |                | Long-term debt, including current maturities |            |            | 773,074   |   |            |            | 683,818   |   |           |           | 663,173   |      |           |           | 572,124   |   |           |           | 559,997   | 
|                                                      |                | Total equities                               |            |            | 1,757,897 |   |            |            | 1,628,086 |   |           |           | 1,481,711 |      |           |           | 1,289,638 |   |           |           | 1,261,153 | 



24



---



##### 



Summary Financial Data by Business Segment


|                                      |                |                        |           |           |             |   |           |           |  |   |           |           |  |      |           |           |      |   |           |           |  |   |           |           | 
|------------------------------------- | -------------- | ---------------------- | --------- | --------- | ----------- | - | --------- | --------- |  | - | --------- | --------- |  | ---- | --------- | --------- | ---- | - | --------- | --------- |  | - | --------- | --------- | 
|                                      |                | Energy                 |           |           | Ag Business |  
|                                      |                |                        |           |           |             |  
|                                      |                | 2005                   |           |           | 2004        |   |           | 2003      |  |   | 2005      |           |  | 2004 |           |           | 2003 |  
|                                      |                |                        |           |           |             |   |           |           |  |   |           |           |  |      |           |           |      |  
|                                      |                | (Dollars in thousands) |          
|Revenues:                             |                |                        |           |           |             |   |           |           |  |   |           |           |  |      |           |           |      |   |           |           |  |   |           |          
|                                      | Net sales      |                        | $         | 5,782,948 |             |   | $         | 4,028,248 |  |   | $         | 3,648,093 |  |      | $         | 5,556,923 |      |   | $         | 6,219,917 |  |   | $         | 5,228,267 | 
|                                      | Other revenues |                        |           | 10,085    |             |   |           | 9,193     |  |   |           | 5,655     |  |      |           | 119,782   |      |   |           | 92,662    |  |   |           | 85,256    | 
|                                      |                |                        |           |           |             |   |           |           |  |   |           |           |  |      |           |           |      |  
|                                      |                |                        | 5,793,033 |           |             |   | 4,037,441 |           |  |   | 3,653,748 |           |  |      | 5,676,705 |           |      |   | 6,312,579 |           |  |   | 5,313,523 |          
|Cost of goods sold                    |                |                        | 5,489,425 |           |             |   | 3,784,260 |           |  |   | 3,470,726 |           |  |      | 5,545,373 |           |      |   | 6,192,528 |           |  |   | 5,213,704 |          
|Marketing, general and administrative |                |                        | 62,077    |           |             |   | 66,493    |           |  |   | 63,740    |           |  |      | 85,570    |           |      |   | 86,202    |           |  |   | 70,193    |          
|                                      |                |                        |           |           |             |   |           |           |  |   |           |           |  |      |           |           |      |  
|Operating earnings                    |                |                        | 241,531   |           |             |   | 186,688   |           |  |   | 119,282   |           |  |      | 45,762    |           |      |   | 33,849    |           |  |   | 29,626    |          
|Gain on sale of investments           |                |                        | (862      | )         |             |   | (14,666   | )         |  |   |           |           |  |      | (11,358   | )         |      |   |           |           |  |   |           |          
|Gain on legal settlements             |                |                        |           |           |             |   |           |           |  |   |           |           |  |      |           |           |      |   | (692      | )         |  |   | (10,867   | )        
|Interest                              |                |                        | 13,947    |           |             |   | 13,819    |           |  |   | 16,401    |           |  |      | 20,535    |           |      |   | 18,812    |           |  |   | 16,343    |          
|Equity income from investments        |                |                        | (3,478    | )         |             |   | (1,399    | )         |  |   | (1,353    | )         |  |      | (55,473   | )         |      |   | (47,488   | )         |  |   | (19,681   | )        
|Minority interests                    |                |                        | 46,741    |           |             |   | 32,507    |           |  |   | 20,782    |           |  |      | (41       | )         |      |   | (24       | )         |  |   | (27       | )        
|                                      |                |                        |           |           |             |   |           |           |  |   |           |           |  |      |           |           |      |  
|Income before income taxes            |                | $                      | 185,183   |           |             | $ | 156,427   |           |  | $ | 83,452    |           |  | $    | 92,099    |           |      | $ | 63,241    |           |  | $ | 43,858    |          
|                                      |                |                        |           |           |             |   |           |           |  |   |           |           |  |      |           |           |      |  
|Intersegment sales                    |                | $                      | (170,642  | )         |             | $ | (121,199  | )         |  | $ | (94,209   | )         |  | $    | (9,640    | )         |      | $ | (18,372   | )         |  | $ | (2,650    | )        
|                                      |                |                        |           |           |             |   |           |           |  |   |           |           |  |      |           |           |      |  
|Total identifiable assets  August 31 |                | $                      | 2,238,614 |           |             | $ | 1,591,254 |           |  | $ | 1,449,652 |           |  | $    | 1,604,571 |           |      | $ | 1,590,337 |           |  | $ | 1,529,211 |          
|                                      |                |                        |           |           |             |   |           |           |  |   |           |           |  |      |           |           |      |  

|                                      |                |                        |         |         |                     |   |         |         |  |   |         |         |  |      |         |        |      |   |         |        |  |   |         |        | 
|------------------------------------- | -------------- | ---------------------- | ------- | ------- | ------------------- | - | ------- | ------- |  | - | ------- | ------- |  | ---- | ------- | ------ | ---- | - | ------- | ------ |  | - | ------- | ------ | 
|                                      |                | Processing             |         |         | Corporate and Other |  
|                                      |                |                        |         |         |                     |  
|                                      |                | 2005                   |         |         | 2004                |   |         | 2003    |  |   | 2005    |         |  | 2004 |         |        | 2003 |  
|                                      |                |                        |         |         |                     |   |         |         |  |   |         |         |  |      |         |        |      |  
|                                      |                | (Dollars in thousands) |        
|Revenues:                             |                |                        |         |         |                     |   |         |         |  |   |         |         |  |      |         |        |      |   |         |        |  |   |         |       
|                                      | Net sales      |                        | $       | 610,006 |                     |   | $       | 731,311 |  |   | $       | 417,863 |  |      |         |        |      |   |         |        |  |   |         |        | 
|                                      | Other revenues |                        |         | 1,522   |                     |   |         | 2,698   |  |   |         | 2,306   |  |      | $       | 40,574 |      |   | $       | 36,612 |  |   | $       | 29,256 | 
|                                      |                |                        |         |         |                     |   |         |         |  |   |         |         |  |      |         |        |      |  
|                                      |                |                        | 611,528 |         |                     |   | 734,009 |         |  |   | 420,169 |         |  |      | 40,574  |        |      |   | 36,612  |        |  |   | 29,256  |       
|Cost of goods sold                    |                |                        | 604,418 |         |                     |   | 703,344 |         |  |   | 407,823 |         |  |      |         |        |      |   |         |        |  |   |         |       
|Marketing, general and administrative |                |                        | 18,292  |         |                     |   | 19,166  |         |  |   | 15,256  |         |  |      | 25,307  |        |      |   | 23,778  |        |  |   | 20,109  |       
|                                      |                |                        |         |         |                     |   |         |         |  |   |         |         |  |      |         |        |      |  
|Operating (losses) earnings           |                |                        | (11,182 | )       |                     |   | 11,499  |         |  |   | (2,910  | )       |  |      | 15,267  |        |      |   | 12,834  |        |  |   | 9,147   |       
|Gain on sale of investments           |                |                        | (457    | )       |                     |   |         |         |  |   |         |         |  |      | (336    | )      |      |   |         |        |  |   |         |       
|Gain on legal settlements Interest    |                |                        | 12,287  |         |                     |   | 12,399  |         |  |   | 10,427  |         |  |      | 8,368   |        |      |   | 3,687   |        |  |   | 3,086   |       
|Equity income from investments        |                |                        | (36,202 | )       |                     |   | (29,966 | )       |  |   | (26,056 | )       |  |      | (589    | )      |      |   | (169    | )      |  |   | (209    | )     
|Minority interests                    |                |                        |         |         |                     |   |         |         |  |   |         |         |  |      | 1,036   |        |      |   | 1,347   |        |  |   | 1,195   |       
|                                      |                |                        |         |         |                     |   |         |         |  |   |         |         |  |      |         |        |      |  
|Income before income taxes            |                | $                      | 13,190  |         |                     | $ | 29,066  |         |  | $ | 12,719  |         |  | $    | 6,788   |        |      | $ | 7,969   |        |  | $ | 5,075   |       
|                                      |                |                        |         |         |                     |   |         |         |  |   |         |         |  |      |         |        |      |  
|Intersegment sales                    |                | $                      | (502    | )       |                     | $ | (1,363  | )       |  | $ | (698    | )       |  |      |         |        |      |   |         |        |  |   |         |       
|                                      |                |                        |         |         |                     |   |         |         |  |   |         |         |  |      |         |        |      |  
|Total identifiable assets  August 31 |                | $                      | 420,373 |         |                     | $ | 415,761 |         |  | $ | 440,122 |         |  | $    | 463,379 |        |      | $ | 433,940 |        |  | $ | 388,983 |       
|                                      |                |                        |         |         |                     |   |         |         |  |   |         |         |  |      |         |        |      |  

25



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##### 








|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
    CONDITION AND RESULTS OF OPERATIONS

Overview
















26



---



##### 













Recent Events




27



---



##### 



Results of Operations




| |                                                           
| | ----------------------------------------------------------
| | Comparison of the years ended August 31, 2005 and
    2004

General.










28



---



##### 







Net Income.


Net Sales.




29



---



##### 







Other Revenues.


Cost of Goods Sold.




30



---



##### 









Marketing, General and Administrative.


Gain on Sale of Investments.






Gain on Legal Settlements.


Interest.


31



---



##### 





Equity Income from Investments.








Minority Interests.


Income Taxes.


Discontinued Operations.


32



---



##### 







| |                                                           
| | ----------------------------------------------------------
| | Comparison of the years ended August 31, 2004 and
    2003

General.










33



---



##### 



Net Income.


Net Sales.








34



---



##### 





Other Revenues.


Cost of Goods Sold.








Marketing, General and Administrative.


35



---



##### 





Gain on Sale of Investments.


Gain on Legal Settlements.


Interest.


Equity Income from Investments.






Minority Interests.


36



---



##### 



Income Taxes.


Discontinued Operations.


Liquidity and Capital Resources








| |                           
| | --------------------------
| | Cash Flows from Operations





37



---



##### 















| |                                     
| | ------------------------------------
| | Cash Flows from Investing Activities





38



---



##### 



















39



---



##### 







| |                                     
| | ------------------------------------
| | Cash Flows from Financing Activities











40



---



##### 















|           |  |   |         | 
|---------- |  | - | ------- | 
|2006       |  | $ | 35,340  | 
|2007       |  |   | 59,856  | 
|2008       |  |   | 98,421  | 
|2009       |  |   | 117,285 | 
|2010       |  |   | 82,589  | 
|Thereafter |  |   | 379,583 | 
|           |  |   |        
|           |  | $ | 773,074 | 
|           |  |   |        





41



---



##### 















42



---



##### 





Off Balance Sheet Financing Arrangements




| |                   
| | ------------------
| | Lease Commitments:







|                                    |      |                       |       |      | 
|----------------------------------- | ---- | --------------------- | ----- | ---- | 
|                                    |      | Total                 |      
|                                    |      |                       |      
|                                    |      | (Dollars in millions) |      
|                                    | 2006 |                       | $     | 28.3 | 
|                                    | 2007 |                       |       | 24.0 | 
|                                    | 2008 |                       |       | 21.0 | 
|                                    | 2009 |                       |       | 12.9 | 
|                                    | 2010 |                       |       | 10.8 | 
|Thereafter                          |      |                       | 6.0   |     
|                                    |      |                       |      
|Total minimum future lease payments |      | $                     | 103.0 |     
|                                    |      |                       |      



| |            
| | -----------
| | Guarantees:





| |      
| | -----
| | Debt:



Contractual Obligations




|                        |  |                        |           |           |        |   |           |       |  |       |         |  |           |         |         |  |  |   |         | 
|----------------------- |  | ---------------------- | --------- | --------- | ------ | - | --------- | ----- |  | ----- | ------- |  | --------- | ------- | ------- |  |  | - | ------- | 
|                        |  | Payments Due by Period |          
|                        |  |                        |          
|                        |  |                        |           | Less Than |        |   | 1 - 3     |       |  | 3 - 5 |         |  | More Than |        
|Contractual Obligations |  | Total                  |           |           | 1 Year |   |           | Years |  |       | Years   |  |           | 5 Years |        
|                        |  |                        |           |           |        |   |           |       |  |       |         |  |           |         |        
|                        |  | (Dollars in thousands) |          
|Notes payable(1)        |  | $                      | 61,147    |           |        | $ | 61,147    |       |  |       |         |  |           |         |         |  |  |   |         | 
|Long-term debt(1)       |  |                        | 773,074   |           |        |   | 35,340    |       |  | $     | 158,277 |  |           | $       | 199,874 |  |  | $ | 379,583 | 
|Interest payments(2)    |  |                        | 237,246   |           |        |   | 47,508    |       |  |       | 84,084  |  |           |         | 59,405  |  |  |   | 46,249  | 
|Operating leases        |  |                        | 103,037   |           |        |   | 28,312    |       |  |       | 44,996  |  |           |         | 23,768  |  |  |   | 5,961   | 
|Purchase obligations(3) |  |                        | 1,759,071 |           |        |   | 1,479,770 |       |  |       | 271,203 |  |           |         | 1,128   |  |  |   | 6,970   | 
|Other liabilities(4)    |  |                        | 52,224    |           |        |   |           |       |  |       | 33,379  |  |           |         | 17,439  |  |  |   | 1,406   | 
|                        |  |                        |           |           |        |   |           |       |  |       |         |  |           |         |        
|Total obligations       |  | $                      | 2,985,799 |           |        | $ | 1,652,077 |       |  | $     | 591,939 |  |           | $       | 301,614 |  |  | $ | 440,169 | 
|                        |  |                        |           |           |        |   |           |       |  |       |         |  |           |         |        

43



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|    |                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Included on our consolidated balance sheet.                                                                                                                                                                                                                                                                                                                                                                                
|   
|(2) | Based on interest rates and long-term debt balances as of
    August 31, 2005.                                                                                                                                                                                                                                                                                                                                             
|   
|(3) | Purchase obligations are legally binding and enforceable
    agreements to purchase goods or services that specify all
    significant terms, including fixed or minimum quantities; fixed,
    minimum or variable price provisions; and time of the
    transactions. Of our total purchase obligations,
    $1,007.1 million is included in accounts payable and
    accrued expenses on our consolidated balance sheet.
|   
|(4) | Other liabilities include deferred compensation, deferred income
    taxes, accrued turnaround and contractual redemptions, and is
    included on the consolidated balance sheet. Of our total other
    liabilities on our consolidated balance sheet in the amount of
    $229.3 million, the timing of the payments of
    $177.1 million of such liabilities cannot be determined.                                    

Critical Accounting Policies






| |                                 
| | --------------------------------
| | Allowances for Doubtful Accounts





| |                                 
| | --------------------------------
| | Inventory Valuation and Reserves





| |                                 
| | --------------------------------
| | Derivative Financial Instruments



44



---



##### 







| |                                          
| | -----------------------------------------
| | Pension and Other Postretirement Benefits





| |                    
| | -------------------
| | Deferred Tax Assets





| |                  
| | -----------------
| | Long-Lived Assets







| |                          
| | -------------------------
| | Environmental Liabilities



45



---



##### 





| |                    
| | -------------------
| | Revenue Recognition



Effect of Inflation and Foreign Currency Transactions




Recent Accounting Pronouncements










46



---



##### 










|         |                                                               
|-------- | --------------------------------------------------------------
|ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
    RISK

COMMODITY PRICE RISK












INTEREST RATE RISK






47



---



##### 





FOREIGN CURRENCY RISK









|        |                                            
|------- | -------------------------------------------
|ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



|                                  |  |                        |           |      |             |   |           |        |  |   |           |  |  |   |           | 
|--------------------------------- |  | ---------------------- | --------- | ---- | ----------- | - | --------- | ------ |  | - | --------- |  |  | - | --------- | 
|                                  |  |                        |           | 2005 |            
|                                  |  | November 30,           |           |      |             |  
|                                  |  | 2004                   |           |      | February 28 |   |           | May 31 |  |   | August 31 | 
|                                  |  |                        |           |      |             |   |           |        |  |   |           | 
|                                  |  | (Unaudited)            |          
|                                  |  | (Dollars in thousands) |          
|Net sales                         |  | $                      | 2,919,891 |      |             | $ | 2,392,442 |        |  | $ | 3,088,403 |  |  | $ | 3,368,357 | 
|Total revenues                    |  |                        | 2,964,408 |      |             |   | 2,427,190 |        |  |   | 3,137,493 |  |  |   | 3,411,965 | 
|Gross profit                      |  |                        | 108,736   |      |             |   | 88,758    |        |  |   | 152,595   |  |  |   | 132,535   | 
|Income from continuing operations |  |                        | 20,341    |      |             |   | 19,718    |        |  |   | 109,861   |  |  |   | 116,906   | 
|Net income                        |  |                        | 17,996    |      |             |   | 8,723     |        |  |   | 106,946   |  |  |   | 116,351   | 

|                                  |  |              |           |      |             |   |           |        |  |   |           |  |  |   |           | 
|--------------------------------- |  | ------------ | --------- | ---- | ----------- | - | --------- | ------ |  | - | --------- |  |  | - | --------- | 
|                                  |  |              |           | 2004 |            
|                                  |  | November 30, |           |      |             |  
|                                  |  | 2003         |           |      | February 28 |   |           | May 31 |  |   | August 31 | 
|                                  |  |              |           |      |             |   |           |        |  |   |           | 
|Net sales                         |  | $            | 2,471,265 |      |             | $ | 2,637,821 |        |  | $ | 2,799,127 |  |  | $ | 2,930,329 | 
|Total revenues                    |  |              | 2,504,293 |      |             |   | 2,672,222 |        |  |   | 2,842,292 |  |  |   | 2,960,900 | 
|Gross profit                      |  |              | 103,529   |      |             |   | 56,966    |        |  |   | 123,652   |  |  |   | 156,362   | 
|Income from continuing operations |  |              | 51,462    |      |             |   | 9,484     |        |  |   | 83,123    |  |  |   | 83,172    | 
|Net income (loss)                 |  |              | 50,739    |      |             |   | 8,511     |        |  |   | 81,389    |  |  |   | 80,693    | 






|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
    ACCOUNTING AND FINANCIAL DISCLOSURE








|         |                        
|-------- | -----------------------
|ITEM 9A. | CONTROLS AND PROCEDURES



48



---



##### 







|         |                  
|-------- | -----------------
|ITEM 9B. | OTHER INFORMATION






PART III.







|         |                                                   
|-------- | --------------------------------------------------
|ITEM 10. | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT




BOARD OF DIRECTORS




|                 |                                                         |     |    |  |          |          |   |       |  |  |      |  | 
|---------------- | ------------------------------------------------------- | --- | -- |  | -------- | -------- | - | ----- |  |  | ---- |  | 
|                 |                                                         |     |    |  |          | Director |  
|Name and Address |                                                         | Age |    |  | District |          |   | Since | 
|                 |                                                         |     |    |  |          |          |   |       | 
|Bruce Anderson   |                                                         |     | 53 |  |          |          | 3 |       |  |  | 1995 | 
|                 | 13500  42nd St NE
    Glenburn, ND 58740-9564          |     |    |  |          |          |   |       |  |  |      |  | 
|Robert Bass      |                                                         |     | 51 |  |          |          | 5 |       |  |  | 1994 | 
|                 | E 6391 Bass Road
    Reedsburg, WI 53959                |     |    |  |          |          |   |       |  |  |      |  | 
|David Bielenberg |                                                         |     | 56 |  |          |          | 6 |       |  |  | 2002 | 
|                 | 16425 Herigstad Road NE
    Silverton, Oregon 97381     |     |    |  |          |          |   |       |  |  |      |  | 
|Dennis Carlson   |                                                         |     | 44 |  |          |          | 3 |       |  |  | 2001 | 
|                 | 3255  50th Street
    Mandan, ND 58554                 |     |    |  |          |          |   |       |  |  |      |  | 
|Curt Eischens    |                                                         |     | 53 |  |          |          | 1 |       |  |  | 1990 | 
|                 | 2153  330th St North
    Minneota, MN 56264-1880       |     |    |  |          |          |   |       |  |  |      |  | 
|Robert Elliott   |                                                         |     | 55 |  |          |          | 8 |       |  |  | 1996 | 
|                 | 324 Hillcrest
    Alliance, NE 69301                    |     |    |  |          |          |   |       |  |  |      |  | 
|Steve Fritel     |                                                         |     | 50 |  |          |          | 3 |       |  |  | 2003 | 
|                 | 2851 77th Street NE
    Barton, ND 58384                |     |    |  |          |          |   |       |  |  |      |  | 
|Robert Grabarski |                                                         |     | 56 |  |          |          | 5 |       |  |  | 1999 | 
|                 | 1770 Highway 21
    Arkdale, WI 54613                   |     |    |  |          |          |   |       |  |  |      |  | 
|Jerry Hasnedl    |                                                         |     | 59 |  |          |          | 1 |       |  |  | 1995 | 
|                 | 12276  150th Avenue SE
    St. Hilaire, MN 56754 -9776 |     |    |  |          |          |   |       |  |  |      |  | 
|Glen Keppy       |                                                         |     | 58 |  |          |          | 7 |       |  |  | 1999 | 
|                 | 21316  155th Avenue
    Davenport, IA 52804            |     |    |  |          |          |   |       |  |  |      |  | 
|James Kile       |                                                         |     | 57 |  |          |          | 6 |       |  |  | 1992 | 
|                 | 508 W. Bell Lane
    St. John, WA 99171                 |     |    |  |          |          |   |       |  |  |      |  | 

49



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##### 



|                     |                                                    |     |    |  |          |          |   |       |  |  |      |  | 
|-------------------- | -------------------------------------------------- | --- | -- |  | -------- | -------- | - | ----- |  |  | ---- |  | 
|                     |                                                    |     |    |  |          | Director |  
|Name and Address     |                                                    | Age |    |  | District |          |   | Since | 
|                     |                                                    |     |    |  |          |          |   |       | 
|Randy Knecht         |                                                    |     | 55 |  |          |          | 4 |       |  |  | 2001 | 
|                     | 40193  112th Street
    Houghton, SD 57449        |     |    |  |          |          |   |       |  |  |      |  | 
|Michael Mulcahey     |                                                    |     | 57 |  |          |          | 1 |       |  |  | 2003 | 
|                     | 8109 360th Avenue
    Waseca, MN 56093             |     |    |  |          |          |   |       |  |  |      |  | 
|Richard Owen         |                                                    |     | 51 |  |          |          | 2 |       |  |  | 1999 | 
|                     | PO Box 129
    Geraldine, MT 59446                 |     |    |  |          |          |   |       |  |  |      |  | 
|Duane Stenzel        |                                                    |     | 59 |  |          |          | 1 |       |  |  | 1993 | 
|                     | 62904  295th Street
    Wells, MN 56097           |     |    |  |          |          |   |       |  |  |      |  | 
|Michael Toelle       |                                                    |     | 43 |  |          |          | 1 |       |  |  | 1992 | 
|                     | 5085 St. Anthony Drive
    Browns Valley, MN 56219 |     |    |  |          |          |   |       |  |  |      |  | 
|Merlin Van Walleghen |                                                    |     | 69 |  |          |          | 4 |       |  |  | 1993 | 
|                     | 24106  408th Avenue
    Letcher, SD 57359-6021    |     |    |  |          |          |   |       |  |  |      |  | 

Bruce Anderson, assistant secretary-treasurer


Robert Bass, first vice chairman


David Bielenberg


Dennis Carlson


Curt Eischens


50



---



##### 



Robert Elliott


Steve Fritel


Robert Grabarski


Jerry Hasnedl


Glen Keppy


James Kile, second vice chairman


Randy Knecht


51



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##### 



Michael Mulcahey


Richard Owen


Duane Stenzel


Michael Toelle, chairman


Merlin Van Walleghen, secretary-treasurer






| |   |                                                                                                                                                                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | At the time of declaration of candidacy, the individual (except
    in the case of an incumbent) must have the written endorsement
    of a locally elected producer board that is part of the CHS
    system and located within the Region from which the individual
    is to be a candidate.
|
| |  | At the time of the election, the individual must be less than
    the age of 68.                                                                                                                                                                                                               





| |   |                                                                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The individual must be a member of this cooperative or a member
    of a Cooperative Association Member.                                                                                                                                                   
|
| |  | The individual must reside in the region from which he or she is
    to be elected.                                                                                                                                                                        
|
| |  | The individual must be an active farmer or rancher. Active
    farmer or rancher means an individual whose primary
    occupation is that of a farmer or rancher, excluding anyone who
    is an employee of ours or of a Cooperative Association Member.

52



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##### 





| |   |                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The individual must currently be serving or shall have served at
    least one full term as a director of a Cooperative Association
    Member of CHS.



|                                                                                   |  |                            |  | 
|---------------------------------------------------------------------------------- |  | -------------------------- |  | 
|Region                                                                             |  | Current Incumbent          | 
|                                                                                   |  |                            | 
|Region 1 (Minnesota)                                                               |  | Curt EischensJerry Hasnedl
|Region 2 (Montana, Wyoming)                                                        |  | Richard Owen               | 
|Region 3 (North Dakota)                                                            |  | Bruce Anderson             | 
|Region 5 (Connecticut, Indiana, Illinois, Kentucky,
    Michigan, Ohio, Wisconsin) |  | Robert Grabarski           | 
|Region 6 (Alaska, Arizona, California, Idaho, Oregon,
    Washington, Utah)        |  | David Bielenberg           | 
|Region 7 (Alabama, Arkansas, Florida, Iowa, Louisiana,
    Missouri, Mississippi)  |  | Glen Keppy                 | 




EXECUTIVE OFFICERS




|                  |  |     |    |  |          |                                                                      
|----------------- |  | --- | -- |  | -------- | ---------------------------------------------------------------------
|Name              |  | Age |    |  | Position
|                  |  |     |    |  |         
|John D. Johnson   |  |     | 57 |  |          | President and Chief Executive Officer                                
|Jay Debertin      |  |     | 45 |  |          | Executive Vice President and Chief Operating Officer, Processing     
|Patrick Kluempke  |  |     | 57 |  |          | Executive Vice President  Corporate Administration                  
|Thomas D. Larson  |  |     | 57 |  |          | Executive Vice President  Business Solutions                        
|Mark Palmquist    |  |     | 48 |  |          | Executive Vice President and Chief Operating Officer,
    Ag Business
|John Schmitz      |  |     | 55 |  |          | Executive Vice President and Chief Financial Officer                 
|Leon E. Westbrock |  |     | 58 |  |          | Executive Vice President and Chief Operating Officer, Energy         

John D. Johnson,


Jay Debertin,


53



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##### 



Patrick Kluempke,


Thomas D. Larson,


Mark Palmquist,


John Schmitz,


Leon E. Westbrock,





Section 16(a) Beneficial Ownership Reporting
Compliance






54



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##### 






Code of Ethics

















Audit Committee Matters













|         |                       
|-------- | ----------------------
|ITEM 11. | EXECUTIVE COMPENSATION

Summary Compensation.


55



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##### 





Summary Compensation Table


|                            |                             |                     |         |              |              |   |           |         |  |   |              |         |  |              |        |        |              |   |         |        |  |   |         |         | 
|--------------------------- | --------------------------- | ------------------- | ------- | ------------ | ------------ | - | --------- | ------- |  | - | ------------ | ------- |  | ------------ | ------ | ------ | ------------ | - | ------- | ------ |  | - | ------- | ------- | 
|                            |                             | Annual Compensation |         |              | Long-Term    |  
|                            |                             |                     |         |              | Compensation |  
|                            |                             |                     |         | Other Annual |              |   | All Other |         |  |   |             
|                            |                             | Year                |         |              | Salary       |   |           | Bonus   |  |   | Compensation |         |  | Compensation |        |        | LTIP Payouts |  
|Name and Principal Position |                             | Ended               |         |              | (1)          |   |           | (1)     |  |   | (2)          |         |  | (3)          |        |        | (1)          |  
|                            |                             |                     |         |              |              |   |           |         |  |   |              |         |  |              |        |        |              |  
|John. D. Johnson            |                             |                     | 8/31/05 |              |              | $ | 850,000   |         |  | $ | 850,000      |         |  | $            | 25,800 |        |              | $ | 141,126 |        |  | $ | 467,500 |        
|                            | President and Chief         |                     |         | 8/31/04      |              |   |           | 850,000 |  |   |              | 800,530 |  |              |        | 25,800 |              |   |         | 97,714 |  |   |         | 969,646 | 
|                            | Executive Officer           |                     |         | 8/31/03      |              |   |           | 850,000 |  |   |              | 710,940 |  |              |        | 25,800 |              |   |         | 99,142 |  |   |         | 820,802 | 
|Jay Debertin                |                             |                     | 8/31/05 |              |              |   | 379,000   |         |  |   | 284,250      |         |  |              | 15,120 |        |              |   | 48,879  |        |  |   | 127,053 |        
|                            | Executive Vice President    |                     |         | 8/31/04      |              |   |           | 300,000 |  |   |              | 186,662 |  |              |        | 15,120 |              |   |         | 31,820 |  |   |         | 230,175 | 
|                            | and Chief Operating         |                     |         | 8/31/03      |              |   |           | 265,000 |  |   |              | 171,083 |  |              |        | 15,120 |              |   |         | 28,561 |  |   |         | 186,104 | 
|                            | Officer  Processing        |                     |         |              |              |   |           |         |  |   |              |         |  |              |        |        |              |   |         |        |  |   |         |         | 
|Patrick Kluempke            |                             |                     | 8/31/05 |              |              |   | 326,400   |         |  |   | 269,800      |         |  |              | 15,120 |        |              |   | 48,747  |        |  |   | 115,088 |        
|                            | Executive Vice President   |                     |         | 8/31/04      |              |   |           | 287,600 |  |   |              | 212,680 |  |              |        | 15,120 |              |   |         | 29,805 |  |   |         | 211,562 | 
|                            | Corporate Administration    |                     |         | 8/31/03      |              |   |           | 230,880 |  |   |              | 145,842 |  |              |        | 15,120 |              |   |         | 26,062 |  |   |         | 166,949 | 
|Thomas D. Larson            |                             |                     | 8/31/05 |              |              |   | 326,400   |         |  |   | 229,525      |         |  |              | 15,120 |        |              |   | 44,416  |        |  |   | 112,723 |        
|                            | Executive Vice President   |                     |         | 8/31/04      |              |   |           | 253,400 |  |   |              | 185,489 |  |              |        | 15,120 |              |   |         | 29,100 |  |   |         | 208,647 | 
|                            | Business Solutions          |                     |         | 8/31/03      |              |   |           | 240,000 |  |   |              | 156,960 |  |              |        | 15,120 |              |   |         | 25,505 |  |   |         | 174,763 | 
|Mark Palmquist              |                             |                     | 8/31/05 |              |              |   | 522,300   |         |  |   | 391,725      |         |  |              | 15,120 |        |              |   | 75,877  |        |  |   | 205,563 |        
|                            | Executive Vice President    |                     |         | 8/31/04      |              |   |           | 490,000 |  |   |              | 342,143 |  |              |        | 15,120 |              |   |         | 44,336 |  |   |         | 412,301 | 
|                            | and Chief Operating         |                     |         | 8/31/03      |              |   |           | 482,400 |  |   |              | 145,323 |  |              |        | 15,120 |              |   |         | 49,611 |  |   |         | 348,215 | 
|                            | Officer  Ag Business       |                     |         |              |              |   |           |         |  |   |              |         |  |              |        |        |              |   |         |        |  |   |         |         | 
|John Schmitz                |                             |                     | 8/31/05 |              |              |   | 464,622   |         |  |   | 384,450      |         |  |              | 15,120 |        |              |   | 71,047  |        |  |   | 182,229 |        
|                            | Executive Vice President    |                     |         | 8/31/04      |              |   |           | 450,000 |  |   |              | 332,775 |  |              |        | 15,120 |              |   |         | 46,226 |  |   |         | 366,907 | 
|                            | and Chief Financial Officer |                     |         | 8/31/03      |              |   |           | 410,700 |  |   |              | 268,140 |  |              |        | 15,120 |              |   |         | 38,514 |  |   |         | 285,155 | 
|Leon E. Westbrock           |                             |                     | 8/31/05 |              |              |   | 522,300   |         |  |   | 391,725      |         |  |              | 15,120 |        |              |   | 77,242  |        |  |   | 205,563 |        
|                            | Executive Vice President    |                     |         | 8/31/04      |              |   |           | 490,000 |  |   |              | 359,783 |  |              |        | 15,120 |              |   |         | 54,159 |  |   |         | 412,301 | 
|                            | and Chief Operating         |                     |         | 8/31/03      |              |   |           | 482,400 |  |   |              | 344,148 |  |              |        | 15,120 |              |   |         | 49,349 |  |   |         | 348,215 | 
|                            | Officer  Energy            |                     |         |              |              |   |           |         |  |   |              |         |  |              |        |        |              |   |         |        |  |   |         |         | 






|    |                                                                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes amounts of salary and bonus deferred pursuant to
    deferred compensation plans.                                                                                                                              
|   
|(2) | Company vehicle allowance.                                                                                                                                                                                              
|   
|(3) | Other compensation includes our matching contributions under our
    401(k) Plan, our nonqualified 401(k) match makeup and our profit
    sharing plan, and the portion of long-term disability premiums
    paid by us.

Report on Executive Compensation






| |                                                              
| | -------------------------------------------------------------
| | Curt
    Eischens                     Michael
    Mulcahey   
| | Richard
    Owen                     Merlin
    Van Walleghen

Executive Compensation Policies and Programs




56



---



##### 









Components of Compensation




Base Pay:


Annual Variable Pay:


Long-Term Variable Pay:




Compensation of the Chief Executive Officer




57



---



##### 







The following summarizes certain benefits in effect as of
August 31, 2005 to the Named Executive Officers.


Employment Agreement with John D. Johnson




Annual Variable Pay Plan




Long-Term Incentive Plan




58



---



##### 





| |                                                           
| | ----------------------------------------------------------
| | Long-Term Incentive Plans  Awards in Last
    Fiscal Year

|                            |                                                                        |           |         |  |                     |  |           |           |  |   |        |  |  |         |         |  |  |   |         |  | 
|--------------------------- | ---------------------------------------------------------------------- | --------- | ------- |  | ------------------- |  | --------- | --------- |  | - | ------ |  |  | ------- | ------- |  |  | - | ------- |  | 
|                            |                                                                        | Award     |         |  |                     |  |           |           |  |   |       
|Name and Principal Position |                                                                        | 2003-2005 |         |  | Maturation of Award |  |           | Threshold |  |   | Target |  |  | Maximum |        
|                            |                                                                        |           |         |  |                     |  |           |           |  |   |        |  |  |         |        
|John. D. Johnson            |                                                                        | $         | 467,500 |  |                     |  | 2003-2005 |           |  | $ | 85,000 |  |  | $       | 569,500 |  |  | $ | 850,000 | 
|                            | President and Chief Executive Officer                                  |           |         |  |                     |  |           |           |  |   |        |  |  |         |         |  |  |   |         |  | 
|Jay Debertin                |                                                                        |           | 127,053 |  |                     |  | 2003-2005 |           |  |   | 23,101 |  |  |         | 154,774 |  |  |   | 231,006 | 
|                            | Executive Vice President and Chief Operating Officer 
    Processing  |           |         |  |                     |  |           |           |  |   |        |  |  |         |         |  |  |   |         |  | 
|Patrick Kluempke            |                                                                        |           | 115,088 |  |                     |  | 2003-2005 |           |  |   | 20,925 |  |  |         | 140,198 |  |  |   | 209,250 | 
|                            | Executive Vice President  Corporate Administration                    |           |         |  |                     |  |           |           |  |   |        |  |  |         |         |  |  |   |         |  | 
|Thomas D. Larson            |                                                                        |           | 112,723 |  |                     |  | 2003-2005 |           |  |   | 20,495 |  |  |         | 137,316 |  |  |   | 204,950 | 
|                            | Executive Vice President  Business Solutions                          |           |         |  |                     |  |           |           |  |   |        |  |  |         |         |  |  |   |         |  | 
|Mark Palmquist              |                                                                        |           | 205,563 |  |                     |  | 2003-2005 |           |  |   | 37,375 |  |  |         | 250,413 |  |  |   | 373,750 | 
|                            | Executive Vice President and Chief Operating Officer 
    Ag Business |           |         |  |                     |  |           |           |  |   |        |  |  |         |         |  |  |   |         |  | 
|John Schmitz                |                                                                        |           | 182,229 |  |                     |  | 2003-2005 |           |  |   | 31,133 |  |  |         | 221,988 |  |  |   | 331,325 | 
|                            | Executive Vice President and Chief Financial Officer                   |           |         |  |                     |  |           |           |  |   |        |  |  |         |         |  |  |   |         |  | 
|Leon E. Westbrock           |                                                                        |           | 205,563 |  |                     |  | 2003-2005 |           |  |   | 37,375 |  |  |         | 250,413 |  |  |   | 373,750 | 
|                            | Executive Vice President and Chief Operating
    Officer  Energy      |           |         |  |                     |  |           |           |  |   |        |  |  |         |         |  |  |   |         |  | 

Retirement Plan








|                         |  |                           |   |   |                           |  |    |  
|------------------------ |  | ------------------------- | - | - | ------------------------- |  | -- | -
|                         |  | Pay Below Social Security |   |   | Pay Above Social Security | 
|Years of Benefit Service |  | Taxable Wage Base         |   |   | Taxable Wage Base         | 
|                         |  |                           |   |   |                           | 
|1 to 3 years             |  |                           | 3 | % |                           |  | 6  | %
|4 to 7 years             |  |                           | 4 | % |                           |  | 8  | %
|8 to 11 years            |  |                           | 5 | % |                           |  | 10 | %
|12 to 15 years           |  |                           | 6 | % |                           |  | 12 | %
|16 years and more        |  |                           | 7 | % |                           |  | 14 | %

59



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##### 







|                  |  |              |           |  |                  |  |    | 
|----------------- |  | ------------ | --------- |  | ---------------- |  | -- | 
|                  |  | Dollar Value |           |  | Years of Service | 
|                  |  |              |           |  |                  | 
|John D. Johnson   |  | $            | 1,111,035 |  |                  |  | 28 | 
|Jay Debertin      |  |              | 218,912   |  |                  |  | 21 | 
|Patrick Kluempke  |  |              | 543,700   |  |                  |  | 22 | 
|Thomas D. Larson  |  |              | 593,762   |  |                  |  | 28 | 
|Mark Palmquist    |  |              | 607,625   |  |                  |  | 25 | 
|John Schmitz      |  |              | 523,644   |  |                  |  | 30 | 
|Leon E. Westbrock |  |              | 1,179,990 |  |                  |  | 24 | 







|                  |  |                   |           |         |                   |   |         | 
|----------------- |  | ----------------- | --------- | ------- | ----------------- | - | ------- | 
|                  |  |                   |           | Special |                  
|                  |  | Supplemental Plan |           |         | Supplemental Plan |  
|                  |  |                   |           |         |                   |  
|John D. Johnson   |  | $                 | 2,440,149 |         |                   | $ | 701,490 | 
|Jay Debertin      |  |                   | 231,910   |         |                   |   | N/A     | 
|Patrick Kluempke  |  |                   | 179,214   |         |                   |   | N/A     | 
|Thomas D. Larson  |  |                   | 743,425   |         |                   |   | N/A     | 
|Mark Palmquist    |  |                   | 435,361   |         |                   |   | N/A     | 
|John Schmitz      |  |                   | 404,193   |         |                   |   | N/A     | 
|Leon E. Westbrock |  |                   | 2,407,296 |         |                   |   | N/A     | 

401(k) Plan




60



---



##### 





Nonqualified Deferred Compensation Plans












61



---



##### 





Change of Control Arrangements






| |   |                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------
| |  | receive payment of their accrued benefit under the plan at time
    of change of control;                                                   
|
| |  | allow their accrued benefit to remain in the plan and have the
    payment made in accordance with the terms and conditions of the
    plan.





Directors Compensation






Committees of the Board of Directors




62



---



##### 





Compensation Committee Interlocks and Insider
Participation






63



---



##### 








|         |                                                                                                   
|-------- | --------------------------------------------------------------------------------------------------
|ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
    MANAGEMENT AND RELATED STOCKHOLDER MATTERS



|                                         |  |                                             |  |            |               |     |            |  |   | 
|---------------------------------------- |  | ------------------------------------------- |  | ---------- | ------------- | --- | ---------- |  | - | 
|                                         |  |                                             |  | Amount and |               |     |           
|                                         |  |                                             |  | Nature of  |               |     |           
|                                         |  |                                             |  | Beneficial |               |     |           
|Title of Class                           |  | Name of Beneficial Owner                    |  | Ownership  |               |     | % of Class | 
|                                         |  |                                             |  |            |               |     |            | 
|8% Cumulative Redeemable Preferred Stock |  | Directors:                                  |  |            |               |     |            |  |   | 
|                                         |  | Michael Toelle                              |  |            | 420 shares    | (1) |            |  | * | 
|                                         |  | Bruce Anderson                              |  |            | 40 shares     |     |            |  | * | 
|                                         |  | Robert Bass                                 |  |            | 120 shares    |     |            |  | * | 
|                                         |  | David Bielenberg                            |  |            | 1,530 shares  |     |            |  | * | 
|                                         |  | Dennis Carlson                              |  |            | 460 shares    | (1) |            |  | * | 
|                                         |  | Curt Eischens                               |  |            | 120 shares    |     |            |  | * | 
|                                         |  | Robert Elliott                              |  |            | 1,155 shares  |     |            |  | * | 
|                                         |  | Steve Fritel                                |  |            | 880 shares    |     |            |  | * | 
|                                         |  | Robert Grabarski                            |  |            | 2,280  shares | (1) |            |  | * | 
|                                         |  | Jerry Hasnedl                               |  |            | 200 shares    |     |            |  | * | 
|                                         |  | Glen Keppy                                  |  |            | 200 shares    |     |            |  | * | 
|                                         |  | James Kile                                  |  |            | 250 shares    | (1) |            |  | * | 
|                                         |  | Randy Knecht                                |  |            | 313 shares    | (1) |            |  | * | 
|                                         |  | Michael Mulcahey                            |  |            | 0 shares      |     |            |  | * | 
|                                         |  | Richard Owen                                |  |            | 240 shares    |     |            |  | * | 
|                                         |  | Duane Stenzel                               |  |            | 400 shares    |     |            |  | * | 
|                                         |  | Merlin Van Walleghen                        |  |            | 1,600 shares  |     |            |  | * | 
|                                         |  | Named Executive Officers:                   |  |            |               |     |            |  |   | 
|                                         |  | John D. Johnson                             |  |            | 4,600 shares  |     |            |  | * | 
|                                         |  | Jay Debertin                                |  |            | 400 shares    |     |            |  | * | 
|                                         |  | Patrick Kluempke                            |  |            | 1,000 shares  |     |            |  | * | 
|                                         |  | Thomas D. Larson                            |  |            | 400 shares    |     |            |  | * | 
|                                         |  | Mark Palmquist                              |  |            | 400 shares    |     |            |  | * | 
|                                         |  | John Schmitz                                |  |            | 1,400 shares  |     |            |  | * | 
|                                         |  | Leon E. Westbrock                           |  |            | 800 shares    |     |            |  | * | 
|                                         |  | Directors and executive officers as a group |  |            | 19,208 shares |     |            |  | * | 






|    |                                                                                       
|--- | --------------------------------------------------------------------------------------
|(1) | Includes shares held by spouse, children and Individual
    Retirement Accounts (IRA).



| |   |              
| | - | -------------
| | * | Less than 1%.










|         |                                               
|-------- | ----------------------------------------------
|ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



64



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##### 





|                     |  |                 |         | 
|-------------------- |  | --------------- | ------- | 
|                     |  | Year Ended      |        
|Name                 |  | August 31, 2005 |        
|                     |  |                 |        
|Bruce Anderson       |  | $               | 156,005 | 
|Curt Eischens        |  |                 | 228,535 | 
|Jerry Hasnedl        |  |                 | 506,277 | 
|Glen Keppy           |  |                 | 207,169 | 
|Michael Mulcahey     |  |                 | 60,768  | 
|Michael Toelle       |  |                 | 511,317 | 
|Merlin Van Walleghen |  |                 | 285,671 | 




PART IV.







|         |                                       
|-------- | --------------------------------------
|ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES



|                        |       |      |           |           |      |   |         |           | 
|----------------------- | ----- | ---- | --------- | --------- | ---- | - | ------- | --------- | 
|Description of Fees     |       | 2005 |           |           | 2004 |  
|                        |       |      |           |           |      |  
|Audit Fees(1)           |       | $    | 1,058,078 |           |      | $ | 904,128 |          
|Audit  Related Fees(2) |       |      | 102,659   |           |      |   | 99,717  |          
|Tax Fees(3)             |       |      | 29,911    |           |      |   | 705,151 |          
|All Other Fees          |       |      |           |           |      |   |         |          
|                        |       |      |           |           |      |  
|                        | Total |      | $         | 1,190,648 |      |   | $       | 1,708,996 | 
|                        |       |      |           |           |      |  






|    |                                                                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes fees for audit of annual financial statements and
    reviews of the related quarterly financial statements, certain
    statutory audits, work related to S-2 and S-8 filings, and
    services for 404 readiness efforts.
|   
|(2) | Includes fees for employee benefit plan audits.                                                                                                                                                                                     
|   
|(3) | Includes fees related to tax compliance, tax advice and tax
    planning.                                                                                                                                                           





65



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##### 








|         |                                  
|-------- | ---------------------------------
|ITEM 15. | EXHIBITS AND FINANCIAL STATEMENTS

FINANCIAL STATEMENTS




|                                                                                             |  |          |      | 
|-------------------------------------------------------------------------------------------- |  | -------- | ---- | 
|                                                                                             |  | Page No. |     
|                                                                                             |  |          |     
|CHS Inc.                                                                                     |  |          |      | 
|Consolidated Balance Sheets as of August 31, 2005 and 2004                                   |  |          | F-1  | 
|Consolidated Statements of Operations for the years ended
    August 31, 2005, 2004 and 2003 |  |          | F-2  | 
|Consolidated Statements of Equities and Comprehensive Income for
    the years ended         |  |          |      | 
|August 31, 2005, 2004 and 2003                                                               |  |          | F-3  | 
|Consolidated Statements of Cash Flows for the years ended
    August 31, 2005, 2004 and 2003 |  |          | F-4  | 
|Notes to Consolidated Financial Statements                                                   |  |          | F-5  | 
|Report of Independent Registered Public Accounting Firm                                      |  |          | F-31 | 

FINANCIAL STATEMENT SCHEDULES


SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS AND
RESERVES


|                                 |      |                        |   |        |                  |  |   |                |  |  |                 |  |  |            |   |        |   |  |   |        | 
|-------------------------------- | ---- | ---------------------- | - | ------ | ---------------- |  | - | -------------- |  |  | --------------- |  |  | ---------- | - | ------ | - |  | - | ------ | 
|                                 |      | Balance at             |   |        | Additions:       |  |   | Additions:     |  |  | Deductions:     |  |  | Balance at |  
|                                 |      | Beginning              |   |        | Charged to Costs |  |   | Charged to     |  |  | Write-offs, net |  |  | End of     |  
|                                 |      | of Year                |   |        | & Expenses       |  |   | Other Accounts |  |  | of Recoveries   |  |  | Year       |  
|                                 |      |                        |   |        |                  |  |   |                |  |  |                 |  |  |            |  
|                                 |      | (dollars in thousands) |  
|Allowances for Doubtful Accounts |      |                        |   |        |                  |  |   |                |  |  |                 |  |  |            |   |        |   |  |   |       
|                                 | 2005 |                        | $ | 55,809 |                  |  | $ | 12,962         |  |  |                 |  |  |            | $ | (8,730 | ) |  | $ | 60,041 | 
|                                 | 2004 |                        |   | 31,618 |                  |  |   | 32,254         |  |  |                 |  |  |            |   | (8,063 | ) |  |   | 55,809 | 
|                                 | 2003 |                        |   | 26,156 |                  |  |   | 11,958         |  |  |                 |  |  |            |   | (6,496 | ) |  |   | 31,618 | 

|                      |      |                        |   |        |                  |  |   |                |  |  |                 |  |  |            |   |         |   |  |   |        | 
|--------------------- | ---- | ---------------------- | - | ------ | ---------------- |  | - | -------------- |  |  | --------------- |  |  | ---------- | - | ------- | - |  | - | ------ | 
|                      |      | Balance at             |   |        | Additions:       |  |   | Additions:     |  |  | Deductions:     |  |  | Balance at |  
|                      |      | Beginning              |   |        | Charged to Costs |  |   | Charged to     |  |  | Expenditures    |  |  | End of     |  
|                      |      | of Year                |   |        | & Expenses       |  |   | Other Accounts |  |  | for maintenance |  |  | Year       |  
|                      |      |                        |   |        |                  |  |   |                |  |  |                 |  |  |            |  
|                      |      | (dollars in thousands) |  
|Accrued Turnaround(1) |      |                        |   |        |                  |  |   |                |  |  |                 |  |  |            |   |         |   |  |   |       
|                      | 2005 |                        | $ | 12,949 |                  |  | $ | 21,558         |  |  |                 |  |  |            | $ | (15,472 | ) |  | $ | 19,035 | 
|                      | 2004 |                        |   | 13,980 |                  |  |   | 11,298         |  |  |                 |  |  |            |   | (12,329 | ) |  |   | 12,949 | 
|                      | 2003 |                        |   | 10,356 |                  |  |   | 12,055         |  |  |                 |  |  |            |   | (8,431  | ) |  |   | 13,980 | 






| |     |                                                                               
| | --- | ------------------------------------------------------------------------------
| | (1) | Accruals for planned major maintenance activities at our energy
    refineries

66



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##### 



Report of Independent Registered Public Accounting Firm on


Financial Statement Schedule















67



---



##### 



EXHIBITS


| |    |      |  |                                                                                                                                                                                                                                                                     
| | -- | ---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 3  | .1   |  | Articles of Incorporation of the Company.(24)                                                                                                                                                                                                                       
| | 3  | .2   |  | Bylaws of the Company.(24)                                                                                                                                                                                                                                          
| | 4  | .1   |  | Resolution Creating a Series of Preferred Equity to be
    Designated 8% Cumulative Redeemable Preferred Stock.(13)                                                                                                                                                 
| | 4  | .2   |  | Form of Certificate Representing 8% Cumulative Redeemable
    Preferred Stock.(14)                                                                                                                                                                                  
| | 4  | .3   |  | Unanimous Written Consent Resolution of the Board of Directors
    Amending the Amended and Restated Resolution Creating a Series
    of Preferred Equity to be Designated 8% Cumulative Redeemable
    Preferred Stock.(14)                                        
| | 4  | .4   |  | Unanimous Written consent Resolution of the Board of Directors
    Amending the Amended and Restated Resolution Creating a Series
    of Preferred Equity to be Designated 8% Cumulative Redeemable
    Preferred Stock to change the record date for dividends.(15)
| | 10 | .1   |  | Lease between the Port of Kalama and North Pacific Grain
    Growers, Inc., dated November 22, 1960.(1)                                                                                                                                                             
| | 10 | .2   |  | Limited Liability Company Agreement for the Wilsey-Holsum Foods,
    LLC dated July 24, 1996.(1)                                                                                                                                                                    
| | 10 | .3   |  | Long Term Supply Agreement between Wilsey-Holsum Foods, LLC and
    Harvest States Cooperatives dated August 30, 1996.(*)(1)                                                                                                                                        
| | 10 | .4   |  | TEMCO, LLC Limited Liability Company Agreement between Cargill,
    Incorporated and Cenex Harvest States Cooperatives dated as of
    August 26, 2002.(12)                                                                                                         
| | 10 | .5   |  | Cenex Harvest States Cooperatives Supplemental Savings Plan.(7)                                                                                                                                                                                                     
| | 10 | .6   |  | Cenex Harvest States Cooperatives Supplemental Executive
    Retirement Plan.(7)                                                                                                                                                                                    
| | 10 | .7   |  | Cenex Harvest States Cooperatives Senior Management Compensation
    Plan.(7)                                                                                                                                                                                       
| | 10 | .8   |  | Cenex Harvest States Cooperatives Executive Long-Term Variable
    Compensation Plan.(7)                                                                                                                                                                            
| | 10 | .9   |  | Cenex Harvest States Cooperatives Share Option Plan.(20)                                                                                                                                                                                                            
| | 10 | .9A  |  | Amendment to Cenex Harvest States Share Option Plan, dated
    June 28, 2001.(10)                                                                                                                                                                                   
| | 10 | .9B  |  | Amendment No. 2 to Cenex Harvest States Share Option Plan,
    dated May 2, 2001.(20)                                                                                                                                                                               
| | 10 | .9C  |  | Amendment No. 3 to Cenex Harvest States Share Option Plan,
    dated June 4, 2002.(20)                                                                                                                                                                              
| | 10 | .9D  |  | Amendment No. 4 to Cenex Harvest States Share Option Plan,
    dated April 6, 2004.(20)                                                                                                                                                                             
| | 10 | .10  |  | CHS Inc. Share Option Plan Option Agreement(20)                                                                                                                                                                                                                     
| | 10 | .11  |  | CHS Inc. Share Option Plan Trust Agreement(20)                                                                                                                                                                                                                      
| | 10 | .11A |  | Amendment No. 1 to the Trust Agreement.(20)                                                                                                                                                                                                                         
| | 10 | .12  |  | $225,000,000 Note Agreement (Private Placement Agreement)
    dated as of June 19, 1998 among Cenex Harvest States
    Cooperatives and each of the Purchasers of the Notes.(2)                                                                                     
| | 10 | .12A |  | First Amendment to Note Agreement ($225,000,000 Private
    Placement), effective September 10, 2003, among CHS Inc.
    and each of the Purchasers of the notes.(16)                                                                                               
| | 10 | .13  |  | 2005 Amended and Restated Credit Agreement (Revolving Loan) by
    and between CHS Inc. and the Syndication Parties dated as of
    May 19, 2005.(22)                                                                                                               
| | 10 | .13A |  | First Amendment to 2005 Amended and Restated Credit Agreement
    (Revolving Loan) by and between CHS Inc. and the Syndication
    Parties dated as of November 18, 2005.(24)                                                                                       
| | 10 | .14  |  | $200 Million Term Loan Credit Agreement dated as of
    June 1, 1998 among Cenex Harvest States Cooperatives,
    CoBank, ACB, and St. Paul Bank for Cooperatives, including
    Exhibit 2.4 (form of $200 Million Promissory Note).(2)                             
| | 10 | .14A |  | First Amendment to Credit Agreement (Term Loan), effective as of
    May 31, 1999 among Cenex Harvest States Cooperatives,
    CoBank, ACB, and St. Paul Bank for Cooperatives.(4)                                                                                  
| | 10 | .14B |  | Second Amendment to Credit Agreement (Term Loan) dated
    May 23, 2000 by and among Cenex Harvest States
    Cooperatives, CoBank, ACB, St. Paul Bank for Cooperatives and
    the Syndication Parties.(6)                                                         
| | 10 | .14C |  | Third Amendment to Credit Agreement (Term Loan) dated
    May 23, 2001 among Cenex Harvest States Cooperatives,
    CoBank, ACB, and the Syndication Parties.(9)                                                                                                    

68



---



##### 



| |    |      |  |                                                                                                                                                                                                                
| | -- | ---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 10 | .14D |  | Fourth Amendment to Credit Agreement (Term Loan) dated
    May 22, 2002 among Cenex Harvest States Cooperatives,
    CoBank, ACB and the Syndication Parties.(11)                                              
| | 10 | .14E |  | Fifth Amendment to Credit Agreement (Term Loan) dated
    May 21, 2003 by and among Cenex Harvest States
    Cooperatives, CoBank, ACB and the Syndication Parties.(20)                                        
| | 10 | .14F |  | Sixth Amendment to Credit Agreement (Term Loan) dated as of
    May 20, 2004 by and among CHS Inc., CoBank, ACB, and the
    Syndication Parties.(18)                                                          
| | 10 | .14G |  | Seventh Amendment to Credit Agreement (Term Loan) dated as of
    May 19, 2005 by and among CHS Inc., CoBank, ACB, and the
    Syndication Parties.(24)                                                        
| | 10 | .14H |  | Eighth Amendment to Credit Agreement (Term Loan) dated as of
    November 18, 2005 by and among CHS Inc., CoBank, ACB, and
    the Syndication Parties.(24)                                                    
| | 10 | .15  |  | Limited Liability Agreement of United Harvest, LLC dated
    November 9, 1998 between United Grain Corporation and Cenex
    Harvest States Cooperatives.(3)                                                   
| | 10 | .16  |  | Joint Venture Agreement for Agriliance LLC, dated as of
    January 1, 2000 among Farmland Industries, Inc., Cenex
    Harvest States Cooperatives, United Country Brands, LLC and Land
    O Lakes, Inc.(5)  
| | 10 | .17  |  | Employment Agreement dated November 6, 2003 by and between
    John D. Johnson and CHS Inc.(16)                                                                                                                
| | 10 | .18  |  | CHS Inc. Special Supplemental Executive Retirement Plan.(16)                                                                                                                                                   
| | 10 | .19  |  | Note purchase and Private Shelf Agreement dated as of
    January 10, 2001 between Cenex Harvest States Cooperatives
    and The Prudential Insurance Company of America.(8)                                   
| | 10 | .19A |  | Amendment No. 1 to Note Purchase and Private Shelf
    Agreement, dated as of March 2, 2001.(8)                                                                                                                
| | 10 | .20  |  | Note Purchase Agreement and Series D & E
    Senior Notes dated October 18, 2002.(12)                                                                                                                          
| | 10 | .21  |  | 2003 Amended and Restated Credit Agreement ($15 million,
    2 Year Facility) dated December 16, 2003 between
    CoBank, ACB, U.S. AgBank, FCB and the National Cooperative
    Refinery Association, Inc.(17)
| | 10 | .22  |  | Note Purchase and Private Shelf Agreement between CHS Inc.
    and Prudential Capital Group dated as of April 13, 2004.(18)                                                                                    
| | 10 | .23  |  | Note Purchase Agreement for Series H Senior Notes
    dated September 21, 2004.(19)                                                                                                                            
| | 10 | .24  |  | Deferred Compensation Plan.(21)                                                                                                                                                                                
| | 10 | .24A |  | First Amendment to CHS Inc. Deferred Compensation Plan.(23)                                                                                                                                                    
| | 10 | .25  |  | New Plan Participants 2005 Plan Agreement and Election Form for
    the CHS Inc. Deferred Compensation Plan.(21)                                                                                               
| | 10 | .26  |  | Beneficiary Designation Form for the CHS Inc. Deferred
    Compensation Plan.(21)                                                                                                                              
| | 10 | .27  |  | Share Option Plan Participants 2005 Plan Agreement and Election
    Form.(23)                                                                                                                                  
| | 21 | .1   |  | Subsidiaries of the Registrant.(24)                                                                                                                                                                            
| | 23 | .1   |  | Consent of Independent Registered Public Accounting Firm.(24)                                                                                                                                                  
| | 24 | .1   |  | Power of Attorney.(24)                                                                                                                                                                                         
| | 31 | .1   |  | Certification Pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002.(24)                                                                                                                               
| | 31 | .2   |  | Certification Pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002.(24)                                                                                                                               
| | 32 | .1   |  | Certification Pursuant to 18 U.S.C. Section 1350, as
    Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002.(24)                                                                            
| | 32 | .2   |  | Certification Pursuant to 18 U.S.C. Section 1350, as
    Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002.(24)                                                                            






|    |                                                                                                                                                                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(*) | Pursuant to Rule 406 of the Securities Act of 1933, as
    amended, confidential portions of Exhibit 10.3 have been
    deleted                     and
    filed separately with the Securities and Exchange Commission
    pursuant to a request for confidential treatment.



| |     |                                                                                                                          
| | --- | -------------------------------------------------------------------------------------------------------------------------
| | (1) | Incorporated by reference to our Registration Statement on
    Form S-1 (File No. 333-17865), filed February 7,
    1997.

69



---



##### 





| |     |                                                                                                                                             
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | Incorporated by reference to our Form 10-Q Transition
    Report for the period June 1, 1998 to August 31, 1998,
    filed October 14, 1998.
|
| | (3) | Incorporated by reference to our Form 10-Q for the
    quarterly period ended November 30, 1998, filed
    January 13, 1999.                
|
| | (4) | Incorporated by reference to our Form 10-Q for the
    quarterly period ended May 31, 1999, filed July 13,
    1999.                        
|
| | (5) | Incorporated by reference to our Form 10-Q for the
    quarterly period ended February 29, 2000 filed
    April 11, 2000.                   
|
| | (6) | Incorporated by reference to our Form 10-Q for the
    quarterly period ended May 31, 2000, filed July 10,
    2000.                        
|
| | (7) | Incorporated by reference to our Form 10-K for the year
    ended August 31, 2000, filed November 22, 2000.                                 
|
| | (8) | Incorporated by reference to our Form 10-Q for the
    quarterly period ended February 28, 2001, filed
    April 10, 2001.                  
|
| | (9) | Incorporated by reference to our Form 10-Q for the
    quarterly period ended May 31, 2001, filed July 3,
    2001.                         



|     |                                                                                                                                              
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Incorporated by reference to our Registration Statement on
    Form S-2 (File No. 333-65364), filed October 26,
    2001.                    
|    
|(11) | Incorporated by reference to our Form 10-Q for the
    quarterly period ended May 31, 2002, filed July 3,
    2002.                          
|    
|(12) | Incorporated by reference to our Form 10-K for the year
    ended August 31, 2002, filed November 25, 2002.                                  
|    
|(13) | Incorporated by reference to Amendment No. 1 to our
    Registration Statement on Form S-2 (File
    No. 333-101916), dated January 13, 2003.
|    
|(14) | Incorporated by reference to Amendment No. 2 to our
    Registration Statement on Form S-2 (File
    No. 333-101916), dated January 23, 2003.
|    
|(15) | Incorporated by reference to our Form 10-Q for the
    quarterly period ended May 31, 2003, filed July 2,
    2003.                          
|    
|(16) | Incorporated by reference to our Form 10-K for the year
    ended August 31, 2003 filed on November 21, 2003.                                
|    
|(17) | Incorporated by reference to our Form 10-Q for the
    quarterly period ended February 29, 2004, filed
    April 7, 2004.                    
|    
|(18) | Incorporated by reference to our Form 10-Q for the
    quarterly period ended May 31, 2004, filed July 12,
    2004.                         
|    
|(19) | Incorporated by reference to our Current Report on Form 8-K
    filed September 22, 2004.                                                    
|    
|(20) | Incorporated by reference to our Form 10-K for the year
    ended August 31, 2004, filed November 18, 2004.                                  
|    
|(21) | Incorporated by reference to our Registration Statement on
    Form S-8 (File No. 333-121161), filed on
    December 10, 2004.               
|    
|(22) | Incorporated by reference to our Form 10-Q for the
    quarterly period ended May 31, 2005, filed July 8,
    2005.                          
|    
|(23) | Incorporated by reference to our Registration Statement on
    Form S-8 (File No. 333-129464), filed November 4,
    2005.                   
|    
|(24) | Filed herewith.                                                                                                                              

EXHIBITS




70



---



##### 



SCHEDULES







SUPPLEMENTAL INFORMATION




71



---



##### 






SIGNATURES






| |         
| | --------
| | CHS INC.



| |     |                    
| | --- | -------------------
| | By: | /s/ John D. Johnson

| |                                      
| | -------------------------------------
| |                                      
| | John D. Johnson                      
| | President and Chief Executive Officer



|                                       |  |                                                                                        |  | 
|-------------------------------------- |  | -------------------------------------------------------------------------------------- |  | 
|Signature                              |  | Title                                                                                 
|                                       |  |                                                                                       
|                                      
|/s/ John D. JohnsonJohn
    D. Johnson |  | President and Chief Executive Officer
    (principal executive officer)               
|                                      
|/s/ John SchmitzJohn
    Schmitz       |  | Executive Vice President and Chief Financial Officer
    (principal financial officer)
|                                      
|/s/ Jodell HellerJodell
    Heller     |  | Vice President and Controller
    (principal accounting officer)                      
|                                      
|*Michael
    Toelle                    |  | Chairman of the Board of Directors                                                    
|                                      
|*Bruce
    Anderson                    |  | Director                                                                              
|                                      
|*Robert
    Bass                       |  | Director                                                                              
|                                      
|*David
    Bielenberg                  |  | Director                                                                              
|                                      
|*Dennis
    Carlson                    |  | Director                                                                              
|                                      
|*Curt
    Eischens                     |  | Director                                                                              
|                                      
|*Robert
    Elliott                    |  | Director                                                                              

72



---



##### 



|                          |  |                                                        |  | 
|------------------------- |  | ------------------------------------------------------ |  | 
|Signature                 |  | Title                                                 
|                          |  |                                                       
|                         
|*Steve
    Fritel         |  | Director                                              
|                         
|*Robert
    Grabarski     |  | Director                                              
|                         
|*Jerry
    Hasnedl        |  | Director                                              
|                         
|*Glen
    Keppy           |  | Director                                              
|                         
|*James
    Kile           |  | Director                                              
|                         
|*Randy
    Knecht         |  | Director                                              
|                         
|*Michael
    Mulcahey     |  | Director                                              
|                         
|*Richard
    Owen*        |  | Director                                              
|                         
|*Duane
    Stenzel        |  | Director                                              
|                         
|*Merlin
    Van Walleghen |  | Director                                              
|                         
|*By:                      |  | /s/ John D. JohnsonJohn
    D. JohnsonAttorney-in-fact |  | 

73



---



##### 



CHS INC.


CONSOLIDATED BALANCE SHEETS


|                                   |                                   |                        |           |           |      |   |           |         | 
|---------------------------------- | --------------------------------- | ---------------------- | --------- | --------- | ---- | - | --------- | ------- | 
|                                   |                                   | August 31              |          
|                                   |                                   |                        |          
|                                   |                                   | 2005                   |           |           | 2004 |  
|                                   |                                   |                        |           |           |      |  
|                                   |                                   | (Dollars in thousands) |          
|ASSETS                            
|Current assets:                    |                                   |                        |           |           |      |   |           |        
|                                   | Cash and cash equivalents         |                        | $         | 241,018   |      |   | $         | 136,491 | 
|                                   | Receivables                       |                        |           | 1,093,986 |      |   |           | 834,965 | 
|                                   | Inventories                       |                        |           | 914,182   |      |   |           | 723,893 | 
|                                   | Other current assets              |                        |           | 367,306   |      |   |           | 273,355 | 
|                                   |                                   |                        |           |           |      |  
|Total current assets               |                                   |                        | 2,616,492 |           |      |   | 1,968,704 |        
|Investments                        |                                   |                        | 520,970   |           |      |   | 575,816   |        
|Property, plant and equipment      |                                   |                        | 1,359,535 |           |      |   | 1,249,655 |        
|Other assets                       |                                   |                        | 229,940   |           |      |   | 237,117   |        
|                                   |                                   |                        |           |           |      |  
|Total assets                       |                                   | $                      | 4,726,937 |           |      | $ | 4,031,292 |        
|                                   |                                   |                        |           |           |      |  
|                                  
|LIABILITIES AND EQUITIES          
|Current liabilities:               |                                   |                        |           |           |      |   |           |        
|                                   | Notes payable                     |                        | $         | 61,147    |      |   | $         | 116,115 | 
|                                   | Current portion of long-term debt |                        |           | 35,340    |      |   |           | 35,117  | 
|                                   | Customer credit balances          |                        |           | 91,902    |      |   |           | 88,686  | 
|                                   | Customer advance payments         |                        |           | 126,815   |      |   |           | 64,042  | 
|                                   | Checks and drafts outstanding     |                        |           | 67,398    |      |   |           | 64,584  | 
|                                   | Accounts payable                  |                        |           | 945,737   |      |   |           | 717,501 | 
|                                   | Accrued expenses                  |                        |           | 397,044   |      |   |           | 305,650 | 
|                                   | Dividends and equities payable    |                        |           | 132,406   |      |   |           | 83,569  | 
|                                   |                                   |                        |           |           |      |  
|Total current liabilities          |                                   |                        | 1,857,789 |           |      |   | 1,475,264 |        
|Long-term debt                     |                                   |                        | 737,734   |           |      |   | 648,701   |        
|Other liabilities                  |                                   |                        | 229,322   |           |      |   | 148,526   |        
|Minority interests in subsidiaries |                                   |                        | 144,195   |           |      |   | 130,715   |        
|Commitments and contingencies      |                                   |                        |           |           |      |   |           |        
|Equities                           |                                   |                        | 1,757,897 |           |      |   | 1,628,086 |        
|                                   |                                   |                        |           |           |      |  
|Total liabilities and equities     |                                   | $                      | 4,726,937 |           |      | $ | 4,031,292 |        
|                                   |                                   |                        |           |           |      |  



F-1



---



##### 



CHS INC.


CONSOLIDATED STATEMENTS OF OPERATIONS


|                                                      |                             |                               |            |            |      |   |            |            |  |   |           |           | 
|----------------------------------------------------- | --------------------------- | ----------------------------- | ---------- | ---------- | ---- | - | ---------- | ---------- |  | - | --------- | --------- | 
|                                                      |                             | For the Years Ended August 31 |           
|                                                      |                             |                               |           
|                                                      |                             | 2005                          |            |            | 2004 |   |            | 2003       | 
|                                                      |                             |                               |            |            |      |   |            |            | 
|                                                      |                             | (Dollars in thousands)        |           
|Revenues:                                             |                             |                               |            |            |      |   |            |            |  |   |           |          
|                                                      | Net sales                   |                               | $          | 11,769,093 |      |   | $          | 10,838,542 |  |   | $         | 9,196,666 | 
|                                                      | Other revenues              |                               |            | 171,963    |      |   |            | 141,165    |  |   |           | 122,473   | 
|                                                      |                             |                               |            |            |      |   |            |            | 
|                                                      |                             |                               | 11,941,056 |            |      |   | 10,979,707 |            |  |   | 9,319,139 |          
|Cost of goods sold                                    |                             |                               | 11,458,432 |            |      |   | 10,539,198 |            |  |   | 8,994,696 |          
|Marketing, general and administrative                 |                             |                               | 191,246    |            |      |   | 195,639    |            |  |   | 169,298   |          
|                                                      |                             |                               |            |            |      |   |            |            | 
|Operating earnings                                    |                             |                               | 291,378    |            |      |   | 244,870    |            |  |   | 155,145   |          
|Gain on sale of investments                           |                             |                               | (13,013    | )          |      |   | (14,666    | )          |  |   |           |          
|Gain on legal settlements                             |                             |                               |            |            |      |   | (692       | )          |  |   | (10,867   | )        
|Interest                                              |                             |                               | 55,137     |            |      |   | 48,717     |            |  |   | 46,257    |          
|Equity income from investments                        |                             |                               | (95,742    | )          |      |   | (79,022    | )          |  |   | (47,299   | )        
|Minority interests                                    |                             |                               | 47,736     |            |      |   | 33,830     |            |  |   | 21,950    |          
|                                                      |                             |                               |            |            |      |   |            |            | 
|Income from continuing operations before income taxes |                             |                               | 297,260    |            |      |   | 256,703    |            |  |   | 145,104   |          
|Income taxes                                          |                             |                               | 30,434     |            |      |   | 29,462     |            |  |   | 16,031    |          
|                                                      |                             |                               |            |            |      |   |            |            | 
|Income from continuing operations                     |                             |                               | 266,826    |            |      |   | 227,241    |            |  |   | 129,073   |          
|Loss from discontinued operations, net of taxes       |                             |                               | 16,810     |            |      |   | 5,909      |            |  |   | 5,232     |          
|                                                      |                             |                               |            |            |      |   |            |            | 
|Net income                                            |                             | $                             | 250,016    |            |      | $ | 221,332    |            |  | $ | 123,841   |          
|                                                      |                             |                               |            |            |      |   |            |            | 
|Distribution of net income:                           |                             |                               |            |            |      |   |            |            |  |   |           |          
|                                                      | Patronage refunds           |                               | $          | 203,000    |      |   | $          | 166,850    |  |   | $         | 90,000    | 
|                                                      | Unallocated capital reserve |                               |            | 47,016     |      |   |            | 54,482     |  |   |           | 33,841    | 
|                                                      |                             |                               |            |            |      |   |            |            | 
|Net income                                            |                             | $                             | 250,016    |            |      | $ | 221,332    |            |  | $ | 123,841   |          
|                                                      |                             |                               |            |            |      |   |            |            | 



F-2



---



##### 



CHS INC.


CONSOLIDATED STATEMENTS OF EQUITIES AND COMPREHENSIVE
INCOME


|                                                          |                            |                                                    |           |             |              |   |        |           |  |             |           |   |       |         |          |           |               |   |         |         |  |   |          |        |  |   |       |  |  |   |           |         | 
|--------------------------------------------------------- | -------------------------- | -------------------------------------------------- | --------- | ----------- | ------------ | - | ------ | --------- |  | ----------- | --------- | - | ----- | ------- | -------- | --------- | ------------- | - | ------- | ------- |  | - | -------- | ------ |  | - | ----- |  |  | - | --------- | ------- | 
|                                                          |                            | For the Years Ended August 31, 2005, 2004 and 2003 |          
|                                                          |                            |                                                    |          
|                                                          |                            |                                                    |           | Accumulated |              |   |       
|                                                          |                            | Capital                                            |           |             | Nonpatronage |   |        |           |  | Unallocated |           |   | Other |         |          | Allocated |               |   |        
|                                                          |                            | Equity                                             |           |             | Equity       |   |        | Preferred |  |             | Patronage |   |       | Capital |          |           | Comprehensive |   |         | Capital |  |   | Total    |       
|                                                          |                            | Certificates                                       |           |             | Certificates |   |        | Stock     |  |             | Refunds   |   |       | Reserve |          |           | Income (Loss) |   |         | Reserve |  |   | Equities |       
|                                                          |                            |                                                    |           |             |              |   |        |           |  |             |           |   |       |         |          |           |               |   |         |         |  |   |          |       
|                                                          |                            | (Dollars in thousands)                             |          
|Balances, September 1, 2002                               |                            | $                                                  | 1,040,596 |             |              | $ | 27,773 |           |  | $           | 9,325     |   |       | $       | 65,030   |           |               | $ | 190,761 |         |  | $ | (51,897  | )      |  | $ | 8,050 |  |  | $ | 1,289,638 |        
|Dividends and equity retirement determination             |                            |                                                    | 28,639    |             |              |   |        |           |  |             |           |   |       |         | 27,870   |           |               |   |         |         |  |   |          |        |  |   |       |  |  |   | 56,509    |        
|Patronage distribution                                    |                            |                                                    | 61,784    |             |              |   |        |           |  |             |           |   |       |         | (92,900  | )         |               |   | 4,638   |         |  |   |          |        |  |   |       |  |  |   | (26,478   | )      
|Equities retired                                          |                            |                                                    | (31,092   | )           |              |   | (52    | )         |  |             |           |   |       |         |          |           |               |   |         |         |  |   |          |        |  |   |       |  |  |   | (31,144   | )      
|Equities issued                                           |                            |                                                    | 350       |             |              |   |        |           |  |             |           |   |       |         |          |           |               |   |         |         |  |   |          |        |  |   |       |  |  |   | 350       |        
|Preferred stock issued, net                               |                            |                                                    |           |             |              |   |        |           |  |             | 86,379    |   |       |         |          |           |               |   | (3,895  | )       |  |   |          |        |  |   |       |  |  |   | 82,484    |        
|Preferred stock redeemed                                  |                            |                                                    |           |             |              |   |        |           |  |             | (2,002    | ) |       |         |          |           |               |   |         |         |  |   |          |        |  |   |       |  |  |   | (2,002    | )      
|Preferred stock dividends                                 |                            |                                                    |           |             |              |   |        |           |  |             |           |   |       |         |          |           |               |   | (3,575  | )       |  |   |          |        |  |   |       |  |  |   | (3,575    | )      
|Other, net                                                |                            |                                                    | (2,440    | )           |              |   | (3     | )         |  |             |           |   |       |         |          |           |               |   | (4      | )       |  |   |          |        |  |   |       |  |  |   | (2,447    | )      
|Comprehensive income:                                     |                            |                                                    |           |             |              |   |        |           |  |             |           |   |       |         |          |           |               |   |         |         |  |   |          |        |  |   |       |  |  |   |           |        
|                                                          | Net income                 |                                                    |           |             |              |   |        |           |  |             |           |   |       |         |          | 90,000    |               |   |         | 33,841  |  |   |          |        |  |   |       |  |  |   |           | 123,841 | 
|                                                          | Other comprehensive income |                                                    |           |             |              |   |        |           |  |             |           |   |       |         |          |           |               |   |         |         |  |   |          | 33,584 |  |   |       |  |  |   |           | 33,584  | 
|                                                          |                            |                                                    |           |             |              |   |        |           |  |             |           |   |       |         |          |           |               |   |         |         |  |   |          |       
|Total comprehensive income                                |                            |                                                    |           |             |              |   |        |           |  |             |           |   |       |         |          |           |               |   |         |         |  |   |          |        |  |   |       |  |  |   | 157,425   |        
|                                                          |                            |                                                    |           |             |              |   |        |           |  |             |           |   |       |         |          |           |               |   |         |         |  |   |          |       
|Dividends and equities payable                            |                            |                                                    | (10,800   | )           |              |   |        |           |  |             |           |   |       |         | (27,000  | )         |               |   | (1,249  | )       |  |   |          |        |  |   |       |  |  |   | (39,049   | )      
|                                                          |                            |                                                    |           |             |              |   |        |           |  |             |           |   |       |         |          |           |               |   |         |         |  |   |          |       
|Balances, August 31, 2003                                 |                            |                                                    | 1,087,037 |             |              |   | 27,718 |           |  |             | 93,702    |   |       |         | 63,000   |           |               |   | 220,517 |         |  |   | (18,313  | )      |  |   | 8,050 |  |  |   | 1,481,711 |        
|Dividends and equity retirement determination             |                            |                                                    | 10,800    |             |              |   |        |           |  |             |           |   |       |         | 27,000   |           |               |   | 1,249   |         |  |   |          |        |  |   |       |  |  |   | 39,049    |        
|Patronage distribution                                    |                            |                                                    | 66,500    |             |              |   |        |           |  |             |           |   |       |         | (90,000  | )         |               |   | (5,222  | )       |  |   |          |        |  |   |       |  |  |   | (28,722   | )      
|Equities retired                                          |                            |                                                    | (10,292   | )           |              |   | (47    | )         |  |             |           |   |       |         |          |           |               |   |         |         |  |   |          |        |  |   |       |  |  |   | (10,339   | )      
|Capital equity certificates exchanged for preferred stock |                            |                                                    | (12,990   | )           |              |   |        |           |  |             | 12,990    |   |       |         |          |           |               |   | (150    | )       |  |   |          |        |  |   |       |  |  |   | (150      | )      
|Equities issued                                           |                            |                                                    | 13,355    |             |              |   |        |           |  |             |           |   |       |         |          |           |               |   |         |         |  |   |          |        |  |   |       |  |  |   | 13,355    |        
|Preferred stock redeemed, treasury                        |                            |                                                    |           |             |              |   |        |           |  |             |          |   |       |         |          |           |               |   |         |         |  |   |          |        |  |   |       |  |  |   |          |        
|Preferred stock dividends                                 |                            |                                                    |           |             |              |   |        |           |  |             |           |   |       |         |          |           |               |   | (7,975  | )       |  |   |          |        |  |   |       |  |  |   | (7,975    | )      
|Other, net                                                |                            |                                                    | (7,669    | )           |              |   | (85    | )         |  |             |           |   |       |         |          |           |               |   | (30     | )       |  |   |          |        |  |   |       |  |  |   | (7,784    | )      
|Comprehensive income:                                     |                            |                                                    |           |             |              |   |        |           |  |             |           |   |       |         |          |           |               |   |         |         |  |   |          |        |  |   |       |  |  |   |           |        
|                                                          | Net income                 |                                                    |           |             |              |   |        |           |  |             |           |   |       |         |          | 166,850   |               |   |         | 54,482  |  |   |          |        |  |   |       |  |  |   |           | 221,332 | 
|                                                          | Other comprehensive income |                                                    |           |             |              |   |        |           |  |             |           |   |       |         |          |           |               |   |         |         |  |   |          | 11,178 |  |   |       |  |  |   |           | 11,178  | 
|                                                          |                            |                                                    |           |             |              |   |        |           |  |             |           |   |       |         |          |           |               |   |         |         |  |   |          |       
|Total comprehensive income                                |                            |                                                    |           |             |              |   |        |           |  |             |           |   |       |         |          |           |               |   |         |         |  |   |          |        |  |   |       |  |  |   | 232,510   |        
|                                                          |                            |                                                    |           |             |              |   |        |           |  |             |           |   |       |         |          |           |               |   |         |         |  |   |          |       
|Dividends and equities payable                            |                            |                                                    | (32,100   | )           |              |   |        |           |  |             |           |   |       |         | (50,060  | )         |               |   | (1,409  | )       |  |   |          |        |  |   |       |  |  |   | (83,569   | )      
|                                                          |                            |                                                    |           |             |              |   |        |           |  |             |           |   |       |         |          |           |               |   |         |         |  |   |          |       
|Balances, August 31, 2004                                 |                            |                                                    | 1,114,641 |             |              |   | 27,586 |           |  |             | 106,692   |   |       |         | 116,790  |           |               |   | 261,462 |         |  |   | (7,135   | )      |  |   | 8,050 |  |  |   | 1,628,086 |        
|Dividends and equity retirement determination             |                            |                                                    | 32,100    |             |              |   |        |           |  |             |           |   |       |         | 50,060   |           |               |   | 1,409   |         |  |   |          |        |  |   |       |  |  |   | 83,569    |        
|Patronage distribution                                    |                            |                                                    | 119,736   |             |              |   |        |           |  |             |           |   |       |         | (166,850 | )         |               |   | (4,464  | )       |  |   |          |        |  |   |       |  |  |   | (51,578   | )      
|Equities retired                                          |                            |                                                    | (23,625   | )           |              |   | (48    | )         |  |             |           |   |       |         |          |           |               |   |         |         |  |   |          |        |  |   |       |  |  |   | (23,673   | )      
|Capital equity certificates exchanged for preferred stock |                            |                                                    | (19,996   | )           |              |   |        |           |  |             | 19,996    |   |       |         |          |           |               |   | (87     | )       |  |   |          |        |  |   |       |  |  |   | (87       | )      
|Equities issued                                           |                            |                                                    | 1,375     |             |              |   |        |           |  |             |           |   |       |         |          |           |               |   |         |         |  |   |          |        |  |   |       |  |  |   | 1,375     |        
|Preferred stock dividends                                 |                            |                                                    |           |             |              |   |        |           |  |             |           |   |       |         |          |           |               |   | (9,178  | )       |  |   |          |        |  |   |       |  |  |   | (9,178    | )      
|Other, net                                                |                            |                                                    | (666      | )           |              |   | (71    | )         |  |             |           |   |       |         |          |           |               |   | 404     |         |  |   |          |        |  |   |       |  |  |   | (333      | )      
|Comprehensive income:                                     |                            |                                                    |           |             |              |   |        |           |  |             |           |   |       |         |          |           |               |   |         |         |  |   |          |        |  |   |       |  |  |   |           |        
|                                                          | Net income                 |                                                    |           |             |              |   |        |           |  |             |           |   |       |         |          | 203,000   |               |   |         | 47,016  |  |   |          |        |  |   |       |  |  |   |           | 250,016 | 
|                                                          | Other comprehensive income |                                                    |           |             |              |   |        |           |  |             |           |   |       |         |          |           |               |   |         |         |  |   |          | 12,106 |  |   |       |  |  |   |           | 12,106  | 
|                                                          |                            |                                                    |           |             |              |   |        |           |  |             |           |   |       |         |          |           |               |   |         |         |  |   |          |       
|Total comprehensive income                                |                            |                                                    |           |             |              |   |        |           |  |             |           |   |       |         |          |           |               |   |         |         |  |   |          |        |  |   |       |  |  |   | 262,122   |        
|                                                          |                            |                                                    |           |             |              |   |        |           |  |             |           |   |       |         |          |           |               |   |         |         |  |   |          |       
|Dividends and equities payable                            |                            |                                                    | (69,856   | )           |              |   |        |           |  |             |           |   |       |         | (60,900  | )         |               |   | (1,650  | )       |  |   |          |        |  |   |       |  |  |   | (132,406  | )      
|                                                          |                            |                                                    |           |             |              |   |        |           |  |             |           |   |       |         |          |           |               |   |         |         |  |   |          |       
|Balances, August 31, 2005                                 |                            | $                                                  | 1,153,709 |             |              | $ | 27,467 |           |  | $           | 126,688   |   |       | $       | 142,100  |           |               | $ | 294,912 |         |  | $ | 4,971    |        |  | $ | 8,050 |  |  | $ | 1,757,897 |        
|                                                          |                            |                                                    |           |             |              |   |        |           |  |             |           |   |       |         |          |           |               |   |         |         |  |   |          |       



F-3



---



##### 



CHS INC.


CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                     |                                                                                       |                                                      |                                       |          |         |          |          |          |         |         |          |          |         |         |  
|---------------------------------------------------- | ------------------------------------------------------------------------------------- | ---------------------------------------------------- | ------------------------------------- | -------- | ------- | -------- | -------- | -------- | ------- | ------- | -------- | -------- | ------- | ------- | -
|                                                     |                                                                                       | For the Years Ended August 31                        |                                      
|                                                     |                                                                                       |                                                      |                                      
|                                                     |                                                                                       | 2005                                                 |                                       |          | 2004    |          |          | 2003     |        
|                                                     |                                                                                       |                                                      |                                       |          |         |          |          |          |        
|                                                     |                                                                                       | (Dollars in thousands)                               |                                      
|Cash flows from operating activities:                |                                                                                       |                                                      |                                       |          |         |          |          |          |         |         |          |         
|                                                     | Net income                                                                            |                                                      | $                                     | 250,016  |         |          | $        | 221,332  |         |         | $        | 123,841  |        
|                                                     | Adjustments to reconcile net income to net cash provided by
    operating activities: |                                                      |                                       |          |         |          |          |          |         |         |          |          |        
|                                                     |                                                                                       | Depreciation and amortization                        |                                       |          | 110,332 |          |          |          | 108,399 |         |          |          | 111,347 |        
|                                                     |                                                                                       | Noncash income from equity investments               |                                       |          | (95,742 | )        |          |          | (79,022 | )       |          |          | (47,299 | )      
|                                                     |                                                                                       | Minority interests                                   |                                       |          | 47,736  |          |          |          | 33,830  |         |          |          | 21,950  |        
|                                                     |                                                                                       | Noncash portion of patronage dividends received      |                                       |          | (3,060  | )        |          |          | (4,986  | )       |          |          | (1,795  | )      
|                                                     |                                                                                       | (Gain) loss on sale of property, plant and equipment |                                       |          | (7,370  | )        |          |          | 775     |         |          |          | 741     |        
|                                                     |                                                                                       | Loss on sale of business                             |                                       |          | 6,163   |          |          |          |         |         |          |          |         |        
|                                                     |                                                                                       | Gain on sale of investments                          |                                       |          | (13,013 | )        |          |          | (14,666 | )       |          |          |         |        
|                                                     |                                                                                       | Deferred tax expense                                 |                                       |          | 26,400  |          |          |          | 8,500   |         |          |          | 9,000   |        
|                                                     |                                                                                       | Other, net                                           |                                       |          | 1,027   |          |          |          | 1,150   |         |          |          | 4,052   |        
|                                                     |                                                                                       | Changes in operating assets and liabilities:         |                                       |          |         |          |          |          |         |         |          |          |         |        
|                                                     |                                                                                       |                                                      | Receivables                           |          |         | (250,202 | )        |          |         | (59,039 | )        |          |         | (18,669 | )
|                                                     |                                                                                       |                                                      | Inventories                           |          |         | (190,081 | )        |          |         | 88,261  |          |          |         | (25,692 | )
|                                                     |                                                                                       |                                                      | Other current assets and other assets |          |         | (77,385  | )        |          |         | (89,237 | )        |          |         | (83,347 | )
|                                                     |                                                                                       |                                                      | Customer credit balances              |          |         | 3,216    |          |          |         | 27,639  |          |          |         | 30,238  |  
|                                                     |                                                                                       |                                                      | Customer advance payments             |          |         | 62,773   |          |          |         | (59,354 | )        |          |         | (45,740 | )
|                                                     |                                                                                       |                                                      | Accounts payable and accrued expenses |          |         | 328,961  |          |          |         | 121,647 |          |          |         | 135,310 |  
|                                                     |                                                                                       |                                                      | Other liabilities                     |          |         | 9,417    |          |          |         | 28,060  |          |          |         | 2,569   |  
|                                                     |                                                                                       |                                                      |                                       |          |         |          |          |          |        
|Net cash provided by operating activities            |                                                                                       |                                                      | 209,188                               |          |         |          | 333,289  |          |         |         | 216,506  |         
|                                                     |                                                                                       |                                                      |                                       |          |         |          |          |          |        
|Cash flows from investing activities:                |                                                                                       |                                                      |                                       |          |         |          |          |          |         |         |          |         
|                                                     | Acquisition of property, plant and equipment                                          |                                                      |                                       | (257,470 | )       |          |          | (245,148 | )       |         |          | (175,689 | )      
|                                                     | Proceeds from disposition of property, plant and equipment                            |                                                      |                                       | 21,109   |         |          |          | 34,530   |         |         |          | 26,886   |        
|                                                     | Proceeds from sale of business                                                        |                                                      |                                       | 38,286   |         |          |          |          |         |         |          |          |        
|                                                     | Investments                                                                           |                                                      |                                       | (25,938  | )       |          |          | (49,757  | )       |         |          | (43,478  | )      
|                                                     | Equity investments redeemed                                                           |                                                      |                                       | 74,231   |         |          |          | 65,158   |         |         |          | 35,939   |        
|                                                     | Investments redeemed                                                                  |                                                      |                                       | 4,152    |         |          |          | 9,481    |         |         |          | 8,467    |        
|                                                     | Proceeds from sale of investments                                                     |                                                      |                                       | 147,801  |         |          |          | 25,000   |         |         |          |          |        
|                                                     | Changes in notes receivable                                                           |                                                      |                                       | (23,770  | )       |          |          | (6,888   | )       |         |          | (6,630   | )      
|                                                     | Acquisitions of working capital, net                                                  |                                                      |                                       |          |         |          |          |          |         |         |          | (13,030  | )      
|                                                     | Distributions to minority owners                                                      |                                                      |                                       | (29,925  | )       |          |          | (15,908  | )       |         |          | (4,444   | )      
|                                                     | Other investing activities, net                                                       |                                                      |                                       | (5,434   | )       |          |          | 2,248    |         |         |          | (1,274   | )      
|                                                     |                                                                                       |                                                      |                                       |          |         |          |          |          |        
|Net cash used in investing activities                |                                                                                       |                                                      | (56,958                               | )        |         |          | (181,284 | )        |         |         | (173,253 | )       
|                                                     |                                                                                       |                                                      |                                       |          |         |          |          |          |        
|Cash flows from financing activities:                |                                                                                       |                                                      |                                       |          |         |          |          |          |         |         |          |         
|                                                     | Changes in notes payable                                                              |                                                      |                                       | (54,968  | )       |          |          | (135,016 | )       |         |          | (81,383  | )      
|                                                     | Borrowings on long-term debt                                                          |                                                      |                                       | 125,000  |         |          |          | 35,457   |         |         |          | 175,000  |        
|                                                     | Principal payments on long-term debt                                                  |                                                      |                                       | (36,033  | )       |          |          | (15,299  | )       |         |          | (89,512  | )      
|                                                     | Payments on derivative financial instruments, net                                     |                                                      |                                       |          |         |          |          | (287     | )       |         |          | (7,574   | )      
|                                                     | Changes in checks and drafts outstanding                                              |                                                      |                                       | 2,814    |         |          |          | (21,431  | )       |         |          | 988      |        
|                                                     | Expenses incurred  capital equity certificates
    redeemed                          |                                                      |                                       | (87      | )       |          |          | (151     | )       |         |          | 82,484   |        
|                                                     | Redemptions of preferred stock                                                        |                                                      |                                       |          |         |          |          |          |         |         |          | (2,002   | )      
|                                                     | Preferred stock dividends paid                                                        |                                                      |                                       | (9,178   | )       |          |          | (7,975   | )       |         |          | (3,575   | )      
|                                                     | Retirements of equities                                                               |                                                      |                                       | (23,673  | )       |          |          | (10,339  | )       |         |          | (31,144  | )      
|                                                     | Cash patronage dividends paid                                                         |                                                      |                                       | (51,578  | )       |          |          | (28,722  | )       |         |          | (26,478  | )      
|                                                     |                                                                                       |                                                      |                                       |          |         |          |          |          |        
|Net cash (used in) provided by financing activities  |                                                                                       |                                                      | (47,703                               | )        |         |          | (183,763 | )        |         |         | 16,804   |         
|                                                     |                                                                                       |                                                      |                                       |          |         |          |          |          |        
|Net increase (decrease) in cash and cash equivalents |                                                                                       |                                                      | 104,527                               |          |         |          | (31,758  | )        |         |         | 60,057   |         
|Cash and cash equivalents at beginning of period     |                                                                                       |                                                      | 136,491                               |          |         |          | 168,249  |          |         |         | 108,192  |         
|                                                     |                                                                                       |                                                      |                                       |          |         |          |          |          |        
|Cash and cash equivalents at end of period           |                                                                                       | $                                                    | 241,018                               |          |         | $        | 136,491  |          |         | $       | 168,249  |         
|                                                     |                                                                                       |                                                      |                                       |          |         |          |          |          |        



F-4



---



##### 





CHS INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




|   |                                            
|-- | -------------------------------------------
|1. | Summary of Significant Accounting Policies:



| |              
| | -------------
| | Organization:





| |               
| | --------------
| | Consolidation:







| |                  
| | -----------------
| | Cash Equivalents:





| |             
| | ------------
| | Inventories:





| |                                  
| | ---------------------------------
| | Derivative Financial Instruments:



F-5



---



##### 



CHS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








| |                      
| | ---------------------
| | Commodity Price Risk:









| |                    
| | -------------------
| | Interest Rate Risk:



F-6



---



##### 



CHS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








| |                       
| | ----------------------
| | Foreign Currency Risk:





| |             
| | ------------
| | Investments:





| |                               
| | ------------------------------
| | Property, Plant and Equipment:







| |                                      
| | -------------------------------------
| | Goodwill and Other Intangible Assets:



F-7



---



##### 



CHS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                     
| | --------------------
| | Revenue Recognition:





| |                            
| | ---------------------------
| | Environmental Expenditures:





| |              
| | -------------
| | Income Taxes:





| |                      
| | ---------------------
| | Comprehensive Income:





| |                  
| | -----------------
| | Use of Estimates:



F-8



---



##### 



CHS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                                  
| | ---------------------------------
| | Recent Accounting Pronouncements:









F-9



---



##### 



CHS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                   
| | ------------------
| | Reclassifications:



2.     Receivables:




|                                      |  |                        |           |  |      |   |         | 
|------------------------------------- |  | ---------------------- | --------- |  | ---- | - | ------- | 
|                                      |  | 2005                   |           |  | 2004 |  
|                                      |  |                        |           |  |      |  
|                                      |  | (Dollars in thousands) |          
|Trade                                 |  | $                      | 1,069,020 |  |      | $ | 835,066 | 
|Other                                 |  |                        | 85,007    |  |      |   | 55,708  | 
|                                      |  |                        |           |  |      |  
|                                      |  |                        | 1,154,027 |  |      |   | 890,774 | 
|Less allowances for doubtful accounts |  |                        | 60,041    |  |      |   | 55,809  | 
|                                      |  |                        |           |  |      |  
|                                      |  | $                      | 1,093,986 |  |      | $ | 834,965 | 
|                                      |  |                        |           |  |      |  



|                              |  |                       |       |  |      |   |       |      |  |   |       | 
|----------------------------- |  | --------------------- | ----- |  | ---- | - | ----- | ---- |  | - | ----- | 
|                              |  | 2005                  |       |  | 2004 |   |       | 2003 | 
|                              |  |                       |       |  |      |   |       |      | 
|                              |  | (Dollars in millions) |      
|Africa                        |  | $                     | 83    |  |      | $ | 112   |      |  | $ | 99    | 
|Asia                          |  |                       | 880   |  |      |   | 1,104 |      |  |   | 815   | 
|Europe                        |  |                       | 129   |  |      |   | 158   |      |  |   | 156   | 
|North America, excluding U.S. |  |                       | 605   |  |      |   | 456   |      |  |   | 367   | 
|South America                 |  |                       | 271   |  |      |   | 209   |      |  |   | 166   | 
|                              |  |                       |       |  |      |   |       |      | 
|                              |  | $                     | 1,968 |  |      | $ | 2,039 |      |  | $ | 1,603 | 
|                              |  |                       |       |  |      |   |       |      | 

3.     Inventories:




|                            |  |                        |         |  |      |   |         | 
|--------------------------- |  | ---------------------- | ------- |  | ---- | - | ------- | 
|                            |  | 2005                   |         |  | 2004 |  
|                            |  |                        |         |  |      |  
|                            |  | (Dollars in thousands) |        
|Grain and oilseed           |  | $                      | 387,820 |  |      | $ | 308,207 | 
|Energy                      |  |                        | 377,076 |  |      |   | 277,801 | 
|Feed and farm supplies      |  |                        | 121,721 |  |      |   | 110,885 | 
|Processed grain and oilseed |  |                        | 26,195  |  |      |   | 25,740  | 
|Other                       |  |                        | 1,370   |  |      |   | 1,260   | 
|                            |  |                        |         |  |      |  
|                            |  | $                      | 914,182 |  |      | $ | 723,893 | 
|                            |  |                        |         |  |      |  



F-10



---



##### 



CHS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




4.     Investments:




|                                                   |                                              |                        |         |         |      |   |         |         | 
|-------------------------------------------------- | -------------------------------------------- | ---------------------- | ------- | ------- | ---- | - | ------- | ------- | 
|                                                   |                                              | 2005                   |         |         | 2004 |  
|                                                   |                                              |                        |         |         |      |  
|                                                   |                                              | (Dollars in thousands) |        
|CF Industries Holdings, Inc. (CF Industries, Inc.) |                                              | $                      | 36,105  |         |      | $ | 152,996 |        
|Cooperatives:                                      |                                              |                        |         |         |      |   |         |        
|                                                   | Land OLakes, Inc.                           |                        |         | 32,874  |      |   |         | 31,057  | 
|                                                   | Ag Processing Inc.                           |                        |         | 23,864  |      |   |         | 24,866  | 
|                                                   | CoBank ACB (CoBank)                          |                        |         | 11,041  |      |   |         | 16,625  | 
|Joint ventures:                                    |                                              |                        |         |         |      |   |         |        
|                                                   | United Country Brands, LLC (Agriliance, LLC) |                        |         | 177,870 |      |   |         | 167,597 | 
|                                                   | Ventura Foods, LLC                           |                        |         | 117,622 |      |   |         | 107,719 | 
|                                                   | Cofina Financial, LLC                        |                        |         | 38,297  |      |   |         |         | 
|                                                   | Horizon Milling, LLC                         |                        |         | 23,174  |      |   |         | 16,499  | 
|                                                   | TEMCO, LLC                                   |                        |         | 4,450   |      |   |         | 5,776   | 
|Other                                              |                                              |                        | 55,673  |         |      |   | 52,681  |        
|                                                   |                                              |                        |         |         |      |  
|                                                   |                                              | $                      | 520,970 |         |      | $ | 575,816 |        
|                                                   |                                              |                        |         |         |      |  







F-11



---



##### 



CHS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                        |  |                        |         |  |      |   |         | 
|----------------------- |  | ---------------------- | ------- |  | ---- | - | ------- | 
|                        |  | 2005                   |         |  | 2004 |  
|                        |  |                        |         |  |      |  
|                        |  | (Dollars in thousands) |        
|Current assets          |  | $                      | 198,576 |  |      | $ | 286,613 | 
|Non-current assets      |  |                        | 455,715 |  |      |   | 258,270 | 
|Current liabilities     |  |                        | 146,035 |  |      |   | 171,269 | 
|Non-current liabilities |  |                        | 307,027 |  |      |   | 194,547 | 

|             |  |                        |           |  |      |   |           |      |  |   |           | 
|------------ |  | ---------------------- | --------- |  | ---- | - | --------- | ---- |  | - | --------- | 
|             |  | 2005                   |           |  | 2004 |   |           | 2003 | 
|             |  |                        |           |  |      |   |           |      | 
|             |  | (Dollars in thousands) |          
|Net sales    |  | $                      | 1,413,426 |  |      | $ | 1,425,061 |      |  | $ | 1,165,823 | 
|Gross profit |  |                        | 184,466   |  |      |   | 167,581   |      |  |   | 155,274   | 
|Net income   |  |                        | 61,779    |  |      |   | 44,696    |      |  |   | 42,837    | 





|                        |  |                        |           |  |      |   |           | 
|----------------------- |  | ---------------------- | --------- |  | ---- | - | --------- | 
|                        |  | 2005                   |           |  | 2004 |  
|                        |  |                        |           |  |      |  
|                        |  | (Dollars in thousands) |          
|Current assets          |  | $                      | 1,337,909 |  |      | $ | 1,115,544 | 
|Non-current assets      |  |                        | 148,611   |  |      |   | 123,116   | 
|Current liabilities     |  |                        | 1,064,424 |  |      |   | 870,718   | 
|Non-current liabilities |  |                        | 119,794   |  |      |   | 128,758   | 

F-12



---



##### 



CHS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                         |  |                        |           |  |      |   |           |      |  |   |           | 
|------------------------ |  | ---------------------- | --------- |  | ---- | - | --------- | ---- |  | - | --------- | 
|                         |  | 2005                   |           |  | 2004 |   |           | 2003 | 
|                         |  |                        |           |  |      |   |           |      | 
|                         |  | (Dollars in thousands) |          
|Net sales                |  | $                      | 3,735,125 |  |      | $ | 3,471,514 |      |  | $ | 3,485,623 | 
|Earnings from operations |  |                        | 90,812    |  |      |   | 82,221    |      |  |   | 67,239    | 
|Net income               |  |                        | 77,113    |  |      |   | 71,278    |      |  |   | 60,741    | 











|   |                               
|-- | ------------------------------
|5. | Property, Plant and Equipment:



|                                               |  |                        |           |  |      |   |           | 
|---------------------------------------------- |  | ---------------------- | --------- |  | ---- | - | --------- | 
|                                               |  | 2005                   |           |  | 2004 |  
|                                               |  |                        |           |  |      |  
|                                               |  | (Dollars in thousands) |          
|Land and land improvements                     |  | $                      | 66,023    |  |      | $ | 64,709    | 
|Buildings                                      |  |                        | 420,851   |  |      |   | 422,545   | 
|Machinery and equipment                        |  |                        | 1,708,400 |  |      |   | 1,611,455 | 
|Office and other                               |  |                        | 76,320    |  |      |   | 72,269    | 
|Construction in progress                       |  |                        | 292,592   |  |      |   | 214,988   | 
|                                               |  |                        |           |  |      |  
|                                               |  |                        | 2,564,186 |  |      |   | 2,385,966 | 
|Less accumulated depreciation and amortization |  |                        | 1,204,651 |  |      |   | 1,136,311 | 
|                                               |  |                        |           |  |      |  
|                                               |  | $                      | 1,359,535 |  |      | $ | 1,249,655 | 
|                                               |  |                        |           |  |      |  





F-13



---



##### 



CHS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |                         
|-- | ------------------------
|6. | Discontinued Operations:





|                                       |  |                        |         |   |      |   |        |      |  |   |        |  
|-------------------------------------- |  | ---------------------- | ------- | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                       |  | 2005                   |         |   | 2004 |   |        | 2003 | 
|                                       |  |                        |         |   |      |   |        |      | 
|                                       |  | (Dollars in thousands) |        
|Sales                                  |  | $                      | 43,556  |   |      | $ | 70,929 |      |  | $ | 74,173 |  
|Cost of goods sold                     |  |                        | 49,919  |   |      |   | 65,047 |      |  |   | 65,859 |  
|Marketing, general and administrative* |  |                        | 18,246  |   |      |   | 12,645 |      |  |   | 14,459 |  
|Interest                               |  |                        | 2,903   |   |      |   | 2,908  |      |  |   | 2,418  |  
|Income tax benefit                     |  |                        | (10,702 | ) |      |   | (3,762 | )    |  |   | (3,331 | )
|                                       |  |                        |         |   |      |   |        |      | 
|Loss from discontinued operations      |  | $                      | (16,810 | ) |      | $ | (5,909 | )    |  | $ | (5,232 | )
|                                       |  |                        |         |   |      |   |        |      | 






|  |  |                                                   
|- |  | --------------------------------------------------
|* |  | 2005 includes $6.2 million of loss on disposition.



|   |              
|-- | -------------
|7. | Other Assets:



|                                                                                              |  |                        |         |  |      |   |         | 
|--------------------------------------------------------------------------------------------- |  | ---------------------- | ------- |  | ---- | - | ------- | 
|                                                                                              |  | 2005                   |         |  | 2004 |  
|                                                                                              |  |                        |         |  |      |  
|                                                                                              |  | (Dollars in thousands) |        
|Goodwill                                                                                      |  | $                      | 3,291   |  |      | $ | 26,896  | 
|Customer lists, less accumulated amortization of $10,335 and
    $7,445, respectively         |  |                        | 4,601   |  |      |   | 7,087   | 
|Non-compete covenants, less accumulated amortization of $2,445
    and $2,115, respectively   |  |                        | 1,317   |  |      |   | 1,638   | 
|Other intangible assets, less accumulated amortization of $4,141
    and $3,113, respectively |  |                        | 12,384  |  |      |   | 13,498  | 
|Prepaid pension and other benefits                                                            |  |                        | 200,600 |  |      |   | 182,773 | 
|Notes receivable                                                                              |  |                        | 3,654   |  |      |   | 1,186   | 
|Other                                                                                         |  |                        | 4,093   |  |      |   | 4,039   | 
|                                                                                              |  |                        |         |  |      |  
|                                                                                              |  | $                      | 229,940 |  |      | $ | 237,117 | 
|                                                                                              |  |                        |         |  |      |  







F-14



---



##### 



CHS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|   |                                  
|-- | ---------------------------------
|8. | Notes Payable and Long-Term Debt:



|                     |                                                                                                                                |                   |                |                        |      |   |         |         |  |   |         |         | 
|-------------------- | ------------------------------------------------------------------------------------------------------------------------------ | ----------------- | -------------- | ---------------------- | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|                     |                                                                                                                                | Interest Rates at |                |                        |      |   |        
|                     |                                                                                                                                | August 31, 2005   |                |                        | 2005 |   |         | 2004    | 
|                     |                                                                                                                                |                   |                |                        |      |   |         |         | 
|                     |                                                                                                                                |                   |                | (Dollars in thousands) |     
|Notes payable(a)(i)  |                                                                                                                                |                   | 3.86% to 3.93% |                        |      | $ | 61,147  |         |  | $ | 116,115 |        
|                     |                                                                                                                                |                   |                |                        |      |   |         |         | 
|Long-term debt:      |                                                                                                                                |                   |                |                        |      |   |         |         |  |   |         |        
|                     | Revolving term loans from cooperative and other banks, payable
    in installments through 2009, when the balance is due(b)(i) |                   |                | 4.82% to 13.00%        |      |   | $       | 133,335 |  |   | $       | 155,784 | 
|                     | Private placement, payable in equal installments beginning in
    2008 through 2013(c)(i)                                      |                   |                | 6.81%                  |      |   |         | 225,000 |  |   |         | 225,000 | 
|                     | Private placement, payable in installments beginning in 2007
    through 2018(d)(i)                                            |                   |                | 4.96% to 5.60%         |      |   |         | 175,000 |  |   |         | 175,000 | 
|                     | Private placement, payable in equal installments beginning in
    2011 through 2015(e)(i)                                      |                   |                | 5.25%                  |      |   |         | 125,000 |  |   |         |         | 
|                     | Private placement, payable in equal installments in 2005 through
    2011(f)(i)                                                |                   |                | 7.43% to 7.90%         |      |   |         | 68,571  |  |   |         | 80,000  | 
|                     | Private placement, payable in its entirety in 2010(g)(i)                                                                       |                   |                | 4.08%                  |      |   |         | 15,000  |  |   |         | 15,000  | 
|                     | Private placement, payable in its entirety in 2011(g)(i)                                                                       |                   |                | 4.39%                  |      |   |         | 15,000  |  |   |         | 15,000  | 
|                     | Industrial revenue bonds, payable in its entirety in 2011                                                                      |                   |                | 5.23%                  |      |   |         | 3,925   |  |   |         | 3,925   | 
|                     | Other notes and contracts(h)                                                                                                   |                   |                | 1.89% to 12.17%        |      |   |         | 12,243  |  |   |         | 14,109  | 
|                     |                                                                                                                                |                   |                |                        |      |   |         |         | 
|Total long-term debt |                                                                                                                                |                   |                |                        |      |   | 773,074 |         |  |   | 683,818 |        
|                     |                                                                                                                                |                   |                |                        |      |   |         |         | 
|Less current portion |                                                                                                                                |                   |                |                        |      |   | 35,340  |         |  |   | 35,117  |        
|                     |                                                                                                                                |                   |                |                        |      |   |         |         | 
|Long-term portion    |                                                                                                                                |                   |                |                        |      | $ | 737,734 |         |  | $ | 648,701 |        
|                     |                                                                                                                                |                   |                |                        |      |   |         |         | 

|                                              |                 |      |  |       |      |  |  |       | 
|--------------------------------------------- | --------------- | ---- |  | ----- | ---- |  |  | ----- | 
|                                              |                 | 2005 |  |       | 2004 | 
|                                              |                 |      |  |       |      | 
|Weighted-average interest rates at August 31: |                 |      |  |       |      |  |  |      
|                                              | Short-term debt |      |  | 3.90% |      |  |  | 2.16% | 
|                                              | Long-term debt  |      |  | 6.15% |      |  |  | 6.35% | 






|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | The Company finances its working capital needs through
    short-term lines of credit with a syndication of domestic and
    international banks. These revolving lines of credit include a
    364-day facility of $700.0 million, and a five-year
    facility of $300.0 million, both of which are committed. On
    August 31, 2005, $60.0 million was outstanding on the
    364-day facility. In addition to these short-term lines of

F-15



---



##### 



CHS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |  |                                                                                                                                                                                                                                                                                                                                                                                                          
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |  | credit, the Company has a two-year credit facility dedicated to
    NCRA, with a syndication of banks in the amount of
    $15.0 million, all of which is committed, with no amounts
    outstanding on August 31, 2005. Other miscellaneous notes
    payable totaled $1.1 million on August 31, 2005.                                                                                                  
|   
|(b) |  | The Company established a long-term credit agreement, which
    committed $200.0 million of long-term borrowing capacity to
    the Company through May 31, 1999, of which
    $164.0 million was drawn before the expiration date of that
    commitment. On August 31, 2005, $114.8 million was
    outstanding. NCRA term loans of $9.0 million are
    collateralized by NCRAs investment in CoBank.
|   
|(c) |  | In June 1998, the Company entered into a private placement with
    several insurance companies for long-term debt in the amount of
    $225.0 million.                                                                                                                                                                                                                                                  
|   
|(d) |  | In October 2002, the Company entered into a private placement
    with several insurance companies for long-term debt in the
    amount of $175.0 million.                                                                                                                                                                                                                                               
|   
|(e) |  | In September 2004, the Company entered into a private placement
    with several insurance companies for long-term debt in the
    amount of $125.0 million.                                                                                                                                                                                                                                             
|   
|(f) |  | In January 2001, the Company entered into a note purchase and
    private shelf agreement with Prudential Insurance Company. A
    long-term note was issued for $25.0 million and a
    subsequent note for $55.0 million was issued in
    March 2001.                                                                                                                                                 
|   
|(g) |  | In March 2004, the Company entered into a note purchase and
    private shelf agreement with Prudential Capital Group. In April
    2004, two long-term notes were issued for $15.0 million
    each.                                                                                                                                                                                                    
|   
|(h) |  | Other notes payable of $9.4 million are collateralized by
    property, plant and equipment, with a cost of approximately
    $16.9 million, less accumulated depreciation of
    approximately $2.6 million on August 31, 2005.                                                                                                                                                                         
|   
|(i) |  | The debt is unsecured, however restrictive covenants under
    various agreements have requirements for maintenance of minimum
    working capital levels and other financial ratios.                                                                                                                                                                                                                    





|           |  |             |         | 
|---------- |  | ----------- | ------- | 
|           |  | (Dollars in |        
|           |  | thousands)  |        
|2006       |  | $           | 35,340  | 
|2007       |  |             | 59,856  | 
|2008       |  |             | 98,421  | 
|2009       |  |             | 117,285 | 
|2010       |  |             | 82,589  | 
|Thereafter |  |             | 379,583 | 
|           |  |             |        
|           |  | $           | 773,074 | 
|           |  |             |        

F-16



---



##### 



CHS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |              
|-- | -------------
|9. | Income Taxes:



|                                                |                     |                        |         |        |      |   |        |        |  |   |        |       | 
|----------------------------------------------- | ------------------- | ---------------------- | ------- | ------ | ---- | - | ------ | ------ |  | - | ------ | ----- | 
|                                                |                     | 2005                   |         |        | 2004 |   |        | 2003   | 
|                                                |                     |                        |         |        |      |   |        |        | 
|                                                |                     | (Dollars in thousands) |        
|Continuing operations:                          |                     |                        |         |        |      |   |        |        |  |   |        |      
|                                                | Current             |                        | $       | 4,034  |      |   | $      | 20,962 |  |   | $      | 7,031 | 
|                                                | Deferred            |                        |         | 34,200 |      |   |        | 7,900  |  |   |        | 7,300 | 
|                                                | Valuation allowance |                        |         | (7,800 | )    |   |        | 600    |  |   |        | 1,700 | 
|                                                |                     |                        |         |        |      |   |        |        | 
|Income taxes from continuing operations         |                     |                        | 30,434  |        |      |   | 29,462 |        |  |   | 16,031 |      
|Income tax benefit from discontinued operations |                     |                        | (10,702 | )      |      |   | (3,762 | )      |  |   | (3,331 | )    
|                                                |                     |                        |         |        |      |   |        |        | 
|Income taxes                                    |                     | $                      | 19,732  |        |      | $ | 25,700 |        |  | $ | 12,700 |      
|                                                |                     |                        |         |        |      |   |        |        | 



|                                      |                                                      |                        |         |        |      |   |         |        | 
|------------------------------------- | ---------------------------------------------------- | ---------------------- | ------- | ------ | ---- | - | ------- | ------ | 
|                                      |                                                      | 2005                   |         |        | 2004 |  
|                                      |                                                      |                        |         |        |      |  
|                                      |                                                      | (Dollars in thousands) |        
|Deferred tax assets:                  |                                                      |                        |         |        |      |   |         |       
|                                      | Accrued expenses and valuation reserves              |                        | $       | 63,964 |      |   | $       | 49,151 | 
|                                      | Postretirement health care and deferred compensation |                        |         | 42,248 |      |   |         | 37,067 | 
|                                      | Alternative minimum tax credit and loss carryforward |                        |         | 39,867 |      |   |         | 28,268 | 
|                                      | Other                                                |                        |         | 9,524  |      |   |         | 21,464 | 
|                                      |                                                      |                        |         |        |      |  
|Total deferred tax assets             |                                                      |                        | 155,603 |        |      |   | 135,950 |       
|                                      |                                                      |                        |         |        |      |  
|Deferred tax liabilities:             |                                                      |                        |         |        |      |   |         |       
|                                      | Pension, including minimum liability                 |                        |         | 53,094 |      |   |         | 47,155 | 
|                                      | Equity method investments                            |                        |         | 19,423 |      |   |         | 7,407  | 
|                                      | Property, plant and equipment                        |                        |         | 72,780 |      |   |         | 35,737 | 
|                                      | Other                                                |                        |         | 7,785  |      |   |         | 1,184  | 
|                                      |                                                      |                        |         |        |      |  
|Total deferred tax liabilities        |                                                      |                        | 153,082 |        |      |   | 91,483  |       
|                                      |                                                      |                        |         |        |      |  
|Deferred tax assets valuation reserve |                                                      |                        | (3,392  | )      |      |   | (11,212 | )     
|                                      |                                                      |                        |         |        |      |  
|Net deferred tax (liability) asset    |                                                      | $                      | (871    | )      |      | $ | 33,255  |       
|                                      |                                                      |                        |         |        |      |  





F-17



---



##### 



CHS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










|                                                                |  |      |       |   |      |  |       |      |  |  |       |  
|--------------------------------------------------------------- |  | ---- | ----- | - | ---- |  | ----- | ---- |  |  | ----- | -
|                                                                |  | 2005 |       |   | 2004 |  |       | 2003 | 
|                                                                |  |      |       |   |      |  |       |      | 
|Statutory federal income tax rate                               |  |      | 35.0  | % |      |  | 35.0  | %    |  |  | 35.0  | %
|State and local income taxes, net of federal income tax benefit |  |      | 3.9   |   |      |  | 3.9   |      |  |  | 3.9   |  
|Patronage earnings                                              |  |      | (26.9 | ) |      |  | (24.8 | )    |  |  | (24.1 | )
|Export activities at rates other than the U.S. statutory rate   |  |      | (2.4  | ) |      |  | (4.4  | )    |  |  | (3.0  | )
|Deferred tax asset valuation allowance                          |  |      | (2.6  | ) |      |  | 0.2   |      |  |  | 1.2   |  
|Other                                                           |  |      | 3.2   |   |      |  | 1.6   |      |  |  | (2.0  | )
|                                                                |  |      |       |   |      |  |       |      | 
|Effective tax rate                                              |  |      | 10.2  | % |      |  | 11.5  | %    |  |  | 11.0  | %
|                                                                |  |      |       |   |      |  |       |      | 



|    |          
|--- | ---------
|10. | Equities:







F-18



---



##### 



CHS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












F-19



---



##### 



CHS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |               
|--- | --------------
|11. | Benefit Plans:





|                                              |                                                  |                        |         |         |                  |   |         |                |   |   |         |        |   |      |         |        |      |   |         |        |   |   |         |        |  
|--------------------------------------------- | ------------------------------------------------ | ---------------------- | ------- | ------- | ---------------- | - | ------- | -------------- | - | - | ------- | ------ | - | ---- | ------- | ------ | ---- | - | ------- | ------ | - | - | ------- | ------ | -
|                                              |                                                  | Qualified              |         |         | Non-Qualified    |   |         |               
|                                              |                                                  | Pension Benefits       |         |         | Pension Benefits |   |         | Other Benefits |  
|                                              |                                                  |                        |         |         |                  |   |         |                |  
|                                              |                                                  | 2005                   |         |         | 2004             |   |         | 2005           |   |   | 2004    |        |   | 2005 |         |        | 2004 |  
|                                              |                                                  |                        |         |         |                  |   |         |                |   |   |         |        |   |      |         |        |      |  
|                                              |                                                  | (Dollars in thousands) |        
|Change in benefit obligation:                 |                                                  |                        |         |         |                  |   |         |                |   |   |         |        |   |      |         |        |      |   |         |        |   |   |         |       
|                                              | Benefit obligation at beginning of period        |                        | $       | 300,436 |                  |   | $       | 289,906        |   |   | $       | 20,998 |   |      | $       | 17,437 |      |   | $       | 28,327 |   |   | $       | 29,255 |  
|                                              | Service cost                                     |                        |         | 12,749  |                  |   |         | 11,548         |   |   |         | 991    |   |      |         | 932    |      |   |         | 874    |   |   |         | 754    |  
|                                              | Interest cost                                    |                        |         | 18,039  |                  |   |         | 17,203         |   |   |         | 1,175  |   |      |         | 1,032  |      |   |         | 1,776  |   |   |         | 1,758  |  
|                                              | Plan amendments                                  |                        |         |         |                  |   |         | 105            |   |   |         | 61     |   |      |         |        |      |   |         | (330   | ) |   |         | (839   | )
|                                              | Transfers                                        |                        |         |         |                  |   |         |                |   |   |         |        |   |      |         |        |      |   |         | (222   | ) |   |         | 1,206  |  
|                                              | Actuarial loss (gain)                            |                        |         | (3,031  | )                |   |         | 4,539          |   |   |         | 2,530  |   |      |         | 3,080  |      |   |         | (1,136 | ) |   |         | (2,162 | )
|                                              | Special agreement                                |                        |         |         |                  |   |         |                |   |   |         | 131    |   |      |         | 1,003  |      |   |         |        |   |   |         |        |  
|                                              | Assumption change                                |                        |         | 23,961  |                  |   |         |                |   |   |         | 2,137  |   |      |         |        |      |   |         | 2,677  |   |   |         | 502    |  
|                                              | Benefits paid                                    |                        |         | (22,117 | )                |   |         | (22,865        | ) |   |         | (583   | ) |      |         | (2,486 | )    |   |         | (2,121 | ) |   |         | (2,147 | )
|                                              |                                                  |                        |         |         |                  |   |         |                |   |   |         |        |   |      |         |        |      |  
|Benefit obligation at end of period           |                                                  | $                      | 330,037 |         |                  | $ | 300,436 |                |   | $ | 27,440  |        |   | $    | 20,998  |        |      | $ | 29,845  |        |   | $ | 28,327  |       
|                                              |                                                  |                        |         |         |                  |   |         |                |   |   |         |        |   |      |         |        |      |  
|Change in plan assets:                        |                                                  |                        |         |         |                  |   |         |                |   |   |         |        |   |      |         |        |      |   |         |        |   |   |         |       
|                                              | Fair value of plan assets at beginning of period |                        | $       | 299,552 |                  |   | $       | 280,217        |   |   |         |        |   |      |         |        |      |   |         |        |   |   |         |        |  
|                                              | Actual income on plan assets                     |                        |         | 32,292  |                  |   |         | 31,500         |   |   |         |        |   |      |         |        |      |   |         |        |   |   |         |        |  
|                                              | Company contributions                            |                        |         | 22,000  |                  |   |         | 10,700         |   |   | $       | 583    |   |      | $       | 2,486  |      |   | $       | 2,451  |   |   | $       | 2,147  |  
|                                              | Participants contributions                       |                        |         |         |                  |   |         |                |   |   |         |        |   |      |         |        |      |   |         | (330   | ) |   |         |        |  
|                                              | Benefits paid                                    |                        |         | (22,117 | )                |   |         | (22,865        | ) |   |         | (583   | ) |      |         | (2,486 | )    |   |         | (2,121 | ) |   |         | (2,147 | )
|                                              |                                                  |                        |         |         |                  |   |         |                |   |   |         |        |   |      |         |        |      |  
|Fair value of plan assets at end of period    |                                                  | $                      | 331,727 |         |                  | $ | 299,552 |                |   | $ |        |        |   | $    |        |        |      | $ |        |        |   | $ |        |       
|                                              |                                                  |                        |         |         |                  |   |         |                |   |   |         |        |   |      |         |        |      |  
|Funded status                                 |                                                  | $                      | 1,690   |         |                  | $ | (884    | )              |   | $ | (27,440 | )      |   | $    | (20,998 | )      |      | $ | (29,845 | )      |   | $ | (28,327 | )     
|Employer contributions after measurement date |                                                  |                        |         |         |                  |   |         |                |   |   |         |        |   |      | 32      |        |      |   | 220     |        |   |   | 222     |       
|Unrecognized actuarial loss (gain)            |                                                  |                        | 124,930 |         |                  |   | 114,401 |                |   |   | 3,749   |        |   |      | 153     |        |      |   | 362     |        |   |   | (1,061  | )     
|Unrecognized transition obligation            |                                                  |                        |         |         |                  |   |         |                |   |   |         |        |   |      |         |        |      |   | 7,389   |        |   |   | 8,325   |       
|Unrecognized prior service cost               |                                                  |                        | 5,939   |         |                  |   | 6,730   |                |   |   | 2,526   |        |   |      | 2,977   |        |      |   | (1,669  | )      |   |   | (1,742  | )     
|Special agreement                             |                                                  |                        |         |         |                  |   |         |                |   |   | (131    | )      |   |      | (1,003  | )      |      |   |         |        |   |   |         |       
|                                              |                                                  |                        |         |         |                  |   |         |                |   |   |         |        |   |      |         |        |      |  
|Prepaid benefit cost (accrued)                |                                                  | $                      | 132,559 |         |                  | $ | 120,247 |                |   | $ | (21,296 | )      |   | $    | (18,839 | )      |      | $ | (23,543 | )      |   | $ | (22,583 | )     
|                                              |                                                  |                        |         |         |                  |   |         |                |   |   |         |        |   |      |         |        |      |  

F-20



---



##### 



CHS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                                 |                                          |                        |         |         |                  |   |         |                |  |   |         |         |   |      |         |         |      |   |         |         |   |   |         |         |  
|------------------------------------------------ | ---------------------------------------- | ---------------------- | ------- | ------- | ---------------- | - | ------- | -------------- |  | - | ------- | ------- | - | ---- | ------- | ------- | ---- | - | ------- | ------- | - | - | ------- | ------- | -
|                                                 |                                          | Qualified              |         |         | Non-Qualified    |   |         |               
|                                                 |                                          | Pension Benefits       |         |         | Pension Benefits |   |         | Other Benefits | 
|                                                 |                                          |                        |         |         |                  |   |         |                | 
|                                                 |                                          | 2005                   |         |         | 2004             |   |         | 2005           |  |   | 2004    |         |   | 2005 |         |         | 2004 |  
|                                                 |                                          |                        |         |         |                  |   |         |                |  |   |         |         |   |      |         |         |      |  
|                                                 |                                          | (Dollars in thousands) |        
|Amounts recognized on balance sheets consist of: |                                          |                        |         |         |                  |   |         |                |  |   |         |         |   |      |         |         |      |   |         |         |   |   |         |        
|                                                 | Other assets (accrued benefit liability) |                        | $       | 132,559 |                  |   | $       | 120,247        |  |   | $       | (24,840 | ) |      | $       | (19,538 | )    |   | $       | (23,543 | ) |   | $       | (22,583 | )
|                                                 | Intangible assets                        |                        |         |         |                  |   |         |                |  |   |         | 2,464   |   |      |         |         |      |   |         |         |   |   |         |         |  
|                                                 | Accumulated other comprehensive loss     |                        |         |         |                  |   |         |                |  |   |         | 1,080   |   |      |         | 699     |      |   |         |         |   |   |         |         |  
|                                                 |                                          |                        |         |         |                  |   |         |                |  |   |         |         |   |      |         |         |      |  
|Net amounts recognized                           |                                          | $                      | 132,559 |         |                  | $ | 120,247 |                |  | $ | (21,296 | )       |   | $    | (18,839 | )       |      | $ | (23,543 | )       |   | $ | (22,583 | )      
|                                                 |                                          |                        |         |         |                  |   |         |                |  |   |         |         |   |      |         |         |      |  



|                                         |                                    |                            |       |               |                  |   |       |                |   |   |       |         |   |      |       |       |      |   |       |       |  |   |       |       |  |      |       |       |   |   |       |       |   |   |       |       |  
|---------------------------------------- | ---------------------------------- | -------------------------- | ----- | ------------- | ---------------- | - | ----- | -------------- | - | - | ----- | ------- | - | ---- | ----- | ----- | ---- | - | ----- | ----- |  | - | ----- | ----- |  | ---- | ----- | ----- | - | - | ----- | ----- | - | - | ----- | ----- | -
|                                         |                                    |                            |       | Non-Qualified |                  |   |      
|                                         |                                    | Qualified Pension Benefits |       |               | Pension Benefits |   |       | Other Benefits |  
|                                         |                                    |                            |       |               |                  |   |       |                |  
|                                         |                                    | 2005                       |       |               | 2004             |   |       | 2003           |   |   | 2005  |         |   | 2004 |       |       | 2003 |   |       | 2005  |  |   | 2004  |       |  | 2003 |      
|                                         |                                    |                            |       |               |                  |   |       |                |   |   |       |         |   |      |       |       |      |   |       |       |  |   |       |       |  |      |      
|                                         |                                    | (Dollars in thousands)     |      
|Components of net periodic benefit cost: |                                    |                            |       |               |                  |   |       |                |   |   |       |         |   |      |       |       |      |   |       |       |  |   |       |       |  |      |       |       |   |   |       |       |   |   |       |      
|                                         | Service cost                       |                            | $     | 12,749        |                  |   | $     | 11,548         |   |   | $     | 10,840  |   |      | $     | 991   |      |   | $     | 932   |  |   | $     | 800   |  |      | $     | 874   |   |   | $     | 754   |   |   | $     | 648   |  
|                                         | Interest cost                      |                            |       | 18,039        |                  |   |       | 17,203         |   |   |       | 17,503  |   |      |       | 1,175 |      |   |       | 1,032 |  |   |       | 1,033 |  |      |       | 1,776 |   |   |       | 1,758 |   |   |       | 1,722 |  
|                                         | Expected return on assets          |                            |       | (27,648       | )                |   |       | (27,489        | ) |   |       | (23,788 | ) |      |       |       |      |   |       |       |  |   |       |       |  |      |       |       |   |   |       |       |   |   |       |       |  
|                                         | Prior service cost amortization    |                            |       | 792           |                  |   |       | 843            |   |   |       | 806     |   |      |       | 519   |      |   |       | 863   |  |   |       | 564   |  |      |       | (294  | ) |   |       | (174  | ) |   |       | (172  | )
|                                         | Actuarial loss (gain) amortization |                            |       | 5,759         |                  |   |       | 4,149          |   |   |       | 2,623   |   |      |       | 124   |      |   |       | 103   |  |   |       | 159   |  |      |       | 43    |   |   |       | 108   |   |   |       | (215  | )
|                                         | Transition amount amortization     |                            |       |               |                  |   |       |                |   |   |       |         |   |      |       |       |      |   |       |       |  |   |       |       |  |      |       | 936   |   |   |       | 936   |   |   |       | 936   |  
|                                         |                                    |                            |       |               |                  |   |       |                |   |   |       |         |   |      |       |       |      |   |       |       |  |   |       |       |  |      |      
|Net periodic benefit cost                |                                    | $                          | 9,691 |               |                  | $ | 6,254 |                |   | $ | 7,984 |         |   | $    | 2,809 |       |      | $ | 2,930 |       |  | $ | 2,556 |       |  | $    | 3,335 |       |   | $ | 3,382 |       |   | $ | 2,919 |      
|                                         |                                    |                            |       |               |                  |   |       |                |   |   |       |         |   |      |       |       |      |   |       |       |  |   |       |       |  |      |      
|Average assumptions:                     |                                    |                            |       |               |                  |   |       |                |   |   |       |         |   |      |       |       |      |   |       |       |  |   |       |       |  |      |       |       |   |   |       |       |   |   |       |      
|                                         | Discount rate                      |                            |       | 5.25%         |                  |   |       | 6.40%          |   |   |       | 6.30%   |   |      |       | 5.25% |      |   |       | 6.25% |  |   |       | 6.00% |  |      |       | 5.25% |   |   |       | 6.40% |   |   |       | 6.30% |  
|                                         | Expected return on plan assets     |                            |       | 9.00%         |                  |   |       | 9.00%          |   |   |       | 9.00%   |   |      |       | N/A   |      |   |       | N/A   |  |   |       | N/A   |  |      |       | N/A   |   |   |       | N/A   |   |   |       | N/A   |  
|                                         | Rate of compensation increase      |                            |       | 4.80%         |                  |   |       | 4.30%          |   |   |       | 5.00%   |   |      |       | 4.50% |      |   |       | 5.00% |  |   |       | 5.00% |  |      |       | 4.80% |   |   |       | 4.30% |   |   |       | 5.00% |  



|                               |  |                        |        |  |      |   |        | 
|------------------------------ |  | ---------------------- | ------ |  | ---- | - | ------ | 
|                               |  | Non-Qualified Pension  |       
|                               |  | Benefits               |       
|                               |  |                        |       
|                               |  | 2005                   |        |  | 2004 |  
|                               |  |                        |        |  |      |  
|                               |  | (Dollars in thousands) |       
|Projected benefit obligation   |  | $                      | 27,440 |  |      | $ | 20,998 | 
|Accumulated benefit obligation |  |                        | 24,693 |  |      |   | 19,254 | 
|Fair value of plan assets      |  |                        |       |  |      |   |       | 

F-21



---



##### 



CHS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                        |  |                        |       |  |             |   |        |  
|------------------------------------------------------- |  | ---------------------- | ----- |  | ----------- | - | ------ | -
|                                                        |  | 1% Increase            |       |  | 1% Decrease |  
|                                                        |  |                        |       |  |             |  
|                                                        |  | (Dollars in thousands) |      
|Effect on total of service and interest cost components |  | $                      | 292   |  |             | $ | (262   | )
|Effect on postretirement benefit obligation             |  |                        | 2,654 |  |             |   | (2,417 | )









|          |  |                        |         |  |                  |   |       |          |  |   |        | 
|--------- |  | ---------------------- | ------- |  | ---------------- | - | ----- | -------- |  | - | ------ | 
|          |  | Qualified              |         |  | Non-Qualified    |   |       | Other    | 
|          |  | Pension Benefits       |         |  | Pension Benefits |   |       | Benefits | 
|          |  |                        |         |  |                  |   |       |          | 
|          |  | (Dollars in thousands) |        
|2006      |  | $                      | 29,746  |  |                  | $ | 624   |          |  | $ | 1,382  | 
|2007      |  |                        | 26,154  |  |                  |   | 644   |          |  |   | 1,653  | 
|2008      |  |                        | 24,481  |  |                  |   | 672   |          |  |   | 1,720  | 
|2009      |  |                        | 27,559  |  |                  |   | 689   |          |  |   | 1,801  | 
|2010      |  |                        | 28,929  |  |                  |   | 732   |          |  |   | 2,116  | 
|2011-2015 |  |                        | 153,556 |  |                  |   | 3,960 |          |  |   | 14,625 | 





| |   |                                                                                           
| | - | ------------------------------------------------------------------------------------------
| |  | optimize the long-term returns on plan assets at an acceptable
    level of risk, and     
|
| |  | maintain broad diversification across asset classes and among
    investment managers, and
|
| |  | focus on long-term return objectives.                                                     





F-22



---



##### 



CHS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|            |  |      |      |    |      |  |      |   
|----------- |  | ---- | ---- | -- | ---- |  | ---- | --
|            |  | 2005 |      |    | 2004 | 
|            |  |      |      |    |      | 
|Cash        |  |      | 1.   | 7% |      |  | 2.   | 7%
|Debt        |  |      | 27.  | 8  |      |  | 29.  | 9 
|Equities    |  |      | 64.  | 5  |      |  | 62.  | 0 
|Real estate |  |      | 4.   | 0  |      |  | 3.   | 8 
|Other       |  |      | 2.   | 0  |      |  | 1.   | 6 
|            |  |      |      |    |      | 
|Total       |  |      | 100. | 0% |      |  | 100. | 0%
|            |  |      |      |    |      | 

12.     Segment Reporting












F-23



---



##### 



CHS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                      |  |                        |           |   |             |   |           |            |  |   |             |   |  |         |         |   |       |   |          |   |  |   |            |  
|----------------------------------------------------- |  | ---------------------- | --------- | - | ----------- | - | --------- | ---------- |  | - | ----------- | - |  | ------- | ------- | - | ----- | - | -------- | - |  | - | ---------- | -
|                                                      |  |                        |           |   |             |   |           | Corporate  |  |   | Reconciling |   |  |        
|                                                      |  | Energy                 |           |   | Ag Business |   |           | Processing |  |   | and Other   |   |  | Amounts |         |   | Total |  
|                                                      |  |                        |           |   |             |   |           |            |  |   |             |   |  |         |         |   |       |  
|                                                      |  | (Dollars in thousands) |          
|For the year ended August 31, 2005:                   |  |                        |           |   |             |   |           |            |  |   |             |   |  |         |         |   |       |   |          |   |  |   |            |  
|Net sales                                             |  | $                      | 5,782,948 |   |             | $ | 5,556,923 |            |  | $ | 610,006     |   |  |         |         |   |       | $ | (180,784 | ) |  | $ | 11,769,093 |  
|Other revenues                                        |  |                        | 10,085    |   |             |   | 119,782   |            |  |   | 1,522       |   |  | $       | 40,574  |   |       |   |          |   |  |   | 171,963    |  
|                                                      |  |                        |           |   |             |   |           |            |  |   |             |   |  |         |         |   |       |  
|                                                      |  |                        | 5,793,033 |   |             |   | 5,676,705 |            |  |   | 611,528     |   |  |         | 40,574  |   |       |   | (180,784 | ) |  |   | 11,941,056 |  
|Cost of goods sold                                    |  |                        | 5,489,425 |   |             |   | 5,545,373 |            |  |   | 604,418     |   |  |         |         |   |       |   | (180,784 | ) |  |   | 11,458,432 |  
|Marketing, general and administrative                 |  |                        | 62,077    |   |             |   | 85,570    |            |  |   | 18,292      |   |  |         | 25,307  |   |       |   |          |   |  |   | 191,246    |  
|                                                      |  |                        |           |   |             |   |           |            |  |   |             |   |  |         |         |   |       |  
|Operating earnings (losses)                           |  |                        | 241,531   |   |             |   | 45,762    |            |  |   | (11,182     | ) |  |         | 15,267  |   |       |   |         |   |  |   | 291,378    |  
|Gain on sale of investments                           |  |                        | (862      | ) |             |   | (11,358   | )          |  |   | (457        | ) |  |         | (336    | ) |       |   |          |   |  |   | (13,013    | )
|Interest                                              |  |                        | 13,947    |   |             |   | 20,535    |            |  |   | 12,287      |   |  |         | 8,368   |   |       |   |          |   |  |   | 55,137     |  
|Equity income from investments                        |  |                        | (3,478    | ) |             |   | (55,473   | )          |  |   | (36,202     | ) |  |         | (589    | ) |       |   |          |   |  |   | (95,742    | )
|Minority interests                                    |  |                        | 46,741    |   |             |   | (41       | )          |  |   |             |   |  |         | 1,036   |   |       |   |          |   |  |   | 47,736     |  
|                                                      |  |                        |           |   |             |   |           |            |  |   |             |   |  |         |         |   |       |  
|Income from continuing operations before income taxes |  | $                      | 185,183   |   |             | $ | 92,099    |            |  | $ | 13,190      |   |  | $       | 6,788   |   |       | $ |         |   |  | $ | 297,260    |  
|                                                      |  |                        |           |   |             |   |           |            |  |   |             |   |  |         |         |   |       |  
|Intersegment sales                                    |  | $                      | (170,642  | ) |             | $ | (9,640    | )          |  | $ | (502        | ) |  |         |         |   |       | $ | 180,784  |   |  | $ |           |  
|                                                      |  |                        |           |   |             |   |           |            |  |   |             |   |  |         |         |   |       |  
|Goodwill                                              |  | $                      | 3,041     |   |             | $ | 250       |            |  |   |             |   |  |         |         |   |       |   |          |   |  | $ | 3,291      |  
|                                                      |  |                        |           |   |             |   |           |            |  |   |             |   |  |         |         |   |       |  
|Capital expenditures                                  |  | $                      | 205,484   |   |             | $ | 27,600    |            |  | $ | 4,751       |   |  | $       | 19,635  |   |       |   |          |   |  | $ | 257,470    |  
|                                                      |  |                        |           |   |             |   |           |            |  |   |             |   |  |         |         |   |       |  
|Depreciation and amortization                         |  | $                      | 59,847    |   |             | $ | 30,748    |            |  | $ | 13,868      |   |  | $       | 5,869   |   |       |   |          |   |  | $ | 110,332    |  
|                                                      |  |                        |           |   |             |   |           |            |  |   |             |   |  |         |         |   |       |  
|Total identifiable assets at August 31, 2005          |  | $                      | 2,238,614 |   |             | $ | 1,604,571 |            |  | $ | 420,373     |   |  | $       | 463,379 |   |       |   |          |   |  | $ | 4,726,937  |  
|                                                      |  |                        |           |   |             |   |           |            |  |   |             |   |  |         |         |   |       |  
|For the year ended August 31, 2004:                   |  |                        |           |   |             |   |           |            |  |   |             |   |  |         |         |   |       |   |          |   |  |   |            |  
|Net sales                                             |  | $                      | 4,028,248 |   |             | $ | 6,219,917 |            |  | $ | 731,311     |   |  |         |         |   |       | $ | (140,934 | ) |  | $ | 10,838,542 |  
|Other revenues                                        |  |                        | 9,193     |   |             |   | 92,662    |            |  |   | 2,698       |   |  | $       | 36,612  |   |       |   |          |   |  |   | 141,165    |  
|                                                      |  |                        |           |   |             |   |           |            |  |   |             |   |  |         |         |   |       |  
|                                                      |  |                        | 4,037,441 |   |             |   | 6,312,579 |            |  |   | 734,009     |   |  |         | 36,612  |   |       |   | (140,934 | ) |  |   | 10,979,707 |  
|Cost of goods sold                                    |  |                        | 3,784,260 |   |             |   | 6,192,528 |            |  |   | 703,344     |   |  |         |         |   |       |   | (140,934 | ) |  |   | 10,539,198 |  
|Marketing, general and administrative                 |  |                        | 66,493    |   |             |   | 86,202    |            |  |   | 19,166      |   |  |         | 23,778  |   |       |   |          |   |  |   | 195,639    |  
|                                                      |  |                        |           |   |             |   |           |            |  |   |             |   |  |         |         |   |       |  
|Operating earnings                                    |  |                        | 186,688   |   |             |   | 33,849    |            |  |   | 11,499      |   |  |         | 12,834  |   |       |   |         |   |  |   | 244,870    |  
|Gain on sale of investments                           |  |                        | (14,666   | ) |             |   |           |            |  |   |             |   |  |         |         |   |       |   |          |   |  |   | (14,666    | )
|Gain on legal settlements                             |  |                        |           |   |             |   | (692      | )          |  |   |             |   |  |         |         |   |       |   |          |   |  |   | (692       | )
|Interest                                              |  |                        | 13,819    |   |             |   | 18,812    |            |  |   | 12,399      |   |  |         | 3,687   |   |       |   |          |   |  |   | 48,717     |  
|Equity income from investments                        |  |                        | (1,399    | ) |             |   | (47,488   | )          |  |   | (29,966     | ) |  |         | (169    | ) |       |   |          |   |  |   | (79,022    | )
|Minority interests                                    |  |                        | 32,507    |   |             |   | (24       | )          |  |   |             |   |  |         | 1,347   |   |       |   |          |   |  |   | 33,830     |  
|                                                      |  |                        |           |   |             |   |           |            |  |   |             |   |  |         |         |   |       |  
|Income from continuing operations before income taxes |  | $                      | 156,427   |   |             | $ | 63,241    |            |  | $ | 29,066      |   |  | $       | 7,969   |   |       | $ |         |   |  | $ | 256,703    |  
|                                                      |  |                        |           |   |             |   |           |            |  |   |             |   |  |         |         |   |       |  
|Intersegment sales                                    |  | $                      | (121,199  | ) |             | $ | (18,372   | )          |  | $ | (1,363      | ) |  |         |         |   |       | $ | 140,934  |   |  | $ |           |  
|                                                      |  |                        |           |   |             |   |           |            |  |   |             |   |  |         |         |   |       |  
|Goodwill                                              |  | $                      | 3,041     |   |             | $ | 250       |            |  |   |             |   |  | $       | 23,605  |   |       |   |          |   |  | $ | 26,896     |  
|                                                      |  |                        |           |   |             |   |           |            |  |   |             |   |  |         |         |   |       |  
|Capital expenditures                                  |  | $                      | 187,937   |   |             | $ | 35,240    |            |  | $ | 8,757       |   |  | $       | 13,214  |   |       |   |          |   |  | $ | 245,148    |  
|                                                      |  |                        |           |   |             |   |           |            |  |   |             |   |  |         |         |   |       |  
|Depreciation and amortization                         |  | $                      | 57,195    |   |             | $ | 30,887    |            |  | $ | 13,536      |   |  | $       | 6,781   |   |       |   |          |   |  | $ | 108,399    |  
|                                                      |  |                        |           |   |             |   |           |            |  |   |             |   |  |         |         |   |       |  
|Total identifiable assets at August 31, 2004          |  | $                      | 1,591,254 |   |             | $ | 1,590,337 |            |  | $ | 415,761     |   |  | $       | 433,940 |   |       |   |          |   |  | $ | 4,031,292  |  
|                                                      |  |                        |           |   |             |   |           |            |  |   |             |   |  |         |         |   |       |  

F-24



---



##### 



CHS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                                      |  |                        |           |   |             |   |           |            |  |   |             |   |  |         |        |   |       |   |         |   |  |   |           |  
|----------------------------------------------------- |  | ---------------------- | --------- | - | ----------- | - | --------- | ---------- |  | - | ----------- | - |  | ------- | ------ | - | ----- | - | ------- | - |  | - | --------- | -
|                                                      |  |                        |           |   |             |   |           | Corporate  |  |   | Reconciling |   |  |        
|                                                      |  | Energy                 |           |   | Ag Business |   |           | Processing |  |   | and Other   |   |  | Amounts |        |   | Total |  
|                                                      |  |                        |           |   |             |   |           |            |  |   |             |   |  |         |        |   |       |  
|                                                      |  | (Dollars in thousands) |          
|For the year ended August 31, 2003:                   |  |                        |           |   |             |   |           |            |  |   |             |   |  |         |        |   |       |   |         |   |  |   |           |  
|Net sales                                             |  | $                      | 3,648,093 |   |             | $ | 5,228,267 |            |  | $ | 417,863     |   |  |         |        |   |       | $ | (97,557 | ) |  | $ | 9,196,666 |  
|Other revenues                                        |  |                        | 5,655     |   |             |   | 85,256    |            |  |   | 2,306       |   |  | $       | 29,256 |   |       |   |         |   |  |   | 122,473   |  
|                                                      |  |                        |           |   |             |   |           |            |  |   |             |   |  |         |        |   |       |  
|                                                      |  |                        | 3,653,748 |   |             |   | 5,313,523 |            |  |   | 420,169     |   |  |         | 29,256 |   |       |   | (97,557 | ) |  |   | 9,319,139 |  
|Cost of goods sold                                    |  |                        | 3,470,726 |   |             |   | 5,213,704 |            |  |   | 407,823     |   |  |         |        |   |       |   | (97,557 | ) |  |   | 8,994,696 |  
|Marketing, general and administrative                 |  |                        | 63,740    |   |             |   | 70,193    |            |  |   | 15,256      |   |  |         | 20,109 |   |       |   |         |   |  |   | 169,298   |  
|                                                      |  |                        |           |   |             |   |           |            |  |   |             |   |  |         |        |   |       |  
|Operating earnings (losses)                           |  |                        | 119,282   |   |             |   | 29,626    |            |  |   | (2,910      | ) |  |         | 9,147  |   |       |   |        |   |  |   | 155,145   |  
|Gain on legal settlements                             |  |                        |           |   |             |   | (10,867   | )          |  |   |             |   |  |         |        |   |       |   |         |   |  |   | (10,867   | )
|Interest                                              |  |                        | 16,401    |   |             |   | 16,343    |            |  |   | 10,427      |   |  |         | 3,086  |   |       |   |         |   |  |   | 46,257    |  
|Equity income from investments                        |  |                        | (1,353    | ) |             |   | (19,681   | )          |  |   | (26,056     | ) |  |         | (209   | ) |       |   |         |   |  |   | (47,299   | )
|Minority interests                                    |  |                        | 20,782    |   |             |   | (27       | )          |  |   |             |   |  |         | 1,195  |   |       |   |         |   |  |   | 21,950    |  
|                                                      |  |                        |           |   |             |   |           |            |  |   |             |   |  |         |        |   |       |  
|Income from continuing operations before income taxes |  | $                      | 83,452    |   |             | $ | 43,858    |            |  | $ | 12,719      |   |  | $       | 5,075  |   |       | $ |        |   |  | $ | 145,104   |  
|                                                      |  |                        |           |   |             |   |           |            |  |   |             |   |  |         |        |   |       |  
|Intersegment sales                                    |  | $                      | (94,209   | ) |             | $ | (2,650    | )          |  | $ | (698        | ) |  |         |        |   |       | $ | 97,557  |   |  | $ |          |  
|                                                      |  |                        |           |   |             |   |           |            |  |   |             |   |  |         |        |   |       |  
|Capital expenditures                                  |  | $                      | 80,837    |   |             | $ | 31,874    |            |  | $ | 50,944      |   |  | $       | 12,034 |   |       |   |         |   |  | $ | 175,689   |  
|                                                      |  |                        |           |   |             |   |           |            |  |   |             |   |  |         |        |   |       |  
|Depreciation and amortization                         |  | $                      | 65,868    |   |             | $ | 28,587    |            |  | $ | 11,177      |   |  | $       | 5,715  |   |       |   |         |   |  | $ | 111,347   |  
|                                                      |  |                        |           |   |             |   |           |            |  |   |             |   |  |         |        |   |       |  





|    |                               
|--- | ------------------------------
|13. | Commitments and Contingencies:



| |               
| | --------------
| | Environmental:







| |                             
| | ----------------------------
| | Other Litigation and Claims:



F-25



---



##### 



CHS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |               
| | --------------
| | Grain Storage:





| |            
| | -----------
| | Guarantees:







F-26



---



##### 



CHS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                                      |  |                        |        |  |             |   |        |           |  |                                                                                                                                                                                                                                     |  |                                                                                                                                                                                      |  |                                             |            |                                          |               |                                                                                                                |  |                                                                                                                  
|--------------------------------------------------------------------- |  | ---------------------- | ------ |  | ----------- | - | ------ | --------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------------------- | ---------- | ---------------------------------------- | ------------- | -------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------
|                                                                      |  | Guarantee/             |        |  | Exposure on |   |        |           |  |                                                                                                                                                                                                                                     |  |                                                                                                                                                                                      |  |                                             |            |                                         
|                                                                      |  | Maximum                |        |  | August 31,  |   |        | Nature of |  |                                                                                                                                                                                                                                     |  | Triggering                                                                                                                                                                           |  |                                             | Recourse   |                                          | Assets Held  
|Entities                                                              |  | Exposure               |        |  | 2005        |   |        | Guarantee |  | Expiration Date                                                                                                                                                                                                                     |  | Event                                                                                                                                                                                |  |                                             | Provisions |                                          | as Collateral
|                                                                      |  |                        |        |  |             |   |        |           |  |                                                                                                                                                                                                                                     |  |                                                                                                                                                                                      |  |                                             |            |                                          |              
|                                                                      |  | (Dollars in thousands) |        |  |             |   |        |           |  |                                                                                                                                                                                                                                     |  |                                                                                                                                                                                      | 
|The Companys financial services cooperative loans sold to
    CoBank |  |                        | *      |  |             | $ | 8,280  |           |  | 10% of the obligations of borrowers (agricultural cooperatives)
    under credit agreements for loans sold                                                                                                                          |  | None stated, but may be terminated by either party upon
    60 days prior notice in regard to future obligations                                                                     |  | Credit agreement default                    |            | Subrogation against borrower             |               | Some or all assets of borrower are held as collateral and should
    be sufficient to cover guarantee exposure
|Fin-Ag, Inc. agricultural loans sold to CoBank                        |  |                        | *      |  |             |   | 33,355 |           |  | 15% of the obligations of borrowers under credit agreements for
    some of the loans sold, 50% of the obligations of borrowers for
    other loans sold, and 100% of the obligations of borrowers for
    the remaining loans sold |  | None stated, but may be terminated by either party upon
    90 days prior notice in regard to future obligations                                                                     |  | Credit agreement default                    |            | Subrogation against borrower             |               | Some or all assets of borrower are held as collateral and should
    be sufficient to cover guarantee exposure
|Horizon Milling, LLC                                                  |  | $                      | 5,000  |  |             |   |       |           |  | Indemnification and reimbursement of 24% of damages related to
    Horizon Milling, LLCs performance under a flour sales
    agreement                                                                                             |  | None stated, but may be terminated by any party upon
    90 days prior notice in regard to future obligations                                                                        |  | Non- performance under flour sale agreement |            | Subrogation against Horizon Milling, LLC |               | None                                                                                                          
|TEMCO, LLC                                                            |  | $                      | 15,000 |  |             |   | 800    |           |  | Obligations by TEMCO, LLC under credit agreement                                                                                                                                                                                    |  | None stated                                                                                                                                                                          |  | Credit agreement default                    |            | Subrogation against TEMCO, LLC           |               | None                                                                                                          
|Third parties                                                         |  |                        | *      |  |             |   | 1,000  |           |  | Surety for, or indemnification of surety for sales contracts
    between affiliates and sellers of grain under deferred payment
    contracts                                                                                       |  | Annual renewal on December 1 in regard to surety for one
    third party, otherwise none stated and may be terminated by the
    Company at any time in regard to future obligations |  |                                             | Nonpayment |                                          |               | Subrogation against affiliates                                                                                 |  | Some or all assets of borrower are held as collateral but might
    not be sufficient to cover guarantee exposure

F-27



---



##### 



CHS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                      |  |                        |        |  |             |   |        |           |  |                                                                                                                       |  |                                                                                                           |  |                          |            |                              |               |                                                                                                                   |  | 
|--------------------- |  | ---------------------- | ------ |  | ----------- | - | ------ | --------- |  | --------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------- |  | ------------------------ | ---------- | ---------------------------- | ------------- | ----------------------------------------------------------------------------------------------------------------- |  | 
|                      |  | Guarantee/             |        |  | Exposure on |   |        |           |  |                                                                                                                       |  |                                                                                                           |  |                          |            |                             
|                      |  | Maximum                |        |  | August 31,  |   |        | Nature of |  |                                                                                                                       |  | Triggering                                                                                                |  |                          | Recourse   |                              | Assets Held  
|Entities              |  | Exposure               |        |  | 2005        |   |        | Guarantee |  | Expiration Date                                                                                                       |  | Event                                                                                                     |  |                          | Provisions |                              | as Collateral
|                      |  |                        |        |  |             |   |        |           |  |                                                                                                                       |  |                                                                                                           |  |                          |            |                              |              
|                      |  | (Dollars in thousands) |        |  |             |   |        |           |  |                                                                                                                       |  |                                                                                                           | 
|Cofina Financial, LLC |  | $                      | 20,561 |  |             |   | 6,650  |           |  | Guaranteed loans which were made by the Company under financing
    programs and contributed by the Company to Cofina |  | Loans contributed mature at various times. Guarantee of a
    particular loan terminates on maturity date |  | Credit agreement default |            | Subrogation against borrower |               | Some or all assets of borrower are held as collateral but might
    not be sufficient to cover guarantee exposure
|                      |  |                        |        |  |             |   |        |           |  |                                                                                                                       |  |                                                                                                           |  |                          |            |                              |              
|                      |  |                        |        |  |             | $ | 50,085 |           |  |                                                                                                                       |  |                                                                                                           |  |                          |            |                              |               |                                                                                                                   |  | 
|                      |  |                        |        |  |             |   |        |           |  |                                                                                                                       |  |                                                                                                           |  |                          |            |                              |              






|  |                                                                                                                                                                                                                                                             
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | The Companys bank covenants allow for guarantees of up to
    $150.0 million, but the Company is under no obligation to
    extend these guarantees. The maximum exposure on any given date
    is equal to the actual guarantees extended as of that date.



| |                   
| | ------------------
| | Lease Commitments:







|                                    |  |                        |        |  |          |   |           |           |  |   |       |  |  |   |         | 
|----------------------------------- |  | ---------------------- | ------ |  | -------- | - | --------- | --------- |  | - | ----- |  |  | - | ------- | 
|                                    |  | Rail                   |        |  |          |   | Equipment |           |  |  
|                                    |  | Cars                   |        |  | Vehicles |   |           | and Other |  |   | Total | 
|                                    |  |                        |        |  |          |   |           |           |  |   |       | 
|                                    |  | (Dollars in thousands) |       
|2006                                |  | $                      | 9,660  |  |          | $ | 16,202    |           |  | $ | 2,450 |  |  | $ | 28,312  | 
|2007                                |  |                        | 8,739  |  |          |   | 13,156    |           |  |   | 2,090 |  |  |   | 23,985  | 
|2008                                |  |                        | 7,588  |  |          |   | 11,869    |           |  |   | 1,554 |  |  |   | 21,011  | 
|2009                                |  |                        | 3,700  |  |          |   | 8,303     |           |  |   | 982   |  |  |   | 12,985  | 
|2010                                |  |                        | 2,614  |  |          |   | 7,373     |           |  |   | 796   |  |  |   | 10,783  | 
|Thereafter                          |  |                        | 3,411  |  |          |   | 1,674     |           |  |   | 876   |  |  |   | 5,961   | 
|                                    |  |                        |        |  |          |   |           |           |  |   |       | 
|Total minimum future lease payments |  | $                      | 35,712 |  |          | $ | 58,577    |           |  | $ | 8,748 |  |  | $ | 103,037 | 
|                                    |  |                        |        |  |          |   |           |           |  |   |       | 

F-28



---



##### 



CHS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                              
|--- | ---------------------------------------------
|14. | Supplemental Cash Flow and Other Information:



|                                                |                                                                            |                        |   |          |      |  |   |         |   |  |   |         |  
|----------------------------------------------- | -------------------------------------------------------------------------- | ---------------------- | - | -------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                |                                                                            | 2005                   |   |          | 2004 |  |   | 2003    |  
|                                                |                                                                            |                        |   |          |      |  |   |         |  
|                                                |                                                                            | (Dollars in thousands) |  
|Net cash paid (received) during the period for: |                                                                            |                        |   |          |      |  |   |         |   |  |   |        
|                                                | Interest                                                                   |                        | $ | 57,569   |      |  | $ | 52,004  |   |  | $ | 45,239  |  
|                                                | Income taxes                                                               |                        |   | (8,804   | )    |  |   | 27,997  |   |  |   | 956     |  
|Other significant noncash transactions:         |                                                                            |                        |   |          |      |  |   |         |   |  |   |        
|                                                | Capital equity certificates exchanged for preferred stock                  |                        |   | 19,996   |      |  |   | 12,990  |   |  |   |         |  
|                                                | Capital equity certificates issued in exchange for elevator
    properties |                        |   | 1,375    |      |  |   | 13,355  |   |  |   | 350     |  
|                                                | Exchange of preferred stock                                                |                        |   |          |      |  |   |         |   |  |   | 7,452   |  
|                                                | Accrual of dividends and equities payable                                  |                        |   | (132,406 | )    |  |   | (83,569 | ) |  |   | (39,049 | )
|                                                | Other comprehensive income                                                 |                        |   | 12,106   |      |  |   | 11,178  |   |  |   | 33,583  |  



|    |                            
|--- | ---------------------------
|15. | Related Party Transactions:



|            |  |      |           |  |      |   |           | 
|----------- |  | ---- | --------- |  | ---- | - | --------- | 
|            |  | 2005 |           |  | 2004 |  
|            |  |      |           |  |      |  
|Sales       |  | $    | 1,066,604 |  |      | $ | 1,185,366 | 
|Purchases   |  |      | 642,840   |  |      |   | 632,993   | 
|Receivables |  |      | 37,713    |  |      |   | 17,679    | 
|Payables    |  |      | 25,576    |  |      |   | 28,118    | 



F-29



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##### 



CHS INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                      
|--- | ---------------------
|16. | Comprehensive Income:



|                                                                                                                                                         |  |                        |         |  |      |   |         |      |  |   |         |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------- | ------- |  | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                                                                                                         |  | 2005                   |         |  | 2004 |   |         | 2003 | 
|                                                                                                                                                         |  |                        |         |  |      |   |         |      | 
|                                                                                                                                                         |  | (Dollars in thousands) |        
|Net income                                                                                                                                               |  | $                      | 250,016 |  |      | $ | 221,332 |      |  | $ | 123,841 |  
|Additional minimum pension liability, net of tax (expense) of
    $(1,854), $(5,432) and $(11,803) in 2005, 2004 and 2003,
    respectively              |  |                        | 2,822   |  |      |   | 10,016  |      |  |   | 36,106  |  
|Unrealized net gains on available for sale investments, net of
    tax (expense) of $(5,147), $(340) and $(349) in 2005, 2004 and
    2003, respectively |  |                        | 8,085   |  |      |   | 698     |      |  |   | 1,045   |  
|Interest rate hedges, net of tax (expense) benefit of $(279),
    $(226) and $2,259 in 2005, 2004 and 2003, respectively                                 |  |                        | 439     |  |      |   | 356     |      |  |   | (3,549  | )
|Foreign currency translation adjustment, net of tax (expense) of
    $(484), $(57) and $(0) in 2005, 2004 and 2003, respectively                         |  |                        | 760     |  |      |   | 108     |      |  |   | (18     | )
|                                                                                                                                                         |  |                        |         |  |      |   |         |      | 
|Comprehensive income                                                                                                                                     |  | $                      | 262,122 |  |      | $ | 232,510 |      |  | $ | 157,425 |  
|                                                                                                                                                         |  |                        |         |  |      |   |         |      | 



|                                                                                                                                           |  |                        |        |   |      |   |        |  
|------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------------------- | ------ | - | ---- | - | ------ | -
|                                                                                                                                           |  | 2005                   |        |   | 2004 |  
|                                                                                                                                           |  |                        |        |   |      |  
|                                                                                                                                           |  | (Dollars in thousands) |       
|Additional minimum pension liability, net of tax benefit of $705
    and $2,559 in 2005 and 2004, respectively                             |  | $                      | (1,108 | ) |      | $ | (3,930 | )
|Unrealized net gains on available for sale investments, net of
    tax (expense) of $(5,487) and $(340) in 2005 and 2004,
    respectively |  |                        | 8,619  |   |      |   | 534    |  
|Interest rate hedges, net of tax benefit of $2,159 and $2,438 in
    2005 and 2004, respectively                                           |  |                        | (3,390 | ) |      |   | (3,829 | )
|Foreign currency translation adjustment, net of tax (expense) of
    $(541) and $(57) in 2005 and 2004, respectively                       |  |                        | 850    |   |      |   | 90     |  
|                                                                                                                                           |  |                        |        |   |      |  
|Accumulated other comprehensive income (loss)                                                                                              |  | $                      | 4,971  |   |      | $ | (7,135 | )
|                                                                                                                                           |  |                        |        |   |      |  

F-30



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##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM













F-31