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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
      Form 10-K
      þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    August 31, 2006oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) 
    OF THE SECURITIES EXCHANGE ACT OF 1934For 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

(I.R.S. Employerincorporation or
    organization)

Identification
    Number)5500 Cenex Drive

(651) 355-6000Inver Grove Heights, Minnesota
    55077(Address of principal executive
    office,

(Registrants Telephone
    number,including zip code)

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 o     NO þ
    YES o     NO þ
    YES þ     NO o
  Regulation S-K Form 10-K Form 10-K: o
  Rule 12b-2
 Large accelerated
    filer o
         Accelerated
    filer o     Non-accelerated
    filer þ
  Rule 12b-2
  YES o     NO þ
        DOCUMENTS
    INCORPORATED BY REFERENCE




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##### 



INDEX
  
  PageNo.PART I.Item 1.

Business


1The
    Company


1Energy


2Ag
    Business


4Processing


9Corporate and
    Other


12Price Risk and
    Hedging


13Employees


13Membership in the
    Company and Authorized Capital


14Item 1A.

Risk
    Factors


17Item 1B.

Unresolved Staff
    Comments


20Item 2.

Properties


21Item 3.

Legal
    Proceedings


22Item 4.

Submission of
    Matters to a Vote of Security Holders


23PART II.Item 5.

Market for
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities


23Item 6.

Selected Financial
    Data


24Item 7.

Managements
    Discussion and Analysis of Financial Condition and Results of
    Operation


26Item 7A.

Quantitative and
    Qualitative Disclosures about Market Risk


48Item 8.

Financial
    Statements and Supplementary Data


49Item 9.

Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


51Item 9A.

Controls and
    Procedures


52Item 9B.

Other
    Information


53PART III.Item 10.

Directors and
    Executive Officers of the Registrant


53Board of
    Directors


53Executive
    Officers


57Section 16(a)
    Beneficial Ownership Reporting Compliance


58Code of
    Ethics


58Audit Committee
    Matters


58Item 11.

Executive
    Compensation


60Item 12.

Security Ownership
    of Certain Beneficial Owners and Management and Related
    Stockholder Matters


67Item 13.

Certain
    Relationships and Related Transactions


67Item 14.

Principal
    Accountant Fees and Services


68PART IV.Item 15.

Exhibits and
    Financial Statements


69SUPPLEMENTAL
    INFORMATION


74SIGNATURES


75Amended and Restated Loan and Security AgreementSubsidiaries of the RegistrantConsent of Independent Registered Public Accounting FirmPower of AttorneySection 302 CertificationSection 302 CertificationSection 906 CertificationSection 906 Certification




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PART I.  ITEM 1.
    BUSINESS THE
    COMPANY             1




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ENERGY  Overview
    Operations
  Laurel Refinery.
    McPherson Refinery.
    Provista Renewable Fuels Marketing, LLC.
 2




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Other Energy Operations.
  Products
    and Services
    Sales and
    Marketing; Customers
    Industry;
    Competition
  Regulation.
     3




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Summary
    Operating Results
    2006


2005


2004(Dollars in thousands)Revenues

$
7,414,361


$
5,794,266


$
4,038,561Cost of goods sold


6,834,676



5,487,813



3,780,726Gross profit


579,685



306,453



257,835Marketing, general and
    administrative


82,867



69,951



72,876Operating earnings


496,818



236,502



184,959Gain on sale of investments






(862
)


(14,666
)Interest, net


6,534



8,918



12,090Equity income from investments


(3,840
)


(3,478
)


(1,399
)Minority interests


86,483



46,741



32,507Income before income taxes

$
407,641


$
185,183


$
156,427Intersegment sales

$
(242,430
)

$
(170,642
)

$
(121,199
)Total identifiable
    assets  August 31

$
2,164,217


$
2,238,614


$
1,591,254  AG
    BUSINESS    Agronomy
  Overview
     4




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Operations
    Products
    and Services
    Sales
    and Marketing; Customers
    Industry;
    Competition
  Regulation.
   5




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Country
    Operations
  Overview
    Products
    and Services
  Grain Purchasing.
  Other Products.
  Fin-Ag, Inc.
  Industry;
    Competition
  Regulation.
 6




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Competition.
  Grain
    Marketing
  Overview
    Operations
       7




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Products
    and Services
    Sales
    and Marketing; Customers
    Industry;
    Competition
  Regulation.
  Competition.
     8




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##### Table of Contents



Summary
    Operating Results
    2006


2005


2004(Dollars in thousands)Revenues

$
6,575,165


$
5,670,644


$
6,306,530Cost of goods sold


6,401,527



5,541,282



6,187,082Gross profit


173,638



129,362



119,448Marketing, general and
    administrative


99,777



83,600



85,479Operating earnings


73,861



45,762



33,969Gain on sale of investments






(11,358
)Gain on legal settlements










(692
)Interest, net


23,559



20,535



18,932Equity income from investments


(40,902
)


(55,473
)


(47,488
)Minority interests


(509
)


(41
)


(24
)Income before income taxes

$
91,713


$
92,099


$
63,241Intersegment sales

$
(8,779
)

$
(9,640
)

$
(18,372
)Total identifiable
    assets  August 31

$
1,806,243


$
1,604,571


$
1,590,337  PROCESSING  Overview
    Regulation.
 9




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Oilseed
    Processing
              Wheat
    Milling
   10




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Foods
          Renewable
    Fuels
       11




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Summary
    Operating Results
    2006


2005


2004(Dollars in thousands)Revenues

$
614,471


$
613,766


$
734,944Cost of goods sold


588,732



604,198



703,129Gross profit


25,739



9,568



31,815Marketing, general and
    administrative


21,645



20,750



20,323Operating earnings (losses)


4,094



(11,182
)


11,492Gain on sale of investments






(457
)Interest, net


11,096



12,287



12,392Equity income from investments


(35,504
)


(36,202
)


(29,966
)Income before income taxes

$
28,502


$
13,190


$
29,066Intersegment sales

$
(368
)

$
(502
)

$
(1,363
)Total identifiable
    assets  August 31

$
518,186


$
420,373


$
415,761  CORPORATE
    AND OTHER  Services
  Financial Services.
        Country Hedging, Inc.
  Ag States Agency, LLC.
 12




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PRICE
    RISK AND HEDGING         EMPLOYEES     13




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MEMBERSHIP
    IN CHS AND AUTHORIZED CAPITAL  Introduction
    Distribution
    of Net Income; Patronage Dividends
        Patrons
    Equities
   14




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10-year
    Governance
    Membership
      Voting
    Rights
     15




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Debt and
    Equity Instruments
    Distribution
    of Assets upon Dissolution; Merger and Consolidation
    Certain
    Antitakeover Measures
      Tax
    Treatment
         16




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ITEM 1A.
    RISK
    FACTORS  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, 2006, includes
    forward-looking statements within the meaning of the
    Private Securities Litigation Reform Act of 1995 with respect to
    CHS. In addition, CHS 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;
    disruption in supply;
    political instability or armed conflict in oil-producing regions; 17




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
    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.
    ENVIRONMENTAL LIABILITIES COULD ADVERSELY AFFECT OUR RESULTS
    AND FINANCIAL CONDITION.
 18




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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;
    the significant inventories that we carry or the facilities we
    own could be damaged or destroyed by catastrophic events,
    extreme weather conditions or contamination; and
    an occurrence of a pandemic flu or other disease affecting a
    substantial part of our workforce or our customers could cause
    an interruption in our business operations, the affects of which
    could be significant.    OUR COOPERATIVE STRUCTURE LIMITS OUR ABILITY TO ACCESS EQUITY
    CAPITAL.
  CONSOLIDATION AMONG THE PRODUCERS OF PRODUCTS WE PURCHASE AND
    CUSTOMERS FOR PRODUCTS WE SELL COULD ADVERSELY AFFECT OUR
    REVENUES AND OPERATING RESULTS.
 19




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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.
  ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS   20




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ITEM 2.
    PROPERTIES    Energy
    Refinery

Laurel, MontanaPropane terminal

Glenwood, MinnesotaTransportation terminals/ repair
    facilities

12 locations in Iowa, Kansas,
    Minnesota, Montana, North Dakota, South Dakota, Texas,
    Washington and Wisconsin, 3 of which are leasedPetroleum & asphalt
    terminals/storage facilities

9 locations in Montana, North
    Dakota and WisconsinPump stations

11 locations in Montana and North
    DakotaPipelines:Cenex Pipeline, LLC

Laurel, Montana to Fargo, North
    DakotaFront Range Pipeline, LLC

Canadian border to Laurel, MontanaConvenience stores/gas stations

42 locations in Iowa, Minnesota,
    Montana, North Dakota, South Dakota and Wyoming, 12 of which are
    leasedLubricant plants/warehouses

3 locations in Minnesota, Ohio and
    Texas, 1 of which is leased     Refinery

McPherson, KansasPetroleum terminals/storage

2 locations in Iowa and KansasPipeline

McPherson, Kansas to Council
    Bluffs, IowaJayhawk Pipeline, LLC

Throughout Kansas, with branches
    in Oklahoma, Texas and NebraskaJayhawk stations

32 locations located in Kansas,
    Oklahoma and NebraskaOsage Pipeline (50% owned by NCRA)

Oklahoma to KansasKaw Pipeline (66.7% owned by NCRA)

Throughout Kansas   Ag
    Business
    Country
    Operations
   21




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Grain
    Marketing
    
  Processing
    Oilseed
    Processing
    Wheat
    Milling
    
  Corporate
    Headquarters
  33-acre
    ITEM 3.
    LEGAL
    PROCEEDINGS     22




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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




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ITEM 6.
    SELECTED
    FINANCIAL DATA    Summary
    Consolidated Financial Data
  2006


2005


2004


2003


2002(Dollars in thousands)Income Statement Data:Revenues

$
14,383,835


$
11,926,962


$
10,969,081


$
9,314,116


$
7,187,578Cost of goods sold


13,570,507



11,449,858



10,527,715



8,989,050



6,877,951Gross profit


813,328



477,104



441,366



325,066



309,627Marketing, general and
    administrative


231,238



199,354



202,455



175,662



170,458Operating earnings


582,090



277,750



238,911



149,404



139,169Gain on sale of investments






(13,013
)


(14,666
)Gain on legal settlements










(692
)


(10,867
)


(2,970
)Interest, net


41,305



41,509



42,758



40,516



37,009Equity income from investments


(84,188
)


(95,742
)


(79,022
)


(47,299
)


(58,133
)Minority interests


85,974



47,736



33,830



21,950



15,390Income from continuing operations
    before income taxes


538,999



297,260



256,703



145,104



147,873Income taxes


49,327



30,434



29,462



16,031



19,881Income from continuing operations


489,672



266,826



227,241



129,073



127,992(Income) loss on discontinued
    operations, net of taxes


(625
)


16,810



5,909



5,232



1,854Net income

$
490,297


$
250,016


$
221,332


$
123,841


$
126,138Balance Sheet Data
    (August 31):Working capital

$
828,954


$
758,703


$
493,440


$
458,738


$
249,115Net property, plant and equipment


1,476,239



1,359,535



1,249,655



1,122,982



1,057,421Total assets


4,942,583



4,726,937



4,031,292



3,807,968



3,481,727Long-term debt, including current
    maturities


744,745



773,074



683,818



663,173



572,124Total equities


2,017,391



1,757,897



1,628,086



1,481,711



1,289,638  24




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##### Table of Contents



Summary
    Financial Data by Business Segment
  Energy


Ag Business2006


2005


2004


2006


2005


2004(Dollars in thousands)Revenues

$
7,414,361


$
5,794,266


$
4,038,561


$
6,575,165


$
5,670,644


$
6,306,530Cost of goods sold


6,834,676



5,487,813



3,780,726



6,401,527



5,541,282



6,187,082Gross profit


579,685



306,453



257,835



173,638



129,362



119,448Marketing, general and
    administrative


82,867



69,951



72,876



99,777



83,600



85,479Operating earnings


496,818



236,502



184,959



73,861



45,762



33,969Gain on sale of investments






(862
)


(14,666
)






(11,358
)Gain on legal settlements






















(692
)Interest, net


6,534



8,918



12,090



23,559



20,535



18,932Equity income from investments


(3,840
)


(3,478
)


(1,399
)


(40,902
)


(55,473
)


(47,488
)Minority interests


86,483



46,741



32,507



(509
)


(41
)


(24
)Income before income taxes

$
407,641


$
185,183


$
156,427


$
91,713


$
92,099


$
63,241Intersegment sales

$
(242,430
)

$
(170,642
)

$
(121,199
)

$
(8,779
)

$
(9,640
)

$
(18,372
)Total identifiable
    assets  August 31

$
2,164,217


$
2,238,614


$
1,591,254


$
1,806,243


$
1,604,571


$
1,590,337   Processing


Corporate and Other2006


2005


2004


2006


2005


2004(Dollars in thousands)Revenues

$
614,471


$
613,766


$
734,944


$
33,175


$
30,672


$
31,466Cost of goods sold


588,732



604,198



703,129



(1,091
)


(1,049
)


(802
)Gross profit


25,739



9,568



31,815



34,266



31,721



32,268Marketing, general and
    administrative


21,645



20,750



20,323



26,949



25,053



23,777Operating earnings (losses)


4,094



(11,182
)


11,492



7,317



6,668



8,491Gain on sale of investments






(457
)










(336
)Gain on legal settlements
    Interest, net


11,096



12,287



12,392



116



(231
)


(656
)Equity income from investments


(35,504
)


(36,202
)


(29,966
)


(3,942
)


(589
)


(169
)Minority interests


















1,036



1,347Income before income taxes

$
28,502


$
13,190


$
29,066


$
11,143


$
6,788


$
7,969Intersegment sales

$
(368
)

$
(502
)

$
(1,363
)

$
(1,760
)

$
(1,602
)

$
(1,486
)Total identifiable
    assets  August 31

$
518,186


$
420,373


$
415,761


$
453,937


$
463,379


$
433,940  25




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##### Table of Contents



ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  Overview
  Form 10-K. Form 10-K.
    ®
           26




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Recent
    Events
   27




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##### Table of Contents



Results
    of Operations
  Comparison
    of the years ended August 31, 2006 and
    2005
  General.
       28




---



##### Table of Contents



Net Income.
  Revenues.
     29




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##### Table of Contents



Cost of Goods Sold.
   30




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Marketing, General and
    Administrative.
  Gain on Sale of Investments.
    Interest, net.
 31




---



##### Table of Contents



Equity Income from Investments.
        Minority Interests.
  Income Taxes.
 32




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##### Table of Contents



Discontinued Operations.
  Comparison
    of the years ended August 31, 2005 and
    2004
  General.
         33




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Net Income.
  Revenues.
     34




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##### Table of Contents



Cost of Goods Sold.
   35




---



##### Table of Contents



Marketing, General and
    Administrative.
  Gain on Sale of Investments.
      Gain on Legal Settlements.
  Interest, net.
 36




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##### Table of Contents



Equity Income from Investments.
        Minority Interests.
  Income Taxes.
  Discontinued Operations.
 37




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##### Table of Contents



Liquidity
    and Capital Resources
    364-day
    Cash
    Flows from Operations
  Form 10-K,
     38




---



##### Table of Contents



Cash
    Flows from Investing Activities
       39




---



##### Table of Contents



40




---



##### Table of Contents



Cash
    Flows from Financing Activities
  364-day 364-day
         41




---



##### Table of Contents



2007

$
60,7482008


98,9572009


117,7342010


82,6172011


111,609Thereafter


273,080$
744,745        42




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##### Table of Contents



10-year
        Off
    Balance Sheet Financing Arrangements
  Lease
    Commitments:
     43




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##### Table of Contents



Total(Dollars in millions)2007

$
31.52008


27.62009


18.22010


14.92011


8.8Thereafter


8.9Total minimum future lease payments

$
109.9   Guarantees:
    Debt:
    Contractual
    Obligations
    Payments Due by PeriodLess than


1 - 3


3 - 5


More thanContractual Obligations

Total


1 Year


Years


Years


5 Years(Dollars in thousands)Notes payable(1)

$
22,007


$
22,007Long-term debt(1)


744,745



60,748


$
216,691


$
194,226


$
273,080Interest payments(2)


190,406



44,138



73,790



45,340



27,138Operating leases


109,898



31,554



45,812



23,669



8,863Purchase obligations(3)


1,999,543



1,593,760



397,796



1,749



6,238Other liabilities(4)


199,310







42,303



38,657



118,350Total obligations

$
3,265,909


$
1,752,207


$
776,392


$
303,641


$
433,669     (1)
    
    Included on our Consolidated Balance Sheet.(2)
    
    Based on interest rates and long-term debt balances as of
    August 31, 2006.(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,
    $975.3 million is included in accounts payable and accrued
    expenses on our Consolidated Balance Sheet.(4)
    
    Other liabilities includes the long-term portion of deferred
    compensation, deferred income taxes, accrued turnaround and
    contractual redemptions, and is included on our Consolidated
    Balance Sheet. Of our total other liabilities on our
    Consolidated Balance Sheet in the amount of $310.2 million,
    the timing of the payments of $110.7 million of such
    liabilities cannot be determined. 44




---



##### Table of Contents



Critical
    Accounting Policies
    Allowances
    for Doubtful Accounts
    Inventory
    Valuation and Resetrves
  last-in, first-in,
  Derivative
    Financial Instruments
    Pension
    and Other Postretirement Benefits
   45




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##### Table of Contents



Deferred
    Tax Assets
    Long-Lived
    Assets
      Environmental
    Liabilities
    Revenue
    Recognition
   46




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##### Table of Contents



Effect of
    Inflation and Foreign Currency Transactions
    Recent
    Accounting Pronouncements
  and/or and/or and/or
        accrue-in-advance accrue-in-advance
 47




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##### Table of Contents



ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  COMMODITY
    PRICE RISK
           48




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##### Table of Contents



INTEREST
    RATE RISK
      FOREIGN
    CURRENCY RISK
    ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  page F-1. Regulation S-K
  November 30,


20062005


February 28


May 31


August 31(Unaudited)(Dollars in thousands)Revenues

$
3,453,549


$
3,156,834


$
3,743,021


$
4,030,431Gross profit


254,481



114,668



218,528



225,651Income from continuing operations


154,026



40,247



136,563



158,836Net income


154,234



40,148



136,593



159,322   November 30,


20052004


February 28


May 31


August 31Revenues

$
2,962,923


$
2,425,199


$
3,133,597


$
3,405,243Gross profit


108,450



88,108



151,348



129,198Income from continuing operations


20,341



19,718



109,861



116,906Net income


17,996



8,723



106,946



116,351  49




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##### Table of Contents



Restatement
    of previously issued quarterly financial statements:
  Form 10-Q
      Fiscal 2006


Fiscal 2005As





AsPreviously


As


Previously


AsReported


Restated


Reported


Restated(Unaudited)Dollars in thousandsCash flows from operating
    activities:Distributions from equity
    investments





$
3,532






$
15,348Net cash provided by operating
    activities

$
160,154



163,686


$
78,408



93,756Cash flows from investing
    activities:Equity investments redeemed


3,532







22,520Investments redeemed


1,175



1,175



983



8,155Distributions to minority owners


(11,677
)






(3,060
)Net cash used in investing
    activities


(94,297
)


(86,152
)


(35,776
)


(48,064
)Cash flows from financing
    activities:Distributions to minority owners






(11,677
)






(3,060
)Net cash used in financing
    activities


(62,119
)


(73,796
)


(12,276
)


(15,336
)Net increase in cash and cash
    equivalents


3,738



3,738



30,356



30,356Cash and cash equivalents at
    beginning of period


241,018



241,018



136,491



136,491Cash and cash equivalents at end
    of period


244,756



244,756



166,847



166,847  50




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##### Table of Contents



Fiscal 2006


Fiscal 2005As





AsPreviously


As


Previously


AsReported


Restated


Reported


Restated(Unaudited)Dollars in thousandsCash flows from operating
    activities:Distributions from equity
    investments





$
38,673






$
27,583Net cash provided by (used in)
    operating activities

$
27,175



65,848


$
(144,837
)


(117,254
)Cash flows from investing
    activities:Equity investments redeemed


40,846







36,945Investments redeemed


3,218



5,391



2,093



11,455Net cash used in investing
    activities


(51,615
)


(90,288
)


(60,195
)


(87,778
)Net cash (used in) provided by
    financing activities


(136,835
)


(136,835
)


262,074



262,074Net (decrease) increase in cash
    and cash equivalents


(161,275
)


(161,275
)


57,042



57,042Cash and cash equivalents at
    beginning of period


241,018



241,018



136,491



136,491Cash and cash equivalents at end
    of period


79,743



79,743



193,533



193,533     Fiscal 2006


Fiscal 2005As





AsPreviously


As


Previously


AsReported


Restated


Reported


Restated(Unaudited)Dollars in thousandsCash flows from operating
    activities:Distributions from equity
    investments





$
51,167






$
43,240Net cash provided by (used in)
    operating activities

$
227,026



278,193


$
(95,495
)


(52,255
)Cash flows from investing
    activities:Equity investments redeemed


53,340







52,602Investments redeemed


4,155



6,328



3,114



12,476Net cash used in investing
    activities


(174,995
)


(226,162
)


(110,167
)


(153,407
)Net cash (used in) provided by
    financing activities


(156,122
)


(156,122
)


303,640



303,640Net (decrease) increase in cash
    and cash equivalents


(104,091
)


(104,091
)


97,978



97,978Cash and cash equivalents at
    beginning of period


241,018



241,018



136,491



136,491Cash and cash equivalents at end
    of period


136,927



136,927



234,469



234,469   ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE   51




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##### Table of Contents



ITEM 9A.
    CONTROLS
    AND PROCEDURES    Rules 13a-15(e) 15d-15(e)
  Form 10-K. Form 10-K.
       52




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##### Table of Contents



ITEM 9B.
    OTHER
    INFORMATION  Form 10-K.
 PART III.  ITEM 10.
    DIRECTORS
    AND EXECUTIVE OFFICERS OF THE REGISTRANT BOARD OF
    DIRECTORS    DirectorName and Address

Age


District


SinceBruce Anderson


54



3



199513500  42nd St
    NE
    Glenburn, ND
    58740-9564Robert Bass


52



5



1994E 6391 Bass Road
    Reedsburg, WI 53959David Bielenberg


57



6



200216425 Herigstad Road NE
    Silverton, Oregon 97381Dennis Carlson


45



3



20013255 
    50th Street
    Mandan, ND 58554Curt Eischens


54



1



19902153  330th St
    North
    Minneota, MN
    56264-1880Steve Fritel


51



3



20032851 77th Street NE
    Barton, ND 58384Robert Grabarski


57



5



19991770 Highway 21
    Arkdale, WI 54613Jerry Hasnedl


60



1



199512276 
    150th Avenue SE
    St. Hilaire, MN 56754 -9776James Kile


58



6



1992508 W. Bell Lane
    St. John, WA 99171Randy Knecht


56



4



200140193 
    112th Street
    Houghton, SD 57449Michael Mulcahey


58



1



20038109 360th Avenue
    Waseca, MN 56093Richard Owen


52



2



1999PO Box 129
    Geraldine, MT 59446 53




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##### Table of Contents



DirectorName and Address

Age


District


SinceDuane Stenzel


60



1



199362904 
    295th Street
    Wells, MN 56097Michael Toelle


44



1



19925085 St. Anthony Drive
    Browns Valley, MN 56219Merlin Van Walleghen


70



4



199324106 
    408th Avenue
    Letcher, SD
    57359-6021   Bruce Anderson, assistant secretary-treasurer
  Robert Bass, first vice chairman
  David Bielenberg
  Dennis Carlson
  Curt Eischens
  Steve Fritel
  Robert Grabarski
 54




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##### Table of Contents



Jerry Hasnedl
  James Kile, second vice chairman
  Randy Knecht
  Michael Mulcahey
  Richard Owen
  Duane Stenzel
  Michael Toelle, chairman
  Merlin Van Walleghen, secretary-treasurer
 55




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##### Table of Contents




    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.    Region

Current IncumbentRegion 1 (Minnesota)

Duane Stenzel
    Michael MulcaheyRegion 3 (North Dakota)

Steve FritelRegion 4 (South Dakota)

open seatRegion 6 (Alaska, Arizona,
    California, Idaho, Oregon, Washington, Utah)

Jim Kile *
    David Bielenberg *Region 7 (Alabama, Arkansas,
    Florida, Iowa, Louisiana, Missouri, Mississippi)

open seatRegion 8 (Colorado, Nebraska,
    Kansas, New Mexico, Oklahoma, Texas)

open seat
    open seat   
    The number of directors from Region 6 will be reduced to one
    director at the 2006 Annual Meeting. 56




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##### Table of Contents



EXECUTIVE
    OFFICERS    Name

Age

PositionJohn D. Johnson


58


President and Chief Executive
    OfficerJay Debertin


46


Executive Vice President and Chief
    Operating Officer, ProcessingPatrick Kluempke


58


Executive Vice
    President  Corporate AdministrationThomas D. Larson


58


Executive Vice
    President  Business SolutionsMark Palmquist


49


Executive Vice President and Chief
    Operating Officer, Ag BusinessJohn Schmitz


56


Executive Vice President and Chief
    Financial OfficerLeon E. Westbrock


59


Executive Vice President and Chief
    Operating Officer, Energy   John D. Johnson
  Jay Debertin,
  Patrick Kluempke,
  Thomas D. Larson,
 57




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##### Table of Contents



Mark Palmquist,
  John Schmitz,
  Leon E. Westbrock,
 Section 16(a)
    Beneficial Ownership Reporting Compliance     Code of
    Ethics  Regulation S-K
  (651) 355-6000
 Audit
    Committee Matters   58




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##### Table of Contents



59




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##### Table of Contents



ITEM 11.
    EXECUTIVE
    COMPENSATION  Summary Compensation.
  Summary
    Compensation Table
  Annual Compensation


Long-Term-Other Annual


All Other


CompensationSalary


Bonus


Compensation


Compensation


LTIP PayoutsName and Principal Position

Year Ended


(1)


(1)


(2)


(3)


(1)John. D. Johnson


8/31/06


$
900,000


$
1,800,000


$
25,800


$
141,621


$
1,733,333President and Chief


8/31/05



850,000



850,000



25,800



141,126



467,500Executive Officer


8/31/04



850,000



800,530



25,800



97,714



969,646Jay Debertin


8/31/06



394,200



551,880



15,120



60,246



456,480Executive Vice President


8/31/05



379,000



284,250



15,120



48,879



127,053and Chief Operating


8/31/04



300,000



186,662



15,120



31,820



230,175Officer  ProcessingPatrick Kluempke


8/31/06



339,500



475,300



15,120



53,793



444,967Executive Vice President 


8/31/05



326,400



269,800



15,120



48,747



115,088Corporate Administration


8/31/04



287,600



212,680



15,120



29,805



211,562Thomas D. Larson


8/31/06



339,500



475,300



15,120



51,085



429,007Executive Vice President 


8/31/05



326,400



229,525



15,120



44,416



112,723Business Solutions


8/31/04



253,400



185,489



15,120



29,100



208,647Mark Palmquist


8/31/06



522,300



731,220



15,120



79,454



716,287Executive Vice President


8/31/05



522,300



391,725



15,120



75,877



205,563and Chief Operating


8/31/04



490,000



342,143



15,120



44,336



412,301Officer  Ag BusinessJohn Schmitz


8/31/06



483,200



676,480



15,120



71,802



652,307Executive Vice President


8/31/05



464,622



384,450



15,120



71,047



182,229and Chief Financial


8/31/04



450,000



332,775



15,120



46,226



366,907OfficerLeon E. Westbrock


8/31/06



543,200



760,480



15,120



80,131



726,040Executive Vice President


8/31/05



522,300



391,725



15,120



77,242



205,563and Chief Operating


8/31/04



490,000



359,783



15,120



54,159



412,301Officer  Energy     (1)
    
    Includes amounts of salary and bonus deferred pursuant to
    deferred compensation plans.(2)
    
    Amounts shown include personal use of a company vehicle or
    vehicle allowance.(3)
    
    Other compensation includes our matching contributions under our
    401(k) Plan, our nonqualified 401(k) match makeup contribution,
    our profit sharing contribution, and the portion of long-term
    disability premiums paid by us.  Report on
    Executive Compensation
      Curt Eischens

Michael MulcaheyRichard Owen

Merlin Van Walleghen  60




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##### Table of Contents



Executive
    Compensation Policies and Programs
        Components
    of Compensation
    Base Pay:
  Annual Variable Pay:
  Long-Term Incentive Plan:
   61




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##### Table of Contents



Compensation
    of the Chief Executive Officer
        The following summarizes certain benefits in effect as of
    August 31, 2006 to the Named Executive Officers.
  Employment
    Agreement with John D. Johnson
  gross-up
  Annual
    Variable Pay Plan
    Long 
    Term Incentive Plan
   62




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##### Table of Contents



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


Maturation ofName and Principal Position

2004-2006


Award


Threshold


Target


MaximumJohn. D. Johnson

$
1,733,333



2004-2006


$
173,333


$
866,667


$
1,733,333President and Chief Executive
    OfficerJay Debertin


456,480



2004-2006



45,648



228,240



456,480Executive Vice President and
    Chief Operating Officer  ProcessingPatrick Kluempke


444,967



2004-2006



44,497



222,484



444,967Executive Vice
    President  Corporate AdministrationThomas D. Larson


429,007



2004-2006



42,901



214,504



429,007Executive Vice
    President  Business SolutionsMark Palmquist


716,287



2004-2006



71,629



358,144



716,287Executive Vice President and Chief
    Operating Officer  Ag BusinessJohn Schmitz


652,307



2004-2006



65,231



326,154



652,307Executive Vice President and
    Chief Financial OfficerLeon E. Westbrock


726,040



2004-2006



72,604



363,020



726,040Executive Vice President and Chief
    Operating Officer  Energy   Retirement
    Plan
        Pay Below Social Security


Pay Above Social SecurityYears of Benefit Service




Taxable Wage Base


Taxable Wage Base1 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
%  63




---



##### Table of Contents



12-month
    Dollar Value


Years of ServiceJohn D. Johnson

$
1,199,955



29Jay Debertin


245,843



22Patrick Kluempke


586,974



23Thomas D. Larson


695,914



29Mark Palmquist


663,503



26John Schmitz


566,944



31Leon E. Westbrock


1,272,975



25         SpecialSupplemental Plan


Supplemental PlanJohn D. Johnson

$
2,678,161


$
1,104,544Jay Debertin


301,476



N/APatrick Kluempke


228,226



N/AThomas D. Larson


1,038,566



N/AMark Palmquist


523,539



N/AJohn Schmitz


496,319



N/ALeon E. Westbrock


3,271,814



N/A   401(k)
    Plan
   64




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##### Table of Contents



Nonqualified
    Deferred Compensation Plans
        2003-2006
  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
   65




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##### Table of Contents



Committees
    of the Board of Directors
    Compensation
    Committee Interlocks and Insider Participation
     66




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##### Table of Contents



ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS    Amount andNature ofBeneficialTitle of Class

Name of Beneficial Owner

Ownership


% of Class8% Cumulative Redeemable Preferred
    Stock

Directors:Michael Toelle


420 shares
(1)


*Bruce Anderson


40 shares



*Robert Bass


120 shares



*David Bielenberg


1,730 shares



*Dennis Carlson


710 shares
(1)


*Curt Eischens


120 shares



*Steve Fritel


880 shares



*Robert Grabarski


6,580 shares
(1)


*Jerry Hasnedl


200 shares



*James Kile


250 shares
(1)


*Randy Knecht


313 shares
(1)


*Michael Mulcahey


0 shares



*Richard Owen


240 shares



*Duane Stenzel


600 shares



*Merlin Van Walleghen


1,600 shares



*Named Executive Officers:John D. Johnson


4,820 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


23,023 shares



*     (1)
    
    Includes shares held by spouse, children and Individual
    Retirement Accounts (IRA).*
    
    Less than 1%.      ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS   67




---



##### Table of Contents



fathers-in-law; daughters-in-law; sisters-in-law)
  Year EndedName

August 31, 2006Bruce Anderson

$
141,707Curt Eischens


230,651Steve Fritel


94,492Jerry Hasnedl


843,611Michael Mulcahey


146,096Richard Owen


73,844Michael Toelle


492,390Merlin Van Walleghen


313,580   ITEM 14.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES    Description of Fees

2006


2005Audit Fees(1)

$
1,308,490


$
1,058,078Audit  Related Fees(2)


95,165



102,659Tax Fees(3)


257,480



29,911All Other Fees






Total

$
1,661,135


$
1,190,648     (1)
    
    Includes fees for audit of annual financial statements and
    reviews of the related quarterly financial statements, certain
    statutory audits, work related to filings of registration
    statements, 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.     68




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##### Table of Contents



PART IV.  ITEM 15.
    EXHIBITS AND
    FINANCIAL STATEMENTS  FINANCIAL STATEMENTS
  Form 10-K.
  Page No.CHS Inc.Consolidated Balance Sheets as of
    August 31, 2006 and 2005


F-1Consolidated Statements of
    Operations for the years ended August 31, 2006, 2005 and
    2004


F-2Consolidated Statements of
    Equities and Comprehensive Income for the years endedAugust 31, 2006, 2005 and 2004


F-3Consolidated Statements of Cash
    Flows for the years ended August 31, 2006, 2005 and 2004


F-4Notes to Consolidated Financial
    Statements


F-5Report of Independent Registered
    Public Accounting Firm


F-30    FINANCIAL STATEMENT SCHEDULES
  SCHEDULE II 
    VALUATION AND QUALIFYING ACOUNTS AND RESERVES
  Balance at


Additions:


Additions:


Deductions:


Balance atBeginning


Charged to Costs


Charged to


Write-offs, net


Endof Year


and Expenses


Other Accounts


of Recoveries


of Year(Dollars in thousands)Allowances for Doubtful Accounts2006

$
60,041


$
11,414






$
(17,557
)

$
53,8982005


55,809



12,962







(8,730
)


60,0412004


31,618



32,254







(8,063
)


55,809   Balance at


Additions:


Additions:


Deductions:


Balance atBeginning


Charged to Costs


Charged to


Expenditures


Endof Year


and Expenses


Other Accounts


for Maintenance


of Year(Dollars in thousands)Accrued Turnaround(1)2006

$
19,035


$
43,234






$
(42,879
)

$
19,3902005


12,949



21,558







(15,472
)


19,0352004


13,980



11,298







(12,329
)


12,949     (1)
    
    Accruals for planned major maintenance activities at our energy
    refineries 69




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##### Table of Contents



Report of
    Independent Registered Public Accounting Firm on
  Financial
    Statement Schedule
    page F-30 Form 10-K Form 10-K.
  
     70




---



##### Table of Contents



EXHIBITS
  3
.1

Articles of Incorporation of CHS
    Inc., as amended. (Incorporated by reference to our
    form 10-K
    for the year ended August 31, 2005, filed on
    November 18, 2005).3
.2

Bylaws of CHS Inc. (Incorporated
    by reference to our
    Form 10-Q
    for the quarterly period ended November 30, 2005, filed on
    January 11, 2006).4
.1

Resolution Creating a Series of
    Preferred Equity to be Designated 8% Cumulative Redeemable
    Preferred Stock. (Incorporated by reference to Amendment
    No. 1 to our Registration Statement on
    Form S-2
    (File
    No. 333-101916),
    dated January 13, 2003).4
.2

Form of Certificate Representing
    8% Cumulative Redeemable Preferred Stock. (Incorporated by
    reference to Amendment No. 2 to our Registration Statement
    on
    Form S-2
    (File
    No. 333-101916),
    dated January 23, 2003).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.
    (Incorporated by reference to Amendment No. 2 to our
    Registration Statement on
    Form S-2
    (File
    No. 333-101916),
    dated January 23, 2003).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. (Incorporated by reference to our
    Form 10-Q
    for the quarterly period ended May 31, 2003, filed
    July 2, 2003).10
.1

Lease between the Port of Kalama
    and North Pacific Grain Growers, Inc., dated November 22,
    1960. (Incorporated by reference to our Registration Statement
    on
    Form S-1
    (File
    No. 333-17865),
    filed December 13, 1996).10
.2

Limited Liability Company
    Agreement for the Wilsey-Holsum Foods, LLC dated July 24,
    1996. (Incorporated by reference to our Registration Statement
    on
    Form S-1
    (File
    No. 333-17865),
    filed December 13, 1996).10
.3

Long Term Supply Agreement between
    Wilsey-Holsum Foods, LLC and Harvest States Cooperatives dated
    August 30, 1996. (Incorporated by reference to our
    Registration Statement on
    Form S-1/A
    (File
    No. 333-17865),
    filed January 24, 1997).(*)10
.4

TEMCO, LLC Limited Liability
    Company Agreement between Cargill, Incorporated and Cenex
    Harvest States Cooperatives dated as of August 26, 2002.
    (Incorporated by reference to our
    Form 10-K
    for the year ended August 31, 2002, filed November 25,
    2002).10
.5

Cenex Harvest States Cooperatives
    Supplemental Savings Plan. (Incorporated by reference to our
    Form 10-K
    for the year ended August 31, 2000, filed November 22,
    2000).10
.5A

Amendment No. 3 to the CHS
    Inc. Supplemental Savings Plan. (Incorporated by reference to
    our
    Form 10-Q
    for the quarterly period ended May 31, 2006, filed
    July 12, 2006).10
.6

Cenex Harvest States Cooperatives
    Supplemental Executive Retirement Plan. (Incorporated by
    reference to our
    Form 10-K
    for the year ended August 31, 2000, filed November 22,
    2000).10
.6A

Amendment No. 4 to the CHS
    Inc. Supplemental Executive Retirement Plan. (Incorporated by
    reference to our
    Form 10-Q
    for the quarterly period ended May 31, 2006, filed
    July 12, 2006).10
.7

Cenex Harvest States Cooperatives
    Senior Management Compensation Plan. (Incorporated by reference
    to our
    Form 10-K
    for the year ended August 31, 2000, filed November 22,
    2000).10
.8

Cenex Harvest States Cooperatives
    Executive Long-Term Variable Compensation Plan. (Incorporated by
    reference to our
    Form 10-K
    for the year ended August 31, 2000, filed November 22,
    2000).10
.9

Cenex Harvest States Cooperatives
    Share Option Plan. (Incorporated by reference to our
    Form 10-K
    for the year ended August 31, 2004, filed November 18,
    2004).10
.9A

Amendment to Cenex Harvest States
    Share Option Plan, dated June 28, 2001. (Incorporated by
    reference to our Registration Statement on
    Form S-2
    (File
    No. 333-65364),
    filed July 18, 2001).10
.9B

Amendment No. 2 to Cenex
    Harvest States Share Option Plan, dated May 2, 2001.
    (Incorporated by reference to our
    Form 10-K
    for the year ended August 31, 2004, filed November 18,
    2004).10
.9C

Amendment No. 3 to Cenex
    Harvest States Share Option Plan, dated June 4, 2002.
    (Incorporated by reference to our
    Form 10-K
    for the year ended August 31, 2004, filed November 18,
    2004). 71




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##### Table of Contents



10
.9D

Amendment No. 4 to Cenex
    Harvest States Share Option Plan, dated April 6, 2004.
    (Incorporated by reference to our
    Form 10-K
    for the year ended August 31, 2004, filed November 18,
    2004).10
.10

CHS Inc. Share Option Plan Option
    Agreement. (Incorporated by reference to our
    Form 10-K
    for the year ended August 31, 2004, filed November 18,
    2004).10
.11

CHS Inc. Share Option Plan
    Trust Agreement. (Incorporated by reference to our
    Form 10-K
    for the year ended August 31, 2004, filed November 18,
    2004).10
.11A

Amendment No. 1 to the
    Trust Agreement. (Incorporated by reference to our
    Form 10-K
    for the year ended August 31, 2004, filed November 18,
    2004).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. (Incorporated by Reference to our
    Form 10-Q
    Transition Report for the period June 1, 1998 to
    August 31, 1998, filed October 14, 1998).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. (Incorporated by reference to our
    Form 10-K
    for the year ended August 31, 2003, filed November 21,
    2003).10
.13

2006 Amended and Restated Credit
    Agreement (Revolving Loan) by and between CHS Inc. and the
    Syndication Parties dated as of May 18, 2006. (Incorporated
    by reference to our
    Form 10-Q
    for the quarterly period ended May 31, 2006, filed
    July 12, 2006).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). (Incorporated by Reference
    to our
    Form 10-Q
    Transition Report for the period June 1, 1998 to
    August 31, 1998, filed October 14, 1998).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. (Incorporated by reference to our
    Form 10-Q
    for the quarterly period ended May 31, 1999, filed
    July 13, 1999).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. (Incorporated by
    reference to our
    Form 10-Q
    for the quarterly period ended May 31, 2000, filed
    July 10, 2000).10
.14C

Third Amendment to Credit
    Agreement (Term Loan) dated May 23, 2001 among Cenex
    Harvest States Cooperatives, CoBank, ACB, and the Syndication
    Parties. (Incorporated by reference to our
    Form 10-Q
    for the quarterly period ended May 31, 2001, filed
    July 3, 2001).10
.14D

Fourth Amendment to Credit
    Agreement (Term Loan) dated May 22, 2002 among Cenex
    Harvest States Cooperatives, CoBank, ACB and the Syndication
    Parties. (Incorporated by reference to our
    Form 10-Q
    for the quarterly period ended May 31, 2002, filed
    July 3, 2002).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. (Incorporated by reference to our
    Form 10-K
    for the year ended August 31, 2004, filed November 18,
    2004).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.
    (Incorporated by reference to our
    Form 10-Q
    for the quarterly period ended May 31, 2004, filed
    July 12, 2004).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.
    (Incorporated by reference to our
    form 10-K
    for the year ended August 31, 2005, filed on
    November 18, 2005).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. (
    Incorporated by reference to our
    form 10-K
    for the year ended August 31, 2005, filed on
    November 18, 2005).10
.14I

Ninth Amendment to Credit
    Agreement (Term Loan) dated as of May 18, 2006 by and among
    CHS Inc., CoBank, ACB and the Syndication Parties. (Incorporated
    by reference to our
    Form 10-Q
    for the quarterly period ended May 31, 2006).10
.15

Limited Liability Agreement of
    United Harvest, LLC dated November 9, 1998 between United
    Grain Corporation and Cenex Harvest States Cooperatives.
    (Incorporated by reference to our
    Form 10-Q
    for the quarterly period ended November 30, 1998, filed
    January 13, 1999). 72




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##### Table of Contents



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. (Incorporated
    by reference to our
    Form 10-Q
    for the quarterly period ended February 29, 2000, filed
    April 11, 2000).10
.17

Employment Agreement dated
    November 6, 2003 by and between John D. Johnson and CHS
    Inc. (Incorporated by reference to our
    Form 10-K
    for the year ended August 31, 2003, filed November 21,
    2003).10
.18

CHS Inc. Special Supplemental
    Executive Retirement Plan. (Incorporated by reference to our
    Form 10-K
    for the year ended August 31, 2003, filed November 21,
    2003).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. (Incorporated by reference to our
    Form 10-Q
    for the quarterly period ended February 28, 2001, filed
    April 10, 2001).10
.19A

Amendment No. 1 to
    Note Purchase and Private Shelf Agreement, dated as of
    March 2, 2001. (Incorporated by reference to our
    Form 10-Q
    for the quarterly period ended February 28, 2001, filed
    April 10, 2001).10
.20

Note Purchase Agreement and
    Series D & E Senior Notes dated October 18,
    2002. (Incorporated by reference to our
    Form 10-K
    for the year ended August 31, 2002, filed November 25,
    2002).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.
    (Incorporated by reference to our
    Form 10-Q
    for the quarterly period ended February 29, 2004, filed
    April 7, 2004).10
.21A

First Amendment to the 2003
    Amended and Restated Credit Agreement between the National
    Cooperative Refinery Association and the Syndication Parties.
    (Incorporated by reference to our Current Report on
    Form 8-K
    filed December 20, 2005).10
.22

Note Purchase and Private
    Shelf Agreement between CHS Inc. and Prudential Capital Group
    dated as of April 13, 2004. (Incorporated by reference to
    our
    Form 10-Q
    for the quarterly period ended May 31, 2004, filed
    July 12, 2004).10
.23

Note Purchase Agreement for
    Series H Senior Notes dated September 21, 2004.
    (Incorporated by reference to our Current Report on
    Form 8-K
    filed September 22, 2004).10
.24

Deferred Compensation Plan.
    (Incorporated by reference to our Registration Statement on
    Form S-8
    (File
    No. 333-121161),
    filed December 10, 2004).10
.24A

First Amendment to CHS Inc.
    Deferred Compensation Plan. (Incorporated by reference to our
    Registration Statement on
    Form S-8
    (File
    No. 333-129464),
    filed November 4, 2005).10
.24B

Second Amendment to the CHS Inc.
    Deferred Compensation Plan. (Incorporated by reference to our
    Form 10-Q
    for the quarterly period ended May 31, 2006, filed
    July 12, 2006).10
.25

New Plan Participants 2005 Plan
    Agreement and Election Form for the CHS Inc. Deferred
    Compensation Plan. (Incorporated by reference to our
    Registration Statement on
    Form S-8
    (File
    No. 333-121161),
    filed December 10, 2004).10
.26

Beneficiary Designation Form for
    the CHS Inc. Deferred Compensation Plan. (Incorporated by
    reference to our Registration Statement on
    Form S-8
    (File
    No. 333-121161),
    filed December 10, 2004).10
.27

Share Option Plan Participants
    2005 Plan Agreement and Election Form. (Incorporated by
    reference to our Registration Statement on
    Form S-8
    (File
    No. 333-129464),
    filed November 4, 2005).10
.28

Amended and Restated Loan and
    Security Agreement dated August 31, 2006, by and between
    Provista Renewable Fuels Marketing, LLC and LaSalle Bank
    National Association.(**)21
.1

Subsidiaries of the Registrant.(**)23
.1

Consent of Independent Registered
    Public Accounting Firm.(**)24
.1

Power of Attorney.(**)31
.1

Certification Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.(**)31
.2

Certification Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.(**)32
.1

Certification Pursuant to
    18 U.S.C. Section 1350, as Adopted Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002. (**) 73




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##### Table of Contents



32
.2

Certification Pursuant to
    18 U.S.C. Section 1350, as Adopted Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002. (**)     (*)
    
    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.(**)
    
    Filed herewith.   EXHIBITS
    SCHEDULES
   SUPPLEMENTAL
    INFORMATION   74




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##### Table of Contents



SIGNATURES      By:
    /s/  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 DirectorsBruce
    Anderson*

DirectorRobert
    Bass*

DirectorDavid
    Bielenberg*

DirectorDennis
    Carlson*

DirectorCurt
    Eischens*

DirectorSteve
    Fritel*

DirectorRobert
    Grabarski*

Director 75




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##### Table of Contents



Signature

TitleJerry
    Hasnedl*

DirectorJames
    Kile*

DirectorRandy
    Knecht*

DirectorMichael
    Mulcahey*

DirectorRichard
    Owen*

DirectorDuane
    Stenzel*

DirectorMerlin
    Van Walleghen*

Director*By

/s/  John
    D. JohnsonJohn
    D. JohnsonAttorney-in-fact  76




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##### Table of Contents



CONSOLIDATED
    BALANCE SHEETS
  August 312006


2005(Dollars in thousands)ASSETSCurrent assets:Cash and cash equivalents

$
112,525


$
241,018Receivables


1,076,602



1,093,986Inventories


1,130,824



914,182Other current assets


298,666



367,306Total current assets


2,618,617



2,616,492Investments


624,253



520,970Property, plant and equipment


1,476,239



1,359,535Other assets


223,474



229,940Total assets

$
4,942,583


$
4,726,937LIABILITIES AND
    EQUITIESCurrent liabilities:Notes payable

$
22,007


$
61,147Current portion of long-term debt


60,748



35,340Customer credit balances


66,468



91,902Customer advance payments


82,362



126,815Checks and drafts outstanding


57,083



67,398Accounts payable


904,143



945,737Accrued expenses


347,078



397,044Dividends and equities payable


249,774



132,406Total current liabilities


1,789,663



1,857,789Long-term debt


683,997



737,734Other liabilities


310,157



229,322Minority interests in subsidiaries


141,375



144,195Commitments and contingenciesEquities


2,017,391



1,757,897Total liabilities and equities

$
4,942,583


$
4,726,937    F-1




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##### Table of Contents



CONSOLIDATED
    STATEMENTS OF OPERATIONS
  For the Years Ended August 312006


2005


2004(Dollars in thousands)Revenues

$
14,383,835


$
11,926,962


$
10,969,081Cost of goods sold


13,570,507



11,449,858



10,527,715Gross profit


813,328



477,104



441,366Marketing, general and
    administrative


231,238



199,354



202,455Operating earnings


582,090



277,750



238,911Gain on sale of investments






(13,013
)


(14,666
)Gain on legal settlements










(692
)Interest, net


41,305



41,509



42,758Equity income from investments


(84,188
)


(95,742
)


(79,022
)Minority interests


85,974



47,736



33,830Income from continuing operations
    before income taxes


538,999



297,260



256,703Income taxes


49,327



30,434



29,462Income from continuing operations


489,672



266,826



227,241(Income) loss from discontinued
    operations, net of taxes


(625
)


16,810



5,909Net income

$
490,297


$
250,016


$
221,332Distribution of net income:Patronage refunds

$
374,000


$
203,000


$
166,850Unallocated capital reserve


116,297



47,016



54,482Net income

$
490,297


$
250,016


$
221,332    F-2




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##### Table of Contents



CONSOLIDATED
    STATEMENTS OF EQUITIES AND COMPREHENSIVE INCOME
  For the Years Ended August 31, 2006, 2005 and 2004AccumulatedCapital


Nonpatronage








Unallocated


Other


AllocatedEquity


Equity


Preferred


Patronage


Capital


Comprehensive


Capital


TotalCertificates


Certificates


Stock


Refunds


Reserve


Income (Loss)


Reserve


EquitiesDollars in thousandsBalances, September 1, 2003

$
1,087,037


$
27,718


$
93,702


$
63,000


$
220,517


$
(18,313
)

$
8,050


$
1,481,711Dividends and equity retirement
    determination


10,800











27,000



1,249











39,049Patronage 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



























13,355Preferred 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











221,332Other comprehensive income






















11,178







11,178Total comprehensive income






























232,510Dividends 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



1,628,086Dividends and equity retirement
    determination


32,100











50,060



1,409











83,569Patronage 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



























1,375Preferred stock dividends


















(9,178
)










(9,178
)Other, net


(666
)


(71
)










404











(333
)Comprehensive income:Net income














203,000



47,016











250,016Other comprehensive income






















12,106







12,106Total comprehensive income






























262,122Dividends 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



1,757,897Dividends and equity retirement
    determination


69,856











60,900



1,650











132,406Patronage distribution


145,333











(203,000
)


(4,850
)










(62,517
)Equities retired


(55,836
)


(97
)






















(55,933
)Capital equity certificates
    exchanged for preferred stock


(23,824
)






23,824







(88
)










(88
)Equities issued


11,064



























11,064Preferred stock dividends


















(10,816
)










(10,816
)Other, net


(3,300
)


(197
)










221











(3,276
)Comprehensive income:Net income














374,000



116,297











490,297Other comprehensive income






















8,131







8,131Total comprehensive income






























498,428Dividends and equities payable


(116,919
)










(130,900
)


(1,955
)










(249,774
)Balances, August 31, 2006

$
1,180,083


$
27,173


$
150,512


$
243,100


$
395,371


$
13,102


$
8,050


$
2,017,391    F-3




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##### Table of Contents



CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  For the Years Ended August 312006


2005


2004As restated(Dollars in thousands)Cash flows from operating
    activities:Net income


$490,297



$250,016



$221,332Depreciation and amortization


126,777



110,332



108,399Income from equity investments


(84,188
)


(95,742
)


(79,022
)Distributions from equity
    investments


58,240



64,869



58,702Minority interests


85,974



47,736



33,830Noncash portion of patronage
    dividends received


(4,969
)


(3,060
)


(4,986
)(Gain) loss on sale of property,
    plant and equipment


(5,232
)


(7,370
)


775Loss on sale of business






6,163Gain on sale of investments






(13,013
)


(14,666
)Deferred taxes


78,300



26,400



8,500Other, net


460



1,027



1,150Changes in operating assets and
    liabilities:Receivables


44,650



(250,202
)


(59,039
)Inventories


(198,501
)


(190,081
)


88,261Other current assets and other
    assets


64,677



(74,911
)


(86,883
)Customer credit balances


(25,915
)


3,216



27,639Customer advance payments


(48,062
)


62,773



(59,354
)Accounts payable and accrued
    expenses


(142,934
)


328,961



121,647Other liabilities


15,368



9,417



28,060Net cash provided by operating
    activities


454,942



276,531



394,345Cash flows from investing
    activities:Acquisition of property, plant and
    equipment


(234,992
)


(257,470
)


(245,148
)Proceeds from disposition of
    property, plant and equipment


13,911



21,109



34,530Proceeds from sale of business






38,286Investments


(72,989
)


(25,938
)


(49,757
)Investments redeemed


7,283



13,514



15,937Proceeds from sale of investments






147,801



25,000Changes in notes receivable


20,955



(23,770
)


(6,888
)Other investing activities, net


484



(5,434
)


2,248Net cash used in investing
    activities


(265,348
)


(91,902
)


(224,078
)Cash flows from financing
    activities:Changes in notes payable


(59,025
)


(54,968
)


(135,016
)Borrowings on long-term debt






125,000



35,457Principal payments on long-term
    debt


(36,669
)


(36,033
)


(15,299
)Payments on derivative financial
    instruments, net










(287
)Payments for bank fees on debt


(1,997
)


(2,474
)


(2,354
)Changes in checks and drafts
    outstanding


(10,513
)


2,814



(21,431
)Distributions to minority owners


(80,529
)


(29,925
)


(15,908
)Costs incurred  capital
    equity certificates redeemed


(88
)


(87
)


(151
)Preferred stock dividends paid


(10,816
)


(9,178
)


(7,975
)Retirements of equities


(55,933
)


(23,673
)


(10,339
)Cash patronage dividends paid


(62,517
)


(51,578
)


(28,722
)Net cash used in financing
    activities


(318,087
)


(80,102
)


(202,025
)Net (decrease) increase in cash
    and cash equivalents


(128,493
)


104,527



(31,758
)Cash and cash equivalents at
    beginning of period


241,018



136,491



168,249Cash and cash equivalents at end
    of period

$
112,525


$
241,018


$
136,491    F-4




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  1.  Summary
    of Significant Accounting Policies
  Organization
    Consolidation      Cash
    Equivalents    Inventories  last-in, first-in,
  Derivative
    Financial Instruments  Commodity
    Price Risk
   F-5




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Interest
    Rate Risk
     F-6




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Foreign
    Currency Risk
    Investments      Property,
    Plant and Equipment      Goodwill
    and Other Intangible Assets    Revenue
    Recognition   F-7




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Environmental
    Expenditures    Income
    Taxes    Comprehensive
    Income    Use of
    Estimates    Recent
    Accounting Pronouncements  and/or and/or and/or
 F-8




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          accrue-in-advance accrue-in-advance
    Reclassifications   F-9




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  2.
    Receivables    2006


2005(Dollars in thousands)Trade

$
1,056,514


$
1,069,020Other


73,986



85,0071,130,500



1,154,027Less allowances for doubtful
    accounts


53,898



60,041$
1,076,602


$
1,093,986     2006


2005


2004(Dollars in millions)Africa

$
119


$
83


$
112Asia


904



880



1,104Europe


183



129



158North America, excluding US


717



605



456South America


156



271



209$
2,079


$
1,968


$
2,039     3.
    Inventories    2006


2005(Dollars in thousands)Grain and oilseed

$
511,413


$
387,820Energy


447,664



377,076Feed and farm supplies


137,978



121,721Processed grain and oilseed


32,198



26,195Other


1,571



1,370$
1,130,824


$
914,182    F-10




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  4.
    Investments    2006


2005(Dollars in thousands)CF Industries Holdings, Inc.

$
34,105


$
36,105Cooperatives:Land OLakes, Inc.


38,929



32,874Ag Processing Inc.


21,297



23,864CoBank, ACB (CoBank)


11,956



11,041Joint ventures:United Country Brands, LLC
    (Agriliance LLC)


175,306



177,870Ventura Foods, LLC


132,222



117,622US BioEnergy Corporation


69,264Cofina Financial, LLC


38,752



38,297Horizon Milling, LLC


30,753



23,174TEMCO, LLC


3,486



4,450Other


68,183



55,673$
624,253


$
520,970        F-11




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        2006


2005(Dollars in thousands)Current assets

$
237,117


$
198,576Non-current assets


441,435



455,715Current liabilities


141,080



146,035Non-current liabilities


308,377



307,027   2006


2005


2004(Dollars in thousands)Net sales

$
1,483,583


$
1,413,426


$
1,425,061Gross profit


196,847



184,466



167,581Net income


57,756



61,779



44,696       2006


2005(Dollars in thousands)Current assets

$
1,261,874


$
1,340,200Non-current assets


166,365



148,611Current liabilities


999,038



1,066,715Non-current liabilities


132,071



119,794   F-12




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  2006


2005


2004(Dollars in thousands)Net sales

$
3,739,632


$
3,735,125


$
3,471,514Earnings from operations


76,052



90,812



82,221Net income


52,268



77,113



71,278         5.
    Property,
    Plant and Equipment    2006


2005(Dollars in thousands)Land and land improvements

$
67,299


$
66,023Buildings


439,559



420,851Machinery and equipment


2,085,951



1,708,400Office and other


75,836



76,320Construction in progress


121,379



292,5922,790,024



2,564,186Less accumulated depreciation and
    amortization


1,313,785



1,204,651$
1,476,239


$
1,359,535      F-13




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  6.
    Discontinued
    Operations      2006


2005


2004(Dollars in thousands)Revenues





$
43,556


$
70,929Cost of goods sold






49,919



65,047Marketing, general and
    administrative*

$
(1,168
)


18,246



12,645Interest, net


145



2,903



2,908Income tax expense (benefit)


398



(10,702
)


(3,762
)Income (loss) from discontinued
    operations

$
625


$
(16,810
)

$
(5,909
)     *
    2006 and 2005 include a $1.6 million gain and a
    $6.2 million loss on disposition, respectively.  7.
    Other
    Assets    2006


2005(Dollars in thousands)Goodwill

$
3,904


$
3,291Customer lists, less accumulated
    amortization of $11,498 and $10,335, respectively


3,381



4,601Non-compete covenants, less
    accumulated amortization of $1,678 and $2,445, respectively


1,531



1,317Trademarks and other intangible
    assets, less accumulated amortization
    of $5,379 and $4,141, respectively


12,838



12,384Prepaid pension and other benefits


192,180



200,600Notes receivable


3,859



3,654Other


5,781



4,093$
223,474


$
229,940      F-14




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  8.
    Notes
    Payable and Long-Term Debt    Interest Rates atAugust 31, 2006

2006


2005(Dollars in thousands)Notes payable(a)(i)

7.25% to 8.80%

$
22,007


$
61,147Long-term debt:Revolving term loans from
    cooperative and other banks, payable in installments through
    2009, when the balance is due(b)(i)

6.30% to 13.00%

$
110,477


$
133,335Private placement, payable in
    equal installments beginning in 2008 through 2013(c)(i)

6.81%


225,000



225,000Private placement, payable in
    installments beginning in 2007 through 2018(d)(i)

4.96% to 5.60%


175,000



175,000Private placement, payable in
    equal installments beginning in 2011 through 2015(e)(i)

5.25%


125,000



125,000Private placement, payable in
    equal installments in 2005 through 2011(f)(i)

7.43% to 7.90%


57,143



68,571Private placement, payable in its
    entirety in 2010(g)(i)

4.08%


15,000



15,000Private placement, payable in its
    entirety in 2011(g)(i)

4.39%


15,000



15,000Industrial revenue bonds, payable
    in its entirety
    in 2011

5.23%


3,925



3,925Other notes and contracts(h)

1.89% to 12.17%


18,200



12,243Total long-term debt




744,745



773,074Less current portion




60,748



35,340Long-term portion



$
683,997


$
737,734   2006


2005Weighted-average interest rates at
    August 31:Short-term debt


7.58%



3.90%Long-term debt


6.09%



6.15%      (a)
    
    The Company finances its working capital needs through a
    short-term line of credit with a syndication of domestic and
    international banks. This revolving line of credit is a
    five-year $1.1 billion committed facility. On
    August 31, 2006, there was no amount outstanding on the
    facility. In addition to this short-term line of credit, the
    Company has a two-year committed credit facility dedicated to
    NCRA, with a syndication of banks in the amount of
    $15.0 million with no amount outstanding on August 31,
    2006. The Company also has a committed revolving line of credit
    dedicated to Provista, through LaSalle Bank National
    Association, in the amount of $20.0 million, with
    $12.5 million outstanding on August 31, 2006. Other
    miscellaneous notes payable totaled $9.5 million on
    August 31, 2006. On August 31, 2005, there was
    $60.0 million outstanding on a
    364-day
    revolving line of credit and $1.1 million of other
    miscellaneous notes payable.(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 F-15




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  expiration date of that commitment. On August 31, 2006,
    $98.4 million was outstanding. NCRA term loans of
    $6.0 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 and contracts payable of $8.9 million are
    collateralized by property, plant and equipment, with a cost of
    $16.9 million, less accumulated depreciation of
    $3.8 million on August 31, 2006.(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)2007

$
60,7482008


98,9572009


117,7342010


82,6172011


111,609Thereafter


273,080$
744,745     2006


2005


2004(Dollars in thousands)Interest expense

$
50,562


$
51,531


$
48,717Interest income


9,257



10,022



5,959Interest, net

$
41,305


$
41,509


$
42,758  F-16




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  9.
    Income
    Taxes    2006


2005


2004(Dollars in thousands)Continuing operations:Current

$
(28,973
)

$
4,034


$
20,962Deferred


81,100



34,200



7,900Valuation allowance


(2,800
)


(7,800
)


600Income taxes from continuing
    operations


49,327



30,434



29,462Income taxes from discontinued
    operations


398



(10,702
)


(3,762
)Income taxes

$
49,725


$
19,732


$
25,700       2006


2005(Dollars in thousands)Deferred tax assets:Accrued expenses and valuation
    reserves

$
76,582


$
63,964Postretirement health care and
    deferred compensation


49,652



42,248Tax credits


16,763



1,936Loss carryforward


25,027



37,931Other


14,573



9,524Total deferred tax assets


182,597



155,603Deferred tax liabilities:Pension, including minimum
    liability


52,715



53,094Equity method investments


55,128



19,423Property, plant and equipment


159,034



72,780Other


12,960



7,785Total deferred tax liabilities


279,837



153,082Deferred tax assets valuation
    reserve


(571
)


(3,392
)Net deferred tax liability

$
(97,811
)

$
(871
)      F-17




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        2006


2005


2004Statutory 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



3.9Patronage earnings


(27.4
)


(26.9
)


(24.8
)Export activities at rates other
    than the US statutory rate


(0.8
)


(2.4
)


(4.4
)Valuation allowance


(0.5
)


(2.6
)


0.2Tax credits


(1.8
)Other


0.8



3.2



1.6Effective tax rate


9.2
%


10.2
%


11.5
%   10.
    Equities      10-year
   F-18




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        11.
    Benefit
    Plans      Qualified


Non-QualifiedPension Benefits


Pension Benefits


Other Benefits2006


2005


2006


2005


2006


2005(Dollars in thousands)Change in benefit obligation:Benefit obligation at beginning
    of period

$
330,037


$
300,436


$
27,440


$
20,998


$
29,845


$
28,327Service cost


14,892



12,749



2,195



991



1,024



874Interest cost


17,037



18,039



1,368



1,175



1,568



1,776Plan amendments


430







345



61







(330
)Transfers










(5,049
)










(222
)Actuarial (gain) loss


(8,813
)


(3,031
)


(885
)


2,530



(552
)


(1,136
)Special agreement










85



131Assumption change


(6,614
)


23,961



(1,333
)


2,137



(1,124
)


2,677Benefits paid


(22,271
)


(22,117
)


(785
)


(583
)


(2,446
)


(2,121
)Benefit obligation at end of period

$
324,698


$
330,037


$
23,381


$
27,440


$
28,315


$
29,845Change in plan assets:Fair value of plan assets at
    beginning of period

$
331,727


$
299,552Actual income on plan assets


25,688



32,292Company contributions


6,955



22,000


$
785


$
583


$
2,446


$
2,451Participants contributions






















(330
)Benefits paid


(22,271
)


(22,117
)


(785
)


(583
)


(2,446
)


(2,121
)Fair value of plan assets at end
    of period

$
342,099


$
331,727


$



$



$



$
 F-19




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Qualified


Non-QualifiedPension Benefits


Pension Benefits


Other Benefits2006


2005


2006


2005


2006


2005(Dollars in thousands)Funded status

$
17,401


$
1,690


$
(23,381
)

$
(27,440
)

$
(28,315
)

$
(29,845
)Employer contributions after
    measurement date










328







205



220Unrecognized actuarial loss (gain)


104,665



124,930



888



3,749



(1,181
)


362Unrecognized transition obligation


















6,452



7,389Unrecognized prior service cost


5,513



5,939



2,009



2,526



(1,362
)


(1,669
)Special agreement










(85
)


(131
)Prepaid benefit cost (accrued)

$
127,579


$
132,559


$
(20,241
)

$
(21,296
)

$
(24,201
)

$
(23,543
)Amounts recognized on balance
    sheets consist of:Other assets (accrued benefit
    liability)

$
127,579


$
132,559


$
(21,396
)

$
(24,840
)

$
(24,201
)

$
(23,543
)Intangible assets










599



2,464Accumulated other comprehensive
    loss










556



1,080Net amounts recognized

$
127,579


$
132,559


$
(20,241
)

$
(21,296
)

$
(24,201
)

$
(23,543
)     Qualified


Non-QualifiedPension Benefits


Pension Benefits


Other Benefits2006


2005


2004


2006


2005


2004


2006


2005


2004(Dollars in thousands)Components of net periodic benefit
    cost:Service cost

$
14,892


$
12,749


$
11,548


$
2,195


$
991


$
932


$
1,024


$
874


$
754Interest cost


17,037



18,039



17,203



1,368



1,175



1,032



1,568



1,776



1,758Expected return on assets


(28,362
)


(27,648
)


(27,489
)Prior service cost amortization


855



792



843



516



519



863



(305
)


(294
)


(174
)Actuarial loss amortization


7,513



5,759



4,149



210



124



103



17



43



108Transition amount amortization


























936



936



936Net periodic benefit cost

$
11,935


$
9,691


$
6,254


$
4,289


$
2,809


$
2,930


$
3,240


$
3,335


$
3,382Average assumptions:Discount rate


6.05%



5.25%



6.40%



6.05%



5.25%



6.25%



6.05%



5.25%



6.40%Expected return on plan assets


8.80%



9.00%



9.00%



N/A



N/A



N/A



N/A



N/A



N/ARate of compensation increase


4.50%



4.80%



4.30%



4.50%



4.50%



5.00%



4.50%



4.80%



4.30%  F-20




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Non-QualifiedPension Benefits2006


2005(Dollars in thousands)Projected benefit obligation

$
23,381


$
27,440Accumulated benefit obligation


21,491



24,693Fair value of plan assets






     1% Increase


1% Decrease(Dollars in thousands)Effect on total of service and
    interest cost components

$
306


$
(271
)Effect on postretirement benefit
    obligation


2,516



(2,262
)           Other BenefitsQualified


Non-Qualified





Part DPension Benefits


Pension Benefits


Gross


Reimbursement(Dollars in thousands)2007

$
25,389


$
636


$
1,684


$
2002008


24,999



674



1,871



2002009


26,249



689



2,039



2002010


29,965



714



2,330



2002011


27,445



673



2,657



2002012-2016


168,955



4,447



16,345



900  F-21




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    
    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.            2006


2005Cash


0.0%



1.7%Debt


31.3



27.8Equities


63.7



64.5Real estate


3.8



4.0Other


1.2



2.0Total


100.0%



100.0%   12.
    Segment
    Reporting     F-22




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            Corporate


ReconcilingEnergy


Ag Business


Processing


and Other


Amounts


Total(Dollars in thousands)For the year ended August 31,
    2006:Revenues

$
7,414,361


$
6,575,165


$
614,471


$
33,175


$
(253,337
)

$
14,383,835Cost of goods sold


6,834,676



6,401,527



588,732



(1,091
)


(253,337
)


13,570,507Gross profit


579,685



173,638



25,739



34,266







813,328Marketing, general and
    administrative


82,867



99,777



21,645



26,949







231,238Operating earnings


496,818



73,861



4,094



7,317







582,090Interest, net


6,534



23,559



11,096



116







41,305Equity income from investments


(3,840
)


(40,902
)


(35,504
)


(3,942
)






(84,188
)Minority interests


86,483



(509
)














85,974Income from continuing operations
    before income taxes

$
407,641


$
91,713


$
28,502


$
11,143


$



$
538,999Intersegment sales

$
(242,430
)

$
(8,779
)

$
(368
)

$
(1,760
)

$
253,337


$
Goodwill

$
3,654


$
250














$
3,904Capital expenditures

$
175,231


$
44,542


$
13,313


$
1,906






$
234,992Depreciation and amortization

$
75,581


$
31,471


$
14,049


$
5,676






$
126,777Total identifiable assets at
    August 31, 2006

$
2,164,217


$
1,806,243


$
518,186


$
453,937






$
4,942,583 F-23




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Corporate


ReconcilingEnergy


Ag Business


Processing


and Other


Amounts


Total(Dollars in thousands)For the year ended August 31,
    2005:Revenues

$
5,794,266


$
5,670,644


$
613,766


$
30,672


$
(182,386
)

$
11,926,962Cost of goods sold


5,487,813



5,541,282



604,198



(1,049
)


(182,386
)


11,449,858Gross profit


306,453



129,362



9,568



31,721







477,104Marketing, general and
    administrative


69,951



83,600



20,750



25,053







199,354Operating earnings (losses)


236,502



45,762



(11,182
)


6,668







277,750Gain on sale of investments


(862
)


(11,358
)


(457
)


(336
)






(13,013
)Interest, net


8,918



20,535



12,287



(231
)






41,509Equity income from investments


(3,478
)


(55,473
)


(36,202
)


(589
)






(95,742
)Minority interests


46,741



(41
)






1,036







47,736Income from continuing operations
    before income taxes

$
185,183


$
92,099


$
13,190


$
6,788


$



$
297,260Intersegment sales

$
(170,642
)

$
(9,640
)

$
(502
)

$
(1,602
)

$
182,386


$
Goodwill

$
3,041


$
250














$
3,291Capital expenditures

$
205,484


$
27,600


$
4,751


$
19,635






$
257,470Depreciation and amortization

$
59,847


$
30,748


$
13,868


$
5,869






$
110,332Total identifiable assets at
    August 31, 2005

$
2,238,614


$
1,604,571


$
420,373


$
463,379






$
4,726,937For the year ended August 31,
    2004:Revenues

$
4,038,561


$
6,306,530


$
734,944


$
31,466


$
(142,420
)

$
10,969,081Cost of goods sold


3,780,726



6,187,082



703,129



(802
)


(142,420
)


10,527,715Gross profit


257,835



119,448



31,815



32,268







441,366Marketing, general and
    administrative


72,876



85,479



20,323



23,777







202,455Operating earnings


184,959



33,969



11,492



8,491







238,911Gain on sale of investments


(14,666
)


















(14,666
)Gain on legal settlements






(692
)














(692
)Interest, net


12,090



18,932



12,392



(656
)






42,758Equity income from investments


(1,399
)


(47,488
)


(29,966
)


(169
)






(79,022
)Minority interests


32,507



(24
)






1,347







33,830Income from continuing operations
    before income taxes

$
156,427


$
63,241


$
29,066


$
7,969


$



$
256,703Intersegment sales

$
(121,199
)

$
(18,372
)

$
(1,363
)

$
(1,486
)

$
142,420


$
Capital expenditures

$
187,937


$
35,240


$
8,757


$
13,214






$
245,148Depreciation and amortization

$
57,195


$
30,887


$
13,536


$
6,781






$
108,399    F-24




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  13.
    Commitments
    and Contingencies  Environmental      Other
    Litigation and Claims    Grain
    Storage    Guarantees     F-25




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Guarantee/


Exposure onMaximum


August 31,


Nature of





Triggering


Recourse


Assets HeldEntities

Exposure


2006


Guarantee


Expiration Date


Event


Provisions


as Collateral(Dollars in thousands)The Companys financial
    services cooperative loans sold to CoBank


*


$
91



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 
    exposureProvista Renewable Fuels Marketing,
    LLC

$
20,000



12,523



Obligations by 
    Provista under 
    credit agreement



None stated



Credit agreement 
    default



Subrogation against 
    Provista



NoneHorizon 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



Nonperformance 
    under flour sale 
    agreement



Subrogation against 
    Horizon Milling, LLC



NoneTEMCO, LLC

$
25,000



4,500



Obligations by 
    TEMCO, LLC 
    under credit 
    agreement



None stated



Credit agreement 
    default



Subrogation against 
    TEMCO, LLC



NoneTEMCO, LLC

$
1,000



729



Obligations by 
    TEMCO, LLC 
    under counterparty 
    agreement



None stated, but 
    may be terminated 
    upon 5 days prior 
    notice in regard to 
    future obligations



Nonpayment



Subrogation against 
    TEMCO, LLC



NoneThird 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 
    exposureCofina Financial, LLC

$
30,834



27,361



Loans to our 
    customers that are 
    originated by 
    Cofina and then sold 
    to ProPartners, 
    which is an affiliate 
    of CoBank



None stated



Credit agreement 
    default



Subrogation against 
    borrower



Some or all assets of 
    borrower are held as 
    collateral but might 
    not be sufficient to 
    cover guarantee 
    exposureCofina Financial, LLC

$
10,600



3,900



Loans made by 
    Cofina to our 
    customers



None stated



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$
50,104     *
    
    The Companys bank covenants allow for guarantees of up to
    $150 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. F-26




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Lease
    Commitments        Rail





EquipmentCars


Vehicles


and Other


Total(Dollars in thousands)2007

$
12,667


$
16,337


$
2,550


$
31,5542008


12,408



13,409



1,803



27,6202009


6,500



10,235



1,457



18,1922010


5,726



7,913



1,273



14,9122011


4,911



2,673



1,173



8,757Thereafter


7,350



651



862



8,863Total minimum future lease payments

$
49,562


$
51,218


$
9,118


$
109,898   14.
    Supplemental
    Cash Flow and Other Information    2006


2005


2004(Dollars in thousands)Net cash paid
    (received) during the period for:Interest

$
54,228


$
57,569


$
52,004Income taxes


(23,724
)


(8,804
)


27,997Other significant noncash
    investing and financing transactions:Capital equity certificates
    exchanged for preferred stock


23,824



19,996



12,990Capital equity certificates issued
    in exchange for elevator properties


11,064



1,375



13,355Accrual of dividends and equities
    payable


(249,774
)


(132,406
)


(83,569
)  F-27




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  15.
    Related
    Party Transactions    2006


2005(Dollars in thousands)Sales

$
1,475,478


$
1,066,604Purchases


468,286



642,840Receivables


27,208



37,713Payables


50,105



25,576     16.
    Comprehensive
    Income    2006


2005


2004(Dollars in thousands)Net income

$
490,297


$
250,016


$
221,332Additional minimum pension
    liability, net of tax expense of $282, $1,854 and $5,432 in
    2006, 2005 and 2004, respectively


444



2,822



10,016Unrealized net gains on available
    for sale investments, net of tax expense of $1,138, $5,147 and
    $340 in 2006, 2005 and 2004, respectively


1,787



8,085



698Interest rate hedges, net of tax
    expense of $826, $279 and $226 in 2006, 2005 and 2004,
    respectively


1,298



439



356Energy derivative instruments
    qualified for hedge accounting, net of tax expense of $1,787 in
    2006


2,806Foreign currency translation
    adjustment, net of tax expense of $1,142, $484 and $57 in 2006,
    2005 and 2004, respectively


1,796



760



108Comprehensive income

$
498,428


$
262,122


$
232,510     2006


2005(Dollars in thousands)Additional minimum pension
    liability, net of tax benefit of $423 and $705 in 2006 and 2005,
    respectively

$
(664
)

$
(1,108
)Unrealized net gains on available
    for sale investments, net of tax expense of $6,625 and $5,487 in
    2006 and 2005, respectively


10,406



8,619Interest rate hedges, net of tax
    benefit of $1,332 and $2,159 in 2006 and 2005, respectively


(2,092
)


(3,390
)Energy derivative instruments
    qualified for hedge accounting, net of tax expense of $1,787 in
    2006


2,806Foreign currency translation
    adjustment, net of tax expense of $1,683 and $541 in 2006 and
    2005, respectively


2,646



850Accumulated other comprehensive
    income

$
13,102


$
4,971  F-28




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  17.
    Restatement        2005


2004As





AsPreviously


As


Previously


AsReported


Restated


Reported


Restated(Dollars in thousands)Cash flows from operating
    activities:Distributions from equity
    investments





$
64,869






$
58,702Net cash provided by operating
    activities

$
209,188



276,531


$
333,289



394,345Cash flows from investing
    activities:Equity investments redeemed


74,231







65,158Investments redeemed


4,152



13,514



9,481



15,937Distributions to minority owners


(29,925
)






(15,908
)Net cash used in investing
    activities


(56,958
)


(91,902
)


(181,284
)


(224,078
)Cash flows from financing
    activities:Distributions to minority owners






(29,925
)






(15,908
)Net cash used in financing
    activities


(47,703
)


(80,102
)


(183,763
)


(202,025
)Net increase (decrease) in cash
    and cash equivalents


104,527



104,527



(31,758
)


(31,758
)Cash and cash equivalents at
    beginning of period


136,491



136,491



168,249



168,249Cash and cash equivalents at end
    of period

$
241,018


$
241,018


$
136,491


$
136,491  F-29




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
         
    F-30