##### Table of Contents



UNITED STATES
 SECURITIES AND EXCHANGE
    COMMISSION
 WASHINGTON, D.C.
    20549
  Form 10-Q
  (Mark One)þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934for the quarterly period ended
    February 29, 2008.o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934for the transition period
    fromto.   Commission File Number 0-50150
  CHS Inc.
 (Exact name of registrant as
    specified in its charter)
  Minnesota

41-0251095(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification Number)5500 Cenex Drive

(651) 355-6000Inver Grove Heights, MN 55077(Address of principal
    executive offices,
    including zip code)

(Registrants telephone
    number,
    including area code)   þ o
  12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer o
    Non-accelerated
    filer þ
    Smaller
    reporting
    company o   Rule 12b-2 o þ
    Number of shares outstanding atClass

April 9, 2008NONE

NONE




---



##### 



INDEX
   
  Page No.PART I. FINANCIAL INFORMATIONItem 1.

Financial Statements (unaudited)


3Consolidated Balance Sheets as of February 29,
    2008, August 31, 2007 and February 28, 2007


3Consolidated Statements of Operations for the
    three and six months ended February 29, 2008 and February 28,
    2007


4Consolidated Statements of Cash Flows for the six
    months ended February 29, 2008 and February 28, 2007


5Notes to Consolidated Financial Statements


6Item 2.

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


21Item 3.

Quantitative and Qualitative Disclosures about Market Risk


42Item 4T.

Controls and Procedures


42PART II. OTHER INFORMATIONItem 6.

Exhibits


43SIGNATURE PAGE


44Second Amendment Deferred Compensation PlanAmendment No.5 Supp. Executive Retirement PlanAmendment No.6 Supp. Executive Retirement PlanAmend. No.1 Spec. Supp. Executive Retirement PlanCertification Pursuant to Section 302Certification Pursuant to Section 302Certification Pursuant to Section 906Certification Pursuant to Section 906   1




---



##### Table of Contents



PART I.
    FINANCIAL INFORMATION  SAFE
    HARBOR STATEMENT UNDER THE PRIVATE
    SECURITIES LITIGATION REFORM ACT OF 1995
  Form 10-Q Form 10-Q
 2




---



##### Table of Contents



Item 1.
    Financial
    Statements  CHS INC.
    AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
 (Unaudited)
  February 29,


August 31,


February 28,2008


2007 *


2007 *(dollars in thousands)ASSETSCurrent assets:Cash and cash equivalents

$
122,351


$
357,712


$
140,308Receivables


2,012,859



1,401,251



1,082,763Inventories


2,714,039



1,666,632



1,269,704Derivative assets


1,028,869



247,082



351,150Other current assets


1,241,153



264,181



420,497Total current assets


7,119,271



3,936,858



3,264,422Investments


848,710



880,592



754,670Property, plant and equipment


1,873,945



1,728,171



1,563,174Other assets


224,199



208,752



277,856Total assets

$
10,066,125


$
6,754,373


$
5,860,122LIABILITIES AND EQUITIESCurrent liabilities:Notes payable

$
970,975


$
672,571


$
552,559Current portion of long-term debt


107,108



98,977



61,704Customer credit balances


272,745



110,818



106,261Customer advance payments


1,269,252



161,525



215,206Checks and drafts outstanding


197,585



143,133



106,089Accounts payable


1,548,135



1,120,822



793,103Derivative liabilities


694,584



177,209



210,173Accrued expenses


298,199



255,631



246,879Dividends and equities payable


197,682



374,294



142,668Total current liabilities


5,556,265



3,114,980



2,434,642Long-term debt


1,152,630



589,344



654,366Other liabilities


371,409



377,208



385,759Minority interests in subsidiaries


192,434



197,386



163,028Commitments and contingenciesEquities


2,793,387



2,475,455



2,222,327Total liabilities and equities

$
10,066,125


$
6,754,373


$
5,860,122     *
    
    Adjusted to reflect adoption of FASB Staff Position No. AUG
    AIR-1; see Note 2   3




---



##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
 (Unaudited)
  For the Three Months Ended


For the Six Months EndedFebruary 29,


February 28,


February 29,


February 28,2008


2007 *


2008


2007 *(dollars in thousands)Revenues

$
6,891,345


$
3,734,580


$
13,416,731


$
7,485,650Cost of goods sold


6,633,720



3,586,639



12,844,469



7,115,275Gross profit


257,625



147,941



572,262



370,375Marketing, general and administrative


75,005



58,591



141,464



110,693Operating earnings


182,620



89,350



430,798



259,682Gain on investments


(230
)


(11,400
)


(95,178
)


(16,748
)Interest, net


18,066



9,003



31,603



16,691Equity income from investments


(45,413
)


(12,315
)


(76,603
)


(16,846
)Minority interests


12,831



14,470



35,810



33,382Income before income taxes


197,366



89,592



535,166



243,203Income taxes


29,335



5,919



66,235



23,151Net income

$
168,031


$
83,673


$
468,931


$
220,052     *
    
    Adjusted to reflect adoption of FASB Staff Position No. AUG
    AIR-1; see Note 2   4




---



##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
 (Unaudited)
  For the Six Months EndedFebruary 29,


February 28,2008


2007 *(dollars in thousands)Cash flows from operating activities:Net income

$
468,931


$
220,052Adjustments to reconcile net income to net cash used in
    operating activities:Depreciation and amortization


83,430



68,947Amortization of deferred major repair costs


14,158



11,912Income from equity investments


(76,603
)


(16,846
)Distributions from equity investments


19,132



24,253Minority interests


35,810



33,382Noncash patronage dividends received


(1,341
)


(1,133
)Gain on sale of property, plant and equipment


(4,298
)


(2,840
)Gain on investments


(95,178
)


(16,748
)Deferred taxes


39,931



23,151Other, net


(627
)


770Changes in operating assets and liabilities:Receivables


(603,924
)


1,304Inventories


(872,787
)


(134,278
)Derivative assets


(781,787
)


(276,877
)Other current assets and other assets


(704,771
)


(196,150
)Customer credit balances


161,927



39,792Customer advance payments


901,475



132,819Accounts payable and accrued expenses


470,614



(92,605
)Derivative liabilities


517,375



112,363Other liabilities


(4,130
)


(110
)Net cash used in operating activities


(432,663
)


(68,842
)Cash flows from investing activities:Acquisition of property, plant and equipment


(187,312
)


(154,996
)Proceeds from disposition of property, plant and equipment


5,839



7,070Expenditures for major repairs


(21,662
)


(2,544
)Investments


(321,167
)


(80,457
)Investments redeemed


34,168



2,989Proceeds from sale of investments


114,198



10,918Acquisition of business transaction, net


(13,024
)Changes in notes receivable


(6,368
)


(15,350
)Acquisition of intangibles


(7,206
)


(638
)Other investing activities, net


429



(2,557
)Net cash used in investing activities


(402,105
)


(235,565
)Cash flows from financing activities:Changes in notes payable


299,799



530,513Long-term debt borrowings


600,000Principal payments on long-term debt


(30,233
)


(28,684
)Payments for bank fees on debt


(3,313
)Changes in checks and drafts outstanding


54,442



49,006Distribution to minority owners


(49,331
)


(22,294
)Costs incurred  capital equity certificates redeemed


(34
)


(45
)Preferred stock dividends paid


(7,240
)


(5,864
)Retirements of equities


(69,703
)


(57,334
)Cash patronage dividends paid


(194,980
)


(133,108
)Net cash provided by financing activities


599,407



332,190Net (decrease) increase in cash and cash equivalents


(235,361
)


27,783Cash and cash equivalents at beginning of period


357,712



112,525Cash and cash equivalents at end of period

$
122,351


$
140,308    *
    
    Adjusted to reflect adoption of FASB Staff Position No. AUG
    AIR-1; see Note 2   5




---



##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 (dollars
    in thousands)
  Note 1.
    Accounting
    Policies      Form 10-K,
  Commodity
    Price Risk
       6




---



##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  Goodwill
    and Other Intangible Assets
      Recent
    Accounting Pronouncements
  (FSP) 157-2, FSP 157-2
     7




---



##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
    .
  Reclassifications
    Note 2.
    Change in
    Accounting Principle  Turnarounds   8




---



##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
    August 31, 2007


February 28, 2007As


FSP AUG





As


FSP AUGPreviously


AIR-1


As


Previously


AIR-1


AsReported


Adjustment


Adjusted


Reported


Adjustment


AdjustedConsolidated Balance SheetsOther current assets













$
423,547


$
(3,050
)

$
420,497Other assets

$
147,965


$
60,787


$
208,752



235,641



42,215



277,856Accrued expenses


261,875



(6,244
)


255,631



273,879



(27,000
)


246,879Other liabilities


359,198



18,010



377,208



363,686



22,073



385,759Minority interests in subsidiaries


190,830



6,556



197,386



156,472



6,556



163,028Equities


2,432,990



42,465



2,475,455



2,184,791



37,536



2,222,327   Three Months Ended


Six Months EndedFebruary 28, 2007


February 28, 2007As


FSP AUG





As


FSP AUGPreviously


AIR-1


As


Previously


AIR-1


AsReported


Adjustment


Adjusted


Reported


Adjustment


AdjustedConsolidated Statements of OperationsCost of goods sold

$
3,588,872


$
(2,233
)

$
3,586,639


$
7,117,666


$
(2,391
)

$
7,115,275Income before income taxes


87,359



2,233



89,592



240,812



2,391



243,203Income taxes


5,050



869



5,919



22,221



930



23,151Net income


82,309



1,364



83,673



218,591



1,461



220,052Consolidated Statements of Cash FlowsOperating activitiesNet income














218,591



1,461



220,052Amortization of deferred major repair costs


















11,912



11,912Deferred taxes














22,221



930



23,151Changes in operating assets and liabilities:Other current assets and other assets














(199,200
)


3,050



(196,150
)Accounts payable and accrued expenses














(84,996
)


(7,609
)


(92,605
)Other liabilities














7,090



(7,200
)


(110
)Net cash (used in) provided by operating activities














(71,386
)


2,544



(68,842
)Investing activitiesExpenditures for major repairs


















(2,544
)


(2,544
)Net cash used in investing activities














(233,021
)


(2,544
)


(235,565
)  9




---



##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  Note 3.
    Receivables  February 29,


August 31,


February 28,2008


2007


2007Trade

$
1,975,126


$
1,366,428


$
1,068,778Other


105,118



97,783



70,4092,080,244



1,464,211



1,139,187Less allowances for doubtful accounts


67,385



62,960



56,424$
2,012,859


$
1,401,251


$
1,082,763   Note 4.
    Inventories  February 29,


August 31,


February 28,2008


2007


2007Grain and oilseed

$
1,552,203


$
928,567


$
598,351Energy


409,926



490,675



387,020Crop nutrients


307,680Feed and farm supplies


361,897



178,167



229,590Processed grain and oilseed


77,800



66,407



52,824Other


4,533



2,816



1,919$
2,714,039


$
1,666,632


$
1,269,704   Note 5.
    Investments       10




---



##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
    50-50
  true-up true-up
    Receivables

$
5,219Inventories


174,620Other current assets


256,390Investments


6,096Property, plant and equipment


29,682Other assets


11,717Customer advance payments


(206,252
)Accounts payable


(5,584
)Accrued expenses


(3,163
)Total net assets received

$
268,725      11




---



##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
    Ventura
    Foods, LLC
  For the Three Months Ended


For the Six Months EndedFebruary 29


February 28


February 29


February 282008


2007


2008


2007Net sales

$
479,133


$
381,594


$
960,091


$
779,727Gross profit


53,315



53,035



110,044



108,499Net income


21,449



22,208



43,110



44,215   February 29,


August 31,


February 28,2008


2007


2007Current assets

$
440,056


$
269,156


$
256,146Non-current assets


481,273



470,359



441,605Current liabilities


341,851



195,376



147,944Non-current liabilities


309,347



309,221



307,954   Agriliance
    LLC
  For the Three Months Ended


For the Six Months EndedFebruary 29


February 28


February 29


February 282008


2007


2008


2007Net sales

$
187,660


$
497,524


$
398,250


$
1,167,517Gross profit


20,363



45,921



54,237



91,544Net loss


(23,670
)


(27,392
)


(47,186
)


(58,781
)   February 29,


August 31,


February 28,2008


2007


2007Current assets

$
614,617


$
1,549,691


$
1,789,935Non-current assets


52,549



115,087



163,332Current liabilities


297,953



1,214,774



1,583,710Non-current liabilities


17,633



137,417



131,208   Note 6.
    Notes
    Payable and Long-term Debt     12




---



##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
      364-day
  Note 7.
    Interest,
    net    For the Three Months Ended


For the Six Months EndedFebruary 29


February 28


February 29


February 282008


2007


2008


2007Interest expense

$
22,058


$
12,844


$
40,429


$
24,127Interest income


3,992



3,841



8,826



7,436Interest, net

$
18,066


$
9,003


$
31,603


$
16,691   Note 8.
    Income
    Taxes         13




---



##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  Note 9.
    Equities    Fiscal 2008*


Fiscal 2007*Balances, September 1, 2007 and 2006

$
2,475,455


$
2,053,466Net income


468,931



220,052Other comprehensive (loss) income


(56,241
)


39,158Patronage distribution


(555,150
)


(380,009
)Patronage accrued


550,000



374,000Equities retired


(69,703
)


(57,334
)Equity retirements accrued


159,315



57,334Equities issued in exchange for elevator properties


1,608



864Preferred stock dividends


(7,240
)


(5,864
)Preferred stock dividends accrued


2,413



1,955Accrued dividends and equities payable


(177,616
)


(83,084
)Other, net


1,615



1,789Balances, February 29, 2008 and February 28, 2007

$
2,793,387


$
2,222,327     *
    
    Adjusted to reflect adoption of FASB Staff Position No. AUG
    AIR-1; see Note 2    Note 10.
    Comprehensive
    Income   14




---



##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  Note 11.
    Employee
    Benefit Plans    Qualified


Non-QualifiedPension Benefits


Pension Benefits


Other Benefits2008


2007


2008


2007


2008


2007Components of net periodic benefit costs for the three months
    ended February 29 and February 28:Service cost

$
3,920


$
3,556


$
315


$
258


$
262


$
223Interest cost


5,411



4,817



550



362



425



419Expected return on plan assets


(7,847
)


(7,380
)Unrecognized net asset obligation amortization


















183Prior service cost amortization


541



222



144



106



(80
)


(128
)Actuarial loss (gain) amortization


1,335



1,381



215



39



(64
)


(6
)Transition amount amortization


















50



234Net periodic benefit cost

$
3,360


$
2,596


$
1,224


$
765


$
776


$
742Components of net periodic benefit costs for the six months
    ended February 29 and February 28:Service cost

$
7,693


$
7,180


$
623


$
512


$
523


$
479Interest cost


10,624



9,634



1,095



722



850



835Expected return on plan assets


(15,651
)


(14,591
)Unrecognized net asset obligation amortization


















367Prior service cost amortization


1,082



433



289



231



(160
)


(256
)Actuarial loss (gain) amortization


2,435



2,883



421



55



(129
)


(20
)Transition amount amortization


















101



468Net periodic benefit cost

$
6,183


$
5,539


$
2,428


$
1,520


$
1,552


$
1,506   Employer
    Contributions:
    Note 12.
    Segment
    Reporting   15




---



##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
             16




---



##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
    Ag





Corporate


ReconcilingEnergy*


Business


Processing


and Other


Amounts


Total*For the Three Months Ended February 29, 2008Revenues

$
2,399,044


$
4,273,984


$
290,049


$
9,147


$
(80,879
)

$
6,891,345Cost of goods sold


2,321,630



4,120,071



273,642



(744
)


(80,879
)


6,633,720Gross profit


77,414



153,913



16,407



9,891







257,625Marketing, general and administrative


24,834



35,908



6,521



7,742







75,005Operating earnings


52,580



118,005



9,886



2,149







182,620Gain on investments










(230
)










(230
)Interest, net


(3,738
)


17,417



5,441



(1,054
)






18,066Equity income from investments


(1,153
)


(19,481
)


(23,320
)


(1,459
)






(45,413
)Minority interests


12,762



69















12,831Income before income taxes

$
44,709


$
120,000


$
27,995


$
4,662


$



$
197,366Intersegment revenues

$
(71,359
)

$
(9,429
)

$
(91
)





$
80,879


$
For the Three Months Ended February 28, 2007Revenues

$
1,713,683


$
1,883,836


$
177,936


$
8,442


$
(49,317
)

$
3,734,580Cost of goods sold


1,629,477



1,841,801



165,576



(898
)


(49,317
)


3,586,639Gross profit


84,206



42,035



12,360



9,340







147,941Marketing, general and administrative


22,224



23,703



6,044



6,620







58,591Operating earnings


61,982



18,332



6,316



2,720







89,350Gain on investments










(11,400
)










(11,400
)Interest, net


(624
)


7,412



3,879



(1,664
)






9,003Equity (income) loss from investments


(1,081
)


8,210



(18,345
)


(1,099
)






(12,315
)Minority interests


14,448



22















14,470Income before income taxes

$
49,239


$
2,688


$
32,182


$
5,483


$



$
89,592Intersegment revenues

$
(48,432
)

$
(795
)

$
(90
)





$
49,317


$
 17




---



##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  Ag





Corporate


ReconcilingEnergy*


Business


Processing


and Other


Amounts


Total*For the Six Months Ended February 29, 2008Revenues

$
4,920,732


$
8,109,235


$
533,345


$
16,773


$
(163,354
)

$
13,416,731Cost of goods sold


4,696,365



7,806,529



506,759



(1,830
)


(163,354
)


12,844,469Gross profit


224,367



302,706



26,586



18,603







572,262Marketing, general and administrative


47,400



66,596



12,018



15,450







141,464Operating earnings


176,967



236,110



14,568



3,153







430,798(Gain) loss on investments


(17
)


(94,545
)


381



(997
)






(95,178
)Interest, net


(9,584
)


32,545



10,465



(1,823
)






31,603Equity income from investments


(2,316
)


(26,674
)


(44,458
)


(3,155
)






(76,603
)Minority interests


35,683



127















35,810Income before income taxes

$
153,201


$
324,657


$
48,180


$
9,128


$



$
535,166Intersegment revenues

$
(149,323
)

$
(13,850
)

$
(181
)





$
163,354


$
Goodwill

$
3,654


$
150














$
3,804Capital expenditures

$
154,117


$
28,057


$
2,932


$
2,206






$
187,312Depreciation and amortization

$
48,581


$
24,218


$
7,616


$
3,015






$
83,430Total identifiable assets at February 29, 2008

$
2,682,038


$
5,718,242


$
807,174


$
858,671






$
10,066,125For the Six Months Ended February 28, 2007Revenues

$
3,567,092


$
3,688,452


$
332,960


$
15,748


$
(118,602
)

$
7,485,650Cost of goods sold


3,332,105



3,588,644



314,039



(911
)


(118,602
)


7,115,275Gross profit


234,987



99,808



18,921



16,659







370,375Marketing, general and administrative


43,211



42,988



12,000



12,494







110,693Operating earnings


191,776



56,820



6,921



4,165







259,682Gain on investments






(5,348
)


(11,400
)










(16,748
)Interest, net


(239
)


12,582



6,766



(2,418
)






16,691Equity (income) loss from investments


(2,137
)


18,799



(31,195
)


(2,313
)






(16,846
)Minority interests


33,409



(27
)














33,382Income before income taxes

$
160,743


$
30,814


$
42,750


$
8,896


$



$
243,203Intersegment revenues

$
(116,252
)

$
(2,176
)

$
(174
)





$
118,602


$
Goodwill

$
3,654


$
150














$
3,804Capital expenditures

$
130,385


$
15,540


$
7,918


$
1,153






$
154,996Depreciation and amortization

$
42,394


$
16,633


$
7,271


$
2,649






$
68,947Total identifiable assets at February 28, 2007

$
2,262,959


$
2,321,157


$
632,690


$
643,316






$
5,860,122     *
    
    Adjusted to reflect adoption of FASB Staff Position No. AUG
    AIR-1; see Note 2 18




---



##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
   Note 13.
    Commitments
    and Contingencies  Guarantees
        Guarantee/


Exposure onMaximum


February 29,






Triggering

Recourse

Assets HeldEntities

Exposure


2008


Nature of Guarantee

Expiration Date

Event

Provisions

as CollateralMountain Country, LLC

$
150


$
5


Obligations by Mountain Country, LLC under credit agreement

None stated, but may be terminated upon 90 days prior
    notice in regard to future obligations

Credit agreement default

Subrogation against borrower

Some or all assets of borrower are held as collateral and
    should be sufficient to cover guarantee exposureProvista Renewable Fuels Marketing, LLC

$
10,000



3,231


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

$
35,000



16,250


Obligations by TEMCO, LLC under credit agreement

None stated

Credit agreement default

Subrogation against TEMCO, LLC

NoneTEMCO, LLC

$
1,000



1,000


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 indemnificaton 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

$
12,193



5,172


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 exposure 19




---



##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  Guarantee/


Exposure onMaximum


February 29,






Triggering

Recourse

Assets HeldEntities

Exposure


2008


Nature of Guarantee

Expiration Date

Event

Provisions

as CollateralCofina Financial, LLC

$
18,200



18,200


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 exposureAgriliance LLC

$
5,674



5,674


Outstanding letter of credit from CoBank to Agriliance LLC

None stated

Default under letter of credit reimbursement agreement

Subrogation against borrower

NoneAg Business segment subsidiaries

$
2,810






Contribution obligations as a participating employer in the
    Co-op Retirement Plan

None stated

Nonpayment

None

None$
50,532     *
    
    The maximum exposure on any given date is equal to the actual
    guarantees extended as of that date. 20




---



##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  General
  Form 10-Q, Form 10-K, Form 10-Q.
    ®
         21




---



##### Table of Contents



50-50
  true-up true-up
       22




---



##### Table of Contents



Recent
    Events
        Results
    of Operations
  Comparison
    of the three months ended February 29, 2008 and
    February 28, 2007
  General.
   23




---



##### Table of Contents



Net Income.
  Revenues.
   24




---



##### Table of Contents



25




---



##### Table of Contents



Cost of Goods Sold.
        Marketing, General and
    Administrative.
 26




---



##### Table of Contents



Gain on Investments.
  Interest, net.
  Equity Income from Investments.
  50-50
   27




---



##### Table of Contents



Minority Interests.
  Income Taxes.
  Comparison
    of the six months ended February 29, 2008 and
    February 28, 2007
  General.
     28




---



##### Table of Contents



Net Income.
  Revenues.
   29




---



##### Table of Contents



30




---



##### Table of Contents



Cost of Goods Sold.
        Marketing, General and
    Administrative.
  Gain on Investments.
 31




---



##### Table of Contents



Interest, net.
  Equity Income from Investments.
  50-50
   32




---



##### Table of Contents



Minority Interests.
  Income Taxes.
  Liquidity
    and Capital Resources
    364-day 364-day
 33




---



##### Table of Contents



Cash
    Flows from Operations
         34




---



##### Table of Contents



Cash
    Flows from Investing Activities
         35




---



##### Table of Contents



Cash
    Flows from Financing Activities
   36




---



##### Table of Contents



364-day
             37




---



##### Table of Contents



Form 10-K
       38




---



##### Table of Contents



Off
    Balance Sheet Financing Arrangements
  Lease
    Commitments:
  Form 10-K
  Guarantees:
   39




---



##### Table of Contents



Debt:
    Contractual
    Obligations
  Form 10-K
    Critical
    Accounting Policies
  Form 10-K
  Effect of
    Inflation and Foreign Currency Transactions
    Recent
    Accounting Pronouncements
  (FSP) 157-2, FSP 157-2
     40




---



##### Table of Contents



.
  CAUTIONARY
    STATEMENTS FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE
    SECURITIES LITIGATION REFORM ACT
    Form 10-K
  
    Our revenues and operating results could be adversely affected
    by changes in commodity prices.
    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. 41




---



##### Table of Contents




    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.
    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 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.
    If our customers choose 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 3.
    Quantitative
    and Qualitative Disclosures About Market Risk  Form 10-K
  Item 4T.
    Controls
    and Procedures  Rule 13a-15(e)
  Rule 13a-15(f)
 42




---



##### Table of Contents



PART II.
    OTHER INFORMATION  Item 1.
    Not
    applicable  Item 1A.
    Risk
    Factors  Form 10-K
  Item 2.
    Not
    applicable  Item 3.
    Not
    applicable  Item 4.
    Not
    applicable.  Item 5.
    Not
    applicable  Item 6.
    Exhibits  Exhibit

Description10
.1

Amendment No. 2 to Note Purchase and Shelf Agreement and
    Senior Series J Notes totaling $50 million issued
    February 8, 2008 (Incorporated by reference to our Current
    Report on
    Form 8-K
    filed February 11, 2008)10
.2

Credit Agreement
    (364-day
    Revolving Loan) by and between CHS Inc., CoBank, ACB and the
    Syndication Parties dated as of February 14, 2008.
    (Incorporated by reference to our Current Report on
    Form 8-K
    filed February 15, 2008)10
.3

Third Amendment to 2006 Amended and Restated Credit Agreement by
    and among CHS Inc., CoBank, ACB and the Syndication Parties
    dated March 5, 2008. (Incorporated by reference to our
    Current Report on
    Form 8-K
    filed March 6, 2008)10
.4

Second Amendment of CHS Inc. Deferred Compensation Plan10
.5

Amendment No. 5 to the CHS Inc. Supplemental Executive
    Retirement Plan10
.6

Amendment No. 6 to the CHS Inc. Supplemental Executive
    Retirement Plan10
.7

Amendment No. 1 to the CHS Inc. Special Supplemental
    Executive Retirement Plan31
.1

Certification Pursuant to Section 302 of the Sarbanes-Oxley
    Act of 200231
.2

Certification Pursuant to Section 302 of the Sarbanes-Oxley
    Act of 200232
.1

Certification Pursuant to 18 U.S.C. Section 1350, as
    Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
    of 200232
.2

Certification Pursuant to 18 U.S.C. Section 1350, as
    Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002  43




---



##### Table of Contents



SIGNATURES    CHS Inc.
   John
    Schmitz
 
  Executive Vice President and
 Chief Financial Officer
   44