================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-Q/A


(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
     ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED FEBRUARY 28, 2003.

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
     EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______________ TO
     ________________ .


                         COMMISSION FILE NUMBER 0-50150


                                    CHS INC.
             (Exact name of registrant as specified in its charter)


          MINNESOTA                                     41-0251095
(State or other jurisdiction of                     (I.R.S. Employer
incorporation or organization)                   Identification Number)


       5500 CENEX DRIVE,                             (651) 355-6000
  INVER GROVE HEIGHTS, MN 55077             (Registrant's telephone number
(Address of principal executive                   including area code)
     offices and zip code)

     Include by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.

                              YES __X___ NO _______

     Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

                              YES _____ NO ___X___

   Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

                                       Number of shares outstanding at
          Class                               February 28, 2003
          -----                        -------------------------------

          NONE                                     NONE

================================================================================


<PAGE>


                                      INDEX

                                                                            PAGE
                                                                             NO.
                                                                            ----
PART I. FINANCIAL INFORMATION

 Item 1. Financial Statements

 Consolidated Balance Sheets as of February 28, 2003 (unaudited),
 August 31, 2002 and February 28, 2002 (unaudited) .......................    2

 Consolidated Statements of Operations for the three months and
 six months ended February 28, 2003 and 2002 (unaudited) .................    3

 Consolidated Statements of Cash Flows for the three months and
 six months ended February 28, 2003 and 2002 (unaudited) .................    4

 Notes to Consolidated Financial Statements (unaudited) ..................    5

 Item 2. Management's Discussion and Analysis of Financial
 Condition and Results of Operations .....................................   13

 Item 3. Quantitative and Qualitative Disclosures about Market Risk ......   21

 Item 4. Controls and Procedures .........................................   22


PART II. OTHER INFORMATION

 Item 6. Exhibits and Reports on Form 8-K ................................   22


SIGNATURE PAGE ...........................................................   23






                                        i
<PAGE>



                                    CHS INC.

                                EXPLANATORY NOTE




     This Amendment No. 1 on Form 10-Q amends the Registrant's Quarterly Report
on Form 10-Q for the quarterly period ended February 28, 2003, for certain sales
and transfers related to the Company's Grain Marketing business segment that
were not properly eliminated during the three months and six months ended
February 28, 2003 and 2002, as more fully explained in Note 12 to the
Consolidated Financial Statements. These changes had no effect on the Company's
financial condition or changes in cash flows, and no effect on reported gross
profit or net income for the periods stated above.




     In addition, in connection with the filing of this Amendment and pursuant
to the rules of the Securities and Exchange Commission, the Registrant is
including with this Amendment certain currently dated certifications in Item
6(a).


                         PART I. FINANCIAL INFORMATION

                    SAFE HARBOR STATEMENT UNDER THE PRIVATE
                    SECURITIES LITIGATION REFORM ACT OF 1995

     This Quarterly Report on Form 10-Q contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements involve risks and uncertainties that may cause the
Company's actual results to differ materially from the results discussed in the
forward-looking statements. These factors include those set forth in Exhibit
99.1, under the caption "Cautionary Statement" to this Quarterly Report on Form
10-Q for the quarterly period ended February 28, 2003.












                                        1
<PAGE>


ITEM 1. FINANCIAL STATEMENTS


              CENEX HARVEST STATES COOPERATIVES AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                     ASSETS

                                                FEBRUARY 28,     AUGUST 31,     FEBRUARY 28,
                                                    2003            2002            2002
                                               --------------   ------------   -------------
(DOLLARS IN THOUSANDS)                           (UNAUDITED)                    (UNAUDITED)
<S>                                              <C>            <C>             <C>
CURRENT ASSETS:
 Cash and cash equivalents .................     $  108,886     $  108,192      $   86,498
 Receivables ...............................        767,147        741,578         586,232
 Inventories ...............................        861,753        759,663         601,650
 Other current assets ......................        254,841        140,944         105,096
                                                 ----------     ----------      ----------
  Total current assets .....................      1,992,627      1,750,377       1,379,476

INVESTMENTS ................................        469,456        496,607         461,058

PROPERTY, PLANT AND EQUIPMENT ..............      1,075,152      1,057,421       1,029,214

OTHER ASSETS ...............................        178,357        177,322         217,027
                                                 ----------     ----------      ----------
  Total assets .............................     $3,715,592     $3,481,727      $3,086,775
                                                 ==========     ==========      ==========

                            LIABILITIES AND EQUITIES

CURRENT LIABILITIES:
 Notes payable .............................     $  370,561     $  332,514      $  298,244
 Current portion of long-term debt .........         59,987         89,032          14,658
 Customer credit balances ..................        103,420         26,461          63,244
 Customer advance payments .................        159,538        169,123          83,154
 Checks and drafts outstanding .............         55,750         84,251          69,535
 Accounts payable ..........................        470,048        517,667         325,422
 Accrued expenses ..........................        229,990        225,704         153,509
 Dividends and equities payable ............         20,580         56,510          32,198
                                                 ----------     ----------      ----------
  Total current liabilities ................      1,469,874      1,501,262       1,039,964

LONG-TERM DEBT .............................        649,863        483,092         565,250

OTHER LIABILITIES ..........................        111,302        118,280         105,720

MINORITY INTERESTS IN SUBSIDIARIES .........         98,222         89,455          90,678

COMMITMENTS AND CONTINGENCIES

EQUITIES ...................................      1,386,331      1,289,638       1,285,163
                                                 ----------     ----------      ----------
  Total liabilities and equities ...........     $3,715,592     $3,481,727      $3,086,775
                                                 ==========     ==========      ==========
</TABLE>


               The accompanying notes are an integral part of the
                 consolidated financial statements (unaudited).


                                        2
<PAGE>


              CENEX HARVEST STATES COOPERATIVES AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                   FOR THE THREE MONTHS ENDED       FOR THE SIX MONTHS ENDED
                                                          FEBRUARY 28,                    FEBRUARY 28,
                                                  -----------------------------   -----------------------------
                                                       2003            2002            2003            2002
                                                  -------------   -------------   -------------   -------------
(DOLLARS IN THOUSANDS)                              RESTATED         RESTATED        RESTATED        RESTATED
                                                    (Note 12)        (Note 12)       (Note 12)       (Note 12)
<S>                                                <C>             <C>             <C>             <C>
REVENUES:
 Net sales ....................................    $2,328,154      $1,704,249      $4,728,750      $3,433,702
 Patronage dividends ..........................           793           1,188             959           1,909
 Other revenues ...............................        27,790          23,648          62,879          55,724
                                                   ----------      ----------      ----------      ----------
                                                    2,356,737       1,729,085       4,792,588       3,491,335

Cost of goods sold ............................     2,295,436       1,666,840       4,632,198       3,328,705
Marketing, general and administrative .........        48,072          46,377          91,220          89,275
                                                   ----------      ----------      ----------      ----------

OPERATING EARNINGS ............................        13,229          15,868          69,170          73,355

Interest ......................................        11,436          10,249          24,249          21,064
Equity loss (income) from investments .........         5,772           2,176          (2,393)         (1,766)
Minority interests ............................         3,345           2,674           8,776           5,710
                                                   ----------      ----------      ----------      ----------
(LOSS) INCOME BEFORE
 INCOME TAXES .................................        (7,324)            769          38,538          48,347

INCOME TAXES ..................................        (3,224)         (1,602)          2,282           4,621
                                                   ----------      ----------      ----------      ----------

NET (LOSS) INCOME .............................    $   (4,100)     $    2,371      $   36,256      $   43,726
                                                   ==========      ==========      ==========      ==========
</TABLE>


               The accompanying notes are an integral part of the
                 consolidated financial statements (unaudited).


                                        3
<PAGE>


              CENEX HARVEST STATES COOPERATIVES AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                              FOR THE THREE MONTHS ENDED      FOR THE SIX MONTHS ENDED
                                                                     FEBRUARY 28,                   FEBRUARY 28,
                                                             ----------------------------   ----------------------------
                                                                 2003            2002           2003            2002
(DOLLARS IN THOUSANDS)                                       ------------   -------------   ------------   -------------
<S>                                                           <C>            <C>             <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net (loss) income .......................................    $   (4,100)    $    2,371      $   36,256     $   43,726
 Adjustments to reconcile net (loss) income to
  net cash used in operating activities:
   Depreciation and amortization .........................        25,768         26,845          51,634         51,544
   Noncash net loss (income) from equity
    investments ..........................................         5,772          2,176          (2,393)        (1,766)
   Minority interests ....................................         3,345          2,674           8,776          5,710
   Adjustment of inventories to market value .............            --         (8,444)             --          6,441
   Noncash portion of patronage dividends
    received .............................................          (497)          (970)           (681)        (1,736)
   Gain on sale of property, plant and equipment .........          (733)          (395)           (270)        (2,743)
   Other, net ............................................         2,014            181           2,460            121
   Changes in operating assets and liabilities:
    Receivables ..........................................        58,291         51,663         (14,131)        97,716
    Inventories ..........................................        68,242        (55,246)       (102,090)      (107,637)
    Other current assets and other assets ................       (51,237)       (15,732)       (118,051)       (41,622)
    Customer credit balances .............................        11,628            654          76,959         24,758
    Customer advance payments ............................       (62,599)       (19,693)         (9,585)       (25,981)
    Accounts payable and accrued expenses ................      (173,502)      (125,337)        (42,291)      (169,596)
    Other liabilities ....................................        (4,842)           348          (6,978)         5,814
                                                              ----------     ----------      ----------     ----------
      Net cash used in operating activities ..............      (122,450)      (138,905)       (120,385)      (115,251)
                                                              ----------     ----------      ----------     ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Acquisition of property, plant and equipment ............       (36,762)       (30,097)        (77,375)       (51,905)
 Proceeds from disposition of property, plant
  and equipment ..........................................         7,177          2,530          11,925          8,646
 Investments .............................................        (2,791)           (51)         (4,175)        (6,176)
 Equity investments redeemed .............................        12,780          7,282          28,093         21,374
 Investments redeemed ....................................         1,670            700           3,383          2,028
 Changes in notes receivable .............................          (275)         4,571         (11,516)         2,408
 Acquisition of intangibles ..............................           (55)           (62)           (434)       (27,531)
 Distribution to minority owners .........................            --           (366)           (463)        (4,351)
 Other investing activities, net .........................            23            (29)            467          1,061
                                                              ----------     ----------      ----------     ----------
      Net cash used in investing activities ..............       (18,233)       (15,522)        (50,095)       (54,446)
                                                              ----------     ----------      ----------     ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Changes in notes payable ................................       124,500        187,429          38,047        201,049
 Long-term debt borrowings ...............................            --             --         175,000         30,000
 Principal payments on long-term debt ....................       (33,377)        (4,348)        (37,279)       (10,128)
 Payments on derivative instruments ......................            --             --          (7,574)            --
 Changes in checks and drafts outstanding ................       (14,400)         9,472         (28,501)       (18,273)
 Proceeds from sale of preferred stock, net of expenses           82,516          2,858          82,580          2,858
 Preferred stock dividends paid ..........................          (190)           (10)           (374)           (10)
 Retirements of equities .................................       (21,938)       (21,357)        (24,360)       (23,187)
 Cash patronage dividends paid ...........................       (26,365)       (39,572)        (26,365)       (39,572)
                                                              ----------     ----------      ----------     ----------
      Net cash provided by financing activities ..........       110,746        134,472         171,174        142,737
                                                              ----------     ----------      ----------     ----------
NET (DECREASE) INCREASE IN CASH
 AND CASH EQUIVALENTS ....................................       (29,937)       (19,955)            694        (26,960)
CASH AND CASH EQUIVALENTS AT BEGINNING
 OF PERIOD ...............................................       138,823        106,453         108,192        113,458
                                                              ----------     ----------      ----------     ----------
CASH AND CASH EQUIVALENTS AT
 END OF PERIOD ...........................................    $  108,886     $   86,498      $  108,886     $   86,498
                                                              ==========     ==========      ==========     ==========
</TABLE>


               The accompanying notes are an integral part of the
                 consolidated financial statements (unaudited).


                                        4
<PAGE>


              CENEX HARVEST STATES COOPERATIVES AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                             (DOLLARS IN THOUSANDS)


NOTE 1. ACCOUNTING POLICIES


     Effective August 5, 2003, Cenex Harvest States Cooperatives changed its
name to CHS Inc. The unaudited consolidated balance sheets as of February 28,
2003 and 2002, and the statements of operations and cash flows for the three and
six months ended February 28, 2003 and 2002 reflect, in the opinion of
management of Cenex Harvest States Cooperatives (CHS or the Company), all normal
recurring adjustments necessary for a fair presentation of the financial
position and results of operations and cash flows for the interim periods
presented. The results of operations and cash flows for interim periods are not
necessarily indicative of results for a full fiscal year because of, among other
things, the seasonal nature of the Company's businesses. The consolidated
balance sheet data as of August 31, 2002 has been derived from the audited
consolidated financial statements but does not include all disclosures required
by accounting principles generally accepted in the United States of America.


     The consolidated financial statements include the accounts of the Company
and all of its wholly-owned and majority-owned subsidiaries and limited
liability companies. The effects of all significant intercompany accounts and
transactions have been eliminated.


     These statements should be read in conjunction with the consolidated
financial statements and notes thereto for the year ended August 31, 2002,
included in the Company's Annual Report on Form 10-K, including two amendments
on Form 10-K/A, filed with the Securities and Exchange Commission.



GOODWILL AND OTHER INTANGIBLE ASSETS

     The Company had $27.5 million of goodwill as of February 28, 2003, and
during the six months then ended the Company disposed of $0.4 million due to
sales of related assets in the Energy segment.

     Intangible assets subject to amortization primarily include trademarks,
tradenames, customer lists and non-compete agreements, and are amortized on a
straight-line basis over the number of years that approximate their respective
useful lives (ranging from 2 to 15 years). The gross carrying amount of these
intangible assets is $42.8 million with total accumulated amortization of $9.3
million as of February 28, 2003. Intangible assets of $0.4 million were acquired
during the six months ended February 28, 2003. Total amortization expense for
intangible assets during the three-month and six-month periods ended February
28, 2003 was approximately $1.2 million and $2.3 million, respectively. The
estimated amortization expense related to intangible assets subject to
amortization for the next five years will approximate $4.0 million annually.


RECENT ACCOUNTING PRONOUNCEMENTS

     The Financial Accounting Standards Board (FASB) issued SFAS No. 143,
"Accounting for Asset Retirement Obligations" which addresses financial
accounting and reporting for obligations associated with the retirement of
tangible long-lived assets and the associated asset retirement costs. SFAS No.
143 is effective for financial statements issued for fiscal years beginning
after June 15, 2002. The Company is in the process of finalizing its analysis of
adopting this standard. The Company's Energy segment operates oil refineries and
related pipelines for which the Company would be subject to Asset Retirement
Obligations (ARO) if such assets were to be dismantled. The Company, however,
expects to operate its refineries and related pipelines indefinitely. Since the
time period to dismantle these assets is indeterminate, a corresponding ARO is
not estimable and therefore has not been recorded. The Company continues to
assess whether any other ARO's exist related to its remaining operations,
however, based on available information to date, no ARO's have been identified.
As such, the Company believes that the effects of adopting this standard do not
have a material effect on the Company.

     In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation
of Variable Interest Entities". The interpretation addresses consolidation of
certain entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the
entity to finance its activities without additional subordinated financial
support from other parties. The interpretation applies immediately to variable
interest entities created after January 31, 2003, and to


                                        5
<PAGE>


variable interest entities in which an enterprise obtains an interest after that
date. It applies in the first fiscal year or interim period beginning after June
15, 2003 to variable interest entities in which an enterprise holds a variable
interest that it acquired before February 1, 2003. The Company believes that the
effects of adopting this standard do not have a material effect on the Company.


NOTE 2. RECEIVABLES

<TABLE>
<CAPTION>
                                                     FEBRUARY 28,     AUGUST 31,     FEBRUARY 28,
                                                         2003            2002            2002
                                                    --------------   ------------   -------------
<S>                                                    <C>             <C>             <C>
  Trade .........................................      $727,301        $717,888        $584,512
  Other .........................................        66,362          49,846          27,540
                                                       --------        --------        --------
                                                        793,663         767,734         612,052
  Less allowances for doubtful accounts .........        26,516          26,156          25,820
                                                       --------        --------        --------
                                                       $767,147        $741,578        $586,232
                                                       ========        ========        ========
</TABLE>


NOTE 3. INVENTORIES

<TABLE>
<CAPTION>
                                           FEBRUARY 28,     AUGUST 31,     FEBRUARY 28,
                                               2003            2002            2002
                                          --------------   ------------   -------------
<S>                                          <C>             <C>             <C>
  Grain and oilseed ...................      $411,584        $393,095        $256,503
  Energy ..............................       274,008         229,981         213,954
  Feed and farm supplies ..............       134,446          91,138         112,247
  Processed grain and oilseed .........        35,225          36,264          15,933
  Other ...............................         6,490           9,185           3,013
                                             --------        --------        --------
                                             $861,753        $759,663        $601,650
                                             ========        ========        ========
</TABLE>


NOTE 4. INVESTMENTS

     During the three months ended February 28, 2003 the Company impaired the
balance of its investment in Farmland Industries, Inc. in the amount of $1.7
million.

     The following provides summarized unaudited financial information for the
Company's unconsolidated significant subsidiaries Ventura Foods, LLC and
Agriliance, LLC, of which the Company has a 50% and 25% equity ownership,
respectively, for the three-month and six-month periods as indicated below.

                               VENTURA FOODS, LLC

<TABLE>
<CAPTION>
                              FOR THE THREE MONTHS        FOR THE SIX MONTHS
                                     ENDED                      ENDED
                                 FEBRUARY 28,                FEBRUARY 28,
                           -------------------------   -------------------------
                               2003          2002          2003          2002
                           -----------   -----------   -----------   -----------
<S>                         <C>           <C>           <C>           <C>
  Net sales ............    $275,392      $238,219      $562,417      $496,619
  Gross profit .........      29,643        36,997        79,371        78,098
  Net income ...........       1,612        10,584        22,403        25,828
</TABLE>

                                 AGRILIANCE, LLC

<TABLE>
<CAPTION>
                              FOR THE THREE MONTHS           FOR THE SIX MONTHS
                                      ENDED                        ENDED
                                  FEBRUARY 28,                  FEBRUARY 28,
                            -------------------------   -----------------------------
                                2003          2002           2003            2002
                            -----------   -----------   -------------   -------------
<S>                         <C>           <C>           <C>             <C>
   Net sales ............    $ 553,390     $ 576,171     $1,146,120      $1,253,218
   Gross profit .........       44,924        39,082         93,446          84,986
   Net loss .............      (25,246)      (31,956)       (45,356)        (53,108)
</TABLE>


NOTE 5. PROPERTY, PLANT AND EQUIPMENT

     During the three months ended February 28, 2003 the Country Operations
segment recorded impairments of $3.2 million related to facilities where the
undiscounted projected income and related cash flows were less than the carrying
value of the facilities.


                                        6
<PAGE>


NOTE 6. DEBT

     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, which
was layered into two series. The first series of $115.0 million has an interest
rate of 4.96% and will be repaid in equal semi-annual installments of
approximately $8.8 million during the years 2007 through 2013. The second series
of $60.0 million has an interest rate of 5.60% and will be repaid in equal
semi-annual installments of approximately $4.6 million during fiscal years 2012
through 2018.


NOTE 7. EQUITIES

     In January 2003, the Board of Directors authorized the sale and issuance of
up to 3,500,000 shares of 8% Cumulative Redeemable Preferred Stock (New
Preferred) at a price of $25.00 per share. The Company filed a registration
statement on Form S-2 with the Securities and Exchange Commission registering
3,000,000 shares of the New Preferred (with an additional over-allotment option
of 450,000 shares granted to the underwriters), which was declared effective on
January 27, 2003. The shares were subsequently sold and are listed on the Nasdaq
National Market. As of February 28, 2003, the Company had $86.3 million
(3,450,000 shares) of the New Preferred outstanding. Expenses related to the
issuance of the New Preferred were $3.7 million through the same period.

     As of February 28, 2003, the Company had $9.5 million (9,454,874 shares) of
8% Preferred Stock (Old Preferred) outstanding. The Company had previously
suspended sales of the Old Preferred, and on February 25, 2003 the Company filed
a post-effective amendment to terminate the offering of the Old Preferred
shares. On March 5, 2003, the Company's Board of Directors authorized the
redemption and conversion of the Old Preferred shares. A redemption notification
and a conversion election form were sent to holders of the Old Preferred shares
on March 21, 2003 explaining that on April 25, 2003 all shares of the Old
Preferred will be redeemed by the Company for $1 per share unless they are
converted into shares of the Company's New Preferred. The conversion will not
change the base liquidation amount or dividend amount of the Old Preferred since
25 shares of the Old Preferred will convert to 1 share of the New Preferred.


NOTE 8. COMPREHENSIVE INCOME

     For the three months ended February 28, 2003 and 2002, total comprehensive
income amounted to $4.9 million loss and $1.6 million income, respectively. For
the six months ended February 28, 2003 and 2002, total comprehensive income
amounted to $29.7 million and $44.0 million, respectively. Accumulated other
comprehensive loss on February 28, 2003, August 31, 2002 and February 28, 2002
was $58.5 million, $51.9 million and $1.7 million, respectively.


NOTE 9. NON-CASH FINANCING ACTIVITIES

     During the six months ended February 28, 2003 and 2002 the Company accrued
dividends and equities payable of $16.3 million and $21.9 million, respectively.


NOTE 10. SEGMENT REPORTING

     Segments, which are based on products and services, include Agronomy,
Energy, Country Operations, Grain Marketing and Processed Grains and Foods.
Reconciling Amounts represent the elimination of intracompany sales between
segments. Due to cost allocations and intersegment activity, management does not
represent that these segments, if operated independently, would report the
income before income taxes and other financial information as presented.


                                        7
<PAGE>
Segment information for the three months and six months ended February 28, 2003
and 2002 is as follows:



<TABLE>
<CAPTION>

                                                                                 PROCESSED
                                                         COUNTRY      GRAIN      GRAINS AND                RECONCILING
                                   AGRONOMY    ENERGY  OPERATIONS   MARKETING       FOODS        OTHER       AMOUNTS        TOTAL
                                   --------   --------   --------   ----------     --------     ------     ----------    ----------
                                                                    RESTATED                               RESTATED       RESTATED
                                                                    (Note 12)                              (Note 12)      (Note 12)
<S>                                <C>         <C>          <C>         <C>            <C>          <C>        <C>           <C>
FOR THE THREE MONTHS ENDED
 FEBRUARY 28, 2003
  Net sales ....................              $900,029   $430,832   $1,104,296     $128,291                $ (235,294)   $2,328,154
  Patronage dividends ..........   $    (57)        50        795          (52)          27     $   30                          793
  Other revenues ...............                 1,993     16,448        6,232          947      2,170                       27,790
                                   --------   --------   --------   ----------     --------     ------     ----------    ----------
                                        (57)   902,072    448,075    1,110,476      129,265      2,200       (235,294)    2,356,737
  Cost of goods sold ...........               887,705    420,857    1,102,203      119,965                  (235,294)    2,295,436
  Marketing, general and
   administrative ..............      1,578     13,577     15,332        5,912       10,057      1,616                       48,072
  Interest .....................       (380)     4,001      2,616        1,024        3,319        856                       11,436
  Equity loss (income) from
   investments .................      6,012       (235)      (255)       1,710       (1,460)                                  5,772
  Minority interests ...........                 3,070        275                                                             3,345
                                   --------   --------   --------   ----------     --------     ------     ----------    ----------
  (Loss) income before
   income taxes ................   $ (7,267)  $ (6,046)  $  9,250   $     (373)    $ (2,616)    $ (272)    $       --    $   (7,324)
                                   ========   ========   ========   ==========     ========     ======     ==========    ==========
  Capital expenditures .........              $ 16,065   $  3,029   $      399     $ 16,808     $  461                   $   36,762
                                              ========   ========   ==========     ========     ======                   ==========
  Depreciation and amortization    $    311   $ 14,510   $  5,333   $    1,605     $  3,267     $  742                   $   25,768
                                   ========   ========   ========   ==========     ========     ======                   ==========
FOR THE THREE MONTHS ENDED
 FEBRUARY 28, 2002
  Net sales ....................              $588,564   $312,089   $  877,562     $126,143                $ (200,109)   $1,704,249
  Patronage dividends ..........                    25        947          173                  $   43                        1,188
  Other revenues ...............                   820     15,793        5,838          538        659                       23,648
                                              --------   --------   ----------     --------     ------     ----------    ----------
                                               589,409    328,829      883,573      126,681        702       (200,109)    1,729,085
  Cost of goods sold ...........               563,148    309,590      874,563      119,648                  (200,109)    1,666,840
  Marketing, general and
   administrative ..............   $  1,637     15,667     11,953        5,590       10,394      1,136                       46,377
  Interest .....................       (306)     4,218      2,661        1,398        2,393       (115)                      10,249
  Equity loss (income) from
   investments .................      8,304        157        219         (976)      (5,528)                                  2,176
  Minority interests ...........                 2,462        212                                                             2,674
                                   --------   --------   --------   ----------     --------     ------     ----------    ----------
  (Loss) income before
   income taxes ................   $ (9,635)  $  3,757   $  4,194   $    2,998     $   (226)    $ (319)    $       --    $      769
                                   ========   ========   ========   ==========     ========     ======     ==========    ==========
  Capital expenditures .........              $ 15,970   $  4,790   $    2,713     $  6,306     $  318                   $   30,097
                                              ========   ========   ==========     ========     ======                   ==========
  Depreciation and amortization    $    311   $ 15,814   $  5,170   $    1,347     $  3,408     $  795                   $   26,845
                                   ========   ========   ========   ==========     ========     ======                   ==========
</TABLE>


                                        8
<PAGE>

<TABLE>
<CAPTION>
                                                                         COUNTRY
                                            AGRONOMY       ENERGY     OPERATIONS
                                         ------------- ------------- ------------
<S>                                        <C>          <C>            <C>
FOR THE SIX MONTHS ENDED
 FEBRUARY 28, 2003
  Net sales ............................                $1,811,618     $919,898
  Patronage dividends ..................   $     (57)           63          846
  Other revenues .......................                     4,729       40,985
                                           ---------    ----------     --------
                                                 (57)    1,816,410      961,729
  Cost of goods sold ...................                 1,748,034      906,970
  Marketing, general and
   administrative ......................       2,718        27,762       27,935
  Interest .............................        (678)        8,011        8,004
  Equity loss (income) from
   investments .........................      10,030          (555)        (470)
  Minority interests ...................                     8,205          571
                                           ---------    ----------     --------
  (Loss) income before
   income taxes ........................   $ (12,127)   $   24,953     $ 18,719
                                           =========    ==========     ========
  Goodwill assets ......................                $    3,647     $    262
                                                        ==========     ========
  Capital expenditures .................                $   34,024     $ 13,351
                                                        ==========     ========
  Depreciation and amortization ........   $     623    $   29,048     $ 10,754
                                           =========    ==========     ========
  Total identifiable assets at
   February 28, 2003 ...................   $ 222,578    $1,363,611     $986,896
                                           =========    ==========     ========
FOR THE SIX MONTHS ENDED
 FEBRUARY 28, 2002
  Net sales ............................                $1,142,806     $686,755
  Patronage dividends ..................                       448        1,008
  Other revenues .......................                     3,439       36,282
                                                        ----------     --------
                                                         1,146,693      724,045
  Cost of goods sold ...................                 1,061,123      683,807
  Marketing, general and
   administrative ......................   $   2,804        30,667       24,405
  Interest .............................        (733)        8,300        5,804
  Equity loss (income) from
   investments .........................      11,606         1,533          213
  Minority interests ...................                     5,357          353
                                           ---------    ----------     --------
  (Loss) income before
   income taxes ........................   $ (13,677)   $   39,713     $  9,463
                                           =========    ==========     ========
  Goodwill assets ......................                $    4,892     $    325
                                                        ==========     ========
  Capital expenditures .................                $   25,650     $ 10,538
                                                        ==========     ========
  Depreciation and amortization ........   $     623    $   29,674     $ 10,543
                                           =========    ==========     ========
  Total identifiable assets at
   February 28, 2002 ...................   $ 217,822    $1,202,734     $784,546
                                           =========    ==========     ========
</TABLE>

<PAGE>

[WIDE TABLE CONTINUED FROM ABOVE]


<TABLE>
<CAPTION>
                                                         PROCESSED
                                             GRAIN      GRAINS AND                 RECONCILING
                                           MARKETING       FOODS        OTHER        AMOUNTS        TOTAL
                                         ------------- ------------ ------------ -------------- -------------
                                           RESTATED                                RESTATED       RESTATED
                                           (Note 12)                               (Note 12)      (Note 12)
<S>                                       <C>           <C>           <C>          <C>            <C>
FOR THE SIX MONTHS ENDED
 FEBRUARY 28, 2003
  Net sales ............................  $2,265,850    $ 242,124                  $ (510,740)   $4,728,750
  Patronage dividends ..................          26           27     $     54                          959
  Other revenues .......................      12,836        1,856        2,473                       62,879
                                          ----------    ---------     --------     ----------    ----------
                                           2,278,712      244,007        2,527       (510,740)    4,792,588
  Cost of goods sold ...................   2,261,650      226,284                    (510,740)    4,632,198
  Marketing, general and
   administrative ......................      11,983       18,145        2,677                       91,220
  Interest .............................       2,882        5,665          365                       24,249
  Equity loss (income) from
   investments .........................         896      (12,294)                                   (2,393)
  Minority interests ...................                                                              8,776
                                          ----------    ---------     --------     ----------    ----------
  (Loss) income before
   income taxes ........................  $    1,301    $   6,207     $   (515)    $       --    $   38,538
                                          ==========    =========     ========     ==========    ==========
  Goodwill assets ......................                $  23,605                                $   27,514
                                                        =========                                ==========
  Capital expenditures .................  $      916    $  27,964     $  1,120                   $   77,375
                                          ==========    =========     ========                   ==========
  Depreciation and amortization ........  $    3,210    $   6,402     $  1,597                   $   51,634
                                          ==========    =========     ========                   ==========
  Total identifiable assets at
   February 28, 2003 ...................  $  466,919    $ 454,453     $221,135                   $3,715,592
                                          ==========    =========     ========                   ==========
FOR THE SIX MONTHS ENDED
 FEBRUARY 28, 2002
  Net sales ............................  $1,757,746    $ 289,192                  $ (442,797)   $3,433,702
  Patronage dividends ..................         352                  $    101                        1,909
  Other revenues .......................      14,290          563        1,150                       55,724
                                          ----------    ---------     --------     ----------    ----------
                                           1,772,388      289,755        1,251       (442,797)    3,491,335
  Cost of goods sold ...................   1,754,847      271,725                    (442,797)    3,328,705
  Marketing, general and
   administrative ......................      11,067       17,973        2,359                       89,275
  Interest .............................       3,027        4,989         (323)                      21,064
  Equity loss (income) from
   investments .........................      (1,965)     (13,153)                                   (1,766)
  Minority interests ...................                                                              5,710
                                          ----------    ---------     --------     ----------    ----------
  (Loss) income before
   income taxes ........................  $    5,412    $   8,221     $   (785)    $       --    $   48,347
                                          ==========    =========     ========     ==========    ==========
  Goodwill assets ......................                $  23,605                                $   28,822
                                                        =========                                ==========
  Capital expenditures .................  $    3,728    $  11,485     $    504                   $   51,905
                                          ==========    =========     ========                   ==========
  Depreciation and amortization ........  $    2,691    $   6,429     $  1,584                   $   51,544
                                          ==========    =========     ========                   ==========
  Total identifiable assets at
   February 28, 2002 ...................  $  306,445    $ 396,734     $178,494                   $3,086,775
                                          ==========    =========     ========                   ==========
</TABLE>



NOTE 11. COMMITMENTS AND CONTINGENCIES

ENVIRONMENTAL
     The Company, including NCRA, expects to incur capital expenditures related
to the Environmental Protection Agency low sulfur fuel regulations required by
2006. These expenditures are expected to be approximately $387.0 million in
total for the Company's Laurel, Montana and NCRA's McPherson, Kansas refineries
over the next three years, of which $0.1 million has been spent at the Laurel
refinery and $15.5 million has been spent by NCRA at the McPherson refinery as
of February 28, 2003. It is expected that approximately 80% of the costs for
these projects will be incurred at NCRA's McPherson facility. The Company
expects to fund the refinery expenditures with a combination of cash, future
earnings and additional borrowings.


                                        9
<PAGE>


GAIN ON LEGAL SETTLEMENTS

     During the six months ended February 28, 2003 the Company received cash
proceeds and recorded gains of $10.7 million, of which $8.9 million was received
during the current quarter then ended, related to legal settlements from several
vitamin product suppliers against whom the Company alleged certain price-fixing
claims. The Company has recorded these gains in cost of goods sold.


GUARANTEES

     In November 2002, the FASB issued FASB Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others". The initial recognition and initial
measurement provisions of this interpretation are applicable on a prospective
basis to guarantees issued or modified after December 31, 2002, irrespective of
the guarantor's fiscal year-end. The disclosure requirements are effective for
financial statements of interim or annual periods ending after December 15,
2002. The interpretation addresses the disclosures to be made by a guarantor in
its interim and annual financial statements about its obligations under
guarantees. The interpretation also clarifies the requirements related to the
recognition of a liability by a guarantor at the inception of the guarantee for
obligations the guarantor has undertaken in issuing the guarantee.

     The Company makes seasonal and term loans to member cooperatives, and its
wholly-owned subsidiary, Fin-Ag, Inc., makes loans for agricultural purposes to
individual producers. Some of these loans are sold to CoBank, ACB, and the
Company guarantees a portion of the loans sold. In addition, the Company also
guarantees certain debt and obligations under contracts for its subsidiaries and
members.







                                       10
<PAGE>

     The Company's obligations pursuant to its guarantees as of February 28,
2003 were as follows:

<TABLE>
<CAPTION>
                           (DOLLARS IN THOUSANDS)
                          GUARANTEE    EXPOSURE ON
                           MAXIMUM    FEBRUARY 28,
 SUBSIDIARY/AFFILIATE     EXPOSURE       2003          NATURE OF GUARANTEE
------------------------ ----------- -------------- -----------------------
<S>                                   <C>            <C>
The Company's                         $ 8,481       10% of the obligations
Financial Services                                  of borrowers
cooperative loans                                   (agricultural
sold to CoBank,                                     cooperatives) under
ACB                                                 credit agreements for
                                                    loans sold

Fin-Ag, Inc.                          $31,102       15% of the obligations
agricultural loans                                  of borrowers under
sold to CoBank,                                     credit agreements for
ACB                                                 some of the loans sold,
                                                    and 100% of the
                                                    obligations of
                                                    borrowers for the
                                                    remaining loans sold

TEMCO, LLC               $ 7,500      $ 6,288       Obligations by
                                                    TEMCO, LLC under
                                                    credit agreement

North Valley             $   194      $   194       Obligations by North
Petroleum, LLC                                      Valley Petroleum, LLC
                                                    under credit agreement

Third parties                         $   407       Surety for, or
                                      -------       indemnification of
                                                    surety for sales
                                                    contracts between
                                                    affiliates and sellers of
                                                    grain under deferred
                                                    payment contracts
                                      $46,472
                                      =======
</TABLE>

[WIDE TABLE CONTINUED FROM ABOVE]
<TABLE>
<CAPTION>
                                             TRIGGERING     RECOURSE     ASSETS HELD
 SUBSIDIARY/AFFILIATE      EXPIRATION DATE      EVENT      PROVISIONS   AS COLLATERAL
------------------------ ------------------ ------------ ------------- ---------------
<S>                      <C>                <C>          <C>           <C>
The Company's            None stated, but   Credit       Subrogation   Some or all
Financial Services       may be             Agreement    against       assets of
cooperative loans        terminated by      Default      borrower      borrower are
sold to CoBank,          either party                                  held as
ACB                      upon 60 days                                  collateral and
                         prior notice in                               should be
                         regard to future                              sufficient to
                         obligations                                   cover
                                                                       guarantee
                                                                        exposure

Fin-Ag, Inc.             None stated, but   Credit       Subrogation   Some or all
agricultural loans       may be             Agreement    against       assets of
sold to CoBank,          terminated by      Default      borrower      borrower are
ACB                      either party                                  held as
                         upon 90 days                                  collateral and
                         prior notice in                               should be
                         regard to future                              sufficient to
                         obligations                                   cover
                                                                       guarantee
                                                                        exposure

TEMCO, LLC               None stated        Credit       Subrogation   None
                                            Agreement    against
                                            Default      TEMCO,
                                                         LLC

North Valley             None stated        Credit       Subrogation   None
Petroleum, LLC                              Agreement    against
                                            Default      North
                                                         Valley
                                                         Petroleum,
                                                         LLC

Third parties            Annual renewal     Nonpayment   Subrogation   Some or all
                         on December                     against       assets of
                         1st in regard to                affiliates    borrower are
                         surety for one                                held as
                         third party,                                  collateral but
                         otherwise none                                might not be
                         stated and may                                sufficient to
                         be terminated                                 cover
                         by the Company                                guarantee
                         at any time in                                exposure
                         regard to future
                         obligations
</TABLE>


                                       11
<PAGE>


NOTE 12.  NET SALES AND COST OF GOODS SOLD RESTATEMENT:

     Recently, the Company determined that certain sales and transfers within
the Grain Marketing segment and between the Grain Marketing segment and the
Processed Grains and Foods segment, were not appropriately eliminated. The
appropriate changes have been made to the consolidated statements of operations
and segment reporting (see Note 10). These changes had no effect on the
Company's financial condition or changes in cash flows, and no effect on
reported gross profit or net income for the periods stated.

<TABLE>
<CAPTION>
                                                          FOR THE THREE MONTHS ENDED            FOR THE SIX MONTHS ENDED
                                                                FEBRUARY 28,                         FEBRUARY 28,
                                                      -----------------------------------  --------------------------------
                                                        AS REPORTED         AS RESTATED      AS REPORTED      AS RESTATED
                                                      -----------------------------------  --------------------------------
<S>                                                      <C>                 <C>              <C>              <C>
Grain Marketing Net Sales
2003                                                     1,224,746           1,104,296        2,612,024        2,265,850
2002                                                     1,006,680             877,562        1,988,577        1,757,746

Grain Marketing Cost of Goods Sold
2003                                                     1,222,653           1,102,203        2,607,824        2,261,650
2002                                                     1,003,681             874,563        1,985,678        1,754,847

Reconciling Amounts - Net Sales & Cost of Goods Sold
2003                                                      (234,768)           (235,294)        (509,906)        (510,740)
2002                                                      (173,665)           (200,109)        (375,567)        (442,797)

Net Sales
2003                                                     2,449,130           2,328,154        5,075,758        4,728,750
2002                                                     1,859,811           1,704,249        3,731,763        3,433,702

Cost of Goods Sold
2003                                                     2,416,412           2,295,436        4,979,206        4,632,198
2002                                                     1,822,402           1,666,840        3,626,766        3,328,705
</TABLE>











                                       12

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
        AND RESULTS OF OPERATIONS


     Effective August 5, 2003, Cenex Harvest States Cooperatives changed its
name to CHS Inc. CHS Inc. (CHS, Cenex Harvest States Cooperatives or the
Company) is one of the nation's leading integrated agricultural companies. As a
cooperative, the Company is owned by farmers, ranchers and their local
cooperatives from the Great Lakes to the Pacific Northwest and from the Canadian
border to Texas. CHS buys commodities from, and provides products and services
to members and other customers. The Company provides a wide variety of products
and services, from initial agricultural inputs such as fuels, farm supplies and
crop nutrients, to agricultural outputs that include grains and oilseeds, grain
and oilseed processing, and food products.


     The Company has five distinct business segments: Agronomy, Energy, Country
Operations, Grain Marketing and Processed Grains and Foods. Summary data for
each of these segments for the three months and six months ended February 28,
2003 and 2002 is shown in Note 10 to the Consolidated Financial Statements.

     Many of the Company's businesses are highly seasonal. As a result,
operating income will vary throughout the year, but overall revenues remain
fairly constant, partly because the Company does not consolidate revenues in the
Agronomy segment. Overall, the Company's income is generally lowest during the
second fiscal quarter and highest during the third fiscal quarter. Certain
business segments are subject to varying seasonal fluctuations. For example,
Agronomy and Country Operations segments experience higher volumes and income
during the spring planting season and in the fall, which corresponds to harvest.
The Grain Marketing segment, as well, is somewhat subject to fluctuations in
revenue and earnings based on producer harvests, world grain prices and demand.
The Company's Energy segment generally experiences higher revenues and
profitability in certain operating areas, such as refined products, in the
summer when gasoline and diesel usage is highest. Other energy products, such as
propane, typically experience higher revenues and profitability during the
winter heating and crop drying seasons.

     While the Company's sales and operating earnings are derived from
businesses and operations which are wholly-owned and majority-owned, a portion
of business operations are conducted through companies in which the Company
holds ownership interests of 50% or less and does not control the operations.
The Company accounts for these investments primarily using the equity method of
accounting, wherein CHS records as equity income from investments its
proportionate share of income or loss reported by the entity, without
consolidating the revenues and expenses of the entity in the Company's
consolidated statements of operations. These investments principally include the
Company's 25% ownership in Agriliance, LLC (Agriliance), the 50% ownership in
TEMCO, LLC, the 50% ownership in United Harvest, LLC, the 24% ownership in
Horizon Milling, LLC (Horizon) and the 50% ownership in Ventura Foods, LLC
(Ventura).


RESULTS OF OPERATIONS

COMPARISON OF THE THREE MONTHS ENDED FEBRUARY 28, 2003 AND 2002

     NET (LOSS) INCOME. Consolidated net loss for the three months ended
February 28, 2003 was $4.1 million compared to net income of $2.4 million for
the three months ended February 28, 2002, which represents a $6.5 million
variance. Losses in the Energy segment were partially offset by increased income
in the Country Operations segment compared to the three months ended February
28, 2002.


     NET SALES. Consolidated net sales of $2.3 billion for the three months
ended February 28, 2003 increased $623.9 million (37%) compared to the three
months ended February 28, 2002.


     Energy net sales of $877.1 million increased $304.6 million (53%) during
the three months ended February 28, 2003 compared to the three months ended
February 28, 2002. Sales for the three months ended February 28, 2003 and 2002
were $900.0 million and $588.6 million, respectively. The Company eliminated all
intracompany sales from the Energy segment to the Country Operations segment of
$22.9 million and $16.1 million for the three months ended February 28, 2003 and
2002, respectively. The net increase in sales was primarily a result of a
refined fuels average sales price increase of $0.34 per gallon and a volume
increase of 5% compared to the three months ended February 28, 2002.
In addition,


                                       13
<PAGE>


propane sales volumes increased 20% and the average sales price increased $0.08
per gallon compared to the three months ended February 28, 2002. Refined fuels
commodity price increases were primarily the result of worldwide market
uncertainties and a colder winter compared to the prior year. The propane volume
increases were primarily a result of increased demand due to a colder winter
compared to the prior year.

     Country Operations farm supply sales of $119.8 million increased by $25.0
million (26%) during the three months ended February 28, 2003 compared to the
three months ended February 28, 2002. The increase is primarily due to increased
volumes from an acquisition, price increases on energy products and additional
tons of feed sold.


     Company-wide grain and oilseed net sales of $1.2 billion increased $292.2
million (32%) during the three months ended February 28, 2003 compared to the
three months ended February 28, 2002. Sales for the three months ended February
28, 2003 were $1,104.3 million and $311.1 million from the Grain Marketing and
Country Operations segments, respectively. Sales for the three months ended
February 28, 2002 were $877.6 million and $217.3 million from the Grain
Marketing and Country Operations segments, respectively. The Company eliminated
all intracompany sales from the Country Operations segment to the Grain
Marketing segment, of $212.4 million and $184.1 million, for the three months
ended February 28, 2003 and 2002, respectively. The net increase in sales was
primarily due to an increase of $0.80 per bushel (24%) in the average sales
price of all grain and oilseed marketed by the Company and an increase in grain
volume of 6% compared to the three months ended February 28, 2002.


     Processed Grains and Foods net sales of $128.3 million increased $2.1
million (2%) during the three months ended February 28, 2003 compared to the
three months ended February 28, 2002. This increase is primarily due to a sales
volume increase of 3% and an average sales price increase of $0.08 per pound on
refined oil. This increase was partially offset by a decrease in wheat milling
sales due to the formation of Horizon, a joint venture that was formed in
January 2002. After that date, the Company has accounted for operating results
of Horizon under the equity method of accounting. The Company has a 24% interest
in Horizon, and Cargill, Incorporated (Cargill) has a 76% interest. The Company
is leasing its five mills and related equipment to Horizon under an operating
lease.

     PATRONAGE DIVIDENDS. Patronage dividends received of $0.8 million decreased
$0.4 million (33%) during the three months ended February 28, 2003 compared to
the three months ended February 28, 2002.

     OTHER REVENUES. Other revenues of $27.8 million increased $4.1 million
(18%) during the three months ended February 28, 2003 compared to the three
months ended February 28, 2002. The most significant changes were increased
revenues within the Energy and Other segments compared to the three months ended
February 28, 2002.


     COST OF GOODS SOLD. Cost of goods sold of $2.3 billion increased $628.6
million (38%) during the three months ended February 28, 2003, compared to the
three months ended February 28, 2002. The Energy segment cost of goods sold
increased by $324.6 million (58%) during the three months ended February 28,
2003 compared to the three months ended February 28, 2002. Refined fuels average
cost increased by $0.36 per gallon and volumes increased by 5% compared to the
three months ended February 28, 2002, primarily the result of worldwide market
uncertainties and a colder winter compared to the prior year. Propane volumes
increased by 20% and the average cost increased by $0.09 per gallon compared to
the three months ended February 28, 2002, which was primarily the result of a
colder winter compared to the prior year. The cost of all grains and oilseed
procured by the Company through its Grain Marketing and Country Operations
segments increased $290.3 million (32%) compared to the three months ended
February 28, 2002 primarily due to a $0.79 average cost per bushel increase
(24%) and a 6% increase in volume. Country Operations segment farm supply cost
of goods sold increased by $17.9 million (25%) during the three months ended
February 28, 2003 compared to the three months ended February 28, 2002. Volumes
increased due to acquisitions and additional feed volumes and the average cost
per unit increased on energy products. In addition, during the three months
ended February 28, 2003 the Country Operations segment recorded impairments of
$3.2 million on its facilities. The increase in the Country Operations segment
was partially offset by $8.9 million of cash received in January 2003 from a
class action lawsuit, alleging illegal price-fixing against various feed vitamin
product suppliers. Processed



                                       14
<PAGE>


Grains and Foods segment cost of goods sold increased $0.3 million compared to
the three months ended February 28, 2002, primarily due to increased volumes of
3% and an average cost of raw materials increase of $0.07 per pound on soybeans,
which was offset by decreased cost of goods sold due to the formation of
Horizon, as previously discussed.

     MARKETING, GENERAL AND ADMINISTRATIVE. Marketing, general and
administrative expenses of $48.1 million for the three months ended February 28,
2003 increased by $1.7 million (4%) compared to the three months ended February
28, 2002. Marketing, general and administrative expenses increased by $1.7
million related to an impairment on the balance of the Company's investment in
Farmland Industries, Inc. (Farmland), of which $1.6 million was in the Country
Operations segment. In addition, marketing, general and administrative expense
changes in Country Operations and Energy segments were primarily due to
acquisitions.

     INTEREST. Interest expense of $11.4 million for the three months ended
February 28, 2003 increased by $1.2 million (12%) compared to the three months
ended February 28, 2002. The average level of short-term borrowings increased
$33.2 million to finance working capital needs, primarily due to increased
inventories related to higher commodity prices. The average short-term interest
rate increased 0.4% during the three months ended February 28, 2003 compared to
the three months ended February 28, 2002.

     EQUITY LOSS (INCOME) FROM INVESTMENTS. Equity loss from investments of $5.8
million for the three months ended February 28, 2003 increased by $3.6 million
compared to the three months ended February 28, 2002. The additional equity loss
was primarily attributable to decreased earnings from Ventura, a Processed
Grains and Foods segment investment and losses in Grain Marketing investments
due to tighter grain margins compared to February 28, 2002. These decreases were
partially offset by decreased losses in Agriliance, an Agronomy segment
investment, compared to the three-month period ended February 28, 2002.

     MINORITY INTERESTS. Minority interests of $3.3 million for the three months
ended February 28, 2003 increased by $0.7 million (25%) compared to the three
months ended February 28, 2002. The net change in minority interests was
primarily a result of more profitable operations within the Company's
majority-owned subsidiaries during the three months ended February 28, 2003
compared to the three months ended February 28, 2002. Substantially all minority
interests relate to National Cooperative Refinery Association (NCRA), an
approximately 74.5% owned subsidiary.

     INCOME TAXES. An income tax benefit of $3.2 million for the three months
ended February 28, 2003 increased $1.6 million compared to the three months
ended February 28, 2002. The income taxes and the effective tax rate vary each
period based upon profitability and nonpatronage business activity during each
of the comparable periods.


COMPARISON OF THE SIX MONTHS ENDED FEBRUARY 28, 2003 AND 2002

     NET (LOSS) INCOME. Consolidated net income for the six months ended
February 28, 2003 was $36.3 million compared to $43.7 million for the six months
ended February 28, 2002, which represents a $7.4 million (17%) decrease. Reduced
income in the Energy segment was partially offset by increased income in the
Country Operations segment compared to the six months ended February 28, 2002.


     NET SALES. Consolidated net sales of $4.7 billion for the six months ended
February 28, 2003 increased $1.3 billion (38%) compared to the six months ended
February 28, 2002.


     Energy net sales of $1.8 billion increased $651.9 million (59%) during the
six months ended February 28, 2003 compared to the six months ended February 28,
2002. Sales for the six months ended February 28, 2003 and 2002 were $1,811.6
million and $1,142.8 million, respectively. The Company eliminated all
intracompany sales from the Energy segment to the Country Operations segment of
$46.9 million and $30.0 million for the six months ended February 28, 2003 and
2002, respectively. The increase was primarily the result of increased refined
fuels volumes of 32% and an average sales price increase of $0.22 per gallon
compared to the six months ended February 28, 2002. In addition, propane sales
volumes increased 38% and the average sales price increased $0.04 per gallon
compared to the six months ended February 28, 2002. Refined fuels and propane
increases were primarily a result of the


                                       15
<PAGE>


acquisition of the wholesale energy business of Farmland, as well as all
interest in Country Energy, LLC a joint venture formerly with Farmland at a
purchase price of $39.2 million. In addition, refined fuels commodity prices
increased as a result of worldwide market uncertainties and a colder winter
compared to the prior year. Propane volumes increased due to a colder winter
compared to the prior year.

     Country Operations farm supply sales of $274.3 million increased by $47.2
million (21%) during the six months ended February 28, 2003 compared to the six
months ended February 28, 2002. The increase is primarily due to increased
volumes from an acquisition, increased tons of feed sold and price increases on
energy products.


     Company-wide grain and oilseed net sales of $2.4 billion increased $643.1
million (36%) during the six months ended February 28, 2003 compared to the six
months ended February 28, 2002. Sales for the six months ended February 28, 2003
were $2,265.9 million and $645.6 million from Grain Marketing and Country
Operations segments, respectively. Sales for the six months ended February 28,
2002 were $1,757.7 million and $459.6 million from the Grain Marketing and
Country Operations segments, respectively. The Company eliminated all
intracompany sales from the Country Operations segment to the Grain Marketing
segment, of $463.8 million and $412.7 million, for the six months ended February
28, 2003 and 2002, respectively. The net increase in sales was primarily due to
an increase of $1.19 per bushel (40%) in the average sales price of all grain
and oilseed marketed by the Company, which was partially offset by a decrease in
grain volume of 3% compared to the six months ended February 28, 2002.


     Processed Grains and Foods net sales of $242.1 million decreased $47.1
million (16%) during the six months ended February 28, 2003 compared to the six
months ended February 28, 2002. The net decrease in sales is primarily due to
the formation of Horizon, as previously discussed. This decrease was partially
offset by increased refined oil sales primarily due to a volume increase of 1%
and an average price increase of $0.05 per pound.

     PATRONAGE DIVIDENDS. Patronage dividends received of $1.0 million decreased
$1.0 million during the six months ended February 28, 2003 compared to the six
months ended February 28, 2002.

     OTHER REVENUES. Other revenues of $62.9 million increased $7.2 million
(13%) during the six months ended February 28, 2003 compared to the six months
ended February 28, 2002. The most significant changes were due to increased
service and other revenues within the Country Operations segment compared to the
six months ended February 28, 2002.


     COST OF GOODS SOLD. Cost of goods sold of $4.6 billion increased $1.3
billion (39%) during the six months ended February 28, 2003, compared to the six
months ended February 28, 2002. Cost of goods sold in the Energy segment
increased by $686.9 million (65%) during the six months ended February 28, 2003
compared to the six months ended February 28, 2002. Refined fuels volumes
increased by 32% and the average cost increased by $0.24 per gallon compared to
the six months ended February 28, 2002, primarily the result of the acquisition
previously discussed, worldwide market uncertainties and a colder winter
compared to the prior year. Propane volumes increased by 38% and the average
cost increased by $0.04 per gallon compared to the six months ended February 28,
2002, primarily the result of the acquisition previously discussed and a colder
winter compared to the prior year. The cost of all grains and oilseed procured
by the Company through its Grain Marketing and Country Operations segments
increased $637.4 million (36%) compared to the six months ended February 28,
2002 primarily due to a $1.18 average cost per bushel increase (40%), which was
partially offset by a 3% decrease in volume. Country Operations segment farm
supply cost of goods sold increased by $34.7 million (19%) during the six months
ended February 28, 2003 compared to the six months ended February 28, 2002
primarily due to an acquisition, volume increases on feed, and an average cost
per unit increase on energy products. In addition, during the six months ended
February 28, 2003 the Country Operations segment recorded impairments of $3.2
million on its facilities. The increase in the Country Operations segment was
partially offset by $10.7 million of cash received from a class action lawsuit,
alleging illegal price fixing against various feed vitamin product suppliers.
Cost of goods sold in the Processed Grains and Foods segment decreased by $45.4
million (17%) compared to the six months ended February 28, 2002, primarily due
to the formation of Horizon, as previously discussed, which was partially offset
by refined oil volume increases of 1% and cost of raw material increases of
$0.04 per pound.



                                       16
<PAGE>


     MARKETING, GENERAL AND ADMINISTRATIVE. Marketing, general and
administrative expenses of $91.2 million for the six months ended February 28,
2003 increased by $1.9 million (2%) compared to the six months ended February
28, 2002. Marketing, general and administrative expenses increased by $1.7
million related to an impairment on the balance of the Company's investment in
Farmland, of which $1.6 million was in the Country Operations segment. In
addition, marketing, general and administrative expense changes in Country
Operations and Energy segments were primarily due to acquisitions.

     INTEREST. Interest expense of $24.2 million for the six months ended
February 28, 2003 increased by $3.2 million (15%) compared to the six months
ended February 28, 2002. The average level of short-term borrowings increased
$142.1 million to finance working capital needs, primarily due to increases in
inventories in the Grain Marketing, Country Operations and Energy segments,
related to higher commodity prices and the purchase of Farmland's wholesale
energy business, discussed previously. The average short-term interest rate
decreased 0.4% during the six months ended February 28, 2003 compared to the six
months ended February 28, 2002. Long-term debt borrowings increased due to an
additional $175.0 million of private placement debt which was issued in October
2002.

     EQUITY (LOSS) INCOME FROM INVESTMENTS. Equity income from investments of
$2.4 million for the six months ended February 28, 2003 increased by $0.6
million (36%) compared to the six months ended February 28, 2002. The increase
was primarily attributable to increased earnings from the Energy segment
investments and decreased losses from Agriliance, an Agronomy segment
investment. The increase was partially offset by decreased investment earnings
in the Grain Marketing and Processed Grain and Foods segments.

     MINORITY INTERESTS. Minority interests of $8.8 million for the six months
ended February 28, 2003 increased by $3.1 million (54%) compared to the six
months ended February 28, 2002. The net change in minority interests was
primarily a result of more profitable operations within the Company's
majority-owned subsidiaries during the six months ended February 28, 2003
compared to the six months ended February 28, 2002. Substantially all minority
interests relate to NCRA, an approximately 74.5% owned subsidiary.

     INCOME TAXES. Income tax expense of $2.3 million for the six months ended
February 28, 2003 decreased $2.3 million (51%) compared to the six months ended
February 28, 2002, resulting in effective tax rates of a 5.9% and 9.6%,
respectively. The income taxes and the effective tax rate vary each period based
upon profitability and nonpatronage business activity during each of the
comparable periods.


LIQUIDITY AND CAPITAL RESOURCES

CASH FLOWS FROM OPERATIONS

     Operating activities of the Company used net cash of $122.5 million and
$138.9 million during the three months ended February 28, 2003 and 2002,
respectively. For the three-month period ended in 2003, net non-cash expenses of
$35.6 million were offset by a net loss for the period of $4.1 million and
increased working capital requirements of $154.0 million. For the three-month
period ended in 2002, net income of $2.4 million and net non-cash expenses of
$22.1 million were offset by increased working capital requirements of $163.4
million.

     Operating activities of the Company used net cash of $120.4 million and
$115.3 million during the six months ended February 28, 2003 and 2002,
respectively. For the six-month period ended in 2003, net income of $36.3
million and net non-cash expenses of $59.5 million were offset by increased
working capital requirements of $216.2 million. For the six-month period ended
in 2002, net income of $43.7 million and net non-cash expenses of $57.6 million
were offset by increased working capital requirements of $216.6 million.

CASH FLOWS FROM INVESTING ACTIVITIES

     For the three months ended February 28, 2003 and 2002, the net cash flows
used in the Company's investing activities totaled $18.2 million and $15.5
million, respectively.

     The acquisition of property, plant and equipment comprised the primary use
of cash totaling $36.8 million and $30.1 million for the three months ended
February 28, 2003 and 2002, respectively. For the year ended August 31, 2003 the
Company expects to spend approximately $216.8 million for the


                                       17
<PAGE>


acquisition of property, plant and equipment, which includes $57.0 million of
expenditures for the construction of an oilseed processing facility in Fairmont,
Minnesota. Total expenditures related to the construction of the facility are
projected to be approximately $80.0 million, of which $47.4 million was used for
construction through February 28, 2003. Capital expenditures primarily related
to the Environmental Protection Agency low sulfur fuel regulations required by
2006, are expected to be approximately $387.0 million in total for the Company's
Laurel, Montana and NCRA's McPherson, Kansas refineries over the next three
years, of which $0.1 million has been spent at the Laurel refinery and $15.5
million has been spent by NCRA at the McPherson refinery as of February 28,
2003. It is expected that approximately 80% of the costs will be incurred at
NCRA's McPherson refinery. The Company expects to fund the refinery expenditures
with a combination of cash, future earnings and additional borrowings.

     Investments made during the three months ended February 28, 2003 and 2002
totaled $2.8 million and $0.1 million, respectively.

     Acquisitions of intangibles were $0.1 million for each of the three months
ended February 28, 2003 and 2002, respectively.

     During the three months ended February 28, 2003 the changes in notes
receivable resulted in a decrease in cash flows of $0.3 million, and during the
three months ended February 28, 2002 the changes in notes receivable resulted in
an increase in cash flows of $4.6 million.

     Partially offsetting cash outlays in investing activities were proceeds
from the disposition of property, plant and equipment of $7.2 million and $2.5
million for the three months ended February 28, 2003 and 2002, respectively.
Also partially offsetting cash outlays were distributions received from joint
ventures and investments totaling $14.5 million and $8.0 million for the three
months ended February 28, 2003 and 2002, respectively.

     For the six months ended February 28, 2003 and 2002, the net cash flows
used in the Company's investing activities totaled $50.1 million and $54.4
million, respectively.

     The acquisition of property, plant and equipment comprised the primary use
of cash totaling $77.4 million and $51.9 million for the six months ended
February 28, 2003 and 2002, respectively.

     Investments made during the six months ended February 28, 2003 and 2002
totaled $4.2 million and $6.2 million, respectively.

     Acquisitions of intangibles were $0.4 million and $27.5 million for the six
months ended February 28, 2003 and 2002, respectively. During the six months
ended February 28, 2002, the acquisitions of intangibles were primarily related
to the purchase of Farmland's interest in its wholesale energy business, as
previously discussed, and represents trademarks, tradenames and non-compete
agreements.

     During the six months ended February 28, 2003 the changes in notes
receivable resulted in a decrease in cash flows of $11.5 million primarily from
additional related party notes receivables at NCRA from its minority owners,
Growmark, Inc. and MFA Oil Company. During the six months ended February 28,
2002 the changes in notes receivable resulted in an increase of $2.4 million.

     Distributions to minority owners for the six months ended February 28, 2003
and 2002 were $0.5 million and $4.4 million, respectively, and were primarily
related to NCRA.

     Partially offsetting cash outlays in investing activities were
distributions received from joint ventures and investments totaling $31.5
million and $23.4 million for the six months ended February 28, 2003 and 2002,
respectively. Also partially offsetting cash outlays were proceeds from the
disposition of property, plant and equipment of $11.9 million and $8.6 million
for the six months ended February 28, 2003 and 2002, respectively.

CASH FLOWS FROM FINANCING ACTIVITIES

     The Company finances its working capital needs through short-term lines of
credit with a syndication of banks. In May 2002, the Company renewed its 364-day
credit facility of $550.0 million committed. In addition to these lines of
credit, the Company has a 364-day credit facility dedicated to NCRA, with a
syndication of banks in the amount of $30.0 million committed. On February 28,
2003,


                                       18
<PAGE>


August 31, 2002 and February 28, 2002, the Company had total short-term
indebtedness outstanding on these various facilities and other short-term notes
payable totaling $370.6 million, $332.5 million and $298.2 million,
respectively. The increase in 2003 is primarily due to increases in inventories
in the Grain Marketing and Country Operations segments related to higher grain
prices. In October 2002, $175.0 million received from private placement proceeds
was used to pay down the Company's 364-day credit facility. In January 2003,
$83.0 million of proceeds received from the issuance of the Company's preferred
stock (net of broker commissions of $3.2 million) was also used to pay down the
364-day credit facility.

     In June 1998, the Company established a five-year revolving credit facility
with a syndication of banks, with $200.0 million committed. The Company had
outstanding balances on this facility of $45.0 million, $75.0 million and $75.0
million on February 28, 2003, August 31, 2002 and February 28, 2002,
respectively. Repayments of $30.0 million were made on this facility during the
three months ended February 28, 2003.

     The Company finances its long-term capital needs, primarily for the
acquisition of property, plant and equipment, with long-term agreements with
various insurance companies and cooperative banks. In June 1998, the Company
established a long-term credit agreement through the cooperative banks. This
facility committed $200.0 million of long-term borrowing capacity to the
Company, with repayments through fiscal year 2009. The amount outstanding on
this credit facility was $141.0 million, $144.3 million and $147.6 million on
February 28, 2003, August 31, 2002 and February 28, 2002, respectively.
Repayments of $1.6 million and $3.3 million were made on this facility during
each of the three months and six months ended February 28, 2003 and 2002.

     Also in June 1998, the Company completed a private placement with several
insurance companies for long-term debt in the amount of $225.0 million.
Repayments will be made in equal annual installments of $37.5 million each in
the years 2008 through 2013.

     In January 2001, the Company entered into a note purchase and private shelf
agreement with Prudential Insurance Company. The long-term note in the amount of
$25.0 million will be repaid in equal annual installments of approximately $3.6
million, in the years 2005 through 2011. A subsequent note for $55.0 million was
issued in March 2001, related to the private shelf facility. The $55.0 million
note will be repaid in equal annual installments of approximately $7.9 million,
in the years 2005 through 2011.

     In October 2002, the Company completed a private placement with several
insurance companies for long-term debt in the amount of $175.0 million which was
layered into two series. The first series of $115.0 million has an interest rate
of 4.96% and will be repaid in equal semi-annual installments of approximately
$8.8 million during the years 2007 through 2013. The second series of $60.0
million has an interest rate of 5.60% and will be repaid in equal semi-annual
installments of approximately $4.6 million during fiscal years 2012 through
2018.

     The Company, through NCRA, had revolving term loans outstanding of $16.5
million, $18.0 million and $19.5 million on February 28, 2003, August 31, 2002
and February 28, 2002, respectively. Repayments of $0.8 million and $1.5 million
were made during each of the three months and six months ended February 28, 2003
and 2002.

     On February 28, 2003, the Company had total long-term debt outstanding of
$709.9 million, of which $219.1 million was bank financing, $480.0 million was
private placement proceeds and $10.8 million was industrial development revenue
bonds and other notes and contracts payable. The aggregate amount of long-term
debt payable presented in Management's Discussion and Analysis in the Company's
Annual Report on Form 10-K for the year ended August 31, 2002 has not materially
changed during the six months ended February 28, 2003 other than for the $30.0
million repayment on the five-year revolver which was classified as a current
payable on August 31, 2002, and the $175.0 million of private placement debt
discussed previously, of which repayments will not start until 2007. The Company
is in compliance with all debt covenants and restrictions as of February 28,
2003.

     During the three months ended February 28, 2003 and 2002, the Company
received no proceeds from borrowings on a long-term basis, and repaid long-term
debt of $33.4 million and $4.3 million, respectively.


                                       19
<PAGE>


     During the six months ended February 28, 2003 and 2002, the Company
borrowed on a long-term basis $175.0 million and $30.0 million, respectively,
and during the same periods repaid long-term debt of $37.3 million and $10.1
million, respectively.

     In accordance with the bylaws and by action of the Board of Directors,
annual net earnings from patronage sources are distributed to consenting patrons
following the close of each fiscal year. Effective September 1, 2000, patronage
refunds are calculated based on earnings for financial statement purposes rather
than based on amounts reportable for federal income tax purposes as had been the
Company's practice prior to this date. This change was authorized through a
bylaw amendment at the Company's annual meeting on December 1, 2000. The
patronage earnings from the fiscal year ended August 31, 2002 were distributed
during the three months ended February 28, 2003. The cash portion of this
distribution, deemed by the Board of Directors to be 30%, was $26.4 million.
During the three months ended February 28, 2002 the Company distributed cash
patronage of $39.6 million from the patronage earnings of the fiscal year ended
August 31, 2001.

     The current equity redemption policy, as authorized by the Board of
Directors, allows for the redemption of capital equity certificates held by
inactive direct members and patrons and active direct members and patrons at age
72 or death that were of age 61 or older on June 1, 1998. For active direct
members and patrons who were of age 60 or younger on June 1, 1998, and member
cooperatives, equities that have been outstanding for more than 10 years will be
redeemed annually based on a prorata formula where the numerator is dollars
available for such purpose as determined by the Board of Directors, and the
denominator is the sum of the patronage certificates that have been outstanding
for more than 10 years held by such eligible members and patrons. Total
redemptions related to the year ended August 31, 2002, to be distributed in
fiscal year 2003, are expected to be approximately $30.3 million, of which $24.4
million was redeemed during the six months ended February 28, 2003. During the
six months ended February 28, 2002 the Company redeemed $23.2 million of equity.
Redemptions of equity by the Company during the three-month periods ended
February 28, 2003 and 2002 were $21.9 million and $21.4 million, respectively.

     In January 2003, the Board of Directors authorized the sale and issuance of
up to 3,500,000 shares of 8% Cumulative Redeemable Preferred Stock (New
Preferred) at a price of $25.00 per share. The Company filed a registration
statement on Form S-2 with the Securities and Exchange Commission registering
3,000,000 shares of the New Preferred (with an additional over-allotment option
of 450,000 shares granted to the underwriters), which was declared effective on
January 27, 2003. The shares were subsequently sold and are listed on the Nasdaq
National Market. As of February 28, 2003 the Company had $86.3 million
(3,450,000 shares) of the New Preferred outstanding. Expenses related to the
issuance of the New Preferred were $3.7 million through the same period.

     As of February 28, 2003 the Company had $9.5 million (9,454,874 shares) of
8% Preferred Stock (Old Preferred) outstanding. The Company had previously
suspended sales of the Old Preferred, and on February 25, 2003 the Company filed
a post-effective amendment to terminate the offering of the Old Preferred
shares. On March 5, 2003 the Company's Board of Directors authorized the
redemption and conversion of the Old Preferred shares. A redemption notification
and a conversion election form were sent to holders of the Old Preferred shares
on March 21, 2003 explaining that on April 25, 2003 all shares of the Old
Preferred will be redeemed by the Company for $1 per share unless they are
converted into shares of the Company's New Preferred. The conversion will not
change the base liquidation amount or dividend amount of the Old Preferred since
25 shares of the Old Preferred will convert to 1 share of the New Preferred.


OFF BALANCE SHEET FINANCING ARRANGEMENTS

LEASE COMMITMENTS:

     The Company's lease commitments presented in Management's Discussion and
Analysis in the Company's Annual Report on Form 10-K for the year ended August
31, 2002 have not materially changed during the six months ended February 28,
2003.

GUARANTEES:

     The Company is a guarantor for lines of credit for related companies of
which $46.5 million was outstanding on February 28, 2003. The Company's bank
covenants allow maximum guarantees of $100.0 million. All outstanding loans with
respective creditors are current as of February 28, 2003.


                                       20
<PAGE>


DEBT:

     There is no material off balance sheet debt.


CRITICAL ACCOUNTING POLICIES

     The Company's Critical Accounting Policies are presented in the Company's
Annual Report on Form 10-K for the year ended August 31, 2002.


EFFECT OF INFLATION AND FOREIGN CURRENCY TRANSACTIONS

     The Company believes that inflation and foreign currency fluctuations have
not had a significant effect on its operations. The Company has recently opened
a grain marketing office in Brazil that will impact its exposure to foreign
currency fluctuations.


RECENT ACCOUNTING PRONOUNCEMENTS

     The Financial Accounting Standards Board (FASB) issued SFAS No. 143,
"Accounting for Asset Retirement Obligations" which addresses financial
accounting and reporting for obligations associated with the retirement of
tangible long-lived assets and the associated asset retirement costs. SFAS No.
143 is effective for financial statements issued for fiscal years beginning
after June 15, 2002. The Company is in the process of finalizing its analysis of
adopting this standard. The Company's Energy segment operates oil refineries and
related pipelines for which the Company would be subject to Asset Retirement
Obligations (ARO) if such assets were to be dismantled. The Company, however,
expects to operate its refineries and related pipelines indefinitely. Since the
time period to dismantle these assets is indeterminate, a corresponding ARO is
not currently estimable and therefore has not been recorded. The Company
continues to assess whether any other ARO's exist related to its remaining
operations, however, based on available information to date, no ARO's have been
identified. As such, the Company believes that the effects of adopting this
standard do not have a material effect on the Company.

     In November 2002, the FASB issued FASB Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others". The initial recognition and initial
measurement provisions of this interpretation are applicable on a prospective
basis to guarantees issued or modified after December 31, 2002, irrespective of
the guarantor's fiscal year-end. The disclosure requirements are effective for
financial statements of interim or annual periods ending after December 15,
2002. The interpretation addresses the disclosures to be made by a guarantor in
its interim and annual financial statements about its obligations under
guarantees. The interpretation also clarifies the requirements related to the
recognition of a liability by a guarantor at the inception of the guarantee for
obligations the guarantor has undertaken in issuing the guarantee. The Company
has adopted this interpretation for the quarter ended February 28, 2003.

     In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation
of Variable Interest Entities". The interpretation addresses consolidation of
certain entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the
entity to finance its activities without additional subordinated financial
support from other parties. The interpretation applies immediately to variable
interest entities created after January 31, 2003, and to variable interest
entities in which an enterprise obtains an interest after that date. It applies
in the first fiscal year or interim period beginning after June 15, 2003 to
variable interest entities in which an enterprise holds a variable interest that
it acquired before February 1, 2003. The Company believes that the effects of
adopting this standard do not have a material effect on the Company.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     For the period ended February 28, 2003 the Company did not experience any
adverse changes in market risk exposures that materially affect the quantitative
and qualitative disclosures presented in the Company's Annual Report on Form
10-K for the year ended August 31, 2002.


                                       21
<PAGE>


ITEM 4. CONTROLS AND PROCEDURES

     The Company's Chief Executive Officer and Chief Financial Officer have
concluded, based on their evaluation within 90 days of the filing date of this
report, that the Company's disclosure controls and procedures are adequately
designed to ensure that information required to be disclosed by the Company in
the reports that it files or submits under the Securities and Exchange Act of
1934, as amended, is recorded, processed, summarized and reported, within the
time periods specified in applicable rules and forms. There have not been any
significant changes in the Company's internal controls or in other factors that
could significantly affect those controls, subsequent to the date of such
evaluation, including any corrective actions taken with regard to significant
deficiencies and material weaknesses.



                           PART II. OTHER INFORMATION

ITEM 6. EXHIBIT AND REPORTS ON FORM 8-K

(a) Exhibits:

          EXHIBIT       DESCRIPTION
          -------       -----------

            4.1         Resolution amending the Certificate of Designations for
                        the Company's 8% Preferred Stock (previously filed).

            10.1        2002 Amended and Restated Credit Agreement (364-Day
                        Revolving Loan) dated December 17, 2002 by and among
                        National Cooperative Refinery Association, CoBank, ACB
                        and Farm Credit Bank of Wichita, D/B/A U.S. AgBank, FCB
                        (previously filed).

            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.

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

            99.1        Cautionary Statement (previously filed).

(b) Reports on Form 8-K

       None.





                                       22
<PAGE>




                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                                    CHS INC.
                                        --------------------------------------
                                                  (Registrant)



         DATE                           SIGNATURE
         ----                           ---------


     November 14, 2003                  /s/ JOHN SCHMITZ
---------------------------             --------------------------------------
         (Date)                         John Schmitz
                                        Executive Vice President and
                                        Chief Financial Officer
















                                       23