##### Table of Contents





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

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934for the quarterly period ended
    February 28, 2009.oro

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

41-0251095(I.R.S. Employer
    Identification Number)5500 Cenex Drive
    Inver Grove Heights, MN 55077(Address of principal
    executive offices,
    including zip code)

(651) 355-6000(Registrants telephone
    number,
    including area code)   þ o
  Rule 12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer o
    Non-accelerated
    filer þ
    Smaller
    reporting
    company o   Rule 12b-2 o þ
    Number of shares outstanding atClass

April 9, 2009NONE

NONE




---



##### 



INDEX
   
 Page No.PART I. FINANCIAL INFORMATIONItem 1.

Financial Statements (unaudited)


3Consolidated Balance Sheets as of February 28,
    2009, August 31, 2008 and February 29, 2008


3Consolidated Statements of Operations for the
    three months and six months ended February 28, 2009 and February
    29, 2008


4Consolidated Statements of Cash Flows for the six
    months ended February 28, 2009 and February 29, 2008


5Notes to Consolidated Financial Statements


6Item 2.

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


21Item 3.

Quantitative and Qualitative Disclosures about
    Market Risk


41Item 4T.

Controls and Procedures


41PART II. OTHER INFORMATIONItem 1.

Legal Proceedings


42Item 1A.

Risk Factors


42Item 4.

Submission of Matters to a Vote of Security
    Holders


42Item 6.

Exhibits


42SIGNATURE PAGE


43EX-31.1EX-31.2EX-32.1EX-32.2   1




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##### Table of Contents



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




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##### Table of Contents



Item 1.
    Financial
    Statements  CHS INC.
    AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
 (Unaudited)
  February 28,


August 31,


February 29,2009


2008


2008(dollars in thousands)ASSETSCurrent assets:Cash and cash equivalents

$
346,687


$
136,540


$
122,351Receivables


1,526,003



2,307,794



2,012,859Inventories


1,982,090



2,368,024



2,714,039Derivative assets


429,784



369,503



1,028,869Other current assets


843,088



667,338



1,241,153Total current assets


5,127,652



5,849,199



7,119,271Investments


704,928



784,516



848,710Property, plant and equipment


2,013,790



1,948,305



1,873,945Other assets


325,171



189,958



224,199Total assets

$
8,171,541


$
8,771,978


$
10,066,125LIABILITIES AND EQUITIESCurrent liabilities:Notes payable

$
273,040


$
106,154


$
970,975Current portion of long-term debt


93,084



118,636



107,108Customer credit balances


235,263



224,349



272,745Customer advance payments


813,139



644,822



1,269,252Checks and drafts outstanding


152,722



204,896



197,585Accounts payable


945,488



1,838,214



1,548,135Derivative liabilities


467,108



273,591



694,584Accrued expenses


300,059



374,898



298,199Dividends and equities payable


93,534



325,039



197,682Total current liabilities


3,373,437



4,110,599



5,556,265Long-term debt


1,058,460



1,076,219



1,152,630Other liabilities


379,524



423,742



371,409Minority interests in subsidiaries


239,903



205,732



192,434Commitments and contingencies
    Equities


3,120,217



2,955,686



2,793,387Total liabilities and equities

$
8,171,541


$
8,771,978


$
10,066,125    3




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##### Table of Contents



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


For the Six Months EndedFebruary 28,


February 29,


February 28,


February 29,2009


2008


2009


2008(dollars in thousands)Revenues

$
5,177,069


$
6,891,345


$
12,910,988


$
13,416,731Cost of goods sold


4,962,092



6,633,720



12,375,504



12,844,469Gross profit


214,977



257,625



535,484



572,262Marketing, general and administrative


98,973



75,005



186,714



141,464Operating earnings


116,004



182,620



348,770



430,798(Gain) loss on investments


(3,001
)


(230
)


51,975



(95,178
)Interest, net


13,775



18,066



33,950



31,603Equity income from investments


(10,388
)


(45,413
)


(31,111
)


(76,603
)Minority interests


19,363



12,831



41,545



35,810Income before income taxes


96,255



197,366



252,411



535,166Income taxes


13,975



29,335



32,880



66,235Net income

$
82,280


$
168,031


$
219,531


$
468,931    4




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##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
 (Unaudited)
  For the Six Months EndedFebruary 28,


February 29,2009


2008(dollars in thousands)Cash flows from operating activities:Net income

$
219,531


$
468,931Adjustments to reconcile net income to net cash provided by
    (used in) operating activities:Depreciation and amortization


95,154



83,430Amortization of deferred major repair costs


12,097



14,158Income from equity investments


(31,111
)


(76,603
)Distributions from equity investments


41,191



19,132Minority interests


41,545



35,810Noncash patronage dividends received


(2,672
)


(1,341
)Gain on sale of property, plant and equipment


(1,184
)


(4,298
)Loss (gain) on investments


51,975



(95,178
)Deferred taxes


2,772



39,931Other, net


(3,829
)


(627
)Changes in operating assets and liabilities:Receivables


986,568



(603,924
)Inventories


403,582



(872,787
)Derivative assets


(60,281
)


(781,787
)Other current assets and other assets


(179,099
)


(704,771
)Customer credit balances


9,375



161,927Customer advance payments


163,611



901,475Accounts payable and accrued expenses


(1,001,756
)


470,614Derivative liabilities


193,518



517,375Other liabilities


(6,746
)


(4,130
)Net cash provided by (used in) operating activities


934,241



(432,663
)Cash flows from investing activities:Acquisition of property, plant and equipment


(136,796
)


(187,312
)Proceeds from disposition of property, plant and equipment


4,396



5,839Expenditures for major repairs


(1
)


(21,662
)Investments


(90,242
)


(321,167
)Investments redeemed


10,017



34,168Proceeds from sale of investments


41,612



114,198Joint venture distribution transaction, net


850



(13,024
)Changes in notes receivable


123,564



(6,368
)Acquisition of intangibles


(1,320
)


(1,948
)Business acquisitions, net of cash received


(76,364
)


(5,258
)Other investing activities, net


(155
)


429Net cash used in investing activities


(124,439
)


(402,105
)Cash flows from financing activities:Changes in notes payable


(221,184
)


299,799Long-term debt borrowings






600,000Principal payments on long-term debt


(39,022
)


(30,233
)Payments for bank fees on debt


(1,434
)


(3,313
)Changes in checks and drafts outstanding


(52,871
)


54,442Distributions to minority owners


(14,942
)


(49,331
)Costs incurred  capital equity certificates redeemed


(111
)


(34
)Preferred stock dividends paid


(9,048
)


(7,240
)Retirements of equities


(34,703
)


(69,703
)Cash patronage dividends paid


(226,340
)


(194,980
)Net cash (used in) provided by financing activities


(599,655
)


599,407Net increase (decrease) in cash and cash equivalents


210,147



(235,361
)Cash and cash equivalents at beginning of period


136,540



357,712Cash and cash equivalents at end of period

$
346,687


$
122,351    5




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##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 (dollars
    in thousands)
  Note 1.
    Accounting
    Policies      Form 10-K,
  Derivative
    Instruments and Hedging Activities
      No. FIN 39-1 FIN 39-1)
    Purchase


SalesContracts


Contracts(units in thousands)Grain and oilseed  bushels


445,967



578,124Energy products  barrels


12,955



9,597Crop nutrients  tons


1,129



1,690Ocean and barge freight  metric tons


2,848



2,621  6




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##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
    Gross FairValuesDerivative Assets:Commodity and freight contracts

$
525,745Foreign exchange contracts


31$
525,776Derivative Liabilities:Commodity and freight contracts

$
558,946Foreign exchange contracts


3,857Interest rate contracts


297$
563,100     Location of

Amount ofGain (Loss)

Gain (Loss)Commodity and freight contracts

Cost of goods sold

$
12,543Foreign exchange contracts

Cost of goods sold


(1,572
)Interest rate contracts

Interest expense


(777
)$
10,194   Commodity
    and Freight Contracts:
     7




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##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
        Foreign
    Exchange Contracts:
    Interest
    Rate Contracts:
    Goodwill
    and Other Intangible Assets
   8




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##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
      Recent
    Accounting Pronouncements
        SFAS No. 141R-1, SFAS No. 141R-1
 9




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##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  Reclassifications
    Note 2.
    Receivables  February 28,


August 31,


February 29,2009


2008


2008Trade accounts receivable

$
1,212,680


$
2,181,132


$
1,975,126Cofina Financial notes receivable


302,122Other


106,585



200,313



105,1181,621,387



2,381,445



2,080,244Less allowances and reserves


95,384



73,651



67,385$
1,526,003


$
2,307,794


$
2,012,859     Note 3.
    Inventories  February 28,


August 31,


February 29,2009


2008


2008Grain and oilseed

$
641,660


$
918,514


$
1,552,203Energy


427,928



596,487



409,926Crop nutrients


380,389



399,986



307,680Feed and farm supplies


493,585



371,670



361,897Processed grain and oilseed


30,962



74,537



77,800Other


7,566



6,830



4,533$
1,982,090


$
2,368,024


$
2,714,039       Note 4.
    Investments   10




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##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
           11




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##### Table of Contents



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


For the Six Months EndedFebruary 28,


February 29,


February 28,


February 29,2009


2008


2009


2008Net sales

$
103,162


$
187,660


$
199,540


$
398,250Gross profit


2,567



20,363



16,867



54,237Net loss


(24,682
)


(23,670
)


(36,424
)


(47,186
)   February 28,


August 31,


February 29,2009


2008


2008Current assets

$
503,030


$
456,385


$
607,950Non-current assets


40,783



40,946



52,549Current liabilities


198,582



119,780



301,053Non-current liabilities


12,125



12,421



17,633   Note 5.
    Notes
    Payable  February 28,


August 31,


February 29,2009


2008


2008Notes payable

$
17,399


$
106,154


$
970,975Cofina Financial notes payable


255,641$
273,040


$
106,154


$
970,975   364-day
       12




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##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  Note 6.
    Interest,
    net  For the Three Months Ended


For the Six Months EndedFebruary 28,


February 29,


February 28,


February 29,2009


2008


2009


2008Interest expense

$
18,651


$
22,058


$
40,117


$
40,429Interest income


4,876



3,992



6,167



8,826Interest, net

$
13,775


$
18,066


$
33,950


$
31,603   Note 7.
    Equities    Fiscal 2009


Fiscal 2008Balances, September 1, 2008 and 2007

$
2,955,686


$
2,475,455Net income


219,531



468,931Other comprehensive loss


(18,066
)


(56,241
)Patronage distribution


(639,887
)


(555,150
)Patronage accrued


652,000



550,000Equities retired


(34,703
)


(69,703
)Equity retirements accrued


84,648



159,315Equities issued in exchange for elevator properties


1,899



1,608Preferred stock dividends


(9,048
)


(7,240
)Preferred stock dividends accrued


3,016



2,413Accrued dividends and equities payable


(84,359
)


(177,616
)Other, net


(10,500
)


1,615Balances, February 28, 2009 and February 29, 2008

$
3,120,217


$
2,793,387     Note 8.
    Comprehensive
    Income   13




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##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  Note 9.
    Employee
    Benefit Plans    Qualified


Non-QualifiedPension Benefits


Pension Benefits


Other Benefits2009


2008


2009


2008


2009


2008Components of net periodic benefit costs for the three months
    ended February 28, 2009 and February 29, 2008:Service cost

$
4,061


$
3,920


$
296


$
315


$
279


$
262Interest cost


5,692



5,411



594



550



561



425Expected return on plan assets


(7,520
)


(7,847
)Prior service cost (credit) amortization


529



541



137



144



(50
)


(80
)Actuarial loss (gain) amortization


1,281



1,335



162



215



(41
)


(64
)Transition amount amortization


















233



233Net periodic benefit cost

$
4,043


$
3,360


$
1,189


$
1,224


$
982


$
776Components of net periodic benefit costs for the six months
    ended February 28, 2009 and February 29, 2008:Service cost

$
8,122


$
7,693


$
592


$
623


$
557


$
523Interest cost


11,382



10,624



1,188



1,095



1,121



850Expected return on plan assets


(15,108
)


(15,651
)Prior service cost (credit) amortization


1,058



1,082



273



289



(99
)


(160
)Actuarial loss (gain) amortization


2,526



2,435



324



421



(83
)


(129
)Transition amount amortization


















468



468Net periodic benefit cost

$
7,980


$
6,183


$
2,377


$
2,428


$
1,964


$
1,552   Employer
    Contributions:
    Note 10.
    Segment
    Reporting   14




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##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
               15




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##### Table of Contents



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





Corporate


ReconcilingEnergy


Business


Processing


and Other


Amounts


TotalFor the Three Months Ended February 28, 2009Revenues

$
1,546,147


$
3,416,515


$
270,628


$
8,454


$
(64,675
)

$
5,177,069Cost of goods sold


1,418,479



3,346,583



262,037



(332
)


(64,675
)


4,962,092Gross profit


127,668



69,932



8,591



8,786







214,977Marketing, general and administrative


33,661



47,545



7,530



10,237







98,973Operating earnings (losses)


94,007



22,387



1,061



(1,451
)






116,004Gain on investments






(3,001
)














(3,001
)Interest, net


982



9,707



3,348



(262
)






13,775Equity income (loss) from investments


(591
)


1,785



(11,509
)


(73
)






(10,388
)Minority interests


18,472



891















19,363Income (loss) before income taxes

$
75,144


$
13,005


$
9,222


$
(1,116
)

$



$
96,255Intersegment revenues

$
(57,575
)

$
(6,330
)

$
(770
)





$
64,675


$
For the Three Months Ended February 29, 2008Revenues

$
2,399,044


$
4,273,984


$
290,049


$
9,147


$
(80,879
)

$
6,891,345Cost of goods sold


2,321,630



4,120,071



273,642



(744
)


(80,879
)


6,633,720Gross profit


77,414



153,913



16,407



9,891







257,625Marketing, general and administrative


24,834



35,908



6,521



7,742







75,005Operating earnings


52,580



118,005



9,886



2,149







182,620Gain on investments










(230
)










(230
)Interest, net


(3,738
)


17,417



5,441



(1,054
)






18,066Equity income from investments


(1,153
)


(19,481
)


(23,320
)


(1,459
)






(45,413
)Minority interests


12,762



69















12,831Income before income taxes

$
44,709


$
120,000


$
27,995


$
4,662


$



$
197,366Intersegment revenues

$
(71,359
)

$
(9,429
)

$
(91
)





$
80,879


$
For the Six Months Ended February 28, 2009Revenues

$
4,096,699


$
8,370,237


$
581,518


$
23,579


$
(161,045
)

$
12,910,988Cost of goods sold


3,747,131



8,236,153



554,619



(1,354
)


(161,045
)


12,375,504Gross profit


349,568



134,084



26,899



24,933







535,484Marketing, general and administrative


61,493



87,108



14,279



23,834







186,714Operating earnings


288,075



46,976



12,620



1,099







348,770(Gain) loss on investments


(15,748
)


(3,001
)


70,724











51,975Interest, net


5,177



23,433



7,105



(1,765
)






33,950Equity income from investments


(1,827
)


(7,105
)


(21,739
)


(440
)






(31,111
)Minority interests


40,637



908















41,545Income (loss) before income taxes

$
259,836


$
32,741


$
(43,470
)

$
3,304


$



$
252,411Intersegment revenues

$
(141,605
)

$
(18,111
)

$
(1,329
)





$
161,045


$
Goodwill

$
3,185


$
8,065






$
6,898






$
18,148Capital expenditures

$
100,577


$
30,979


$
3,671


$
1,569






$
136,796Depreciation and amortization

$
57,644


$
25,290


$
8,328


$
3,892






$
95,154Total identifiable assets at February 28, 2009

$
2,637,591


$
3,926,788


$
607,975


$
999,187






$
8,171,541 16




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##### Table of Contents



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





Corporate


ReconcilingEnergy


Business


Processing


and Other


Amounts


TotalFor the Six Months Ended February 29, 2008Revenues

$
4,920,732


$
8,109,235


$
533,345


$
16,773


$
(163,354
)

$
13,416,731Cost of goods sold


4,696,365



7,806,529



506,759



(1,830
)


(163,354
)


12,844,469Gross profit


224,367



302,706



26,586



18,603







572,262Marketing, general and administrative


47,400



66,596



12,018



15,450







141,464Operating earnings


176,967



236,110



14,568



3,153







430,798(Gain) loss on investments


(17
)


(94,545
)


381



(997
)






(95,178
)Interest, net


(9,584
)


32,545



10,465



(1,823
)






31,603Equity income from investments


(2,316
)


(26,674
)


(44,458
)


(3,155
)






(76,603
)Minority interests


35,683



127















35,810Income before income taxes

$
153,201


$
324,657


$
48,180


$
9,128


$



$
535,166Intersegment revenues

$
(149,323
)

$
(13,850
)

$
(181
)





$
163,354


$
Goodwill

$
3,654


$
150














$
3,804Capital expenditures

$
154,117


$
28,057


$
2,932


$
2,206






$
187,312Depreciation and amortization

$
48,581


$
24,218


$
7,616


$
3,015






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

$
2,682,038


$
5,718,242


$
807,174


$
858,671






$
10,066,125   Note 11.
    Fair
    Value Measurements  No. 157-2,
      Level 1: available-for-sale
 17




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##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  Level 2:
  Level 3:
    Fair Value Measurements at February 28, 2009Quoted Prices inActive Markets for


Significant Other


SignificantIdentical Assets


Observable Inputs


Unobservable Inputs(Level 1)


(Level 2)


(Level 3)


TotalAssets:Readily marketable inventories





$
672,622






$
672,622Commodity, freight and foreign currency derivatives

$
98,326



331,458







429,784Short-term investments









$
3,077



3,077Rabbit Trust assets


38,406











38,406Available-for-sale
    investments


3,485











3,485Total Assets

$
140,217


$
1,004,080


$
3,077


$
1,147,374Liabilities:Commodity, freight and foreign currency derivatives

$
100,688


$
366,123






$
466,811Interest rate swap derivative






297







297Total Liabilities

$
100,688


$
366,420






$
467,108   Readily marketable inventories
  Commodity, freight and foreign currency
    derivatives
 18




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##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  and/or
  Short-term investments
  Available-for-sale
    investments available-for-sale
  Rabbi Trust assets
  Interest rate swap derivative
    Level 3 InstrumentsShort-Term InvestmentsBalance, September 1, 2008

$
7,154Total losses (realized/unrealized) included in marketing,
    general and administrative expense


(1,031
)Purchases, issuances and settlements


(3,046
)Transfer in (out) of Level 3Balance, February 28, 2009

$
3,077     Note 12.
    Commitments
    and Contingencies  Guarantees
   19




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##### Table of Contents



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


Exposure onMaximum


February 28,






Triggering

Recourse

Assets HeldEntities

Exposure


2009


Nature of Guarantee

Expiration Date

Event

Provisions

as CollateralMountain Country, LLC

$
150


$
6


Obligations by Mountain Country, LLC under credit agreement

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

Credit agreement default

Subrogation against Mountain Country, LLC

Some or all assets of borrower are held as collateral and
    should be sufficient to cover guarantee exposureMorgan County Investors, LLC

$
383



383


Obligations by Morgan County Investors, LLC under credit
    agreement

When obligations are paid in full, scheduled for year 2018

Credit agreement default

Subrogation against Morgan County Investors, LLC

Some or all assets of borrower are held as collateral and should
    be sufficient to cover guarantee exposureHorizon Milling, LLC

$
5,000






Indemnification and reimbursement of 24% of damages related to
    Horizon Milling, LLCs performance under a flour sales
    agreement

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

Nonperformance under flour sales agreement

Subrogation against Horizon Milling, LLC

NoneTEMCO, LLC

$
35,000






Obligations by TEMCO under credit agreement

None stated

Credit agreement default

Subrogation against TEMCO, LLC

NoneTEMCO, LLC

$
1,000






Obligations by TEMCO under counterparty agreement

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

Nonpayment

Subrogation against TEMCO, LLC

NoneThird parties


*



1,000


Surety for, or indemnificaton of surety for sales contracts
    between affiliates and sellers of grain under deferred payment
    contracts

Annual renewal on December 1 in regard to surety for one third
    party, otherwise none stated and may be terminated by the
    Company at any time in regard to future obligations

Nonpayment

Subrogation against affiliates

Some or all assets of borrower are held as collateral but might
    not be sufficient to cover guarantee exposureThird parties

$
689



689


Obligations by individual producers under credit agreements for
    which CHS guarantees a certain percentage.  Obligations are for
    livestock production facilities where CHS supplies the nutrition
    products

Various

Credit agreement default by individual producers

Subrogation against borrower

NoneCofina Financial, LLC

$
16,500



10,434


Loans made by Cofina to our customers that are participated with
    other lenders

None stated

Credit agreement default

Subrogation against borrower

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

$
5,674



5,674


Outstanding letter of credit from CoBank to Agriliance LLC

None stated

Default under letter of credit reimbursement agreement

Subrogation against borrower

NoneAgriliance LLC

$
500



500


Vehicle operating lease obligations of Agriliance LLC

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

Lease agreement default

Subrogation against Agriliance LLC

None$
18,686     *
    
    The maximum exposure on any give date is equal to the actual
    guarantees extended as of that date, not to exceed
    $1.0 million. 20




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##### Table of Contents



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




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##### Table of Contents



Results
    of Operations
  Comparison
    of the three months ended February 28, 2009 and
    February 29, 2008
  General.
     22




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##### Table of Contents



lower-of-cost
  available-for-sale
    Net Income.
  Revenues.
     23




---



##### Table of Contents



Cost of Goods Sold.
 24




---



##### Table of Contents



lower-of-cost lower-of-cost
      Marketing, General and
    Administrative.
  (Gain) Loss on Investments.
 25




---



##### Table of Contents



Interest, net.
  Equity Income from Investments.
    available-for-sale
 26




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##### Table of Contents



Minority Interests.
  Income Taxes.
  Comparison
    of the six months ended February 28, 2009 and
    February 29, 2008
  General.
    lower-of-cost
 27




---



##### Table of Contents



available-for-sale
    Net Income.
  Revenues.
       28




---



##### Table of Contents



Cost of Goods Sold.
   29




---



##### Table of Contents



lower-of-cost lower-of-cost
      Marketing, General and
    Administrative.
  (Gain) Loss on Investments.
  available-for-sale
  Interest, net.
 30




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##### Table of Contents



Equity Income from Investments.
  available-for-sale
       31




---



##### Table of Contents



Minority Interests.
  Income Taxes.
  Liquidity
    and Capital Resources
    364-day 364-day
    Cash
    Flows from Operations
     32




---



##### Table of Contents



33




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##### Table of Contents



Cash
    Flows from Investing Activities
               34




---



##### Table of Contents



Cash
    Flows from Financing Activities
  Working
    Capital Financing
  364-day
   35




---



##### Table of Contents



Cofina
    Financial Financing
        Long-term
    Debt Financing
         36




---



##### Table of Contents



Form 10-K
     37




---



##### Table of Contents



Other
    Financing
        Form S-1 filed
    Off
    Balance Sheet Financing Arrangements
  Lease
    Commitments:
  Form 10-K
 38




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##### Table of Contents



Guarantees:
    Debt:
    Cofina
    Financial:
    Contractual
    Obligations
  Form 10-K
  Critical
    Accounting Policies
  Form 10-K
  Effect of
    Inflation and Foreign Currency Transactions
    Recent
    Accounting Pronouncements
     39




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##### Table of Contents



SFAS No. 141R-1, SFAS No. 141R-1
  CAUTIONARY
    STATEMENTS FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE
    SECURITIES LITIGATION REFORM ACT
    Form 10-K
  
    Our revenues and operating results could be adversely affected
    by changes in commodity prices.
    Our operating results could be adversely affected if our members
    were to do business with others rather than with us.
    We participate in highly competitive business markets in which
    we may not be able to continue to compete successfully.
    Changes in federal income tax laws or in our tax status could
    increase our tax liability and reduce our net income.
    We incur significant costs in complying with applicable laws and
    regulations. Any failure to make the capital investments
    necessary to comply with these laws and regulations could expose
    us to financial liability.
    Environmental liabilities could adversely affect our results and
    financial condition.
    Actual or perceived quality, safety or health risks associated
    with our products could subject us to liability and damage our
    business and reputation.
    Our operations are subject to business interruptions and
    casualty losses; we do not insure against all potential losses
    and could be seriously harmed by unexpected liabilities. 40




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##### Table of Contents




    Our cooperative structure limits our ability to access equity
    capital.
    Consolidation among the producers of products we purchase and
    customers for products we sell could adversely affect our
    revenues and operating results.
    If our customers choose alternatives to our refined petroleum
    products our revenues and profits may decline.
    Operating results from our agronomy business could be volatile
    and are dependent upon certain factors outside of our control.
    Technological improvements in agriculture could decrease the
    demand for our agronomy and energy products.
    We operate some of our business through joint ventures in which
    our rights to control business decisions are limited.  Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk  Form 10-K
  Item 4T.
    Controls
    and Procedures  Rule 13a-15(e)
  Rule 13a-15(f)
 41




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##### Table of Contents



PART II.
    OTHER INFORMATION  Item 1.
    Legal
    Proceedings    Item 1A.
    Risk
    Factors  Form 10-K
  Item 4.
    Submission
    of Matters to a Vote of Security Holders      Item 6.
    Exhibits  Exhibit

Description10
.1

Second Amendment to Credit Agreement
    (364-day
    Revolving Loan) by and between CHS Inc., CoBank, ACB and the
    Syndication Parties dated as of February 10, 2009
    (Incorporated by reference to our Current Report on
    Form 8-K,
    filed February 11, 2009)10
.2

Fifth Amendment to 2006 Amended and Restated Credit Agreement by
    and among CHS Inc., CoBank, ACB and the Syndication Parties
    dated February 10, 2009 (Incorporated by reference to our
    Current Report on
    Form 8-K,
    filed February 11, 2009)10
.3

Amendment No. 1 to Note Purchase Agreement
    (Series 2008-A)
    dated February 25, 2009, by and among Cofina Funding LLC,
    as the Issuer; Victory Receivables Corporation, as the Conduit
    Purchaser; and The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York
    Branch, as the Funding Agent and as a Committed Purchaser
    (Incorporated by reference to our Current Report on
    Form 8-K,
    filed March 2, 2009)31
.1

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

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

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

Certification Pursuant to 18 U.S.C. Section 1350, as
    Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002  42




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##### Table of Contents



SIGNATURES    CHS Inc.
  /s/  John
    Schmitz    Executive Vice President and 
    Chief Financial Officer
   43