##### 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
    May 31, 2008o

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

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

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

July 10, 2008NONE

NONE




---



##### 



INDEX
   
 Page No.PART I. FINANCIAL INFORMATIONItem 1.

Financial Statements (unaudited)


3Consolidated Balance Sheets as of May 31,
    2008, August 31, 2007 and May 31, 2007


3Consolidated Statements of Operations for the
    three and nine months ended May 31, 2008 and 2007


4Consolidated Statements of Cash Flows for the
    nine months ended May 31, 2008 and 2007


5Notes to Consolidated Financial Statements


6Item 2.

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


20Item 3.

Quantitative and Qualitative Disclosures about
    Market Risk


41Item 4T.

Controls and Procedures


41PART II. OTHER INFORMATIONItem 1.

Legal Proceedings


42Item 6.

Exhibits


42SIGNATURE PAGE


43Fourth Amendment to 2006 Amended and Restated Credit AgreementFirst Amendment to Credit AgreementFirst Amendment to $150 Million Term Loan Credit Agreement$75 Million Uncommitted Demand FacilityThird Amendment to the CHS Inc. Deferred Compensation Plan$60 Million Uncommitted Trade Finance FacilityCertificationCertificationSection 1350 CertificationSection 1350 Certification   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)
  May 31,


August 31,


May 31,2008


2007 *


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

$
249,715


$
357,712


$
245,911Receivables


2,234,061



1,401,251



1,440,022Inventories


2,165,907



1,666,632



1,197,178Derivative assets


683,065



247,082



235,334Other current assets


532,426



264,181



325,322Total current assets


5,865,174



3,936,858



3,443,767Investments


784,091



880,592



811,037Property, plant and equipment


1,923,637



1,728,171



1,625,669Other assets


231,340



208,752



287,269Total assets

$
8,804,242


$
6,754,373


$
6,167,742LIABILITIES AND EQUITIESCurrent liabilities:Notes payable

$
405,877


$
672,571


$
528,628Current portion of long-term debt


111,973



98,977



60,471Customer credit balances


164,379



110,818



94,920Customer advance payments


623,995



161,525



88,899Checks and drafts outstanding


153,639



143,133



90,032Accounts payable


1,785,115



1,120,822



1,029,336Derivative liabilities


400,482



177,209



166,303Accrued expenses


296,215



255,631



244,674Dividends and equities payable


263,386



374,294



199,677Total current liabilities


4,205,061



3,114,980



2,502,940Long-term debt


1,123,609



589,344



630,449Other liabilities


409,174



377,208



420,560Minority interests in subsidiaries


200,924



197,386



210,649Commitments and contingenciesEquities


2,865,474



2,475,455



2,403,144Total liabilities and equities

$
8,804,242


$
6,754,373


$
6,167,742     *
    
    Adjusted to reflect adoption of FASB Staff Position No. AUG
    AIR-1; see Note 2   3




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##### Table of Contents



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


For the Nine Months EndedMay 31,


May 31,2008


2007 *


2008


2007 *(dollars in thousands)Revenues

$
9,336,609


$
4,732,465


$
22,753,340


$
12,218,115Cost of goods sold


9,055,967



4,401,557



21,900,436



11,516,832Gross profit


280,642



330,908



852,904



701,283Marketing, general and administrative


86,571



64,871



228,035



175,564Operating earnings


194,071



266,037



624,869



525,719(Gain) loss on investments


(5,305
)


251



(100,483
)


(16,497
)Interest, net


22,183



9,272



53,786



25,963Equity income from investments


(51,820
)


(67,490
)


(128,423
)


(84,336
)Minority interests


16,666



61,287



52,476



94,669Income before income taxes


212,347



262,717



747,513



505,920Income taxes


23,631



23,121



89,866



46,272Net income

$
188,716


$
239,596


$
657,647


$
459,648     *
    
    Adjusted to reflect adoption of FASB Staff Position No. AUG
    AIR-1; see Note 2   4




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##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
 (Unaudited)
  For the Nine Months EndedMay 31,2008


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

$
657,647


$
459,648Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation and amortization


130,005



103,374Amortization of deferred major repair costs


21,652



17,581Income from equity investments


(128,423
)


(84,336
)Distributions from equity investments


72,777



60,099Minority interests


52,476



94,669Noncash patronage dividends received


(1,619
)


(1,346
)Gain on sale of property, plant and equipment


(5,707
)


(4,080
)Gain on investments


(100,483
)


(16,497
)Deferred taxes


89,866



15,787Other, net


233



328Changes in operating assets and liabilities:Receivables


(765,766
)


(314,184
)Inventories


(317,696
)


(58,834
)Derivative assets


(435,983
)


(161,061
)Other current assets and other assets


(416
)


(106,558
)Customer credit balances


53,531



28,132Customer advance payments


256,236



6,513Accounts payable and accrued expenses


604,352



124,654Derivative liabilities


321,084



68,493Other liabilities


8,342



38,483Net cash provided by operating activities


512,108



270,865Cash flows from investing activities:Acquisition of property, plant and equipment


(255,818
)


(249,648
)Proceeds from disposition of property, plant and equipment


8,132



9,263Expenditures for major repairs


(21,662
)


(8,225
)Investments


(336,117
)


(84,208
)Investments redeemed


35,498



4,438Proceeds from sale of investments


120,758



10,918Joint venture distribution transaction, net


(4,737
)Changes in notes receivable


(62,478
)


(54,215
)Acquisition of intangibles


(2,463
)


(8,144
)Business acquisitions


(45,891
)Other investing activities, net


(3,813
)


(2,143
)Net cash used in investing activities


(568,591
)


(381,964
)Cash flows from financing activities:Changes in notes payable


(265,299
)


506,583Long-term debt borrowings


600,000Principal payments on long-term debt


(54,639
)


(54,150
)Payments for bank fees on debt


(3,486
)Changes in checks and drafts outstanding


10,105



32,313Distribution to minority owners


(55,437
)


(32,725
)Costs incurred  capital equity certificates redeemed


(135
)


(145
)Preferred stock dividends paid


(11,764
)


(9,484
)Retirements of equities


(75,899
)


(64,856
)Cash patronage dividends paid


(194,960
)


(133,051
)Net cash (used in) provided by financing activities


(51,514
)


244,485Net (decrease) increase in cash and cash equivalents


(107,997
)


133,386Cash and cash equivalents at beginning of period


357,712



112,525Cash and cash equivalents at end of period

$
249,715


$
245,911     *
    
    Adjusted to reflect adoption of FASB Staff Position No. AUG
    AIR-1; see Note 2   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,
  Commodity
    Price Risk
       6




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##### Table of Contents



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




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##### Table of Contents



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




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##### Table of Contents



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


May 31, 2007As


FSP AUG





As


FSP AUGPreviously


AIR-1


As


Previously


AIR-1


AsReported


Adjustment


Adjusted


Reported


Adjustment


AdjustedConsolidated Balance SheetsOther assets

$
147,965


$
60,787


$
208,752


$
245,042


$
42,227


$
287,269Accrued expenses


261,875



(6,244
)


255,631



267,995



(23,321
)


244,674Other liabilities


359,198



18,010



377,208



400,927



19,633



420,560Minority interests in subsidiaries


190,830



6,556



197,386



204,093



6,556



210,649Equities


2,432,990



42,465



2,475,455



2,363,785



39,359



2,403,144   For the


For theThree Months Ended


Nine Months EndedMay 31, 2007


May 31, 2007As


FSP AUG





As


FSP AUGPreviously


AIR-1


As


Previously


AIR-1


AsReported


Adjustment


Adjusted


Reported


Adjustment


AdjustedConsolidated Statements of OperationsCost of goods sold

$
4,404,540


$
(2,983
)

$
4,401,557


$
11,522,206


$
(5,374
)

$
11,516,832Income before income taxes


259,734



2,983



262,717



500,546



5,374



505,920Income taxes


21,961



1,160



23,121



44,182



2,090



46,272Net income


237,773



1,823



239,596



456,364



3,284



459,648Consolidated Statements of Cash FlowsOperating activitiesNet income














456,364



3,284



459,648Amortization of deferred major repair costs


















17,581



17,581Deferred taxes














13,697



2,090



15,787Changes in operating assets and liabilities:Accounts payable and accrued expenses














128,584



(3,930
)


124,654Other liabilities














49,283



(10,800
)


38,483Net cash provided by operating activities














262,640



8,225



270,865Investing activitiesExpenditures for major repairs


















(8,225
)


(8,225
)Net cash used in investing activities














(373,739
)


(8,225
)


(381,964
)  9




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##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  Note 3.
    Receivables  May 31,


August 31,


May 31,2008


2007


2007Trade

$
2,140,795


$
1,366,428


$
1,394,391Other


165,646



97,783



105,4712,306,441



1,464,211



1,499,862Less allowances for doubtful accounts


72,380



62,960



59,840$
2,234,061


$
1,401,251


$
1,440,022   Note 4.
    Inventories  May 31,


August 31,


May 31,2008


2007


2007Grain and oilseed

$
887,765


$
928,567


$
546,938Energy


617,238



490,675



422,274Crop nutrients


289,010Feed and farm supplies


310,696



178,167



180,267Processed grain and oilseed


55,147



66,407



45,023Other


6,051



2,816



2,676$
2,165,907


$
1,666,632


$
1,197,178   Note 5.
    Investments         10




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##### Table of Contents



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

$
5,219Inventories


174,620Other current assets


256,390Investments


6,096Property, plant and equipment


29,682Other assets


11,717Customer advance payments


(206,252
)Accounts payable


(5,584
)Accrued expenses


(3,163
)Total net assets received

$
268,725      11




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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 Nine Months EndedMay 31,


May 31,2008


2007


2008


2007Net sales

$
389,113


$
1,832,590


$
787,363


$
3,000,107Gross profit


59,414



208,656



113,651



300,200Net income (loss)


20,893



108,036



(26,293
)


49,255   May 31,


August 31,


May 31,2008


2007


2007Current assets

$
678,267


$
1,549,691


$
1,754,732Non-current assets


42,044



115,087



162,822Current liabilities


322,813



1,214,774



1,468,437Non-current liabilities


10,201



137,417



141,932   Note 6.
    Notes
    Payable and Long-term Debt          364-day
  Note 7.
    Interest,
    net    For the Three Months Ended


For the Nine Months EndedMay 31,


May 31,2008


2007





2007Interest expense

$
24,798


$
13,567


$
65,227


$
37,694Interest income


2,615



4,295



11,441



11,731Interest, net

$
22,183


$
9,272


$
53,786


$
25,963  12




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##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  Note 8.
    Income
    Taxes            Note 9.
    Equities    Fiscal 2008*


Fiscal 2007*Balances, September 1, 2007 and 2006

$
2,475,455


$
2,053,466Net income


657,647



459,648Other comprehensive (loss) income


(95,424
)


44,706Patronage distribution


(555,419
)


(379,838
)Patronage accrued


550,000



374,000Equities retired


(75,899
)


(64,856
)Equity retirements accrued


165,511



100,755Equities issued in exchange for elevator properties


1,909



4,652Preferred stock dividends


(11,764
)


(9,484
)Preferred stock dividends accrued


2,413



1,955Accrued dividends and equities payable


(249,516
)


(183,513
)Other, net


561



1,653Balances, May 31, 2008 and 2007

$
2,865,474


$
2,403,144     *
    
    Adjusted to reflect adoption of FASB Staff Position No. AUG
    AIR-1; see Note 2 13




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##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
     Note 10.
    Comprehensive
    Income    Note 11.
    Employee
    Benefit Plans    Qualified


Non-QualifiedPension Benefits


Pension Benefits


Other Benefits2008


2007


2008


2007


2008


2007Components of net periodic benefit costs for the three months
    ended May 31:Service cost

$
3,847


$
3,590


$
312


$
255


$
358


$
239Interest cost


5,311



4,816



548



361



510



417Expected return on plan assets


(7,824
)


(7,296
)Unrecognized net asset obligation amortization


















184Prior service cost amortization


541



217



144



115



(79
)


(127
)Actuarial loss (gain) amortization


1,218



1,442



210



27



5



(9
)Transition amount amortization


















50



233Net periodic benefit cost

$
3,093


$
2,769


$
1,214


$
758


$
1,028


$
753Components of net periodic benefit costs for the nine months
    ended May 31:Service cost

$
11,540


$
10,770


$
935


$
767


$
881


$
718Interest cost


15,935



14,450



1,643



1,083



1,360



1,252Expected return on plan assets


(23,475
)


(21,887
)Unrecognized net asset obligation amortization


















551Prior service cost amortization


1,623



650



433



346



(239
)


(383
)Actuarial loss (gain) amortization


3,653



4,325



631



82



(124
)


(29
)Transition amount amortization


















151



701Net periodic benefit cost

$
9,276


$
8,308


$
3,642


$
2,278


$
2,580


$
2,259  14




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##### Table of Contents



CHS INC.
    AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited)  (Continued)
  Employer
    Contributions:
    Note 12.
    Segment
    Reporting           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


Total*For the Three Months Ended May 31, 2008Revenues

$
3,058,367


$
6,005,755


$
353,475


$
7,095


$
(88,083
)

$
9,336,609Cost of goods sold


3,000,380



5,811,948



332,188



(466
)


(88,083
)


9,055,967Gross profit


57,987



193,807



21,287



7,561







280,642Marketing, general and administrative


28,250



44,126



6,704



7,491







86,571Operating earnings


29,737



149,681



14,583



70







194,071(Gain) loss on investments


(18
)


(5,848
)


562



(1
)






(5,305
)Interest, net


1,739



15,310



6,471



(1,337
)






22,183Equity income from investments


(753
)


(40,101
)


(9,593
)


(1,373
)






(51,820
)Minority interests


16,265



401















16,666Income before income taxes

$
12,504


$
179,919


$
17,143


$
2,781


$



$
212,347Intersegment revenues

$
(75,557
)

$
(11,671
)

$
(855
)





$
88,083


$
For the Three Months Ended May 31, 2007Revenues

$
2,186,568


$
2,411,945


$
193,553


$
6,121


$
(65,722
)

$
4,732,465Cost of goods sold


1,926,275



2,354,272



187,502



(770
)


(65,722
)


4,401,557Gross profit


260,293



57,673



6,051



6,891







330,908Marketing, general and administrative


23,938



27,381



5,928



7,624







64,871Operating earnings (losses)


236,355



30,292



123



(733
)






266,037Loss on investments










251











251Interest, net


(1,925
)


8,956



4,151



(1,910
)






9,272Equity income from investments


(952
)


(55,826
)


(9,431
)


(1,281
)






(67,490
)Minority interests


61,268



19















61,287Income before income taxes

$
177,964


$
77,143


$
5,152


$
2,458


$



$
262,717Intersegment revenues

$
(54,936
)

$
(10,677
)

$
(109
)





$
65,722


$
 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


Total*For the Nine Months Ended May 31, 2008Revenues

$
7,979,099


$
14,114,990


$
886,820


$
23,868


$
(251,437
)

$
22,753,340Cost of goods sold


7,696,745



13,618,477



838,947



(2,296
)


(251,437
)


21,900,436Gross profit


282,354



496,513



47,873



26,164







852,904Marketing, general and administrative


75,650



110,722



18,722



22,941







228,035Operating earnings


206,704



385,791



29,151



3,223







624,869(Gain) loss on investments


(35
)


(100,393
)


943



(998
)






(100,483
)Interest, net


(7,845
)


47,855



16,936



(3,160
)






53,786Equity income from investments


(3,069
)


(66,775
)


(54,051
)


(4,528
)






(128,423
)Minority interests


51,948



528















52,476Income before income taxes

$
165,705


$
504,576


$
65,323


$
11,909


$



$
747,513Intersegment revenues

$
(224,880
)

$
(25,521
)

$
(1,036
)





$
251,437


$
Goodwill

$
3,654


$
150














$
3,804Capital expenditures

$
207,527


$
40,970


$
4,015


$
3,306






$
255,818Depreciation and amortization

$
76,134


$
37,374


$
11,720


$
4,777






$
130,005Total identifiable assets at May 31, 2008

$
3,097,313


$
4,197,684


$
710,419


$
798,826






$
8,804,242For the Nine Months Ended May 31, 2007Revenues

$
5,753,660


$
6,100,397


$
526,513


$
21,869


$
(184,324
)

$
12,218,115Cost of goods sold


5,258,380



5,942,916



501,541



(1,681
)


(184,324
)


11,516,832Gross profit


495,280



157,481



24,972



23,550







701,283Marketing, general and administrative


67,149



70,369



17,928



20,118







175,564Operating earnings


428,131



87,112



7,044



3,432







525,719Gain on investments






(5,348
)


(11,149
)










(16,497
)Interest, net


(2,164
)


21,538



10,917



(4,328
)






25,963Equity income from investments


(3,089
)


(37,027
)


(40,626
)


(3,594
)






(84,336
)Minority interests


94,677



(8
)














94,669Income before income taxes

$
338,707


$
107,957


$
47,902


$
11,354


$



$
505,920Intersegment revenues

$
(171,188
)

$
(12,853
)

$
(283
)





$
184,324


$
Goodwill

$
3,654


$
150














$
3,804Capital expenditures

$
212,450


$
24,754


$
10,657


$
1,787






$
249,648Depreciation and amortization

$
63,719


$
24,847


$
10,862


$
3,946






$
103,374Total identifiable assets at May 31, 2007

$
2,669,680


$
2,320,757


$
634,745


$
542,560






$
6,167,742     *
    
    Adjusted to reflect adoption of FASB Staff Position No. AUG
    AIR-1; see Note 2 17




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##### Table of Contents



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


Exposure onMaximum


May 31,






Triggering

Recourse

Assets HeldEntities

Exposure


2008


Nature of Guarantee

Expiration Date

Event

Provisions

as CollateralMountain Country, LLC

$
150


$
80


Obligations by Mountain Country, LLC under credit agreement

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

Credit agreement default

Subrogation against borrower

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

$
400



400


Obligations by Morgan County Investors, LLC under credit
    agreement

When obligations are paid in full, scheduled for year 2018

Credit agreement default

Subrogation against borrower

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 sale agreement

Subrogation against Horizon Milling, LLC

NoneTEMCO, LLC

$
35,000



5,000


Obligations by TEMCO, LLC under credit agreement

None stated

Credit agreement default

Subrogation against TEMCO, LLC

NoneTEMCO, LLC

$
1,000



1,000


Obligations by TEMCO, LLC under counterparty agreement

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

Nonpayment

Subrogation against TEMCO, LLC

NoneThird parties



*


1,000


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

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

Nonpayment

Subrogation against affiliates

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

$
17,131



11,175


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

None stated

Credit agreement default

Subrogation against borrower

Some or all assets of borrower are held as collateral but might
    not be sufficient to cover guarantee exposure 18




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##### Table of Contents



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


Exposure onMaximum


May 31,






Triggering

Recourse

Assets HeldEntities

Exposure


2008


Nature of Guarantee

Expiration Date

Event

Provisions

as CollateralCofina Financial, LLC

$
18,200



18,200


Loans made by Cofina to our customers

None stated

Credit agreement default

Subrogation against borrower

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

$
5,674



5,674


Outstanding letter of credit from CoBank to Agriliance LLC

None stated

Default under letter of credit reimbursement agreement

Subrogation against borrower

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

NoneAg Business segment subsidiaries

$
4,993






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

None stated

Nonpayment

None

None$
43,029     *
    
    The maximum exposure on any given date is equal to the actual
    guarantees extended as of that date. 19




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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.
    ®
         20




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##### Table of Contents



50-50
  true-up true-up
       21




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##### Table of Contents



Recent
    Events
    Results
    of Operations
  Comparison
    of the three months ended May 31, 2008 and
    2007
  General.
     22




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##### Table of Contents



Net Income.
  Revenues.
     23




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##### Table of Contents



24




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##### Table of Contents



Cost of Goods Sold.
        Marketing, General and
    Administrative.
  (Gain) Loss on Investments.
  Interest, net.
 25




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##### Table of Contents



Equity Income from Investments.
  50-50
     26




---



##### Table of Contents



Minority Interests.
  Income Taxes.
  Comparison
    of the nine months ended May 31, 2008 and
    2007
  General.
     27




---



##### Table of Contents



Net Income.
  Revenues.
     28




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##### Table of Contents



Cost of Goods Sold.
   29




---



##### Table of Contents



Marketing, General and
    Administrative.
  (Gain) Loss on Investments.
  Interest, net.
 30




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##### Table of Contents



Equity Income from Investments.
  50-50
     31




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##### Table of Contents



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




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##### Table of Contents



33




---



##### Table of Contents



Cash
    Flows from Investing Activities
             34




---



##### Table of Contents



Cash
    Flows from Financing Activities
  364-day
 35




---



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36




---



##### Table of Contents



Form 10-K
           37




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##### Table of Contents



Off
    Balance Sheet Financing Arrangements
  Lease
    Commitments:
  Form 10-K
  Guarantees:
    Debt:
    Contractual
    Obligations
  Form 10-K
 38




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##### Table of Contents



Critical
    Accounting Policies
  Form 10-K
  Effect of
    Inflation and Foreign Currency Transactions
    Recent
    Accounting Pronouncements
  157-2, FSP 157-2
       39




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##### Table of Contents



.
  CAUTIONARY
    STATEMENTS FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE
    SECURITIES LITIGATION REFORM ACT
    Form 10-K
  
    Our revenues and operating results could be adversely affected
    by changes in commodity prices.
    Our operating results could be adversely affected if our members
    were to do business with others rather than with us.
    We participate in highly competitive business markets in which
    we may not be able to continue to compete successfully.
    Changes in federal income tax laws or in our tax status could
    increase our tax liability and reduce our net income.
    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. 40




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##### Table of Contents




    Actual or perceived quality, safety or health risks associated
    with our products could subject us to liability and damage our
    business and reputation.
    Our operations are subject to business interruptions and
    casualty losses; we do not insure against all potential losses
    and could be seriously harmed by unexpected liabilities.
    Our cooperative structure limits our ability to access equity
    capital.
    Consolidation among the producers of products we purchase and
    customers for products we sell could adversely affect our
    revenues and operating results.
    If our customers choose alternatives to our refined petroleum
    products our revenues and profits may decline.
    Operating results from our agronomy business could be volatile
    and are dependent upon certain factors outside of our control.
    Technological improvements in agriculture could decrease the
    demand for our agronomy and energy products.
    We operate some of our business through joint ventures in which
    our rights to control business decisions are limited.  Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk  Form 10-K
  Item 4T.
    Controls
    and Procedures  Rule 13a-15(e)
  Rule 13a-15(f)
 41




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##### Table of Contents



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

Description10
.1

Fourth Amendment to 2006 Amended and Restated Credit Agreement
    by and among CHS Inc., CoBank, ACB and the Syndication Parties
    dated May 1, 200810
.2

First Amendment to Credit Agreement
    (364-day
    Revolving Loan) by and between CHS Inc., CoBank, ACB and the
    Syndication Parties dated as of May 1, 200810
.3

First Amendment to $150 Million Term Loan Credit Agreement by
    and between CHS Inc., CoBank, ACB and the Syndication Parties
    dated as of December 12, 200710
.4

$75 Million Uncommitted Demand Facility by and between CHS
    Europe S.A. and Fortis Bank (Nederland) N.V. dated
    April 18, 200810
.5

Third Amendment to the CHS Inc. Deferred Compensation Plan10
.6

$60 Million Uncommitted Trade Finance Facility by and
    between CHS Europe S.A. and Societe Generale dated June 6,
    200831
.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.
    John
    Schmitz
 
  Executive Vice President and
 Chief Financial Officer
   43