Equities

In accordance with our 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, and are based on amounts using financial statement earnings. The cash portion of the qualified patronage distribution is determined annually by the Board of Directors, with the balance issued in the form of qualified and non-qualified capital equity certificates. Total qualified patronage refunds for fiscal 2014 are estimated to be $662.1 million, with the cash portion estimated to be $264.8 million. The portion to be issued in the form of non-qualified capital equity certificates is estimated to be $148.6 million. The actual patronage refunds and cash portion for fiscal years 2013, 2012, and 2011 were $841.1 million ($286.8 million in cash), $976.0 million ($380.9 million in cash), and $676.3 million ($260.7 million in cash), respectively.

Annual net savings from patronage or other sources may be added to the unallocated capital reserve or, upon action by the Board of Directors, may be allocated to members in the form of nonpatronage equity certificates. The Board of Directors authorized, in accordance with our bylaws, that 10% of the earnings from patronage business for fiscal years 2014, 2013, and 2012 be added to our capital reserves.

Redemptions are at the discretion of the Board of Directors. Redemptions of capital equity certificates approved by the Board of Directors are divided into two pools, one for non-individuals (primarily member cooperatives) who may participate in an annual program for equities held by them and another for individual members who are eligible for equity redemptions at age 70 or upon death. In accordance with authorization from the Board of Directors, we expect total redemptions related to the year ended August 31, 2014 that will be distributed in fiscal 2015, to be approximately $130.1 million. These expected distributions are classified as a current liability on the August 31, 2014 Consolidated Balance Sheet. For the years ended August 31, 2014, 2013 and 2012, we redeemed in cash, equities in accordance with authorization from the Board of Directors, in the amounts of $99.6 million, $193.4 million and $145.7 million, respectively. Additionally, in fiscal 2014, we redeemed $200.0 million of patron's equities by issuing 6,752,188 shares of preferred stock in exchange for member's equity certificates.

Preferred Stock

Our 8% Preferred Stock is listed on the NASDAQ under the symbol CHSCP. On August 31, 2014, we had 12,272,003 shares of 8% Preferred Stock outstanding with a total redemption value of $306.8 million, excluding accumulated dividends. The 8% Preferred Stock accumulates dividends at a rate of 8% per year, which are payable quarterly. During the year ended August 31, 2013, we amended the terms of our 8% Preferred Stock to provide that it may not be redeemed at our option until July 18, 2023.

On August 31, 2014, we had 18,071,363 shares of our Class B Series 1 Preferred Stock outstanding with a total redemption value of $451.8 million, excluding accumulated dividends. We issued 11,319,175 shares in September 2013, which yielded net proceeds of approximately $273.3 million after deducting the underwriting discount and offering expenses payable by us. In addition, we issued an additional 6,752,188 shares in August 2014, to redeem approximately $200.0 million of qualified equity certificates to eligible owners at a market price of $29.62 per share. Our Class B Series 1 Preferred Stock is listed on the NASDAQ under the symbol CHSCO and accumulates dividends at a rate of 7.875% per year, which are payable quarterly. The Class B Series 1 Preferred Stock may be redeemed at our option beginning September 26, 2023.

In March 2014, we issued 16,800,000 shares of Class B Series 2 Preferred Stock with a total redemption value of $420.0 million excluding accumulated dividends. Net proceeds from the sale of our Class B Series 2 Preferred Stock, after deducting the underwriting discount and offering expenses payable by us, were $406.3 million. The Class B Series 2 Preferred Stock is listed on the NASDAQ under the symbol CHSCN and accumulates dividends at a rate of 7.10% per year until March 31, 2024, and at a rate equal to the three-month LIBOR plus 4.298%, not to exceed 8.00% per annum, subsequent to March 31, 2024, which are payable quarterly. Our Class B Series 2 Preferred Stock may not be redeemed at our option until March 31, 2024.

In June 2014, we filed a shelf registration statement on Form S-3 with the Securities and Exchange Commission (SEC). Under the shelf registration, which has been declared effective by the SEC, we may offer and sell, from time to time, up to $2.0 billion of our Class B Cumulative Redeemable Preferred Stock over a three-year period. In September 2014, we issued 19,700,000 shares of Class B Series 3 Preferred Stock with a total redemption value of $492.5 million, excluding accumulated dividends. Net proceeds from the sale of our Class B Series 3 Preferred Stock, after deducting the underwriting discount and offering expenses payable by us, were approximately $477.0 million. The Class B Series 3 Preferred Stock is listed on the NASDAQ under the symbol CHSCM and accumulates dividends at a rate of 6.75% per year until September 30, 2024, and at a rate equal to the three-month LIBOR plus 4.155%, not to exceed 8.00% per annum, subsequent to September 30, 2024, which are payable quarterly. Our Class B Series 3 Preferred Stock may not be redeemed at our option until September 30, 2024.

We made dividend payments on our Preferred Stock of $50.8 million, $24.5 million, and $24.5 million, during the years ended August 31, 2014, 2013 and 2012, respectively. As of August 31, 2014 we have no authorized but unissued shares of preferred stock.

Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive income (loss) by component, net of tax, for the years ended August 31, 2014 and 2013 are as follows:



	Pension and Other Postretirement Benefits			Unrealized Net Gain on Available for Sale Investments		Cash Flow Hedges			Foreign Currency Translation Adjustment			Total
	(Dollars in thousands)
Balance as of August 31, 2012	$	(228,727	)	$	1,391	$	(3,806	)	$	(1,445	)	$	(232,587	)
Current period other comprehensive income (loss), net of tax	46,471			979		15,491			(3,866		)	59,075
Amounts reclassified from accumulated other comprehensive income (loss), net of tax	16,645			—		—			—			16,645
Net other comprehensive income (loss), net of tax	63,116			979		15,491			(3,866		)	75,720
Balance as of August 31, 2013	$	(165,611	)	$	2,370	$	11,685		$	(5,311	)	$	(156,867	)
Current period other comprehensive income (loss), net of tax	(90		)	2,028		(6,011		)	(1,957		)	(6,030		)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax	13,849			—		(8,396		)	687			6,140
Net other comprehensive income (loss), net of tax	13,759			2,028		(14,407		)	(1,270		)	110
Balance as of August 31, 2014	$	(151,852	)	$	4,398	$	(2,722	)	$	(6,581	)	$	(156,757	)

Amounts reclassified from accumulated other comprehensive income (loss) were related to pension and other postretirement benefits, cash flow hedges and foreign currency translation adjustments, and were recorded to net income. Pension and other postretirement reclassifications include amortization of net actuarial loss, prior service credit and transition amounts as disclosed in Note 10, Benefit Plans. In February 2014, interest rate swaps, which were previously accounted for as cash flow hedges, were terminated as the issuance of the underlying debt was no longer probable. As a result, a $13.5 million gain was reclassified from accumulated other comprehensive loss into net income. This pre-tax gain is included as a component of interest, net in the Consolidated Statement of Operations for the year ended August 31, 2014.

Noncontrolling Interests

As described in Note 17, Acquisitions, we have a firm commitment to purchase the remaining NCRA noncontrolling interests. The following table presents the effects of changes in our NCRA ownership interest on CHS Inc. equities for the years ended August 31, 2014, 2013, and 2012.



	2014		2013		2012
	(Dollars in thousands)
Net income attributable to CHS Inc.	$	1,081,435	$	992,386	$	1,260,628
Transfers to noncontrolling interests:
Decrease in CHS Inc. capital reserves for purchase of noncontrolling interests	—		—		(82,138		)
Changes from net income attributable to CHS Inc. and transfers to noncontrolling interests	$	1,081,435	$	992,386	$	1,178,490