Notes Payable and Long-Term Debt

Our notes payable and long-term debt are subject to various restrictive requirements for maintenance of minimum consolidated net worth and other financial ratios. We were in compliance with our debt covenants as of August 31, 2015.

Notes Payable

Notes payable as of August 31, 2015 and 2014, consisted of the following:



	Weighted-average Interest Rate
	2015	2014	2015		2014
			(Dollars in thousands)
Notes payable ^(a)	2.33%	1.69%	$	813,717	$	840,699
CHS Capital notes payable ^(b)	1.05%	1.07%	351,661		318,774
Total notes payable			$	1,165,378	$	1,159,473

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^(a)

On August 31, 2015, our primary committed line of credit was a $2.5 billion five-year, unsecured revolving credit facility with a syndication of domestic and international banks, with no amounts outstanding as of that date. In September 2015 this facility was amended and restated as a five-year, unsecured revolving credit facility with a committed amount of $3.0 billion that expires in September 2020. In addition to our primary revolving line of credit, we have a three-year $250.0 million committed revolving pre-export credit facility for CHS Agronegocio Industria e Comercio Ltda ("CHS Agronegocio"), our wholly-owned subsidiary, to provide financing for its working capital needs arising from its purchases and sales of grains, fertilizers and other agricultural products which expires in October 2016. The outstanding balance on this facility was $200.0 million as of August 31, 2015.

As of August 31, 2015, our wholly-owned subsidiaries, CHS Europe S.a.r.l and CHS Agronegocio, had uncommitted lines of credit with $303.4 million outstanding. In addition, our other international subsidiaries had lines of credit with a total of $310.2 million outstanding as of August 31, 2015, of which $216.7 million was collateralized.

We have two commercial paper programs with an aggregate capacity of $125.0 million, with two banks participating in our revolving credit facilities. Terms of our credit facilities allow a maximum usage of $100.0 million to pay principal under any commercial paper facility. On August 31, 2015 we had no commercial paper outstanding.

Miscellaneous short-term notes payable totaled $0.1 million as of August 31, 2015.

^(b)

Cofina Funding, LLC ("Cofina Funding"), a wholly-owned subsidiary of CHS Capital, has available credit totaling $350.0 million as of August 31, 2015, under note purchase agreements with various purchasers, through the issuance of short-term notes payable. CHS Capital sells eligible commercial loans receivable it has originated to Cofina Funding, which are then pledged as collateral under the note purchase agreements. The notes payable issued by Cofina Funding bear interest at variable rates based on commercial paper with a weighted average rate of 1.04% as of August 31, 2015. There were no borrowings by Cofina Funding utilizing the issuance of commercial paper under the note purchase agreements as of August 31, 2015.

CHS Capital has available credit under master participation agreements with numerous counterparties. Borrowings under these agreements are accounted for as secured borrowings and bear interest at variable rates ranging from 1.64% to 3.70% as of August 31, 2015. As of August 31, 2015, the total funding commitment under these agreements was $145.7 million, of which $35.9 million was borrowed.

CHS Capital sells loan commitments it has originated to ProPartners Financial ("ProPartners") on a recourse basis. The total capacity for commitments under the ProPartners program is $300.0 million. The total outstanding commitments under the program totaled $56.8 million as of August 31, 2015, of which $39.9 million was borrowed under these commitments with an interest rate of 1.62%.

CHS Capital borrows funds under short-term notes issued as part of a surplus funds program. Borrowings under this program are unsecured and bear interest at variable rates ranging from 0.10% to 0.90% as of August 31, 2015, and are due upon demand. Borrowings under these notes totaled $275.8 million as of August 31, 2015.

Long-Term Debt

Amounts included in long-term debt on our Consolidated Balance Sheets as of August 31, 2015 and 2014 are presented in the table below. We have revised prior period amounts in this table to include capital lease obligations that were previously accounted for as operating leases. See Note 18, Correction of Immaterial Errors for more information on the nature and amounts of these revisions.



	2015		2014
	(Dollars in thousands)
5.59% unsecured revolving term loans from cooperative and other banks, due in equal installments beginning in 2013 through 2018	$	75,000	$	105,000
6.18% unsecured notes $400 million face amount, due in equal installments beginning in 2014 through 2018	240,000		320,000
5.60% unsecured notes $60 million face amount, due in equal installments beginning in 2012 through 2018	23,077		32,308
5.25% unsecured notes $125 million face amount, due in equal installments beginning in 2011 through 2015	—		25,000
5.78% unsecured notes $50 million face amount, due in equal installments beginning in 2014 through 2018	30,000		40,000
4.00% unsecured notes $100 million face amount, due in equal installments beginning in 2017 through 2021	100,000		100,000
4.08% unsecured notes $130 million face amount, due in 2019 ^(a)	132,161		130,840
4.52% unsecured notes $160 million face amount, due in 2021 ^(a)	164,654		160,000
4.67% unsecured notes $130 million face amount, due in 2023 ^(a)	135,422		133,360
3.85% unsecured notes $80 million face amount, due in 2025	80,000		80,000
3.80% unsecured notes $100 million face amount, due in 2025	100,000		100,000
4.82% unsecured notes $80 million face amount, due in 2026	80,000		80,000
4.71% unsecured notes $100 million face amount, due in 2033	100,000		100,000
Other notes and contracts with interest rates from 1.30% to 15.25% ^(b)	44,909		43,751
Capital lease obligations	125,894		155,366
Total long-term debt	1,431,117		1,605,625
Less current portion	170,309		201,965
Long-term portion	$	1,260,808	$	1,403,660

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^(a)	We have entered into interest rate swaps designated as fair value hedging relationships with these notes. Changes in the fair value of the swaps are recorded each period with a corresponding adjustment to the carrying value of the debt. See Note 12, Derivative Financial Instruments and Hedging Activities for more information.


^(b)	Other notes and contracts payable of $0.5 million were collateralized on August 31, 2015.

As of August 31, 2015, the carrying value of our long-term debt approximated its fair value, which is estimated to be $1.3 billion based on quoted market prices of similar debt (a Level 2 fair value measurement based on the classification hierarchy of ASC Topic 820, Fair Value Measurement). We have outstanding interest rate swaps designated as fair value hedges of select portions of our fixed-rate debt. During fiscal 2015, we recorded corresponding fair value adjustments of $8.0 million, which are included in the amounts in the table above. See Note 12, Derivative Financial Instruments and Hedging Activities for additional information.

In September 2015, we entered into a ten-year term loan with a syndication of banks. The agreement provides for committed term loans in an amount up to $600.0 million, which may be drawn down from time to time, but in no event on more than 10 occasions, from September 4, 2015 until September 4, 2016. Amounts drawn under this agreement that are subsequently repaid or prepaid may not be reborrowed. Principal on the term loans is payable in full on September 4, 2025. Borrowings under the agreement will bear interest at a base rate (or a LIBO rate) plus an applicable margin, or at a fixed rate of interest determined and quoted by the administrative agent under the agreement in its sole and absolute discretion from time to time. The applicable margin will be based on our leverage ratio and ranges between 1.50% and 2.00% for LIBO rate loans and between 0.50% and 1.00% for base rate loans. There are currently no amounts drawn under this agreement.

Long-term debt outstanding as of August 31, 2015 has aggregate maturities, excluding fair value adjustments and capital leases (see Note 5, Property, Plant and Equipment for a schedule of minimum future lease payments under capital leases), as follows:



	(Dollars in thousands)
2016	$	129,994
2017	149,932
2018	161,596
2019	150,098
2020	31,340
Thereafter	670,400
Total	$	1,293,360

The following table presents the components of interest expense, net for the years ended August 31, 2015, 2014 and 2013. We have revised prior period amounts in this table to include interest expense related to capital lease obligations that were previously accounted for as operating leases. See Note 18, Correction of Immaterial Errors for more information on the nature and amounts of these revisions.



	2015			2014			2013
	(Dollars in thousands)
Interest expense	$	93,152		$	84,925		$	104,403
Interest - purchase of CHS McPherson noncontrolling interests	34,810			70,843			149,087
Capitalized interest	(57,303		)	(8,528		)	(10,579		)
Interest income	(10,326		)	(6,987		)	(6,212		)
Interest expense, net	$	60,333		$	140,253		$	236,699