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Receivables | 12 Months Ended
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Aug. 31, 2018
Receivables [Abstract] |
Receivables | Receivables Receivables as of August 31, 2018, and 2017, are as follows:
| 2018 |  | (As Restated) 2017
| (Dollars in thousands)
Trade accounts receivable | $ | 1,578,764 |  |  | $ | 1,258,644 |
CHS Capital short-term notes receivable | 569,379 |  |  | 164,807 |
Deferred purchase price receivable | — |  |  | 202,947 |
Other | 534,071 |  |  | 491,496 |
| 2,682,214 |  |  | 2,117,894 |
Less allowances and reserves | 221,813 |  |  | 225,726 |
Total receivables | $ | 2,460,401 |  |  | $ | 1,892,168 |
Trade Accounts Trade accounts receivable are initially recorded at a selling price, which approximates fair value, upon the sale of goods or services to customers. Subsequently, trade accounts receivable are carried at net realizable value, which includes an allowance for estimated uncollectible amounts. We calculate this allowance based on our history of write-offs, level of past due accounts, and our relationships with and the economic status of our customers. Receivables from related parties are disclosed in Note 17, Related Party Transactions. During the third quarter of fiscal 2017, a trading partner of ours in Brazil entered bankruptcy-like proceedings under Brazilian law, resulting in a $98.7 million increase to our accounts receivable reserve. We also recorded a reserve of approximately $130.7 million related to supplier advance payments held by this trading partner, which is included in supplier advance payments in the Consolidated Balance Sheets. We initiated efforts to recover these losses during fiscal 2017 and we recorded a recovery of approximately $20.8 million during the fourth quarter of fiscal 2018 within reserve and impairment charges (recoveries), net in the Consolidated Statements of Operations. We continue to pursue additional recoveries in relation to these losses; however, additional recoveries are not estimable and have not been recorded as of the date of this Annual Report on Form 10-K. CHS Capital Notes Receivable CHS Capital, our wholly-owned subsidiary, has short-term notes receivable from commercial and producer borrowers. The short-term notes receivable have maturity terms of 12 months or less and are reported at their outstanding unpaid principal balances, adjusted for the allowance of loan losses, as CHS Capital has the intent and ability to hold the applicable loans for the foreseeable future or until maturity or pay-off. The carrying value of CHS Capital short-term notes receivable approximates fair value given the notes' short-term duration and the use of market pricing adjusted for risk. The notes receivable from commercial borrowers are collateralized by various combinations of mortgages, personal property, accounts and notes receivable, inventories and assignments of certain regional cooperative’s capital stock. These loans are primarily originated in the states of Minnesota, Wisconsin and North Dakota. CHS Capital also has loans receivable from producer borrowers which are collateralized by various combinations of growing crops, livestock, inventories, accounts receivable, personal property and supplemental mortgages and are originated in the same states as the commercial notes with the addition of Michigan. In addition to the short-term balances included in the table above, CHS Capital had long-term notes receivable, with durations of generally not more than 10 years, totaling $203.0 million and $17.0 million at August 31, 2018, and 2017, respectively. The long-term notes receivable are included in other assets on our Consolidated Balance Sheets. As of August 31, 2018, and 2017, the commercial notes represented 40% and 17%, respectively, and the producer notes represented 60% and 83%, respectively, of the total CHS Capital notes receivable. The increase in short-term and long-term notes receivable is the result of the activities described within the Sale of Receivables section below. CHS Capital has commitments to extend credit to customers if there are no violations of any contractually established conditions. As of August 31, 2018, CHS Capital's customers have additional available credit of $706.3 million. Allowance for Loan Losses and Impairments CHS Capital maintains an allowance for loan losses which is the estimate of potential incurred losses inherent in the loans receivable portfolio. In accordance with FASB ASC 450-20, Accounting for Loss Contingencies, and ASC 310-10, Accounting by Creditors for Impairment of a Loan, the allowance for loan losses consists of general and specific components. The general component is based on historical loss experience and qualitative factors addressing operational risks and industry trends. The specific component relates to loans receivable that are classified as impaired. Additions to the allowance for loan losses are reflected within reserve and impairment charges (recoveries), net in the Consolidated Statements of Operations. The portion of loans receivable deemed uncollectible is charged off against the allowance. Recoveries of previously charged off amounts increase the allowance for loan losses. No significant amounts of CHS Capital notes were past due as of August 31, 2018, or August 31, 2017, and specific and general loan loss reserves related to CHS Capital notes were not material as of either date. Interest Income Interest income is recognized on the accrual basis using a method that computes simple interest on a daily basis. The accrual of interest on commercial loans receivable is discontinued at the time the receivable is 90 days past due unless the credit is well-collateralized and in process of collection. Past due status is based on contractual terms of the loan. Producer loans receivable are placed in non-accrual status based on estimates and analysis due to the annual debt service terms inherent to CHS Capital’s producer loans. In all cases, loans are placed in nonaccrual status or charged off at an earlier date if collection of principal or interest is considered doubtful. Troubled Debt Restructurings A restructuring of a loan constitutes a troubled debt restructuring, or restructured loan, if the creditor for economic reasons related to the debtor’s financial difficulties grants a concession to the debtor that it would otherwise not consider. Concessions vary by program and borrower. Concessions may include interest rate reductions, term extensions, payment deferrals, or the acceptance of additional collateral in lieu of payments. In limited circumstances, principal may be forgiven. When a restructured loan constitutes a troubled debt restructuring, CHS includes these loans within its impaired loans. During the third quarter of fiscal 2017, CHS Capital concluded a transaction with a single producer borrower whereby CHS Capital obtained from the borrower title to approximately 14,000 acres of land and improvements that, prior to the transaction, was owned by the borrower and served as collateral for the outstanding loans to CHS Capital. The amount corresponding to the fair value of the land and improvements was credited against the notes receivable from this single producer borrower. As a result of this arrangement, all remaining outstanding notes receivable balances and corresponding reserves related to this single producer borrower were removed from the balance sheet of CHS Capital, with no incremental impact to the Consolidated Statements of Operations. During the first quarter of fiscal 2018, CHS Capital sold all rights to the outstanding notes receivable which had been previously removed from the balance sheet as they were deemed uncollectible. Through this sale, we realized a small recovery in the first quarter of fiscal year 2018. As of August 31, 2018, and 2017, CHS Capital had no other significant troubled debt restructurings and no third-party borrowers that accounted for more than 10% of the total CHS Capital notes receivable. Sale of Receivables Receivables Securitization Facility On June 28, 2018, we amended an existing receivables and loans securitization facility (“Securitization Facility”) with certain unaffiliated financial institutions (the "Purchasers"). Under the Securitization Facility, we and certain of our subsidiaries sell trade accounts and notes receivable (the “Receivables”) to Cofina Funding, LLC (“Cofina”), a wholly-owned bankruptcy-remote indirect subsidiary of CHS. Cofina in turn transfers the purchased Receivables to the Purchasers. During the period from July 2017 through the amendment of the Securitization Facility in June 2018, CHS accounted for Receivables sold under the Facility as a sale of financial assets pursuant to ASC 860, Transfers and Servicing, and the Receivables sold were derecognized from its Consolidated Balance Sheets. Under the terms of the amended Securitization Facility, the transfer of Receivables is accounted for as a secured borrowing. We use the proceeds from the sale of Receivables under the Securitization Facility for general corporate purposes. The Securitization Facility terminates on June 17, 2019, but may be extended. The amount available under the Securitization Facility fluctuates over time based on the total amount of eligible Receivables generated during the normal course of business, with maximum availability of $700.0 million. Sales of Receivables by Cofina occur continuously and are settled with the Purchasers on a monthly basis. As of August 31, 2018, and 2017, the total availability under the Securitization Facility was $645.0 million and $618.0 million, respectively, of which all had been utilized. Prior to amending the Securitization Facility in June 2018, the proceeds from the sale of these Receivables were comprised of a combination of cash and a deferred purchase price (“DPP”) receivable. The DPP receivable was ultimately realized by CHS following the collection of the underlying Receivables sold to the Purchasers. At the time of the amendment to the Securitization Facility in June 2018, $1.0 billion of Receivables and $634.0 million of securitized debt were recognized and a DPP receivable of $386.9 million was removed from the Consolidated Balance Sheets. At the time of a previous amendment to the Securitization Facility in July 2017, $1.1 billion of Receivables and $554.0 million of securitized debt were removed from the Consolidated Balance Sheets and a DPP receivable of $580.5 million was recognized. These amounts have been reflected as non-cash transactions in the Consolidated Statements of Cash Flows and disclosed within Note 16, Supplemental Cash Flow and Other Information. Prior to its derecognition during June 2018, the fair value of the DPP receivable was determined by discounting the expected cash flows to be received based on unobservable inputs consisting of the face amount of the Receivables adjusted for anticipated credit losses. Refer to Note 14, Fair Value Measurements, for details related to the fair value measurement of the DPP receivable. The following table is a reconciliation of the beginning and ending balances of the DPP receivable, including the long-term portion included in other assets, for the years ended August 31, 2018, and 2017:
| 2018 |  | 2017
| (Dollars in thousands)
Balance - beginning of year | $ | 548,602 |  |  | $ | — |
Cash collections on DPP receivable | (10,961 | ) |  | — |
Transfer of receivables | (386,900 | ) |  | 580,509 |
Monthly settlements, net | (169,827 | ) |  | (31,907 | )
Fair value adjustment | 19,086 |  |  | — |
Balance - end of year | $ | — |  |  | $ | 548,602 |
Loan Participations During fiscal 2018 CHS Capital sold $64.1 million of notes receivable to numerous counterparties under a master participation agreement. The sale resulted in the removal of the notes receivable from the Consolidated Balance Sheet. CHS Capital has no retained interests in the transferred notes receivable, other than collection and administrative services. The proceeds from the sale of the notes receivable have been included in investing activities in the Consolidated Statement of Cash Flows. Fees received related to the servicing of the notes receivables are recorded in other income in the Consolidated Statements of Operations. We consider the fees received adequate compensation for services rendered, and accordingly have recorded no servicing asset or liability. Other Receivables Other receivables are comprised of certain other amounts recorded in the normal course of business, including receivables related to value added taxes and pre-crop financing, primarily to Brazilian farmers, to finance a portion of supplier production costs. CHS does not bear any of the costs or operational risks associated with the related growing crops. The financing is largely collateralized by future crops and physical assets of the suppliers, carries a local market interest rate and settles when the farmer’s crop is harvested and sold.

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- Definition The entire disclosure for financing receivables. Examples of financing receivables include, but are not limited to, loans, trade accounts receivables, notes receivable, credit cards, and receivables relating to a lessor's right(s) to payment(s) from a lease other than an operating lease that is recognized as assets. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -URI http://asc.fasb.org/topic&trid=2196771 + Details
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