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Restatement of Previously Issued Financial Information (Notes) | 3 Months Ended
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Nov. 30, 2018
Accounting Changes and Error Corrections [Abstract] |
Restatement of Previously Issued Financial Information | Restatement of Previously Issued Financial Information The consolidated financial statements for the three months ended November 30, 2017, have been restated to reflect the correction of misstatements. We have also restated all amounts impacted within the notes to the consolidated financial statements. A description of the adjustments and their impact on the previously issued financial information are included below. Descriptions of Restatement Adjustments Restatement Background During the preparation of our Annual Report on Form 10-K for the year ended August 31, 2018, we noted potentially excessive valuations in the net derivative asset valuations relating to certain rail freight contracts purchased in connection with our North American grain marketing operations. An investigation concluded that the rail freight misstatements included in our consolidated financial statements were due to intentional misconduct by a former employee in our rail freight trading operations, as well as due to rail freight contracts and certain non-rail contracts not meeting the technical accounting requirements to qualify as derivative financial instruments. The misconduct consisted of the former employee manipulating the mark-to-market valuation of rail cars that were the subject of rail freight purchase contracts and manipulating the quantity of rail cars included in the monthly mark-to-market valuation. In addition, the investigation revealed intentional misstatements were made by the former employee to our independent registered public accounting firm in connection with its audit of our consolidated financial statements for the fiscal year ended August 31, 2017. During the course of, and as a result of, the investigation, we terminated the former employee and have taken additional personnel actions. As described in additional detail in the Explanatory Note in our Annual Report on Form 10-K for the year ended August 31, 2018, the Company restated its audited consolidated financial statements for the fiscal years ended August 31, 2017 and 2016, and our unaudited consolidated financial statements for the quarterly periods ended November 30, 2017 and 2016, February 28, 2018 and 2017, and May 31, 2018 and 2017. As a result of the misstatements, we restated our interim consolidated financial statements for the three months ended November 30, 2017. In addition to the adjustments related to freight derivatives and related misstatements, we also made adjustments related to certain intercompany balances and other historical misstatements unrelated to the freight derivatives and related misstatements. Consolidated financial statement adjustment tables The following tables present the impacts of the restatement adjustments to our unaudited Consolidated Statement of Operations, unaudited Consolidated Statement of Comprehensive Income and unaudited Consolidated Statement of Cash Flows for the three months ended November 30, 2017. The restatement references identified in the following tables directly correlate to the restatement adjustments detailed below. The categories of restatement adjustments and their impact on previously reported consolidated financial statements are described below. (a) Freight derivatives and related misstatements - Corrections for freight derivatives and related misstatements were driven by the misstatement of amounts associated with both the value and quantity of rail freight contracts, as well as due to rail and certain non-rail freight contracts not meeting the technical accounting requirements to qualify as derivative financial instruments. In addition to the elimination of the underlying freight derivative assets and liabilities and related impacts on revenues and cost of goods sold, additional adjustments were recorded to account for prepaid freight capacity balances in relevant periods. Additional details related to the impact of the freight derivatives and related misstatements and their impact on each period are discussed in restatement reference (a). (b) Intercompany misstatements - As a result of the work performed in relation to the freight misstatement, additional misstatements related to the incorrect elimination of intercompany balances were also identified and corrected within the consolidated financial statements. Certain of these intercompany misstatements resulted in a misstatement of various financial statement line items; however, the intercompany misstatements did not result in a material misstatement of income (loss) before income taxes or net income (loss). Additional details related to the impact of the intercompany misstatements and their impact on each period are discussed in restatement reference (b). (c) Other misstatements - We made adjustments for other previously identified misstatements unrelated to the freight derivatives and related misstatements that were not material, individually or in the aggregate, to our consolidated financial statements. These other misstatements related primarily to certain misclassifications, adjustments to revenues and cost of goods sold, and adjustments to various income tax and indirect tax accrual accounts. Additional details related to the impact of the other misstatements and their impact on each period are discussed in restatement reference (c). CHS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
| For the Three Months Ended November 30, 2017 |  |
| As Previously Reported |  | Restatement Adjustments |  | As Restated |  | Accounting Changes* |  | As Presented |  | Restatement References
| (Dollars in thousands) |  |
Revenues | $ | 8,048,889 |  |  | $ | (17,005 | ) |  | $ | 8,031,884 |  |  | $ | — |  |  | $ | 8,031,884 |  |  | a, b, c
Cost of goods sold | 7,735,627 |  |  | (24,570 | ) |  | 7,711,057 |  |  | 335 |  |  | 7,711,392 |  |  | a, b, c
Gross profit | 313,262 |  |  | 7,565 |  |  | 320,827 |  |  | (335 | ) |  | 320,492 |  |  |
Marketing, general and administrative | 140,168 |  |  | (668 | ) |  | 139,500 |  |  | 846 |  |  | 140,346 |  |  | c
Reserve and impairment charges (recoveries), net | (3,787 | ) |  | — |  |  | (3,787 | ) |  | — |  |  | (3,787 | ) |  |
Operating earnings (loss) | 176,881 |  |  | 8,233 |  |  | 185,114 |  |  | (1,181 | ) |  | 183,933 |  |  |
Interest expense | 40,702 |  |  | — |  |  | 40,702 |  |  | — |  |  | 40,702 |  |  |
Other (income) loss | (25,014 | ) |  | — |  |  | (25,014 | ) |  | (1,181 | ) |  | (26,195 | ) |  |
Equity (income) loss from investments | (38,362 | ) |  | — |  |  | (38,362 | ) |  | — |  |  | (38,362 | ) |  |
Income (loss) before income taxes | 199,555 |  |  | 8,233 |  |  | 207,788 |  |  | — |  |  | 207,788 |  |  |
Income tax expense (benefit) | 19,936 |  |  | 670 |  |  | 20,606 |  |  | — |  |  | 20,606 |  |  | a
Net income (loss) | 179,619 |  |  | 7,563 |  |  | 187,182 |  |  | — |  |  | 187,182 |  |  |
Net income (loss) attributable to noncontrolling interests | (464 | ) |  | — |  |  | (464 | ) |  | — |  |  | (464 | ) |  |
Net income (loss) attributable to CHS Inc. | $ | 180,083 |  |  | $ | 7,563 |  |  | $ | 187,646 |  |  | $ | — |  |  | $ | 187,646 |  |  |
* Previously reported amounts have been revised to reflect the impact of adopting ASU 2017-17 retrospectively during the first quarter of fiscal 2019. Refer to details related to the adoption of new ASUs within Note 1, Basis of Presentation and Significant Accounting Policies. Freight derivatives and related misstatements (a) The correction of freight derivatives and related misstatements resulted in a $0.5 million reduction of income before income taxes and a $1.2 million reduction of net income. These adjustments related to a $0.5 million increase of cost of goods sold and a $0.7 million increase of income tax expense related to the tax effect of the freight derivatives and related misstatements. Intercompany misstatements (b) The correction of intercompany misstatements had no impact on income (loss) before income taxes or net income (loss); however, the correction resulted in an $11.4 million decrease of both revenues and cost of goods sold due to different practices of eliminating intercompany sales between CHS's businesses that existed in previous periods. Other misstatements (c) The correction of other misstatements resulted in an $8.8 million increase of income before income taxes and net income. The $8.8 million increase of income before income taxes relates primarily to a $6.2 million decrease of cost of goods sold related to the valuation of crack spread derivatives and a $2.6 million decrease in costs related to postretirement benefit plan activity that resulted from a timing difference associated with recording certain benefit plan expenses (included in cost of goods sold and marketing, general and administrative expenses). Additionally, certain misclassification and offsetting adjustments were made between line items included in the Consolidated Statements of Operations primarily due to the application of differing accounting policies between businesses. These misclassification adjustments resulted in a $5.7 million decrease of revenues and cost of goods sold. CHS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Unaudited)
| For the Three Months Ended November 30, 2017 |  |
| As Previously Reported |  | Restatement Adjustments |  | As Restated |  | Restatement References
| (Dollars in thousands) |  |
Net income (loss) | $ | 179,619 |  |  | $ | 7,563 |  |  | $ | 187,182 |  |  | a, c
Other comprehensive income (loss), net of tax: |  |  |  |  |  |  |
Postretirement benefit plan activity | 4,196 |  |  | (2,602 | ) |  | 1,594 |  |  | c
Unrealized net gain (loss) on available for sale investments | 3,640 |  |  | — |  |  | 3,640 |  |  |
Cash flow hedges | (4 | ) |  | — |  |  | (4 | ) |  |
Foreign currency translation adjustment | (2,607 | ) |  | 396 |  |  | (2,211 | ) |  | a
Other comprehensive income (loss), net of tax | 5,225 |  |  | (2,206 | ) |  | 3,019 |  |  |
Comprehensive income | 184,844 |  |  | 5,357 |  |  | 190,201 |  |  |
Less comprehensive income attributable to noncontrolling interests | (464 | ) |  | — |  |  | (464 | ) |  |
Comprehensive income attributable to CHS Inc. | $ | 185,308 |  |  | $ | 5,357 |  |  | $ | 190,665 |  |  |
Freight derivatives and related misstatements (a) The correction of freight derivatives and related misstatements resulted in a $1.2 million reduction of net income. Refer to descriptions of the adjustments and their impact on net income (loss) in the Consolidated Statement of Operations section for the three months ended November 30, 2017, above. The adjustment related to foreign currency translation is attributable to the foreign currency impact associated with goodwill that was impaired during fiscal 2015. Intercompany misstatements (b) None Other misstatements (c) The correction of other misstatements resulted in an $8.8 million increase of net income. Refer to descriptions of the adjustments and their impact on net income (loss) in the Consolidated Statement of Operations section for the three months ended November 30, 2017, above. The adjustment related to postretirement benefit plan activity is attributable to a timing difference associated with recording certain benefit plan expenses. CHS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
| For the Three Months Ended November 30, 2017 |  |
| As Previously Reported |  | Restatement Adjustments |  | As Restated |  | Accounting Changes* |  | As Presented |  | Restatement References
| (Dollars in thousands) |  |  |
Cash flows from operating activities: |  |  |  |  |  |  |  |  |  |  |  |  |
Net income (loss) | $ | 179,619 |  |  | $ | 7,563 |  |  | $ | 187,182 |  |  | $ | — |  |  | $ | 187,182 |  |  | a, c
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |  |  |  |  |  |  |  |  |  |  |  |  |
Depreciation and amortization | 120,148 |  |  | — |  |  | 120,148 |  |  | — |  |  | 120,148 |  |  |
Amortization of deferred major repair costs | 16,418 |  |  | — |  |  | 16,418 |  |  | — |  |  | 16,418 |  |  |
Equity (income) loss from investments | (38,362 | ) |  | — |  |  | (38,362 | ) |  | — |  |  | (38,362 | ) |  |
Distributions from equity investments | 12,514 |  |  | — |  |  | 12,514 |  |  | — |  |  | 12,514 |  |  |
Provision for doubtful accounts | (3,601 | ) |  | — |  |  | (3,601 | ) |  | — |  |  | (3,601 | ) |  |
Deferred taxes | 15,044 |  |  | 1,302 |  |  | 16,346 |  |  | — |  |  | 16,346 |  |  | a
Other, net | 2,976 |  |  | (2,601 | ) |  | 375 |  |  | — |  |  | 375 |  |  | c
Changes in operating assets and liabilities, net of acquisitions: |  |  |  |  |  |  |  |  |  |  |  |  |
Receivables | (80,637 | ) |  | 23,937 |  |  | (56,700 | ) |  | — |  |  | (56,700 | ) |  | c
Inventories | (472,180 | ) |  | (40,843 | ) |  | (513,023 | ) |  | — |  |  | (513,023 | ) |  | c
Derivative assets | 67,365 |  |  | (3,439 | ) |  | 63,926 |  |  | — |  |  | 63,926 |  |  | a, c
Margin and related deposits | (893 | ) |  | — |  |  | (893 | ) |  | — |  |  | (893 | ) |  |
Supplier advance payments | (292,905 | ) |  | (631 | ) |  | (293,536 | ) |  | — |  |  | (293,536 | ) |  | b
Other current assets and other assets | 2,689 |  |  | 883 |  |  | 3,572 |  |  | 2,751 |  |  | 6,323 |  |  | a
Customer margin deposits and credit balances | (18,045 | ) |  | — |  |  | (18,045 | ) |  | — |  |  | (18,045 | ) |  |
Customer advance payments | 1,278 |  |  | (11,529 | ) |  | (10,251 | ) |  | — |  |  | (10,251 | ) |  | b, c
Accounts payable and accrued expenses | 441,071 |  |  | 12,148 |  |  | 453,219 |  |  | — |  |  | 453,219 |  |  | a, c
Derivative liabilities | (97,329 | ) |  | (2,627 | ) |  | (99,956 | ) |  | — |  |  | (99,956 | ) |  | a, c
Other liabilities | 4,376 |  |  | — |  |  | 4,376 |  |  | — |  |  | 4,376 |  |  |
Net cash provided by (used in) operating activities | (140,454 | ) |  | (15,837 | ) |  | (156,291 | ) |  | 2,751 |  |  | (153,540 | ) |  |
Cash flows from investing activities: |  |  |  |  |  |  |  |  |  |  |  |  |
Acquisition of property, plant and equipment | (85,824 | ) |  | — |  |  | (85,824 | ) |  | — |  |  | (85,824 | ) |  |
Proceeds from disposition of property, plant and equipment | 56,079 |  |  | — |  |  | 56,079 |  |  | — |  |  | 56,079 |  |  |
Proceeds from sale of business | 29,457 |  |  | — |  |  | 29,457 |  |  | — |  |  | 29,457 |  |  |
Expenditures for major repairs | (1,039 | ) |  | — |  |  | (1,039 | ) |  | — |  |  | (1,039 | ) |  |
Investments redeemed | 5,195 |  |  | — |  |  | 5,195 |  |  | — |  |  | 5,195 |  |  |
Changes in CHS Capital notes receivable, net | (69,227 | ) |  | — |  |  | (69,227 | ) |  | — |  |  | (69,227 | ) |  |
Financing extended to customers | (15,778 | ) |  | — |  |  | (15,778 | ) |  | — |  |  | (15,778 | ) |  |
Payments from customer financing | 16,520 |  |  | — |  |  | 16,520 |  |  | — |  |  | 16,520 |  |  |
Other investing activities, net | 1,847 |  |  | — |  |  | 1,847 |  |  | — |  |  | 1,847 |  |  |
Net cash provided by (used in) investing activities | (62,770 | ) |  | — |  |  | (62,770 | ) |  | — |  |  | (62,770 | ) |  |
Cash flows from financing activities: |  |  |  |  |  |  |  |  |  |  |  |  |
Proceeds from lines of credit and long-term borrowings | 8,006,980 |  |  | — |  |  | 8,006,980 |  |  | — |  |  | 8,006,980 |  |  |
Payments on lines of credit, long-term borrowings and capital lease obligations | (7,657,713 | ) |  | 3,052 |  |  | (7,654,661 | ) |  | — |  |  | (7,654,661 | ) |  | c
Preferred stock dividends paid | (42,167 | ) |  | — |  |  | (42,167 | ) |  | — |  |  | (42,167 | ) |  |
Redemptions of equities | (3,682 | ) |  | — |  |  | (3,682 | ) |  | — |  |  | (3,682 | ) |  |
Other financing activities, net | (31,680 | ) |  | 10,423 |  |  | (21,257 | ) |  | — |  |  | (21,257 | ) |  | c
Net cash provided by (used in) financing activities | 271,738 |  |  | 13,475 |  |  | 285,213 |  |  | — |  |  | 285,213 |  |  |
Effect of exchange rate changes on cash and cash equivalents | 2,236 |  |  | — |  |  | 2,236 |  |  | — |  |  | 2,236 |  |  |
Net increase (decrease) in cash and cash equivalents and restricted cash | 70,750 |  |  | (2,362 | ) |  | 68,388 |  |  | 2,751 |  |  | 71,139 |  |  | b
Cash and cash equivalents and restricted cash at beginning of period | 181,379 |  |  | — |  |  | $ | 181,379 |  |  | 90,893 |  |  | 272,272 |  |  |
Cash and cash equivalents and restricted cash at end of period | $ | 252,129 |  |  | $ | (2,362 | ) |  | $ | 249,767 |  |  | $ | 93,644 |  |  | $ | 343,411 |  |  |
* Previously reported amounts have been revised to reflect the impact of adopting ASU 2016-18 retrospectively during the first quarter of fiscal 2019. Refer to details related to the adoption of new ASUs within Note 1, Basis of Presentation and Significant Accounting Policies. Freight derivatives and related misstatements (a) The correction of freight derivatives and related misstatements resulted in a $1.2 million reduction of net income for the three months ended November 30, 2017. Refer to descriptions of the adjustments and their impact on net income (loss) in the Consolidated Statement of Operations section for the three months ended November 30, 2017, above. The impact of the adjustments to the Consolidated Balance Sheets as of August 31, 2017, and November 30, 2017, resulted in certain misclassifications of less than $3.0 million between operating activity line items in the Consolidated Statements of Cash Flows; however, none of the freight derivatives and related misstatements impacted the classifications between operating, investing or financing activities. Intercompany misstatements (b) The correction of intercompany misstatements did not impact net income for the three months ended November 30, 2017; however, the impact of adjustments to the Consolidated Balance Sheets as of August 31, 2017, and November 30, 2017, resulted in certain misclassification adjustments of less than $3.0 million between line items in the Consolidated Statements of Cash Flows. None of the intercompany misstatements impacted the classifications between operating, investing or financing activities within the Consolidated Statements of Cash Flows; however, a timing difference related to the application of supplier advance payments resulted in a $2.4 million decrease of cash as of November 30, 2017. Other misstatements (c) The correction of other misstatements resulted in an $8.8 million increase of net income for the three months ended November 30, 2017. Refer to further details of the adjustments and their impact on net income (loss) in the Consolidated Statement of Operations section for the three months ended November 30, 2017, above. The impact of the adjustments to the Consolidated Balance Sheets as of August 31, 2017, and November 30, 2017, resulted in certain misclassification adjustments between line items in the Consolidated Statements of Cash Flows. As a result, two misclassification adjustments were made between operating and financing activities, including a $3.1 million reduction of notes payable resulting from a duplicative entry and the misclassification of a $10.4 million negative cash balance associated with a timing difference for the application of in-transit cash. In addition, various misclassification adjustments were made between operating activity lines, the most significant of which related to (1) a $24.1 million decrease of inventory and increase in accounts receivable as of August 31, 2017, due to a timing difference related to the settlement of a single ocean vessel and (2) the $18.3 million net impact associated with the decrease of inventory and increase of accounts payable that resulted from the misclassification adjustment for certain items previously included within a contra-inventory account to accounts payable as of August 31, 2017, and November 30, 2017.

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- Definition The entire disclosure for reporting accounting changes and error corrections. It includes the conveyance of information necessary for a user of the Company's financial information to understand all aspects and required disclosure information concerning all changes and error corrections reported in the Company's financial statements for the period. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -URI http://asc.fasb.org/topic&trid=2122394 + Details
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