CHS 2011 Annual Report Download - page 40

2011 CHS 39
for the three months ended November 30, 2010,
$269.3 million for the six months ended February 28,
2011 and $255.8 million for the nine months ended
May 31, 2011. The Company has evaluated this error
and determined that the impact to the previously issued
interim financial statements was not material. The Com-
pany plans to make these corrections to its previously
reported unaudited interim Consolidated Balance Sheets
and Consolidated Statements of Cash Flows prospec-
tively in its fiscal 2012 Form 10-Q filings. These correc-
tions will have no impact on the Company’s previously
reported net income or equity. In addition, the correc-
tions will have no impact upon the Company’s compli-
ance with any covenants under its credit facilities.
NOTE 3
INVENTORIES
Inventories as of August 31, 2011 and 2010 are as follows:
(DOLLARS IN THOUSANDS) 2011 2010
Grain and oilseed $1,232,818 $ 983,846
Energy 732,609 515,930
Crop nutrients 389,741 135,526
Feed and farm supplies 346,572 242,482
Processed grain and oilseed 55,231 74,064
Other 11,453 9,528
$2,768,424 $1,961,376
As of August 31, 2011, the Company valued approxi-
mately 12% of inventories, primarily crude oil and
refined fuels within the Energy segment, using the lower
of cost, determined on the LIFO method, or market (12%
as of August 31, 2010). If the FIFO method of account-
ing had been used, inventories would have been higher
than the reported amount by $551.0 million and
$345.4 million at August 31, 2011 and 2010, respec-
tively. During 2010, energy inventory quantities were
reduced. The reduction resulted in liquidation of LIFO
inventory quantities carried at lower costs prevailing in
prior years as compared with the cost of 2010 pur-
chases, the effect of which decreased cost of goods sold
by approximately $5.7 million.
NOTE 4
INVESTMENTS
Investments as of August 31, 2011 and 2010 are as follows:
(DOLLARS IN THOUSANDS) 2011 2010
Joint ventures:
Ventura Foods, LLC $278,865 $262,550
Multigrain AG 148,528
Horizon Milling, LLC 79,770 69,873
TEMCO, LLC 47,337 29,128
Horizon Milling G.P. 20,445 20,166
Cooperatives:
Land O’Lakes, Inc. 53,147 48,854
Ag Processing Inc. 17,876 18,245
CoBank, ACB 13,272 15,704
Other 85,267 106,344
$595,979 $719,392
The Company has a 50% interest in Ventura Foods, LLC
(Ventura Foods), a joint venture which produces and
distributes primarily vegetable oil-based products, and
is included in Corporate and Other. During the year
ended August 31, 2009, the Company made capital
contributions to Ventura Foods of $35.0 million. The
Company accounts for Ventura Foods as an equity
method investment, and as of August 31, 2011, its
carrying value of Ventura Foods exceeded its share of
their equity by $13.4 million, of which $0.6 million is
being amortized with a remaining life of approximately
one year. The remaining basis difference represents
equity method goodwill. The following provides sum-
marized unaudited financial information for Ventura
Foods balance sheets as of August 31, 2011 and 2010,
and statements of operations for the twelve months
ended August 31, 2011, 2010 and 2009:
(DOLLARS IN THOUSANDS) 2011 2010
Current assets $585,760 $512,554
Non-current assets 464,621 459,346
Current liabilities 227,199 166,408
Non-current liabilities 292,368 308,795
(DOLLARS IN THOUSANDS) 2011 2010 2009
Net sales $2,350,895 $1,954,289 $2,055,768
Gross profit 255,748 259,388 269,269
Net earnings 105,754 95,480 125,174
Earnings attributable to
CHS Inc. 52,877 47,740 62,587