CHS 2011 Annual Report Download - page 50

2011 CHS 49
Definitionsfor valuation levels are found in Note 12, Fair
Value Measurements. The Company uses the following
valuation methodologies for assets measured at fair value.
Mutual Funds: Valued at quoted market prices, which
are based on the net asset value of shares held by the
plan at year end. Mutual funds traded in active markets
are classified within Level 1 of the fair value hierarchy.
Certain of the mutual fund investments held by the plan
have observable inputs other than Level 1 and are
classified within Level 2 of the fair value hierarchy.
The 2010 information in the above table contains cor-
rections to the classifications within the fair value hier-
archy from that reported in the prior year.
Real Estate Funds: Valued quarterly at estimated fair
value based on the underlying investee funds in which
the real estate fund invests. This information is com-
piled, in addition to any other assets and liabilities
(accrued expenses and unit-holder transactions), to
determine the fund’s unit value. The real estate fund
is not traded on an active market and is classified within
Level 3 of the fair value hierarchy.
Hedge Funds: Valued at estimated fair value based on
prices quoted by various national markets and publications
and/or independent financial analysts. These investments
are classified within Level 3 of the fair value hierarchy.
The preceding methods described may produce a fair
value calculation that may not be indicative of the net
realizable value or reflective of future fair values. Further-
more, although the Company believes its valuation meth-
ods are appropriate and consistent with other market
participants, the use of different methodologies or
assumptions to determine the fair value of certain financial
instruments could result in a different fair value measure-
ment at the reporting date. The following tables set forth a
summary of changes in the fair value of the plan’s Level 3
assets for the years ended August 31, 2011 and 2010:
(DOLLARS IN THOUSANDS)
REAL
ESTATE
FUNDS
HEDGE
FUNDS TOTAL
2011
Balances at beginning of period $ 9,407 $ 2,705 $12,112
Unrealized gains 2,104 132 2,236
Purchases, sales, issuances and
settlements, net 3,011 (2,646) 365
Total $14,522 $ 191 $14,713
(DOLLARS IN THOUSANDS)
REAL
ESTATE
FUNDS
HEDGE
FUNDS TOTAL
2010
Balances at beginning of period $10,335 $1,091 $11,426
Unrealized (losses) gains (939) 126 (813)
Purchases, sales, issuances and
settlements, net 11 1,488 1,499
Total $ 9,407 $2,705 $12,112
NOTE 11
SEGMENT REPORTING
The Company has aligned the segments based on an
assessment of how the businesses are managed and oper-
ated, as well as the products and services it sells. During
the second quarter of fiscal 2011, there were several
changes in the senior leadership team which resulted in
the realignment of the segments. One of these changes is
that there is no longer a chief operating officer of Pro-
cessing, resulting in a change in the way the Company
manages its business and the elimination of that segment.
The revenues previously reported in the Processing seg-
ment were entirely from the oilseed processing operations,
and since those operations have grain-based commodity
inputs and similar commodity risk management require-
ments as other operations in the Ag Business segment, the
Company has included oilseed processing in that segment.
The wheat milling and packaged food operations previ-
ously included in the Processing segment are now
included in Corporate and Other, as those businesses
are conducted through non-consolidated joint ventures.
In addition, the non-consolidated agronomy joint venture
is winding down its business activity and is included in
Corporate and Other, rather than in the Ag Business
segment, where it was previously reported. There was
no change to the Energy segment. For comparative pur-
poses, segment information for the years ended August 31,
2010 and 2009, have been retrospectively revised to reflect
these changes. This revision had no impact on consolidated
net income or net income attributable to CHS Inc.
The Energy segment produces and provides primarily
for the wholesale distribution of petroleum products
and transportation of those products. The Ag Business
segment purchases and further processes or resells
grains and oilseeds originated by the country opera-
tions business, by the Company’s member cooperatives
and by third parties, and also serves as a wholesaler and