CHS 2011 Annual Report Download - page 56

2011 CHS 55
August 31, 2011, 2010 and 2009, respectively. Both
refineries were producing gasoline within the regulated
benzene levels as of January 2011.
OTHER LITIGATION AND CLAIMS
The Company is involved as a defendant in various
lawsuits, claims and disputes, which are in the normal
course of the Company’s business. The resolution of any
such matters may affect consolidated net income for
any fiscal period; however, management believes any
resulting liabilities, individually or in the aggregate, will
not have a material effect on the consolidated financial
position, results of operations or cash flows of the
Company during any fiscal year.
GRAIN STORAGE
As of August 31, 2011 and 2010, the Company stored
grain for third parties totaling $408.8 million and
$246.2 million, respectively. Such stored commodities
and products are not the property of the Company and
therefore are not included in the Company’s inventories.
GUARANTEES
The Company is a guarantor for lines of credit and
performance obligations of related companies. The Com-
pany’s bank covenants allow maximum guarantees of
$500.0 million, of which $42.6 million was outstanding
on August 31, 2011. The Company has collateral for a
portion of these contingent obligations. The Company has
not recorded a liability related to the contingent obliga-
tions as it does not expect to pay out any cash related to
them, and the fair values are considered immaterial. The
underlying loans to the counterparties for which the
Company provides guarantees are current as of
August 31, 2011.
CREDIT COMMITMENTS
CHS Capital has commitments to extend credit to cus-
tomers as long as there is no violation of any condition
established in the contracts. As of August 31, 2011, CHS
Capital’s customers have additional available credit
of $789.0 million.
LEASE COMMITMENTS
The Company is committed under operating lease
agreements for approximately 2,000 rail cars with
remaining terms of one to ten years. In addition, the
Company has commitments under other operating
leases for various refinery, manufacturing and trans-
portation equipment, vehicles and office space. Some
leases include purchase options at not less than fair
market value at the end of the lease terms.
Total rental expense for all operating leases, net of rail car
mileage credits received from railroad and sublease
income, was $66.2 million, $64.3 million and $61.1 million
for the years ended August 31, 2011, 2010 and 2009,
respectively. Mileage credits and sublease income totaled
$2.0 million, $1.4 million and $1.3 million for the years
ended August 31, 2011, 2010 and 2009, respectively.
Minimum future lease payments, required under non-
cancellable operating leases as of August 31, 2011 are
as follows:
(DOLLARS IN
THOUSANDS) RAIL CARS VEHICLES
EQUIPMENT
AND OTHER TOTAL
2012 $12,472 $25,937 $13,551 $ 51,960
2013 10,858 19,861 10,667 41,386
2014 8,309 14,844 7,880 31,033
2015 7,400 11,005 6,753 25,158
2016 6,373 5,591 5,791 17,755
Thereafter 11,625 1,099 10,229 22,953
Total minimum
future lease
payments $57,037 $78,337 $54,871 $190,245
PURCHASE OBLIGATIONS
As of August 31, 2011 and 2010, the Company has pur-
chase obligations of $5.0 billion and $4.1 billion, respec-
tively, which are not recorded on the Consolidated
Balance Sheets. Such purchase obligations are legally
binding and enforceable agreements to purchase goods
or services that specify all significant terms, including
fixed or minimum quantities; fixed, minimum or variable
price provisions; and time of the transactions.