CHS 2013 Annual Report Download - page 31

that have been included in our Consolidated Statements
of Operations during fiscal 2013, 2012, and 2011.
Our derivative instruments primarily consist of com- (DOLLARS IN LOCATION OF
modity and freight futures and forward contracts and, THOUSANDS) GAIN (LOSS) 2013 2012 2011
to a minor degree, may include foreign currency and Commodity and freight derivatives
interest rate swap contracts. These contracts are eco- Cost of goods sold $ (482,352) $ 311,167 $ 186,265
nomic hedges of price risk, but are not designated or Foreign exchange derivatives
accounted for as hedging instruments for accounting Cost of goods sold (452) (5,219) 3,363
purposes, with the exception of certain interest rate Interest rate derivatives
swap contracts which are accounted for as cash flow Interest, net 300 206 522
hedges. Derivative instruments are recorded on our $(482,504) $ 306,154 $ 190,150
Consolidated Balance Sheets at fair values as described
in Note 12, Fair Value Measurements.
As of August 31, 2013 and 2012, the gross fair values of
derivative assets and liabilities as cash flow hedging
Even though we have netting arrangements for our
instruments were as follows:
exchange-traded futures and options contracts and cer-
tain over-the-counter (OTC) contracts, we report our (DOLLARS IN THOUSANDS) 2013 2012
derivative on a gross basis on our Consolidated Balance Derivative Assets:
Sheets. Our associated margin deposits are also Interest rate swaps $ 24,135
reported on a gross basis.
As of August 31, 2013 and 2012, we had the following During the year ended August 31, 2013, we entered into
outstanding purchase and sale contracts: derivative contracts designated as cash flow hedging
instruments which expire during fiscal 2014, with
(UNITS IN THOUSANDS) 2013 2012 $0.9 million expected to be included in earnings during
PURCHASE SALE PURCHASE SALE
CONTRACTS CONTRACTS CONTRACTS CONTRACTS the next 12 months. As of August 31, 2013 and 2012, the
unrealized gains deferred to accumulated other com-
Grain and oilseed
—bushels 521,979 806,295 722,895 1,074,535 prehensive loss were as follows:
Energy products (DOLLARS IN THOUSANDS) 2013 2012
—barrels 12,626 21,312 9,047 19,561 Gains included in accumulated other
Soy products comprehensive loss, net of tax expense
—tons 24 847 15 215 of $9.2 million in 2013 $ 14,930
Crop nutrients
—tons 968 1,050 600 725 Commodity and Freight Contracts:
Ocean and barge freight When we enter into a commodity or freight purchase or
—metric tons 1,225 151 1,018 183 sales contract, we incur risks related to price changes
Rail freight and performance (including delivery, quality, quantity,
—rail cars 220 43 184 34 and counterparty credit). We are exposed to risk of loss
Livestock in the market value of positions held, consisting of
—pounds 17,280 2,560 3,440 inventory and purchase contracts at a fixed or partially
fixed price in the event market prices decrease. We are
also exposed to risk of loss on fixed or partially fixed
As of August 31, 2013 and 2012, with the exception of our
price sales contracts in the event market prices increase.
interest rate swaps described below, our derivative
assets and liabilities are not designated as hedging
Our commodity contracts primarily relate to grain, oilseed,
instruments.
energy (crude, refined products and propane) and fertilizer
commodities. Our freight contracts primarily relate to rail,
The following table sets forth the pretax gains (losses)
barge and ocean freight transactions. Our use of com-
on derivatives not designated as hedging instruments
modity and freight contracts reduces the effects of price
volatility, thereby protecting us against adverse short-term
36 CHS 2013
ONE: Summary of Significant Accounting Policies, continued
Derivative Financial Instruments and
Hedging Activities