CHS 2014 Annual Report Download - page 39

5NOV201416072628
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
from producer borrowers which are collateralized by
various combinations of growing crops, livestock, inven-
tories, accounts receivable, personal property and sup-
plemental mortgages. In addition to the short-term
balances included in the table above, CHS Capital had
long-term notes receivable, with durations of not more
than 10 years, totaling $159.7 million and $127.7 million at
August 31, 2014 and 2013, respectively. The long-term
notes receivable are included in other assets on our
Consolidated Balance Sheets. As of August 31, 2014 and
2013, the commercial notes represented 46% and 59%,
respectively, and the producer notes represented 54%
Trade accounts receivable are initially recorded at a and 41%, respectively, of the total CHS Capital notes
selling price, which approximates fair value, upon the receivable.
sale of goods or services to customers. Subsequently,
trade accounts receivable are carried at net realizable CHS Capital evaluates the collectability of both com-
value, which includes an allowance for estimated uncol- mercial and producer notes on a specific identification
lectible amounts. We calculate this allowance based on basis, based on the amount and quality of the collateral
our history of write-offs, level of past due accounts, and obtained, and records specific loan loss reserves when
our relationships with, and the economics status of, our appropriate. A general reserve is also maintained based
customers. The carrying value of CHS Capital, LLC (CHS on historical loss experience and various qualitative fac-
Capital) notes receivable approximates fair value, given tors. In total, the specific and general loan loss reserves
their short duration and the use of market pricing related to CHS Capital are not material to our consoli-
adjusted for risk. dated financial statements, nor are the associated his-
torical write-offs. The accrual of interest income is
CHS Capital, our wholly-owned subsidiary, has notes discontinued at the time the loan is 90 days past due
receivable from commercial and producer borrowers. unless the credit is well-collateralized and in process of
The short-term notes receivable generally have maturity collection. The amount of CHS Capital notes that were
terms of 12-14 months and are reported at their out- past due was not significant at any reporting date
standing principle balances, as CHS Capital holds these presented.
notes to maturity. The notes receivable from commercial
borrowers are collateralized by various combinations of CHS Capital has commitments to extend credit to cus-
mortgages, personal property, accounts and notes tomers as long as there are no violations of any contrac-
receivable, inventories and assignments of certain tually established conditions. As of August 31, 2014, CHS
regional cooperative’s capital stock. These loans are pri- Capital’s customers have additional available credit of
marily originated in the states of Minnesota, Wisconsin $1.1 billion.
and North Dakota. CHS Capital also has loans receivable
CHS 2014 37
Receivables
Receivables as of August 31, 2014 and 2013 are as
follows:
(DOLLARS IN THOUSANDS) 2014 2013
Trade accounts receivable $ 2,153,929 $ 2,338,336
CHS Capital notes receivable 633,475 437,141
Other 304,798 254,590
3,092,202 3,030,067
Less allowances and reserves 103,639 94,589
Total receivables $ 2,988,563 $ 2,935,478