CHS INC - 10-Q filing on 2021-07-08

Equities

9 Months Ended

May 31, 2021

Changes in Equities

Changes in equities for the three and nine months ended May 31, 2021 and 2020, are as follows:


	Equity Certificates								Accumulated Other Comprehensive Loss
	Capital Equity Certificates		Nonpatronage Equity Certificates		Nonqualified Equity Certificates		Preferred Stock				Capital Reserves		Noncontrolling Interests		Total Equities
	(Dollars in thousands)
Balances, August 31, 2020	$	3,724,187	$	28,727	$	1,408,696	$	2,264,038	$	(233,924)	$	1,618,147	$	9,302	$	8,819,173
Reversal of prior year redemption estimates	7,726		—		—		—		—		—		—		7,726
Redemptions of equities	(6,539)		(31)		(1,156)		—		—		—		—		(7,726)
Preferred stock dividends	—		—		—		—		—		(84,334)		—		(84,334)
Other, net	(654)		(47)		(197)		—		—		(7,798)		35		(8,661)
Net income (loss)	—		—		—		—		—		69,671		(302)		69,369
Other comprehensive income, net of tax	—		—		—		—		8,917		—		—		8,917
Estimated 2021 cash patronage refunds	—		—		—		—		—		(9,304)		—		(9,304)
Estimated 2021 equity redemptions	(9,304)		—		—		—		—		—		—		(9,304)
Balances, November 30, 2020	$	3,715,416	$	28,649	$	1,407,343	$	2,264,038	$	(225,007)	$	1,586,382	$	9,035	$	8,785,856
Reversal of prior year patronage and redemption estimates	4,760		—		(211,970)		—		—		233,345		—		26,135
Distribution of 2020 patronage refunds	—		—		214,720		—		—		(236,136)		—		(21,416)
Redemptions of equities	(4,177)		(35)		(548)		—		—		—		—		(4,760)
Preferred stock dividends	—		—		—		—		—		(42,167)		—		(42,167)
Other, net	(26)		—		(15)		—		—		1,068		(361)		666
Net loss	—		—		—		—		—		(38,229)		(129)		(38,358)
Other comprehensive income, net of tax	—		—		—		—		2,549		—		—		2,549
Estimated 2021 cash patronage refunds	—		—		—		—		—		5,639		—		5,639
Estimated 2021 equity redemptions	5,639		—		—		—		—		—		—		5,639
Balances, February 28, 2021	$	3,721,612	$	28,614	$	1,409,530	$	2,264,038	$	(222,458)	$	1,509,902	$	8,545	$	8,719,783
Reversal of prior year redemption estimates	15,514		—		5,000		—		—		8,625		—		29,139
Distribution of 2020 patronage refunds	—		—		7		—		—		(8,632)		—		(8,625)
Redemptions of equities	(19,275)		(35)		(6,013)		—		—		—		—		(25,323)
Other, net	(298)		43		58		—		—		(1,726)		(61)		(1,984)
Net income	—		—		—		—		—		273,591		81		273,672
Other comprehensive income, net of tax	—		—		—		—		7,115		—		—		7,115
Estimated 2021 cash patronage refunds	—		—		—		—		—		(21,292)		—		(21,292)
Estimated 2021 equity redemptions	(21,292)		—		—		—		—		—		—		(21,292)
Balances, May 31, 2021	$	3,696,261	$	28,622	$	1,408,582	$	2,264,038	$	(215,343)	$	1,760,468	$	8,565	$	8,951,193


	Equity Certificates								Accumulated Other Comprehensive Loss
	Capital Equity Certificates		Nonpatronage Equity Certificates		Nonqualified Equity Certificates		Preferred Stock				Capital Reserves		Noncontrolling Interests		Total Equities
	(Dollars in thousands)
Balances, August 31, 2019	$	3,753,493	$	29,074	$	1,206,310	$	2,264,038	$	(226,933)	$	1,584,158	$	7,390	$	8,617,530
Reversal of prior year redemption estimates	5,447		—		—		—		—		—		—		5,447
Redemptions of equities	(4,721)		(54)		(672)		—		—		—		—		(5,447)
Preferred stock dividends	—		—		—		—		—		(84,334)		—		(84,334)
ASC Topic 842 cumulative-effect adjustment	—		—		—		—		—		33,707		—		33,707
Other, net	(8)		—		(39)		—		—		(1,312)		410		(949)
Net income	—		—		—		—		—		177,882		855		178,737
Other comprehensive loss, net of tax	—		—		—		—		(1,638)		—		—		(1,638)
Estimated 2020 cash patronage refunds	—		—		—		—		—		(28,504)		—		(28,504)
Estimated 2020 equity redemptions	(91,633)		—		—		—		—		—		—		(91,633)
Balances, November 30, 2019	$	3,662,578	$	29,020	$	1,205,599	$	2,264,038	$	(228,571)	$	1,681,597	$	8,655	$	8,622,916
Reversal of prior year patronage and redemption estimates	3,387		—		(472,398)		—		—		562,398		—		93,387
Distribution of 2019 patronage refunds	—		—		474,066		—		—		(564,096)		—		(90,030)
Redemptions of equities	(2,998)		(20)		(369)		—		—		—		—		(3,387)
Preferred stock dividends	—		—		—		—		—		(42,167)		—		(42,167)
Other, net	(201)		—		3		—		—		10		(324)		(512)
Net income	—		—		—		—		—		125,447		247		125,694
Other comprehensive loss, net of tax	—		—		—		—		(10,585)		—		—		(10,585)
Estimated 2020 cash patronage refunds	—		—		—		—		—		(22,206)		—		(22,206)
Estimated 2020 equity redemptions	(49,154)		—		—		—		—		—		—		(49,154)
Balances, February 29, 2020	$	3,613,612	$	29,000	$	1,206,901	$	2,264,038	$	(239,156)	$	1,740,983	$	8,578	$	8,623,956
Reversal of prior year redemption estimates	67,438		—		10,000		—		—		—		—		77,438
Distribution of 2019 patronage refunds	—		—		327		—		—		(409)		—		(82)
Redemptions of equities	(64,273)		(91)		(13,074)		—		—		—		—		(77,438)
Other, net	(1,544)		(7)		(116)		—		—		1,053		8		(606)
Net income (loss)	—		—		—		—		—		97,648		(147)		97,501
Other comprehensive loss, net of tax	—		—		—		—		(2,009)		—		—		(2,009)
Estimated 2020 cash patronage refunds	—		—		—		—		—		13,551		—		13,551
Estimated 2020 equity redemptions	47,975		—		—		—		—		—		—		47,975
Balances, May 31, 2020	$	3,663,208	$	28,902	$	1,204,038	$	2,264,038	$	(241,165)	$	1,852,826	$	8,439	$	8,780,286

Preferred Stock Dividends

The following is a summary of dividends per share by series of preferred stock for the nine months ended May 31, 2021 and 2020. Note that due to the timing of dividend declarations during the fiscal year, no declarations were made during the third quarter of fiscal 2021 or the third quarter of fiscal 2020.


			Nine Months Ended May 31,
	Nasdaq symbol		2021		2020
Series of preferred stock:		(Dollars per share)
8% Cumulative Redeemable	CHSCP		$	1.50	$	1.50
Class B Cumulative Redeemable, Series 1	CHSCO		$	1.48	$	1.48
Class B Reset Rate Cumulative Redeemable, Series 2	CHSCN		$	1.33	$	1.33
Class B Reset Rate Cumulative Redeemable, Series 3	CHSCM		$	1.27	$	1.27
Class B Cumulative Redeemable, Series 4	CHSCL		$	1.41	$	1.41

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) by component, net of tax, are as follows for the three and nine months ended May 31, 2021 and 2020:


	Pension and Other Postretirement Benefits		Cash Flow Hedges		Foreign Currency Translation Adjustment		Total
	(Dollars in thousands)
Balance as of August 31, 2020, net of tax	$	(159,680)	$	10,886	$	(85,130)	$	(233,924)
Other comprehensive income (loss), before tax:
Amounts before reclassifications	(125)		14,506		3,629		18,010
Amounts reclassified	4,977		(12,284)		—		(7,307)
Total other comprehensive income, before tax	4,852		2,222		3,629		10,703
Tax effect	(1,207)		(553)		(26)		(1,786)
Other comprehensive income, net of tax	3,645		1,669		3,603		8,917
Balance as of November 30, 2020, net of tax	$	(156,035)	$	12,555	$	(81,527)	$	(225,007)
Other comprehensive income (loss), before tax:
Amounts before reclassifications	—		2,929		(587)		2,342
Amounts reclassified	5,151		(3,673)		—		1,478
Total other comprehensive income (loss), before tax	5,151		(744)		(587)		3,820
Tax effect	(1,282)		185		(174)		(1,271)
Other comprehensive income (loss), net of tax	3,869		(559)		(761)		2,549
Balance as of February 28, 2021, net of tax	$	(152,166)	$	11,996	$	(82,288)	$	(222,458)
Other comprehensive income (loss), before tax:
Amounts before reclassifications	112		(4,725)		8,398		3,785
Amounts reclassified	5,064		(1,919)		—		3,145
Total other comprehensive income (loss), before tax	5,176		(6,644)		8,398		6,930
Tax effect	(1,288)		1,653		(180)		185
Other comprehensive income (loss), net of tax	3,888		(4,991)		8,218		7,115
Balance as of May 31, 2021, net of tax	$	(148,278)	$	7,005	$	(74,070)	$	(215,343)


	Pension and Other Postretirement Benefits		Cash Flow Hedges		Foreign Currency Translation Adjustment		Total
	(Dollars in thousands)
Balance as of August 31, 2019, net of tax	$	(172,478)	$	15,297	$	(69,752)	$	(226,933)
Other comprehensive income (loss), before tax:
Amounts before reclassifications	(85)		(3,331)		(2,411)		(5,827)
Amounts reclassified	4,977		(4,473)		—		504
Total other comprehensive income (loss), before tax	4,892		(7,804)		(2,411)		(5,323)
Tax effect	181		1,932		1,572		3,685
Other comprehensive income (loss), net of tax	5,073		(5,872)		(839)		(1,638)
Balance as of November 30, 2019, net of tax	$	(167,405)	$	9,425	$	(70,591)	$	(228,571)
Other comprehensive income (loss), before tax:
Amounts before reclassifications	—		(5,975)		(8,540)		(14,515)
Amounts reclassified	4,977		(1,747)		—		3,230
Total other comprehensive income (loss), before tax	4,977		(7,722)		(8,540)		(11,285)
Tax effect	(1,231)		1,910		21		700
Other comprehensive income (loss), net of tax	3,746		(5,812)		(8,519)		(10,585)
Balance as of February 29, 2020, net of tax	$	(163,659)	$	3,613	$	(79,110)	$	(239,156)
Other comprehensive income (loss), before tax:
Amounts before reclassifications	(340)		7,795		(12,515)		(5,060)
Amounts reclassified	4,977		1,263		—		6,240
Total other comprehensive income (loss), before tax	4,637		9,058		(12,515)		1,180
Tax effect	(1,147)		(2,241)		199		(3,189)
Other comprehensive income (loss), net of tax	3,490		6,817		(12,316)		(2,009)
Balance as of May 31, 2020, net of tax	$	(160,169)	$	10,430	$	(91,426)	$	(241,165)

Amounts reclassified from accumulated other comprehensive income (loss) were related to pension and other postretirement benefits, cash flow hedges and foreign currency translation adjustments. Pension and other postretirement reclassifications include amortization of net actuarial loss, prior service credit and transition amounts and are recorded as cost of goods sold, marketing, general and administrative expenses, and other income (see Note 9, Benefit Plans, for further information). Gains or losses associated with cash flow hedges are recorded as cost of goods sold (see Note 11, Derivative Financial Instruments and Hedging Activities, for further information). Gains or losses on foreign currency translation reclassifications related to sales of businesses are recorded as other income.