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CHS Inc. 8% Cumulative Redeemable Prefe Reports Operating Results for Fiscal Quarter Ended on 2008-11-30

January 13, 2009 | About:

CHS Inc. 8% Cumulative Redeemable Prefe (CHSCP) filed Quarterly Report for the period ended 2008-11-30.

CHS Inc. is a diversified energy grains and food company committed to providing the essential resources that enrich lives around the world. A Fortune 200 company CHS is owned by farmers ranchers and cooperatives along with thousands of preferred stockholders from the Great Lakes to the Pacific Northwest and from the Canadian border to Texas. CHS supplies energy crop nutrients livestock feed grain food and food ingredients along with business solutions including insurance financial and risk management services. CHS Inc. 8% Cumulative Redeemable Prefe has a market cap of $229.38 million; its shares were traded at around $25.77 . The dividend yield of CHS Inc. 8% Cumulative Redeemable Prefe stocks is 7.89%.

Highlight of Business Operations:

appreciation on propane and renewable fuels marketing products and a $24.6 million net decrease in sales volume. Refined fuels revenues decreased $6.5 million (less than 1%), of which $0.9 million was related to a net average selling price decrease and $5.6 million was attributable to decreased volumes, compared to the same period in the previous year. The sales price and volumes of refined fuels both decreased less than 1% when comparing the three months ended November 30, 2008 with the same period a year ago. Renewable fuels marketing revenues decreased $72.8 million (32%), mostly from a 37% decrease in volumes partially offset with an increase of $0.14 (7%) per gallon, when compared with the same three-month period in the previous year. The decrease in renewable fuels marketing volumes was primarily attributable to the loss of two customers. Propane revenues increased by $100.2 million (60%), of which $14.7 million related to an increase in the net average selling price and $85.5 million related to an increase in volumes, when compared to the same period in the previous year. The average selling price of propane increased $0.08 per gallon (6%) and sales volume increased 51% in comparison to the same period of the prior year. The increase in propane volumes primarily reflects increased demand caused by an earlier home heating and an improved crop drying season.

Our Ag Business segment revenues, after elimination of intersegment revenues, of $4.9 billion, increased $1.1 billion (29%) during the three months ended November 30, 2008 compared to the three months ended November 30, 2007. Grain revenues in our Ag Business segment totaled $3.8 billion and $2.9 billion during the three months ended November 30, 2008 and 2007, respectively. Of the grain revenues increase of $0.9 billion (31%), $62.5 million is attributable to increased volumes and $832.5 million is due to increased average grain selling prices during the three months ended November 30, 2008 compared to the same period last fiscal year. The average sales price of all grain and oilseed commodities sold reflected an increase of $1.85 per bushel (28%) over the same three-month period in fiscal 2008. The 2008 fall harvest produced good yields throughout most of the United States, with the quality of most grains rated as good. The average month-end market price per bushel of corn increased approximately $0.35 when compared to the three months ended November 30, 2007, while the average month-end market price for spring wheat and soybeans decreased $2.32 and $0.76, respectively. Volumes increased 2% during the three months ended November 30, 2008 compared with the same period of a year ago.

Our Processing segment revenues, after elimination of intersegment revenues, of $310.3 million increased $67.1 million (28%) during the three months ended November 30, 2008 compared to the three months ended November 30, 2007. Because our wheat milling and packaged foods operations are operated through non-consolidated joint ventures, revenues reported in our Processing segment are entirely from our oilseed processing operations. Oilseed processing revenues increased $20.3 million (17%), of which $21.7 million was due to higher average sales prices, partially offset by a $1.4 million (1%) net decrease in sales volume. Oilseed refining revenues increased $40.6 million (35%), of which $52.0 million was due to higher average sales prices, partially offset by an $11.4 million (10%) net decrease in sales volume. The average selling price of processed oilseed increased $42 per ton (18%) and the average selling price of refined oilseed products

Interest, net. Net interest of $20.2 million for the three months ended November 30, 2008 increased $6.6 million (49%) compared to the same period last fiscal year. Interest expense for the three months ended November 30, 2008 and 2007 was $21.5 million and $18.4 million, respectively. Interest income, generated primarily from marketable securities, was $1.3 million and $4.9 million, for the three months ended November 30, 2008 and 2007, respectively. The interest expense increase of $3.1 million (17%) includes $2.6 million from the consolidation of Cofina Financial. Through August 31, 2008, we held a 49% ownership interest in Cofina Financial and accounted for our investment using the equity method of accounting. On September 1, 2008, we purchased Cenex Finance Associations 51% ownership interest. In addition, interest expense increased from a decrease in capitalized interest of $3.4 million. It was partially offset by decreases in the average short-term interest rate and short-term borrowings for loans excluding Cofina Financial. For the three months ended November 30, 2008 and 2007, we capitalized interest of $0.9 million and $4.3 million, respectively, primarily related to construction projects in our Energy segment. The average short-term interest rate decreased 3.26% for loans excluding Cofina Financial, while the average level of short-term borrowings decreased $625.9 million during the three months ended November 30, 2008, compared to the same three-month period in fiscal 2008, mostly due to decreased working capital needs. Also, in October 2007, we entered into a private placement with several insurance companies and banks for additional long-term debt in the amount of $400.0 million with an interest rate of 6.18%, which primarily replaced short-term debt. The net decrease in interest income of $3.6 million (73%) was primarily at NCRA within our Energy segment, which primarily relates to marketable securities.

Our operating activities provided net cash of $997.3 million during the three months ended November 30, 2008. Net income of $137.3 million, net non-cash expenses and cash distributions from equity investments of $141.9 million and a decrease in net operating assets and liabilities of $718.1 million provided the cash flows from operating activities. The primary components of net non-cash expenses and cash distributions from equity investments included depreciation and amortization, including major repair costs, of $55.2 million, loss on investments of $55.0 million, minority interests of $22.2 million and redemptions from equity investments, net of income from those investments of $18.7 million. Loss on investments was previously discussed in Results of Operations, and primarily includes the impairment of our VeraSun investment, partially offset by the gain on the sale of our NYMEX Holdings common stock. The decrease in net operating assets and liabilities was caused primarily by a decline in commodity prices reflected in decreased receivables and inventories, and an increase in derivative liabilities, partially offset by a decrease in accounts payable and accrued expenses on November 30, 2008, when compared to August 31, 2008. On November 30, 2008, the per bushel market prices of our three primary grain commodities, corn, soybeans and spring wheat, decreased by $2.19 (39%), $4.49 (34%) and $2.62 (30%), respectively, when compared to the prices on August 31, 2008. Crude oil market prices decreased $61.03 (53%) per barrel on November 30, 2008 when compared to August 31, 2008. In addition, on November 30, 2008, fertilizer commodity prices affecting our wholesale crop nutrients and country operations retail businesses generally had decreases between 9% and 59%, depending on the specific products, compared to prices on August 31, 2008.

Our operating activities provided net cash of $14.5 million during the three months ended November 30, 2007. Net income of $300.9 million was partially offset by net non-cash gains and cash distributions from equity investments of $8.3 million and an increase in net operating assets and liabilities of $278.1 million. The primary components of net non-cash gains and cash distributions from equity investments included gains on investments of $94.9 million and income from equity investments, net of redemptions from those investments, of $18.9 million, partially offset by depreciation and amortization, including major repair costs, of $47.2 million, deferred taxes of $36.9 million and minority interests of $23.0 million. Gains on investments were previously discussed in Results of Operations, and primarily includes the gain on the sale of all of our

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