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Despite solid performance in our core businesses, a few large events have resulted in substantial fiscal 2017 financial losses in certain patronage-based businesses. These events included a loss attributed to a large producer loan and business unit asset impairments in the United States. It has been the Board’s practice to offset patronage-sourced operating losses against the income in patronage allocation units. This practice will continue for fiscal year 2017, with some modification due to the size of the operating losses. Specifically, some of these patronage-based business operating losses will be offset against patronage income from specific allocation units and some will be offset against the unallocated capital reserve. In addition, the CHS Board made the following equity management decisions at its September meeting:
These decisions were not made lightly and came after much discussion and assessment about how best to serve CHS and all of our patrons for the long-term.
While CHS experienced a challenging year, we are taking necessary steps to restore financial flexibility and minimize operational risk to ensure a strong future for our owners.