2019-11-15T13:39:37-06:00 2018-12-31 750882037 BOLINGER SEGARS GILBERT AND MOSS LLP 8215 NASHVILLE AVENUE LUBBOCK TX 79423 990 2018-01-01 750233075 DENTON COUNTY ELECTRIC COOPERATIVE INC DENT 9403217800 7701 SOUTH STEMMONS FREEWAY CORINTH TX 76210 BRENT BISHOP SENIOR VP & CFO 9403217800 2019-11-15 1 WILLIAM M MILLER P00439459 8067473806 2019-11-14 X 65.182.80.152 2019-11-15 11:38:53 CS P 2EBFA2265763A01132BE48D36E167D9476E1DDEB 587A88673713A033F58E04FDF6801CBB1F7DD2F2 2018 2020-04-17 16:48:07Z COSERV ELECTRIC DONALD CLARY 7701 SOUTH STEMMONS FREEWAY CORINTH TX 76210 525924193 0 X WWW.COSERV.COM X 1938 TX TO PROVIDE ELECTRIC POWER TO MEMBERS AT COST ON A COOPERATIVE BASIS. 7 7 443 0 37100 41963 0 0 487791651 523059033 408805 1079989 1031892 982558 489232348 525121580 50490 57750 44823498 45750008 39048641 41697436 0 0 0 404804540 436380168 488727169 523885362 505179 1236218 1236291525 1305141201 693828246 724770867 542463279 580370334 TO DELIVER EXCELLENT SERVICE TO OUR MEMBERS AND CUSTOMERS BY PROVIDING SAFE AND RELIABLE ENERGY SOLUTIONS. 0 0 THE COOPERATIVE PROVIDED ELECTRICITY TO 236,992 ACTIVE MEMBER SERVICES AT YEAR END. THE ELECTRICITY AND RELATED SERVICES WERE PROVIDED AT COST ON A COOPERATIVE BASIS THROUGH THE ALLOCATION OF PATRONAGE CAPITAL. 0 0 0 0 0 0 0 1 0 1 1 1 0 1 1 0 1 0 0 0 0 0 0 0 0 0 1 0 1 0 0 0 0 0 0 0 0 0 0 1 1 1 1 0 1 91 0 443 1 1 1 0 0 0 0 510037577 37632269 0 0 0 X 7 7 0 0 0 0 1 1 1 1 1 0 0 1 1 1 1 1 0 1 1 0 X BRENT BISHOP SENIOR VP & CFO 9403217800 7701 SOUTH STEMMONS FREEWAY CORINTH TX 76210 X RICHARD MUIR CHAIRMAN 10.70 X X 45718 0 0 BILL RAGSDALE VICE CHAIRMAN 11.20 X X 49018 0 0 CHRISTOPHER MCCRAW SECRETARY/TREASURER 14.10 X X 58068 0 0 CURTIS TALLY DIRECTOR 10.10 X 45568 0 0 LEON PELZEL DIRECTOR 11.90 X 49268 0 0 CLINTON BEDSOLE DIRECTOR 12.10 X 52818 0 0 TRISHA SHEFFIELD DIRECTOR 10.70 X 40573 0 0 DONALD CLARY PRESIDENT & CEO 50.00 1.00 X 447737 0 219990 CURTIS TRIVITT SENIOR VP - ENERGY SERVICE 40.00 1.00 X 380883 0 136833 STACIA SIMS JAN-SEP SENIOR VP - INFORMATION SERVICES 45.00 5.00 X 296294 0 17420 DENISE SMITHERS SENIOR VP - CORPORATE RELATIONS 45.00 1.00 X 273991 0 106513 BRENT BISHOP SENIOR VP & CFO 45.00 1.00 X 262389 0 117252 GREG WARD SENIOR VP - FIELD OPERATIONS 45.00 1.00 X 255680 0 108270 ROBBY HAMLIN SENIOR VP - ENGINEERING SERVICES 45.00 X 256271 0 128597 JEFFREY MCNEAL SENIOR VP - INFORMATION TECHNOLOGY 45.00 X 243094 0 85527 JAMES LAMIRAND SENIOR VP - MARKETING & CUST. CARE 50.00 X 262208 0 37734 BRUCE BOUTILIER SR DIRECTOR OF CUSTOMER OPERATIONS 45.00 X 194988 0 106952 CHARLES TURNER DIRECTOR OF FINANCE 40.00 X 185281 0 89413 WAYNE FRANCIS DIRECTOR OF INFORMATION TECHNOLOGY 40.00 X 177426 0 82169 RUTH ANN SICKING DIRECTOR OF INFORMATION SYSTEMS 50.00 X 173954 0 69896 VICKI SARGENT DIRECTOR OF COMMUNITY RELATIONS 45.00 X 163617 0 44118 3914844 0 1350684 94 0 1 0 TEXAS STATE UTILITIES INC 3112 WICHITA COURT FORT WORTH TX 76140 UTILITY LINE CONTRACTOR 7721564 WILLBROS T&D SERVICES LLC 1432 CHURCH STREET MCKINNEY TX 75069 UTILITY LINE CONTRACTOR 7186018 PRIMORIS T&D SERVICES LLC 115 WEST 7TH ST SUITE 1410 FORT WORTH TX 76102 UTILITY LINE CONTRACTOR 6234291 MASTEC NORTH AMERICA INC PO BOX 70 SHEVLIN MN 56676 UTILITY LINE CONTRACTOR 5339701 SIRIUS COMPUTER SOLUTIONS INC PO BOX 202289 DALLAS TX 75320 COMPUTER NETWORK SERVICES 3264724 39 X SALES OF ELECTRICITY 221000 501257564 501257564 PATRONAGE DIVIDENDS 221000 16037734 16037734 SERVICE FEES 221000 5763735 5763735 523059033 1096867 1096867 1213345 45324 655400 13100 557945 32224 590169 286410 37100 266659 117235 134113 -16878 -16878 -16878 POLE ATTACHMENT INCOME 221000 392389 392389 392389 525121580 523345443 37100 1739037 X 57750 45750008 3977714 22812259 4358614 8172617 2376232 27424312 33207310 PURCHASED POWER 351848435 ADMIN & GENERAL EXPENSE 9756649 TAXES- PROPERTY & OTHER 6891634 UBIT EXPENSE 9500 7242328 523885362 20013867 16079890 39000000 67000000 23148769 23673474 1064077 1024330 113168539 107685822 1089547689 290607427 759737771 798940262 86167322 89885835 174905770 183335976 19085410 17515612 1236291525 1305141201 47708468 50927051 63111 64256 668842 512592 592510000 621155000 52877825 52111968 693828246 724770867 X 2880560 3058095 125569414 136527076 414013305 440785163 542463279 580370334 1236291525 1305141201 X 1236218 36670837 X X 0 1 X 1 0 0 1 X 3134067 2866189 6000256 34345775 12580311 21765464 1328580 975132136 278027116 698433600 72740942 72740942 798940262 INVESTMENT IN SUBSIDIARY CORPORATION - EQUITY METHOD 89885835 C 89885835 MEMBERSHIPS IN ASSOCIATED ORGANIZATIONS 2365 C PATRONAGE CAPITAL - BEPCI 181356335 C PATRONAGE CAPITAL - CFC 357632 C PATRONAGE CAPITAL - COBANK 404095 C PATRONAGE CAPITAL - NRTC 708 C PATRONAGE CAPITAL - TEC 1214841 C 183335976 POST RETIREMENT HEALTH INSURANCE BENEFITS 9439614 DEFERRED COMPENSATION 693839 CONSUMER DEPOSITS 7788977 ACCRUED OPERATING TAXES & MUNICIPAL FRANCHISE FEES 16857070 ACCRUED UNBILLED POWER COST 10795945 DEFERRED CREDITS 3957497 OTHER CURRENT & ACCRUED LIABILITIES 2579026 52111968 X PART IV, LINE 2B: PURSUANT TO SECTION 74.3013 OF THE TEXAS PROPERTY CODE, THE COOPERATIVE HAS ESTABLISHED A SCHOLARSHIP FUND WITH AMOUNTS DESIGNATED UNCLAIMED UNDER STATE LAW. THE AMOUNTS DEPOSITED INTO THE SCHOLARSHIP FUND ARE APPROVED BY THE STATE OF TEXAS AND CAN ONLY BE USED FOR SCHOLARSHIPS TO ENABLE STUDENTS WITHIN AREAS SERVED BY THE COOPERATIVE TO ATTEND COLLEGE, TECHNICAL SCHOOL OR OTHER POST SECONDARY EDUCATION INSTITUTION. ANY AMOUNTS SO DEPOSITED INTO THE SCHOLARSHIP FUND ARE STILL PAYABLE TO THE PERSON TO WHOM THE ORIGINAL PAYMENT WAS MADE BUT UNCLAIMED. ALSO PURSUANT TO SECTION 74.3013 OF THE TEXAS PROPERTY CODE, THE COOPERATIVE HAS ESTABLISHED AN ECONOMIC DEVELOPMENT FUND WITH AMOUNTS DESIGNATED UNCLAIMED UNDER STATE LAW. THE AMOUNTS DEPOSITED INTO THE ECONOMIC DEVELOPMENT FUND ARE APPROVED BY THE STATE OF TEXAS AND CAN ONLY BE USED FOR THE STIMULATION AND IMPROVEMENT OF BUSINESS AND COMMERCIAL ACTIVITY FOR ECONOMIC DEVELOPMENT WITHIN AREAS SERVED BY THE COOPERATIVE. ANY AMOUNTS SO DEPOSITED INTO THE ECONOMIC DEVELOPMENT FUND ARE STILL PAYABLE TO THE PERSON TO WHOM THE ORIGINAL PAYMENT WAS MADE BUT UNCLAIMED. ALSO PURSUANT TO SECTION 74.3013 OF THE TEXAS PROPERTY CODE, THE COOPERATIVE HAS ESTABLISHED AN ENERGY EFFICIENCY ASSISTANCE FUND WITH AMOUNTS DESIGNATED UNCLAIMED UNDER STATE LAW. THE AMOUNTS DEPOSITED INTO THE ENERGY EFFICIENCY ASSISTANCE FUND ARE APPROVED BY THE STATE OF TEXAS AND CAN ONLY BE USED TO ASSIST MEMBERS OF AN ELECTRIC COOPERATIVE IN REDUCING THEIR ENERGY CONSUMPTION AND ELECTRICITY BILLS. ANY AMOUNTS SO DEPOSITED INTO THE ENERGY EFFICIENCY ASSISTANCE FUND ARE STILL PAYABLE TO THE PERSON TO WHOM THE ORIGINAL PAYMENT WAS MADE BUT UNCLAIMED. PART X, LINE 2: THE COOPERATIVE FOLLOWS THE "UNCERTAIN TAX POSITIONS" PROVISIONS OF ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA. THE PRIMARY TAX POSITION OF THE COOPERATIVE IS ITS FILING STATUS AS A TAX EXEMPT ENTITY. THE COOPERATIVE DETERMINED THAT IT IS MORE LIKELY THAN NOT THAT THEIR TAX POSITIONS WILL BE SUSTAINED UPON EXAMINATION BY THE INTERNAL REVENUE SERVICE OR OTHER STATE TAXING AUTHORITY AND THAT ALL TAX BENEFITS ARE LIKELY TO BE REALIZED UPON SETTLEMENT WITH TAXING AUTHORITIES. PART IX: THE AMOUNT OF OTHER ASSETS ON FORM 990, PAGE 11, PART X, LINE 15 DOES NOT EQUAL OR EXCEED 5% OF THE TOTAL ASSETS ON FORM 990, PAGE 11, PART X, LINE 16, COLUMN B. CONSEQUENTLY, IN ACCORDANCE WITH IRS INSTRUCTIONS, SCHEDULE D, PART IX HAS BEEN LEFT BLANK. 1 COSERV CHARITABLE FOUNDATION 7701 SOUTH STEMMONS FREEWAY CORINTH TX 76210 134281766 501(C)(3) 57650 TO SUPPORT THE FOUNDATION'S OPERATIONS. 1 PART I, LINE 2: ALL DONATIONS WERE MADE TO A NON-PROFIT ORGANIZATION; AS SUCH, ALL DONATIONS MADE TO THE ORGANIZATION SUPPORT THE FOUNDATION'S OPERATIONS. X X X X 1 1 0 DONALD CLARY PRESIDENT & CEO 397976 0 35000 0 14761 0 187050 0 32940 0 667727 0 0 0 CURTIS TRIVITT SENIOR VP - ENERGY SERVICE 306549 0 12954 0 61380 0 110359 0 26474 0 517716 0 0 0 STACIA SIMS JAN-SEP SENIOR VP - INFORMATION SERVICES 186364 0 10698 0 99232 0 4846 0 12574 0 313714 0 0 0 DENISE SMITHERS SENIOR VP - CORPORATE RELATIONS 248154 0 10610 0 15227 0 70217 0 36296 0 380504 0 0 0 BRENT BISHOP SENIOR VP & CFO 238664 0 10257 0 13468 0 82477 0 34775 0 379641 0 0 0 GREG WARD SENIOR VP - FIELD OPERATIONS 232652 0 9590 0 13438 0 73631 0 34639 0 363950 0 0 0 ROBBY HAMLIN SENIOR VP - ENGINEERING SERVICES 231953 0 9487 0 14831 0 93395 0 35202 0 384868 0 0 0 JEFFREY MCNEAL SENIOR VP - INFORMATION TECHNOLOGY 220983 0 8762 0 13349 0 51811 0 33716 0 328621 0 0 0 JAMES LAMIRAND SENIOR VP - MARKETING & CUST. CARE 238892 0 8839 0 14477 0 33903 0 3831 0 299942 0 0 0 BRUCE BOUTILIER SR DIRECTOR OF CUSTOMER OPERATIONS 172558 0 7676 0 14754 0 72097 0 34855 0 301940 0 0 0 CHARLES TURNER DIRECTOR OF FINANCE 172210 0 7755 0 5316 0 62761 0 26652 0 274694 0 0 0 WAYNE FRANCIS DIRECTOR OF INFORMATION TECHNOLOGY 164843 0 7429 0 5154 0 55564 0 26605 0 259595 0 0 0 RUTH ANN SICKING DIRECTOR OF INFORMATION SYSTEMS 165144 0 7175 0 1635 0 37749 0 32147 0 243850 0 0 0 VICKI SARGENT DIRECTOR OF COMMUNITY RELATIONS 144327 0 6350 0 12940 0 32397 0 11721 0 207735 0 0 0 PART I, LINES 4A-B THE FOLLOWING INDIVIDUAL RECEIVED AN EARLY RETIREMENT RELATED SEVERANCE PAYMENT THAT IS INCLUDED IN OTHER REPORTABLE COMPENSATION IN PART II, COLUMN B (III): STACIA SIMS $ 75,000 THE FOLLOWING INDIVIDUAL PARTICIPATES IN A SECTION 457(F) NON-QUALIFIED DEFERRED COMPENSATON (NQDC) PLAN, AND THE AMOUNT LISTED REPRESENTS THE ACTUARIAL INCREASE OF UNVESTED BENEFITS ASSOCIATED WITH PARTICIPATION IN THE PLAN: DONALD CLARY $ 105,002 CURTIS TRIVITT ALSO PARTICIPATES IN A SECTION 457(F) NQDC PLAN. DUE TO THE VESTING REQUIREMENTS OF THE PLAN, BENEFITS ARE CURRENTLY ACCRUED AND FULLY VESTED IN THE SAME YEAR. TOTAL BENEFITS PAID AND INCLUDED AS W-2 WAGES DURING THE YEAR WERE $39,912. PART II, COLUMN C: INCLUDED IN THIS AMOUNT IS THE INCREASE IN ACTUARIAL VALUE OF BENEFITS PAYABLE UNDER A DEFINED BENEFIT RETIREMENT PLAN. THE CONTRIBUTION RATE FOR PARTICIPANTS IN THE NRECA R&S DEFINED BENEFIT PENSION PLAN ARE THE SAME FOR ALL INDIVIDUALS IN THIS MULTI-EMPLOYER PLAN. THE CHANGE IN ACTUARIAL VALUE FOR EACH PARTICIPANT, HOWEVER, VARIES WITH AGE. IN OTHER WORDS, THE OLDER A PLAN PARTICIPANT IS, THE GREATER THE INCREASE IN THAT INDIVIDUAL'S CHANGE IN ACTUARIAL VALUE, ALL OTHER THINGS BEING EQUAL. BECAUSE THIS RELATES TO A MULTI-EMPLOYER PLAN, CASH CONTRIBUTIONS TO THE PLAN IN LIEU OF THE ACTUARIAL INCREASE ARE EXPENSED IN THE FINANCIAL STATEMENTS. DONALD CLARY: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 73,798 ACTUARIAL INCREASE IN NQDC PLAN 105,002 401(K) EMPLOYER CONTRIBUTION 8,250 TOTAL COLUMN C $ 187,050 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT & NQDC PLANS (178,800) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT & NQDC PLANS 58,404 EXPENSE TO THE COOPERATIVE $ 66,654 CURTIS TRIVITT: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 102,109 ACTUARIAL INCREASE IN NQDC PLAN -0- 401(K) EMPLOYER CONTRIBUTION 8,250 TOTAL COLUMN C $ 110,359 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT & NQDC PLANS (102,109) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT & NQDC PLAN 44,756 EXPENSE TO THE COOPERATIVE $ 53,006 STACIA SIMS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ -0- 401(K) EMPLOYER CONTRIBUTION 4,846 TOTAL COLUMN C $ 4,846 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN -0- ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 38,711 EXPENSE TO THE COOPERATIVE $ 43,557 DENISE SMITHERS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 62,544 401(K) EMPLOYER CONTRIBUTION 7,673 TOTAL COLUMN C $ 70,217 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (62,544) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 36,867 EXPENSE TO THE COOPERATIVE $ 44,540 BRENT BISHOP: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 75,129 401(K) EMPLOYER CONTRIBUTION 7,348 TOTAL COLUMN C $ 82,477 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (75,129) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 35,582 EXPENSE TO THE COOPERATIVE $ 42,930 GREG WARD: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 66,465 401(K) EMPLOYER CONTRIBUTION 7,166 TOTAL COLUMN C $ 73,631 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (66,465) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 34,662 EXPENSE TO THE COOPERATIVE $ 41,828 ROBBY HAMLIN: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 86,229 401(K) EMPLOYER CONTRIBUTION 7,166 TOTAL COLUMN C $ 93,395 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (86,229) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 34,662 EXPENSE TO THE COOPERATIVE $ 41,828 JEFFREY MCNEAL: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 47,558 401(K) EMPLOYER CONTRIBUTION 4,253 TOTAL COLUMN C $ 51,811 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (47,558) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 32,514 EXPENSE TO THE COOPERATIVE $ 36,767 JAMES LAMIRAND: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 26,737 401(K) EMPLOYER CONTRIBUTION 7,166 TOTAL COLUMN C $ 33,903 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (26,737) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 34,662 EXPENSE TO THE COOPERATIVE $ 41,828 BRUCE BOUTILIER: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 66,760 401(K) EMPLOYER CONTRIBUTION 5,337 TOTAL COLUMN C $ 72,097 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (66,760) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 25,380 EXPENSE TO THE COOPERATIVE $ 30,717 CHARLES TURNER: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 57,391 401(K) EMPLOYER CONTRIBUTION 5,370 TOTAL COLUMN C $ 62,761 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (57,391) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 25,956 EXPENSE TO THE COOPERATIVE $ 31,326 WAYNE FRANCIS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 50,415 401(K) EMPLOYER CONTRIBUTION 5,149 TOTAL COLUMN C $ 55,564 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (50,415) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 24,668 EXPENSE TO THE COOPERATIVE $ 29,817 RUTH ANN SICKING: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 32,646 401(K) EMPLOYER CONTRIBUTION 5,103 TOTAL COLUMN C $ 37,749 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (32,646) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 24,668 EXPENSE TO THE COOPERATIVE $ 29,771 VICKI SARGENT: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 28,032 401(K) EMPLOYER CONTRIBUTION 4,365 TOTAL COLUMN C $ 32,397 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (28,032) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 20,904 EXPENSE TO THE COOPERATIVE $ 25,269 FORM 990, PART I, LINE 19: REVENUE LESS EXPENSES AS REPORTED ON PAGE 1, PART I, LINE 19 DIFFERS FROM THE TOTAL NET MARGINS REPORTED ON THE COOPERATIVE'S AUDITED FINANCIAL STATEMENTS DUE TO BOOK TO TAX ADJUSTMENTS REQUIRED TO CONFORM TO THE FORM 990 INSTRUCTIONS. THE FIRST ADJUSTMENT IS FOR THE EQUITY METHOD INCOME RECORDED ON THE COOPERATIVE'S BOOKS AND INCLUDED IN TOTAL NET MARGINS. U.S. GAAP REQUIRES THE COOPERATIVE TO RECORD ON ITS BOOKS THE EQUITY METHOD INCOME FROM ITS WHOLLY OWNED SUBSIDIARY. EQUITY METHOD INCOME IS NOT INCOME FOR IRS FORM 990 PURPOSES AND AS SUCH HAS BEEN REPORTED AS AN OTHER CHANGE IN NET ASSETS. THE SECOND ADJUSTMENT IS FOR THE PATRONAGE DIVIDENDS ALLOCATED OR TO BE ALLOCATED BY THE COOPERATIVE TO MEMBERS. WHEREAS THE FORM 990 REQUIRES SUCH AMOUNTS TO BE REPORTED AS AN EXPENSE, PATRONAGE DIVIDENDS ALLOCATED OR TO BE ALLOCATED ARE AN INCREASE IN CAPITAL AND EQUITY, SPECIFICALLY PATRONAGE CAPITAL, ON U.S. GAAP BASIS FINANCIAL STATEMENTS. FORM 990, PART VI, SECTION A, LINE 6 THE COOPERATIVE WAS FORMED BY THE MEMBERS TO PROVIDE ELECTRIC SERVICE AT COST ON A COOPERATIVE BASIS. FORM 990, PART VI, SECTION A, LINE 7A THE MEMBERS OF THE COOPERATIVE VOTE ON THE BOARD OF DIRECTORS. ELECTIONS ARE DONE ON A ONE MEMBER ONE VOTE BASIS. FORM 990, PART VI, SECTION A, LINE 7B THE FOLLOWING ACTS REQUIRE APPROVAL OF THE MEMBERS OF THE COOPERATIVE: 1. AMENDMENTS TO THE ARTICLES OF INCORPORATION 2. DISPOSAL OF A SUBSTANTIAL PORTION OF THE COOPERATIVE'S ASSETS 3. DISSOLUTION/LIQUIDATION OF THE COOPERATIVE 4. MERGER OR CONSOLIDATION OF THE COOPERATIVE WITH ANOTHER ORGANIZATION FORM 990, PART VI, SECTION B, LINE 11B MANAGEMENT PRESENTED A COPY OF THE FORM 990 TO THE BOARD FOR DISCUSSION AND REVIEW PRIOR TO FILING. FORM 990, PART VI, SECTION B, LINE 12C ALL DIRECTORS, OFFICERS, AND EMPLOYEES OF THE COOPERATIVE ARE REQUIRED TO ANNUALLY CERTIFY THAT THEY HAVE COMPLIED WITH THE CODE OF CONDUCT AND ARE NOT AWARE OF ANY UNREPORTED VIOLATIONS OF THE CODE THAT MAY HAVE OCCURRED. FORM 990, PART VI, SECTION B, LINE 15 THE CEO IS SUBJECT TO AN ANNUAL EVALUATION BY A COMPENSATION COMMITTEE, WHICH IS COMPRISED OF THE BOARD OF DIRECTORS. A COMPENSATION SURVEY, FORMS 990 OF OTHER COOPERATIVES, AND AN INDEPENDENT COMPENSATION CONSULTANT ARE USED WHEN DETERMINING COMPENSATION OF THE CEO. THE SURVEY SHOWS COMPARATIVE SALARIES FOR CEOS FROM SIMILARLY SITUATED COOPERATIVES, UTILITIES, AND OTHER BUSINESSES LOCATED IN THE DALLAS/FT. WORTH AREA, TEXAS, AND THE NATION. THE CEO USES A WAGE AND SALARY PLAN APPROVED BY THE BOARD, WHICH IS BASED ON A COMPENSATION SURVEY FROM SIMILARLY SITUATED COOPERATIVES, UTILITIES, AND OTHER BUSINESSES LOCATED IN THE DALLAS/FT. WORTH AREA, TEXAS, AND THE NATION WHEN DETERMINING THE COMPENSATION OF THE COOPERATIVE'S OTHER EMPLOYEES MEETING THE DEFINITION OF OFFICER AND KEY EMPLOYEE, IF ANY. FORM 990, PART VI, SECTION C, LINE 19 ANNUALLY, THE COOPERATIVE PROVIDES A CONDENSED SET OF AUDITED FINANCIAL STATEMENTS TO THE MEMBERS OF THE COOPERATIVE BY PUBLISHING THE COOPERATIVE'S ANNUAL REPORT IN THE CO-OP POWER MAGAZINE. THE BY-LAWS AND ANNUAL REPORT, WHICH INCLUDE THE CONDENSED FINANCIAL STATEMENTS, CAN ALSO BE FOUND ON THE COOPERATIVE'S WEBSITE. FORM 990, PART VII, COLUMN F: IN ORDER TO PROVIDE RETIREMENT BENEFITS TO ITS EMPLOYEES, THE COOPERATIVE HAS ESTABLISHED A DEFINED CONTRIBUTION PLAN UNDER SECTION 401(K) OF THE INTERNAL REVENUE CODE. EMPLOYER CONTRIBUTIONS TO THE PLAN ARE MADE PURSUANT TO THE PLAN DOCUMENT. ADDITIONALLY, THE COOPERATIVE PARTICIPATES IN A MULTI-EMPLOYER DEFINED BENEFIT PLAN. CONTRIBUTIONS TO THIS PLAN ARE BASED ON THE FULL FUNDING LIMITATION OF SUCH PLAN. EMPLOYER CONTRIBUTIONS FOR BOTH PLANS ARE AVAILABLE TO PARTICIPATING EMPLOYEES, INCLUDING OFFICERS AND HIGHLY COMPENSATED EMPLOYEES, MEETING THE ELIGIBILITY REQUIREMENTS OF SUCH PLANS. THE COOPERATIVE ALSO PROVIDES HEALTH, DENTAL, VISION, LONGTERM DISABILITY, ACCIDENTAL DEATH & DISMEMBERMENT AND GROUP TERM LIFE INSURANCE TO ALL EMPLOYEES, INCLUDING OFFICERS, THROUGH A QUALIFIED PLAN. THE AMOUNTS REPORTED ON PART VII, COLUMN (F) FOR THE OFFICERS AND HIGHLY COMPENSATED EMPLOYEES IS COMPRISED OF THE ACTUARIAL INCREASE IN THE DEFINED BENEFIT PLAN, THE TOTAL AMOUNT CONTRIBUTED TO THE 401(K) PENSION PLAN AND EMPLOYER PAID INSURANCE PREMIUMS. IN ADDITION TO THE ABOVE PENSION PLANS, THE COOPERATIVE ALSO PROVIDES POST-RETIREMENT HEALTH INSURANCE BENEFITS THROUGH AN UNFUNDED WELFARE BENEFIT PLAN. THE VALUE OF THESE BENEFITS PER INDIVIDUAL HAS NOT BEEN ESTIMATED. FORM 990, PART VIII, LINE 2: PATRONAGE DIVIDENDS RESULT FROM THE PURCHASE OF WHOLESALE POWER FROM A GENERATION & TRANSMISSION COOPERATIVE. PATRONAGE DIVIDENDS ALSO RESULT FROM THE PAYMENT OF INTEREST TO COOPERATIVE BANKS AND THE PURCHASE OF SUPPLIES AND SERVICES FROM OTHER COOPERATIVE ORGANIZATIONS. THE EXPENSES ASSOCIATED WITH PURCHASES FROM AND PAYMENTS TO SUCH COOPERATIVE ORGANIZATIONS ARE A DIRECT COMPONENT OF COST OF THE ELECTRIC SERVICE PROVIDED BY THE COOPERATIVE TO ITS MEMBERS. FORM 990, PART IX: ALTHOUGH NO LONGER A BORROWER OF THE RURAL UTILITIES SERVICE (RUS), THE ACCOUNTING RECORDS OF THE COOPERATIVE ARE MAINTAINED IN ACCORDANCE WITH THE UNIFORM SYSTEM OF ACCOUNTS (USOA) AS PRESCRIBED FOR RUS BORROWERS. THE USOA DOES NOT RECORD EXPENSES IN THE GENERAL EXPENSE CATEGORIES PROVIDED ON PART IX LINES 1 - 23. THE COOPERATIVE SEPARATELY REPORTS SALARIES AND WAGES, EMPLOYEE BENEFITS AND PAYROLL TAXES THAT ARE ALLOCATED IN ACCORDANCE WITH ITS ACCOUNTING SYSTEM, BUT OTHER EXPENSES THAT ARE DESCRIBED IN LINES 1 - 23 ARE REPORTED ON LINE 24 UNDER THE EXPENSE CATEGORIES REQUIRED BY THE USOA. FORM 990, PART IX, LINES 5-7: SALARIES AND WAGES ARE ALLOCATED TO ASSET, LIABILITY, AND EXPENSE ACCOUNTS BASED ON THE ACCOUNTING SYSTEM DESCRIBED ABOVE. THE FOLLOWING SCHEDULE RECONCILES AMOUNTS REPORTED ON LINES 5-7 TO THE TOTAL WAGES ACCRUED AND/OR PAID: TOTAL PER LINES 5-7 $ 26,789,973 LESS: DIRECTOR FEES REPORTED ON FORMS 1099-MISC (341,031) LESS: EMPLOYEE OFFICER BENEFITS INCLUDED IN LINE 5 (958,136) PLUS: SALARIES AND WAGES CAPITALIZED DIRECTLY TO PLANT 8,963,978 TOTAL WAGES ACCRUED AND/OR PAID $ 34,454,784 FORM 990, PART IX, LINE 24: ADMINISTRATIVE AND GENERAL EXPENSE IS COMPRISED OF THE FOLLOWING: ADMINISTRATIVE & GENERAL $ 1,659,460 OUTSIDE SERVICES 1,498,569 PROPERTY INSURANCE 880,708 LOSS/DAMAGES 351,779 MAINTENANCE OF GENERAL PLANT 24,127 MISCELLANEOUS GENERAL EXPENSE 5,342,006 TOTAL ADMINISTRATIVE AND GENERAL EXPENSE PER 990 $ 9,756,649 FORM 990, PART IX, LINE 4: PURSUANT TO THE FORM 990 INSTRUCTIONS, THE AMOUNT OF PATRONAGE DIVIDENDS PAID TO THE MEMBERS (HEREINAFTER REFERRED TO AS "PATRONS") SHOULD BE REPORTED ON PART IX, LINE 4. THE PHRASE "PATRONAGE DIVIDENDS PAID" REFERS TO THE PROCESS, SUBSEQUENT TO YEAR-END, BY WHICH THE COOPERATIVE ALLOCATES PATRONAGE CAPITAL TO AND, THEREFORE, OPERATES AT COST WITH ITS PATRONS. THE COOPERATIVE'S TAX EXEMPT PURPOSE IS TO PROVIDE ELECTRICITY TO ITS PATRONS AND TO DO SO ON A COOPERATIVE BASIS. TAX LAW DEFINES "OPERATING ON A COOPERATIVE BASIS" AS SUBORDINATION OF CAPITAL, DEMOCRATIC CONTROL, AND OPERATION AT COST. THE COOPERATIVE OPERATES AT COST THROUGH THE ALLOCATION OF TRUE PATRONAGE DIVIDENDS (ALSO REFERRED TO AS ALLOCATIONS OF PATRONAGE CAPITAL) TO ITS PATRONS. PATRONAGE DIVIDENDS ARE CONSIDERED PAID IF THE ALLOCATION IS MADE (1) PURSUANT TO A PRE-EXISTING OBLIGATION, (2) FROM THE MARGINS PRODUCED FROM THE TRANSACTIONS DONE WITH OR FOR PATRONS, AND (3) IN A FAIR AND EQUITABLE MANNER ON THE BASIS OF PATRONAGE (I.E. PURCHASES). ADDITIONALLY, THE ALLOCATION OF PATRONAGE DIVIDENDS SHOULD BE MADE WITHIN A REASONABLE TIME PERIOD AFTER THE CLOSE OF THE COOPERATIVE'S YEAR-END OF DECEMBER 31. EACH ONE OF THESE REQUIREMENTS FOR A TRUE PATRONAGE DIVIDEND IS PROVIDED FOR IN THE NON-PROFIT OPERATION ARTICLE OF THE COOPERATIVE'S BYLAWS. THE AMOUNT REPORTED ON PART IX, LINE 4 REPRESENTS THE AMOUNT OF PATRONAGE CAPITAL THAT IS EITHER ALLOCATED OR TO BE ALLOCATED TO THE PATRONS RESULTING FROM THEIR PURCHASE OF ELECTRICITY FROM THE COOPERATIVE FOR THE 2018 CALENDAR YEAR. BECAUSE PATRONAGE DIVIDENDS ARE THE PROCESS BY WHICH THE COOPERATIVE OPERATES AT COST WITH ITS PATRONS AND THEREBY A KEY COMPONENT TO ACCOMPLISHING ITS EXEMPT PURPOSE, THE COOPERATIVE HAS REPORTED SUCH AMOUNTS AS AN EXPENSE FOR FORM 990 REPORTING. PATRONAGE DIVIDENDS ARE NOT AN EXPENSE FOR FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, HOWEVER. FORM 990, PART IX, LINE 24E: OTHER EXPENSES IS COMPRISED OF THE FOLLOWING: DISTRIBUTION - OPERATION & MAINTENANCE $ 5,484,527 SALES 1,527,049 MISCELLANEOUS 230,752 TOTAL OTHER EXPENSES PER FORM 990, LINE 24E $ 7,242,328 FORM 990, PART XI, LINE 9: PATRONAGE CAPITAL ALLOCATED 45,750,008. PATRONAGE CAPITAL RETIRED - TOTAL -28,853,950. PATRONAGE CAPITAL RETIRED - DISCOUNT 10,957,662. EQUITY METHOD INCOME (LOSS) FROM SUBSIDIARY COMPANY 3,158,484. NET CHANGE IN MEMBERSHIPS 177,535. OTHER COMPREHENSIVE INCOME - POST EMPLOYMENT BENEFITS & AFFILIATES 5,481,098. FORM 990, PART XII, LINE 2C: PURSUANT TO BOARD POLICY, THE BOARD OF DIRECTORS IS THE AUDIT COMMITTEE AND IS RESPONSIBLE FOR OVERSEEING THE FINANCIAL STATEMENT AUDIT AND SELECTING THE INDEPENDENT FINANCIAL STATEMENT AUDITOR. PROCEDURES REMAINED UNCHANGED DURING THE YEAR. QUAIL RUN REALTY LLC 7701 SOUTH STEMMONS FWY CORINTH TX 76210 REAL ESTATE TX 703281 DENTON COUNTY ELECTRIC COOPERATIVE INC COSERV PROPERTY HOLDINGS LLC 7701 SOUTH STEMMONS FWY CORINTH TX 76210 REAL ESTATE TX 277198 3871588 DENTON COUNTY ELECTRIC COOPERATIVE INC COSERV ELECTRIC GROUP HEALTH BENEFIT PLAN TRUST 7701 SOUTH STEMMONS FWY CORINTH TX 76210 300403374 MEDICAL SELF INSURANCE FUND TX 501(C)(9) N/A DENTON COUNTY ELECTRIC COOPERATIVE INC 1 COSERV CHARITABLE FOUNDATION 7701 SOUTH STEMMONS FWY CORINTH TX 76210 134281766 COMMUNITY CHARITABLE CONTRIBUTIONS TX 501(C)(3) 7 DENTON COUNTY ELECTRIC COOPERATIVE INC 1 COSERV UTILITY SERVICES INC 7701 SOUTH STEMMONS FWY CORINTH TX 76210 752766000 GP FOR COSERV INVESTMENTS TX DENTON COUNTY ELECTRIC COOPERATIVE INC C 895362 1.00000 1 COSERV INVESTMENTS LP 7701 SOUTH STEMMONS FWY CORINTH TX 76210 752729645 INVESTMENTS TX DENTON COUNTY ELECTRIC COOPERATIVE INC C 59347988 214476638 1.00000 1 1 1 0 0 0 0 0 0 0 0 0 1 0 1 1 0 1 1 0 COSERV INVESTMENTS LP AND SUBSIDIARIES A 368479 INVOICES AND OTHER RECORDS COSERV INVESTMENTS LP AND SUBSIDIARIES R 365579 INVOICES AND OTHER RECORDS COSERV ELECTRIC GROUP HEALTH BENEFIT PLAN R 6068204 INVOICES AND OTHER RECORDS COSERV ELECTRIC GROUP HEALTH BENEFIT PLAN O N/A - LESS THAN $50,000 COSERV CHARITABLE FOUNDATION B 57650 CASH CONTRIBUTION COSERV CHARITABLE FOUNDATION N N/A - LESS THAN $50,000 COSERV CHARITABLE FOUNDATION O N/A - LESS THAN $50,000 COSERV CHARITABLE FOUNDATION L N/A - LESS THAN $50,000 COSERV INVESTMENTS LP AND SUBSIDIARIES Q 7717731 INVOICES AND OTHER RECORDS PART IV & V: THE DISCLOSURES PERTAINING TO COSERV INVESTMENTS LP INCLUDE THE FOLLOWING ENTITIES WHICH WERE DISREGARDED OF ITS SOLE OWNER FOR FEDERAL TAX REPORTING PURPOSES, AS OF DECEMBER 31, 2018: COSERV NATURAL LLC COSERV GAS LTD RENEWABLE ENERGY ALTERNATIVES LLC THIRTY SEVEN REALTY GP LLC THIRTY SEVEN REALTY HOLDINGS LP