2015-11-13T16:13:42-06:00 2014-12-31 750882037 BOLINGER SEGARS GILBERT AND MOSS LLP 8215 NASHVILLE AVENUE LUBBOCK TX 79423 990 2014-01-01 750233075 DENTON COUNTY ELECTRIC COOPERATIVE INC DBA COSERV ELECTRIC DENT 9403217800 7701 SOUTH STEMMONS FREEWAY CORINTH TX 76210 BRENT BISHOP CFO 9403217800 2015-11-11 1 WILLIAM M MILLER P00439459 8067473806 2015-11-11 X 2014 2016-02-25 16:41:14Z DONALD CLARY 7701 SOUTH STEMMONS FREEWAY CORINTH TX 76210 512960969 0 X WWW.COSERV.COM X 1938 TX TO PROVIDE ELECTRIC POWER TO MEMBERS AT COST ON A COOPERATIVE BASIS. 7 7 352 0 67627 66627 0 0 432006748 510501484 -1847706 663155 520494 763633 430679536 511928272 241493 276543 51250059 55782639 27368612 28636561 0 0 0 353609219 426548373 432469383 511244116 -1789847 684156 1014720702 1074607340 640014384 651680008 374706318 422927332 TO DELIVER EXCELLENT SERVICE TO OUR MEMBERS AND CUSTOMERS BY PROVIDING SAFE AND RELIABLE ENERGY SOLUTIONS. 0 0 THE COOPERATIVE PROVIDED ELECTRICITY TO 186,301 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 1 100 0 352 0 1 1 0 0 0 0 469612902 29190312 0 X 7 7 0 0 1 0 1 1 1 1 1 1 0 1 1 1 1 1 0 1 1 0 X BRENT BISHOP CFO 9403217800 7701 SOUTH STEMMONS FREEWAY CORINTH TX 76210 X CLYDE GEER CHAIRMAN 12.40 X X 43891 0 0 ANNE VADEN VICE CHAIRMAN 12.60 X X 45079 0 0 RICHARD MUIR SEC-TREASURER 11.70 X X 42641 0 0 JERRY COBB DIRECTOR (JAN - AUG) 9.80 X 25394 0 0 LEON PELZEL DIRECTOR 9.60 X 37935 0 0 WILLIAM RAGSDALE DIRECTOR 13.30 X 46891 0 0 CURTIS TALLY DIRECTOR 9.90 X 39091 0 0 CLINTON BEDSOLE DIRECTOR (SEPT - DEC) 19.50 X 15156 0 0 MICHAEL DREYSPRING PRESIDENT & CEO (JAN) 50.00 X 740007 0 10231 DONALD CLARY PRESIDENT AND CEO 50.00 1.00 X 333495 0 123988 JOE FORMAN SENIOR VP - OPERATIONS 50.00 1.50 X 279200 0 124315 STACIA SIMS SENIOR VP - INFO SERVICES 45.00 0.60 X 243757 0 69132 CURTIS TRIVITT SENIOR VP - ENERGY SERVICE 40.00 X 301951 0 139599 DENISE SMITHERS SENIOR VP - EMPLOYEE RELATIONS 45.00 1.00 X 214593 0 75422 BRENT BISHOP VP & CFO 47.00 1.00 X 179756 0 55963 BRUCE BOUTILIER SR DIRECTOR OF CUSTOMER OPERATIONS 50.00 X 163429 0 60131 ROBBY HAMLIN SR DIRECTOR OF ENGINEERING 40.00 X 167662 0 52944 JEFFREY MCNEAL SR DIRECTOR OF INFO SECURITY 45.00 X 181041 0 45393 GREG WARD SR DIRECTOR OF OPERATIONS 45.00 X 155444 0 49625 CHARLES TURNER DIRECTOR OF FINANCE 40.00 X 165691 0 73778 3422104 0 880521 35 0 1 0 WILLBROS T&D SERVICES LLC 1432 CHURCH STREET MCKINNEY TX 75069 UTILITY LINE CONTRACTOR 14659601 TEXAS STATE UTILITIES INC 3112 WICHITA COURT FORT WORTH TX 76140 UTILITY LINE CONTRACTOR 5690915 MASTEC NORTH AMERICA INC PO BOX 277181 ATLANTA GA 30384 UTILITY LINE CONTRACTOR 2681757 SIRIUS COMPUTER SOLUTIONS INC PO BOX 202289 DALLAS TX 75320 IT/IS CONSULTING 2328974 DATAPROSE 1122 WEST BETHEL ROAD STE 100 COPPELL TX 75019 PRINTING 1568512 39 X ELECTRIC SALES 221000 478775680 478775680 PATRONAGE DIVIDENDS 221000 25450255 25450255 SERVICE FEES 221000 6275549 6275549 510501484 711742 711742 1184709 374639 809055 0 375654 374639 750293 260440 67627 422226 175055 223642 -48587 -48587 -48587 13340 0 13340 13340 511928272 510775264 67627 1085381 X 276543 55782639 3187487 15630925 2718299 5424850 1675000 24990190 25037917 COST OF PURCHASED POWER 357072141 ADMINISTRATIVE & GENERA 9494702 DISTRIBUTION EXPENSE 3694894 UBIT EXPENSE 11657 6246872 511244116 18270555 10310760 45351794 43352042 25662482 34387149 160968 107921 920179 954014 130832503 131166144 832189301 207984773 586069856 624204528 73694788 77111780 110766525 136009318 22991052 17003684 1014720702 1074607340 42390652 34951510 54453 75965 902393 873379 537340000 563180000 10000000 0 49326886 52599154 640014384 651680008 X 2295843 2429855 91880544 101288885 280529931 319208592 374706318 422927332 1014720702 1074607340 X 684156 47536858 X X 0 1 X 1 0 0 1 X 2132738 2967182 5099920 33119754 10926197 22193557 745099529 197058576 548040953 67351 48802747 48870098 624204528 INVESTMENT IN SUBSIDIARY CORPORATION - EQUITY METHOD 77111780 C 77111780 MEMBERSHIPS IN ASSOCIATED ORGANIZATIONS 2365 C PATRONAGE CAPITAL - BEPCI 134308454 C PATRONAGE CAPITAL - CFC 357632 C PATRONAGE CAPITAL - COBANK 307696 C PATRONAGE CAPITAL - NRTC 708 C PATRONAGE CAPITAL - TEC 1032463 C 136009318 CONSUMER DEPOSITS 7685380 ACCRUED COMPENSATED ABSENCES 1173393 ACCRUED INTEREST 4985330 ACCRUED UNBILLED POWER COST 10129141 ACCRUED PAYROLL 1147471 ACCRUED OPERATING TAXES & MUNICIPAL FRANCHISE FEES 12696803 OTHER CURRENT & ACCRUED LIABILITIES 727780 POST RETIREMENT HEALTH INSURANCE BENEFITS 8686909 DEFERRED COMPENSATION 438469 DEFERRED CREDIT - UNCLAIMED PROPERTY 2219604 DEFERRED CREDIT - OTHER 5067 DEFERRED CREDIT - CUSTOMER ADVANCES 2248000 CAPITAL LEASE OBLIGATIONS 455807 52599154 X Part IV, Line 2b: PURSUANT TO SECTION 74.3013 OF THE TEXAS PROPERTY CODE, THE COOPERATIVE HAS ESTABLISHED A RURAL SCHOLARSHIP FUND WITH AMOUNTS DESIGNATED UNCLAIMED UNDER STATE LAW. THE AMOUNTS DEPOSITED INTO THE RURAL SCHOLARSHIP FUND ARE APPROVED BY THE STATE OF TEXAS AND CAN ONLY BE USED FOR SCHOLARSHIPS TO ENABLE STUDENTS FROM RURAL AREAS TO ATTEND COLLEGE, TECHNICAL SCHOOL OR OTHER POST SECONDARY EDUCATION INSTITUTION. ANY AMOUNTS SO DEPOSITED INTO THE RURAL 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 IN RURAL COMMUNITIES. 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 ITS TAX POSITION 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 PERCENT 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 FRISCO EDUCATION FOUNDATION PO BOX 567 FRISCO TX 75034 311689773 501(C)(3) 35000 TO FUND AN ENDOWMENT TO REIMBURSE TEACHERS FOR OUT-OF-POCKET PURCHASES OF TEACHING SUPPLIES. LEWISVILLE EDUCATION FOUNDATION INC PO BOX 643 LEWISVILLE TX 75067 752333118 501(C)(3) 25000 TO FUND AN ENDOWMENT TO REIMBURSE TEACHERS FOR OUT-OF-POCKET PURCHASES OF TEACHING SUPPLIES. NORTHWEST EDUCATIONAL FOUNDATION PO BOX 77070 FORT WORTH TX 76177 752678804 501(C)(3) 25000 TO FUND AN ENDOWMENT TO REIMBURSE TEACHERS FOR OUT-OF-POCKET PURCHASES OF TEACHING SUPPLIES. LITTLE ELM INDEPENDENT SCHOOL DISTRICT 1900 WALKER RD LITTLE ELM TX 75068 751318916 501(C)(3) 20000 TO FUND AN ENDOWMENT TO REIMBURSE TEACHERS FOR OUT-OF-POCKET PURCHASES OF TEACHING SUPPLIES. DENTON PUBLIC SCHOOL FOUNDATION 1307 N LOCUST ST DENTON TX 76201 752578743 501(C)(3) 25000 TO FUND AN ENDOWMENT TO REIMBURSE TEACHERS FOR OUT-OF-POCKET PURCHASES OF TEACHING SUPPLIES. SANGER EDUCATION FOUNDATION INC PO BOX 429 JEFF SPRINGER SANGER TX 76266 204067636 501(C)(3) 15000 TO FUND AN ENDOWMENT TO REIMBURSE TEACHERS FOR OUT-OF-POCKET PURCHASES OF TEACHING SUPPLIES. AUBREY EDUCATION FOUNDATION INC PO BOX 593 AUBREY TX 76227 752876306 501(C)(3) 15000 TO FUND AN ENDOWMENT TO REIMBURSE TEACHERS FOR OUT-OF-POCKET PURCHASES OF TEACHING SUPPLIES. ARGYLE ISD EDUCATION FOUNDATION INC 800 EAGLE DR ARGYLE TX 76226 611413533 501(C)(3) 15000 TO FUND AN ENDOWMENT TO REIMBURSE TEACHERS FOR OUT-OF-POCKET PURCHASES OF TEACHING SUPPLIES. PROSPER OPEN FOUNDATION PO BOX 158 PROSPER TX 75078 752662259 501(C)(3) 15000 TO FUND AN ENDOWMENT TO REIMBURSE TEACHERS FOR OUT-OF-POCKET PURCHASES OF TEACHING SUPPLIES.. MCKINNEY EDUCATION FOUNDATION 510 HEARD ST MCKINNEY TX 75069 752401624 501(C)(3) 10000 TO FUND AN ENDOWMENT TO REIMBURSE TEACHERS FOR OUT-OF-POCKET PURCHASES OF TEACHING SUPPLIES. FOUNDATION FOR ALLEN SCHOOLS 612 EAST BETHANY DRIVE ALLEN TX 75002 752750519 501(C)(3) 10000 TO FUND AN ENDOWMENT TO REIMBURSE TEACHERS FOR OUT-OF-POCKET PURCHASES OF TEACHING SUPPLIES. COSERV CHARITABLE FOUNDATION 7701 SOUTH STEMMONS FREEWAY CORINTH TX 76210 134281766 501(C)(3) 36380 TO SUPPORT THE FOUNDATION'S OPERATIONS. 12 Part I, Line 2: ALL DONATIONS ARE MADE TO SCHOOL DISTRICTS AND THEIR RESPECTIVE FOUNDATIONS. ANY FUNDS NOT USED BY THE SCHOOL DISTRICTS AND THEIR FOUNDATIONS FOR THE INTENDED PURPOSES ARE RETURNED TO THE COOPERATIVE. 1 X X X X 1 1 0 MICHAEL DREYSPRING PRESIDENT & CEO (JAN) 63463 0 0 0 676544 0 1689 0 8542 0 750238 0 501204 0 DONALD CLARY PRESIDENT AND CEO 306176 0 13221 0 14098 0 90679 0 33309 0 457483 0 0 0 JOE FORMAN SENIOR VP - OPERATIONS 248782 0 10975 0 19443 0 98995 0 25320 0 403515 0 0 0 STACIA SIMS SENIOR VP - INFO SERVICES 219933 0 9478 0 14346 0 54409 0 14723 0 312889 0 0 0 CURTIS TRIVITT SENIOR VP - ENERGY SERVICE 270138 0 11755 0 20058 0 115912 0 23687 0 441550 0 0 0 DENISE SMITHERS SENIOR VP - EMPLOYEE RELATIONS 193258 0 8228 0 13107 0 44106 0 31316 0 290015 0 0 0 BRENT BISHOP VP & CFO 163223 0 5874 0 10659 0 25936 0 30027 0 235719 0 0 0 BRUCE BOUTILIER SR DIRECTOR OF CUSTOMER OPERATIONS 143048 0 6440 0 13941 0 35667 0 24464 0 223560 0 0 0 ROBBY HAMLIN SR DIRECTOR OF ENGINEERING 150692 0 6380 0 10590 0 22291 0 30653 0 220606 0 0 0 JEFFREY MCNEAL SR DIRECTOR OF INFO SECURITY 165138 0 6509 0 9394 0 15211 0 30182 0 226434 0 0 0 GREG WARD SR DIRECTOR OF OPERATIONS 139118 0 6099 0 10227 0 19882 0 29743 0 205069 0 0 0 CHARLES TURNER DIRECTOR OF FINANCE 154294 0 7040 0 4357 0 42853 0 30925 0 239469 0 0 0 Part I, Lines 4a-b THE FOLLOWING INDIVIDUAL RECEIVED SEVERANCE PAY DURING THE YEAR. MICHAEL DREYSPRING - $213,787 ADDITIONALLY, THE AMOUNTS REPORTED IN PART II, COLUMN (F) WERE FULLY REIMBURSED BY THE PLAN WITH NO ADDITIONAL COST TO THE COOPERATIVE. THE FOLLOWING INDIVIDUALS PARTICIPATE IN A SECTION 457(F) NON-QUALIFIED DEFERRED COMPENSATON (NQDC) PLAN. THE AMOUNTS LISTED REPRESENT THE ACTUARIAL INCREASE ASSOCIATED WITH PARTICIPATION IN THE PLAN. DONALD CLARY - $37,263 CURTIS TRIVITT - $11,750 SCHEDULE J, 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. MICHAEL DREYSPRING 401(K) EMPLOYER MATCH $ 1,689 TOTAL COLUMN C $ 1,689 ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 5,487 EXPENSE TO THE COOPERATIVE $ 7,176 DONALD CLARY ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 45,666 ACTUARIAL INCREASE IN NQDC PLAN 37,263 401(K) EMPLOYER MATCH 7,750 TOTAL COLUMN C $ 90,679 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT & NQDC PLANS (82,929) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT & NQDC PLANS 43,226 EXPENSE TO THE COOPERATIVE $ 50,976 JOE FORMAN ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 91,195 401(K) EMPLOYER MATCH 7,800 TOTAL COLUMN C $ 98,995 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (91,195) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 35,290 EXPENSE OF THE COOPERATIVE $ 43,090 STACIA SIMS ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 47,967 401(K) EMPLOYER MATCH 6,442 TOTAL COLUMN C $ 54,409 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (47,967) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 31,108 EXPENSE TO THE COOPERATIVE $ 37,550 CURTIS TRIVITT ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 96,362 ACTUARIAL INCREASE IN NQDC PLAN 11,750 401(K) EMPLOYER MATCH 7,800 TOTAL COLUMN C $ 115,912 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT & NQDC PLANS (108,112) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT & NQDC PLAN 38,112 EXPENSE TO THE COOPERATIVE $ 45,912 DENISE SMITHERS ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 38,117 401(K) EMPLOYER MATCH 5,989 TOTAL COLUMN C $ 44,106 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (38,117) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 27,209 EXPENSE TO THE COOPERATIVE $ 33,198 BRENT BISHOP ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 20,869 401(K) EMPLOYER MATCH 5,067 TOTAL COLUMN C $ 25,936 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (20,869) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 22,954 EXPENSE TO THE COOPERATIVE $ 28,021 BRUCE BOUTILIER ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 32,668 401(K) EMPLOYER MATCH 2,999 TOTAL COLUMN C $ 35,667 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (32,668) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 20,691 EXPENSE TO THE COOPERATIVE $ 23,690 ROBBY HAMLIN ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 17,578 401(K) EMPLOYER MATCH 4,713 TOTAL COLUMN C $ 22,291 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (17,578) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 20,732 EXPENSE TO THE COOPERATIVE $ 25,445 JEFFREY MCNEAL ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 15,211 401(K) EMPLOYER MATCH 0 TOTAL COLUMN C $ 15,211 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (15,211) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 21,026 EXPENSE TO THE COOPERATIVE $ 21,026 GREG WARD ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 15,538 401(K) EMPLOYER MATCH 4,344 TOTAL COLUMN C $ 19,882 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (15,538) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 20,099 EXPENSE TO THE COOPERATIVE $ 24,443 CHARLES TURNER ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 38,025 401(K) EMPLOYER MATCH 4,828 TOTAL COLUMN C $ 42,853 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (38,025) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 22,768 EXPENSE TO THE COOPERATIVE $ 27,596 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 4 ARTICLE IV, SECTION 4.6 OF BYLAWS WAS AMENDED DURING THE YEAR TO INCLUDE MORE DETAIL ON DIRECTOR QUALIFICATIONS TO READ "...NO PERSON SHALL BE ELIGIBLE TO BE NOMINATED FOR ELECTION AS, OR TO BECOME, A DIRECTOR OF THE COOPERATIVE WHO: OCCUPIES OR HOLDS ANY ELECTED POSITION OR ANY EXECUTIVE OR OFFICER POSITION, OR ANY POLITICAL SUBDIVISION, GOVERNMENTAL AGENCY, OR BODY POLITIC AND CORPORATE OF TEXAS, INCLUDING, BUT NOT LIMITED TO, ANY CITY, MUNICIPALITY, MUNICIPAL CORPORATION, TOWN, VILLAGE, DISTRICT OR COUNTY LOCATION WHOLLY OR PARITIALLY WITHIN THE GEOGRAPHIC AREA SERVED BY THE COOPERATIVE." AS USED ABOVE, THE TERM "EXECUTIVE OR OFFICER POSITION" INCLUDES (I) CITY MANAGER, TOWN MANAGER, GENERAL MANAGER, EXECUTIVE DIRECTOR, COMMISSIONER, CHAIRMAN, CHIEF EXECUTIVE OFFICER, PRESIDENT, CHIEF FINANCIAL OFFICER, VICE PRESIDENT, SECRETARY OR TREASURER, (II) ANY POSITION WITH AUTHORITY SIMILAR TO THE POSITIONS DESCRIBED IN CLAUSE (I) ABOVE, OR (III) ANY POSITION THAT REPORTS DIRECTLY TO ANY OF THE POSITIONS DESCRIBED IN CLAUSES (I) OR (II) ABOVE. 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. DISPOSAL OF A SUBSTANTIAL PORTION OF THE COOPERATIVE'S ASSETS; 2. DISSOLUTION/LIQUIDATION OF THE COOPERATIVE; 3. MERGER OR CONSOLIDATION OF THE COOPERATIVE WITH ANOTHER ORGANIZATION; AND 4. AMENDMENTS TO THE ARTICLES OF INCORPORATION. Form 990, Part VI, Section B, line 11 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 AND AN INDEPENDENT COMPENSATION CONSULTANT ARE USED WHEN DETERMINING THE 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 METROPLEX AREA, TEXAS AND THE NATION. THE CEO USES A WAGE AND SALARY PLAN APPROVED BY THE BOARD, WHICH IS BASED ON A COMPENSATION SURVEY, WHEN DETERMINING THE COMPENSATION OF THE COOPERATIVE'S OTHER EMPLOYEES MEETING THE DEFINITION OF OFFICER AND KEY EMPLOYEE, IF ANY, FROM SIMILARLY SITUATED COOPERATIVES, UTILITIES, AND OTHER BUSINESSES LOCATED IN THE DALLAS/FT. WORTH METROPLEX AREA, TEXAS AND THE NATION. 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 VI, QUESTION 9 THE NAMES AND ADDRESSES OF DIRECTORS,OFFICERS AND KEY EMPLOYEES, WHO CANNOT BE REACHED AT THE COOPERATIVE'S ADDRESS, ARE AS FOLLOWS: MR. MIKE DREYSPRING 45 STEWART STREET DURANGO, CO 81303 MR. JERRY COBB 8431 EDGEWOOD COVE FRISCO, TX 75033 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. AS PART OF THE PLAN DOCUMENT, THE COOPERATIVE PROVIDES A MATCHING CONTRIBUTION UP TO 3% OF A PARTICIPATING EMPLOYEE'S SALARY. 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, Line 24(e) OTHER EXPENSES IS COMPRISED OF THE FOLLOWING: CONSUMER ACCOUNTS & SERVICE $ 923,805 MISCELLANEOUS 239,839 SALES 1,017,449 TAXES - MUNICIPAL FRANCHISE FEES 5,520 TAXES - PROPERTY & OTHER 4,060,259 TOTAL OTHER EXPENSES PER FORM 990 LINE 24(e) $6,246,872 Form 990, Part IX THE ACCOUNTING RECORDS OF THE COOPERATIVE ARE MAINTAINED IN ACCORDANCE WITH THE UNIFORM SYSTEM OF ACCOUNTS AS PRESCRIBED BY THE FEDERAL ENERGY REGULATORY COMMISSION FOR CLASS A AND B ELECTRIC UTILITIES. THE UNIFORM SYSTEM OF ACCOUNTING 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 UNIFORM SYSTEM OF ACCOUNTS. 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 $18,818,412 LESS DIRECTORS FEES REPORTED ON 1099-MISC (296,078) LESS EMPLOYEE OFFICER BENEFITS INCLUDED IN LINE 5 (598,650) PLUS SALARIES AND WAGES CAPITALIZED DIRECTLY TO PLANT 6,190,390 TOTAL WAGES ACCRUED AND/OR PAID $24,114,074 Form 990, Part IX, Line 24 ADMINISTRATIVE AND GENERAL EXPENSE IS COMPRISED OF THE FOLLOWING: ADMINISTRATIVE & GENERAL EXPENSE $2,213,276 OUTSIDE SERVICES 1,935,366 PROPERTY INSURANCE 752,281 LOSS/DAMAGES 329,046 MAINTENANCE OF GENERAL PLANT 10,208 MISCELLANEOUS GENERAL EXPENSE 4,254,525 TOTAL ADMINISTRATIVE AND GENERAL EXPENSE PER 990 $ 9,494,702 Form 990, Part IX, Line 4 THE FORM 990 INSTRUCTIONS PROVIDE THAT THE AMOUNT OF PATRONAGE DIVIDENDS PAID TO THE MEMBERS 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 MEMBERS. THE COOPERATIVE'S TAX EXEMPT PURPOSE IS TO PROVIDE ELECTRICITY TO ITS MEMBERS 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 MEMBERS. 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 MEMBERS, 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 AND IS SUMMARIZED AS FOLLOWS: (A) IN ORDER TO INDUCE PATRONAGE AND TO ASSURE THAT THE COOPERATIVE WILL OPERATE ON A NONPROFIT BASIS, THE COOPERATIVE IS OBLIGATED TO ACCOUNT ON A PATRONAGE BASIS TO ALL ITS MEMBERS FOR ALL AMOUNTS RECEIVED AND RECEIVABLE FROM THE FURNISHING OF ELECTRIC ENERGY IN EXCESS OF OPERATING COSTS AND EXPENSES PROPERLY CHARGEABLE AGAINST SUCH SERVICES (I.E. MARGINS FROM THE PROVISION OF ELECTRIC ENERGY). (B) THE MARGINS FROM THE PROVISION OF ELECTRIC ENERGY ARE RECEIVED WITH THE UNDERSTANDING THAT THEY ARE FURNISHED BY THE MEMBERS AS CAPITAL. (C) THE COOPERATIVE IS OBLIGATED TO PAY BY CREDITS TO A CAPITAL ACCOUNT FOR EACH MEMBER FOR ALL SUCH MARGINS. AND (D) ALL SUCH AMOUNTS CREDITED TO THE CAPITAL ACCOUNT OF ANY MEMBER SHALL HAVE THE SAME STATUS AS THOUGH THEY HAD BEEN PAID TO THE MEMBER IN CASH IN PURSUANCE OF A LEGAL OBLIGATION TO DO SO AND THE MEMBER HAD THEN FURNISHED TO THE COOPERATIVE CORRESPONDING AMOUNTS OF CAPITAL. THE AMOUNT REPORTED ON PART IX, LINE 4 REPRESENTS THE AMOUNT OF PATRONAGE CAPITAL ALLOCATED TO THE MEMBERS RESULTING FROM THEIR PURCHASE OF ELECTRICITY FROM THE COOPERATIVE FOR THE 2014 CALENDAR YEAR. AS NOTED ABOVE, SUCH AMOUNTS ARE ALLOCATED SUBSEQUENT TO YEAR-END IN A FAIR AND EQUITABLE MANNER ON THE BASIS OF PATRONAGE (I.E. PURCHASES). THE AMOUNTS ALLOCATED ARE REPRESENTATIVE OF THE MARGINS FROM THE PROVISION OF ELECTRIC ENERGY TO THE MEMBERS AND ARE DONE PURSUANT TO THE OBLIGATION THAT EXISTED IN THE BYLAWS PRIOR TO THE COOPERATIVE PROVIDING ELECTRICITY TO ITS MEMBERS. THEREFORE, THESE AMOUNTS MEET THE DEFINITION OF THE TERM "PATRONAGE DIVIDENDS PAID". PLEASE NOTE, HOWEVER, THAT BECAUSE PATRONAGE DIVIDENDS IS THE PROCESS BY WHICH THE COOPERATIVE OPERATES AT COST WITH ITS MEMBERS AND THEREBY A KEY COMPONENT TO ACCOMPLISHING ITS EXEMPT PURPOSE, THE COOPERATIVE HAS REPORTED THE AMOUNT OF ITS 2014 MARGIN THAT WAS ALLOCATED TO THE MEMBERS SUBSEQUENT TO YEAR-END. SUCH AMOUNTS ARE AN EXPENSE FOR FORM 990 REPORTING AND IS NOT AN EXPENSE FOR FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. AS A RESULT, THE DIFFERENCE BETWEEN THE COOPERATIVE'S GAAP BASIS FINANCIAL STATEMENTS AND THE REVENUE LESS EXPENSES REPORTED ON PART I, LINE 19 IS THE AMOUNT OF PATRONAGE DIVIDENDS REPORTED AS BENEFITS PAID TO MEMBERS. Form 990, Part XI, line 9: EQUITY METHOD INCOME (LOSS) FROM SUBSIDIARY COMPANY 5,150,715. NET CHANGE IN MEMBERSHIPS 134,012. OTHER COMPREHENSIVE INCOME - POST EMPLOYMENT BENEFITS & AFFILIATES -1,452,379. PATRONAGE CAPITAL ASSIGNED 55,782,639. PATRONAGE CAPITAL RETIRED - TOTAL -21,486,470. PATRONAGE CAPITAL RETIRED - DISCOUNT 9,408,341. Form 990, Part XI, 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. PROCEDURAL CHANGES DID NOT OCCUR DURING THE YEAR. FORM 990, SCHEDULE R, PARTS IV AND 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, 2014: COSERV UTILITY GP LLC COSERV UTILITY HOLDINGS LP COSERV NATURAL LLC COSERV GAS LTD COSERV LLANO, LLC COLLIN COUNTY EQUIPMENT, LTD. LLANO UTILITY SERVICES LLC RENEWABLE ENERGY ALTERNATIVES LLC THIRTY SEVEN REALTY GP LLC THIRTY SEVEN REALTY HOLDINGS LP QUAIL RUN REALTY LLC 7701 SOUTH STEMMONS FWY CORINTH TX 76210 REAL ESTATE TX 8000 767104 DENTON COUNTY ELECTRIC COOPERATIVE INC COSERV PROPERTY HOLDINGS LLC 7701 SOUTH STEMMONS FWY CORINTH TX 76210 REAL ESTATE TX 0 1512866 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 767616 1.00000 1 COSERV INVESTMENTS LP 7701 SOUTH STEMMONS FWY CORINTH TX 76210 752729645 INVESTMENTS TX DENTON COUNTY ELECTRIC COOPERATIVE INC C 40686005 164290507 1.00000 1 1 1 0 0 0 1 0 0 0 0 0 0 0 1 1 0 1 0 0 COSERV INVESTMENTS LP AND SUBSIDIARY A 234139 INVOICES AND OTHER RECORDS COSERV INVESTMENTS LP AND SUBSIDIARY F 1744668 DIVDEND DECLARED & RECEIVED COSERV INVESTMENTS LP AND SUBSIDIARY Q 5292760 INVOICES AND OTHER RECORDS COSERV ELECTRIC GROUP HEALTH BENEFIT PLAN R 4191580 INVOICES AND OTHER RECORDS COSERV ELECTRIC GROUP HEALTH BENEFIT PLAN O N/A - LESS THAN $50,000 COSERV CHARITABLE FOUNDATION B N/A - LESS THAN $50,000 COSERV CHARITABLE FOUNDATION N N/A - LESS THAN $50,000 COSERV CHARITABLE FOUNDATION O N/A - LESS THAN $50,000