2015-11-16T08:36:11-06:00 2014-12-31 750882037 BOLINGER SEGARS GILBERT AND MOSS LLP 8215 NASHVILLE AVENUE LUBBOCK TX 79423 990 2014-01-01 740880083 SAN BERNARD ELECTRIC COOPERATIVE INC SANB 9798653171 PO BOX 1208 BELLVILLE TX 77418 BILLY MARRICLE PRESIDENT/GM 9798653171 2015-11-09 1 CELINDA J LEVERETT P01455941 8067473806 2015-11-09 2014 2016-02-25 16:41:14Z BILLY MARRICLE PO BOX 1208 BELLVILLE TX 77418 75935613 0 X WWW.SBEC.ORG X 1939 TX TO PROVIDE QUALITY AND RELIABLE ELECTRIC SERVICE TO MEMBERS OF THE COOPERATIVE. 8 8 128 0 3333 2333 0 0 62701732 75368997 81134 71142 72228 -16790 62855094 75423349 47151 40844 4300888 5307886 6088042 6020806 0 0 0 52419013 64053813 62855094 75423349 0 0 168080643 187905693 95498308 111348413 72582335 76557280 THE COOPERATIVE'S RESPONSIBILITY AND AIM IS TO PROVIDE EXCELLENT AND INNOVATIVE CUSTOMER SERVICE AS REFLECTED IN TOP QUALITY ELECTRIC SERVICE RELIABILITY, AFFORDABLE RATES, EMPLOYEE TEAMWORK AND THE HIGHEST DEGREE OF INTEGRITY IN ALL COOPERATIVE ENDEAVORS. 0 0 PROVIDING ELECTRIC ENERGY TO OUR MEMBERS - 25,894 ACTIVE SERVICES AT YEAR END WERE PROVIDED ELECTRICITY ON A COOPERATIVE BASIS THROUGH THE ALLOCATION OF PATRONAGE CAPITAL. 0 0 0 0 0 0 0 1 0 1 0 0 0 1 1 1 0 0 0 0 0 0 0 0 0 0 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 59 0 128 1 1 1 0 0 0 0 74888818 2616711 0 X 8 8 0 0 1 0 1 1 1 1 0 0 0 1 1 1 1 0 0 1 1 0 X KEN WIED BUSINESS GROUP MANAGER 9798653171 309 WEST MAIN STREET BELLVILLE TX 77418 X GUS H MILLER JR BOARD PRESIDENT 10.00 X X 27746 0 0 BRUCE R PILCIK 1ST VICE PRESIDENT 10.00 X X 25355 0 0 KARL N MICKLITZ 2ND VICE PRESIDENT 5.00 X X 24849 0 0 SAMMY CONDRA 3RD VICE PRESIDENT 10.00 X X 28755 0 0 CHARLES MATULA SECRETARY/TREASURER 10.00 X X 26280 0 0 ELROY KIECKE ASSISTANT SEC/TREASURER 3.50 X X 26348 0 0 ROY H COOK DIRECTOR (1/1/14 - 2/18/14) 4.00 X 8342 0 0 FRANK POKLUDA DIRECTOR 12.00 X 7283 0 0 COLT HAACK DIRECTOR 10.00 X 29755 0 0 JOHN ALLEN DIRECTOR 15.00 X 16811 0 0 BILLY MARRICLE PRESIDENT/GM 50.00 X 192855 0 102089 KEN WIED BUSINESS GROUP MANAGER 40.00 X 126745 0 52324 MICHAEL ABLES ENERGY SERVICES DIRECTOR 43.00 X 102695 0 51780 SHAWN BARD IT GROUP MANAGER 42.00 X 102854 0 44744 DON ROBERTS ELECTRIC SYS. MANAGER 42.00 X 141183 0 125582 CLAYTON STANFORD ENGINEERING MANAGER 43.00 X 104984 0 72077 LARRY WEDEKING LINE CREW LEADER 48.00 X 110446 0 44184 1103286 0 492780 7 0 1 0 BURNS & MCDONNELL PO BOX 411883 KANSAS CITY MO 64141 ENGINEERING CONSULTING/SUBSTATION CONSTR 5535868 MCCOY TREE SURGERY PO BOX 720342 NORMAN OK 73072 ROW CLEARING 1105771 LINE TECH INC 402 TECHNOLOGY DRIVE BASTROP TX 78602 LINE CONSTRUCTION 825454 ABC PROFESSIONAL TREE SERVICES 201 FLINT RIDGE RD WEBSTER TX 77598 ROW CLEARING 658579 DAVIDSON TROILO REAM & GARZA 7550 WEST IH 10 SUITE 800 SAN ANTONIO TX 78229 LEGAL FEES 335143 12 X ELECTRICITY SALES 221000 72607833 72607833 LEASE INC. FROM LCRA 221000 2228965 2228965 PATRONAGE DIVIDENDS 221000 395279 385341 9938 SERVICE FEES 221000 136920 136920 75368997 68773 68773 51966 0 51966 51966 51966 14480 12111 2369 2369 2369 421917 500153 -78236 -71151 -7085 DISPATCHING REVENUE 519100 9000 9000 INTERNET PROVIDER 519100 480 480 9480 75423349 75287908 3333 132108 X 40844 5307886 695537 3444231 794885 800673 285480 3454560 6430234 PURCHASED POWER 46000839 DISTRIBUTION EXPENSE 4800985 CUSTOMER SERVICE 1412396 UNRELATED BUS. INC. TAX 20808 1933991 75423349 1044627 1259699 3020482 2932927 3414949 3433380 3508044 13814610 213007398 54391789 150482893 158615609 4996725 4752557 1612923 3096911 168080643 187905693 7963374 4818261 172731 286657 80402863 101501393 6959340 4742102 95498308 111348413 X 71425 68905 0 0 72510910 76488375 72582335 76557280 168080643 187905693 X 0 3974945 X X 0 1 X 0 0 0 1 X 2002404 2002404 5854088 2706926 3147162 202556957 51684863 150872094 2593949 2593949 158615609 ACCUMULATED PROVISION FOR POST RETIREMENT BENEFITS 1042935 CONSUMER DEPOSITS 798695 ACCRUED EMPLOYEE COMPENSATED ABSENCES 645384 ACCRUED INTEREST 398331 OTHER CURRENT AND ACCRUED LIABILITIES 106180 DEFERRED CREDITS 1750577 4742102 X 75426547 3198 3198 75423349 0 75423349 70118661 0 70118661 5304688 5304688 75423349 Part IV, Line 2b: PURSUANT TO SECTION 74.3013 OF THE TEXAS PROPERTY CODE, THE COOPERATIVE HAS ESTABLISHED A RURAL SCHOLARSHIP FUND WITH RETIREMENTS OF PATRONAGE CAPITAL, WHICH HAVE REMAINED UNCLAIMED FOR A PERIOD OF THREE YEARS. 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. THE COOPERATIVE HAS PUT INTO PLACE AN "OPERATION ROUNDUP" PLAN. MEMBERS WHO WISH TO PARTICIPATE IN THE PLAN VOLUNTARILY ROUND THEIR ELECTRIC BILLS UP TO THE NEAREST WHOLE DOLLAR. THE DIFFERENCE IS USED TO FUND THE PLAN. THE "OPERATION ROUNDUP" FUNDS ARE MAINTAINED IN A SEPARATE ACCOUNT AND USED TO SUPPORT EDUCATION PROJECTS, YOUTH PROJECTS, COMMUNITY PROJECTS AND EMERGENCY ASSISTANCE WITHIN THE COMMUNITIES AND AREAS SERVED BY THE COOPERATIVE. Part X, Line 2: THE COOPERATIVE HAS ADOPTED THE "UNCERTAIN TAX POSITIONS" PROVISIONS OF ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA. THE PRIMARY TAX POSITION OF THE COOPERATIVE IS THEIR FILING STATUS AS A TAX EXEMPT ENTITY. THE COOPERATIVE DETERMINED THAT IT IS MORE LIKELY THAN NOT THAT ITS TAX POSITIONS WILL BE SUSTAINED UPON EXAMINATION BY THE INTERNAL REVENUE SERVICE, AND THAT ALL TAX BENEFITS ARE LIKELY TO BE REALIZED UPON SETTLEMENT WITH TAXING AUTHORITIES. Part XI, Line 2d - Other Adjustments: EXPENSES RECORDED IN NON-OPERATING MARGINS RECLASSED TO EXPENSE 3,198. Part XII, Line 4b - Other Adjustments: PATRONAGE CAPITAL ASSIGNABLE 5,307,886. EXPENSES RECORDED IN NON-OPERATING MARGINS RECLASSED TO EXPENSE -3,198. Part VIII THE AMOUNT OF INVESTMENTS - PROGRAM RELATED ON FORM 990, PAGE 11, PART X, LINE 13 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 VIII HAS BEEN LEFT BLANK. 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. Part XII, Line 4B PATRONAGE CAPITAL ASSIGNABLE - $5,307,886 FOR THE AUDITED FINANCIAL STATEMENTS, THE AMOUNT OF PATRONAGE DIVIDENDS PAID OR ALLOCATED TO THE MEMBERS IS REPORTED AS AN INCREASE IN EQUITY AND NOT AS AN EXPENSE. THEREFORE, NET INCOME PER THE AUDITED FINANCIAL STATEMENTS IS REPORTED GROSS OF THE AMOUNT OF PATRONAGE DIVIDENDS THAT ARE EITHER ALLOCATED OR TO BE ALLOCATED AT THE TIME THE AUDITED FINANCIAL STATEMENTS ARE PREPARED. HOWEVER, BECAUSE THE ALLOCATION OF PATRONAGE DIVIDENDS IS ONE ASPECT OF HOW THE COOPERATIVE FULFILLS ITS TAX EXEMPT PURPOSE OF OPERATING ON A COOPERATIVE BASIS, THE AMOUNT OF PATRONAGE DIVIDENDS EITHER ALLOCATED OR TO BE ALLOCATED TO THE MEMBERS IS REPORTED ON FORM 990, PART IX, LINE 4 AS "BENEFITS PAID TO MEMBERS". PATRONAGE DIVIDENDS ARE ALLOCATED ON A PATRONAGE BASIS AND DONE SO PURSUANT TO A PRE-EXISTING OBLIGATION AS PROVIDED FOR IN THE "NON-PROFIT OPERATION" ARTICLE OF THE COOPERATIVE'S BYLAWS. 1 WALLER COUNTY FAIR ASSOCIATION PO BOX 911 HEMPSTEAD TX 77445 741481196 501 (C) (3) 6686 OPERATIONS 1 SCHEDULE I ALL GRANTS, SPONSORSHIPS AND DONATIONS ARE MADE TO NON-PROFIT AND CIVIC ORGANIZATIONS THAT ARE LOCATED IN THE COOPERATIVE'S SERVICE AREA. ALL DONATIONS ARE INTENDED TO IMPROVE THE COMMUNITIES IN WHICH OUR MEMBERS RESIDE. X X X X 0 0 0 BILLY MARRICLE PRESIDENT/GM 168184 0 17509 0 7162 0 91998 0 10091 0 294944 0 0 0 KEN WIED BUSINESS GROUP MANAGER 118942 0 2786 0 5017 0 43147 0 9177 0 179069 0 0 0 MICHAEL ABLES ENERGY SERVICES DIRECTOR 98559 0 2430 0 1706 0 31616 0 20164 0 154475 0 0 0 DON ROBERTS ELECTRIC SYS. MANAGER 130639 0 3181 0 7363 0 104727 0 20855 0 266765 0 0 0 CLAYTON STANFORD ENGINEERING MANAGER 99911 0 2463 0 2610 0 51398 0 20679 0 177061 0 0 0 LARRY WEDEKING LINE CREW LEADER 107556 0 1898 0 992 0 35959 0 8225 0 154630 0 0 0 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 CONTRIBUTION TO THE PLAN IN LIEU OF THE ACTUARIAL INCREASE ARE EXPENSED IN THE FINANCIAL STATEMENTS. BILLY MARRICLE ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN: $ 81,813 CONTRIBUTION TO 401(K): 10,185 TOTAL COLUMN C: $ 91,998 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN: (81,813) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN: 41,771 EXPENSE TO THE COOPERATIVE: $ 51,956 KEN WIED ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN: $ 36,030 CONTRIBUTION TO 401(K): 7,117 TOTAL COLUMN C: $ 43,147 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN: (36,030) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN: 20,290 EXPENSE TO THE COOPERATIVE: $ 36,407 MICHAEL ABLES ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN: $ 25,408 CONTRIBUTION TO 401(K): 6,208 TOTAL COLUMN C: $ 36,616 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN: (25,408) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN: 25,549 EXPENSE TO THE COOPERATIVE: $31,757 DON ROBERTS ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN: $ 96,600 CONTRIBUTION TO 401(K): 8,127 TOTAL COLUMN C: $ 104,727 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN: (96,600) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN: 33,445 EXPENSE TO THE COOPERATIVE: $ 41,572 CLAYTON STANFORD ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN: $ 45,114 CONTRIBUTION TO 401(K): 6,284 TOTAL COLUMN C: $ 51,398 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN: (45,114) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN: 25,821 EXPENSE TO THE COOPERATIVE: $ 32,105 LARRY WEDEKING ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN: $ 30,873 CONTRIBUTION TO 401(K): 5,086 TOTAL COLUMN C: $ 35,959 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN: (30,873) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN: 19,955 EXPENSE TO THE COOPERATIVE: $ 25,041 Form 990, Part VI, Section A, line 4 SECTION 4.06 OF THE COOPERATIVE'S BYLAWS WERE AMENDED TO INCLUDE THE STATEMENT THAT A MEMBER OF THE NOMINATING COMMITTEE IS NOT ELIGIBLE TO RUN FOR DIRECTOR AND CANNOT NOMINATE HIS OR HERSELF FOR DIRECTORSHIP. SECTION 4.09 WAS AMENDED TO INCLUDE THAT IF AT SUCH TIME THERE IS A VACANCY ON THE BOARD OF DIRECTORS AND THE BOARD CHOOSES TO FILL THE VACANCY BEFORE THE NEXT REGULAR ELECTION, AT LEAST TWO BUT NOT MORE THAN FOUR CANDIDATES WILL BE CONSIDERED TO FILL THE VACANCY. THESE CANDIDATES WILL BE REVIEWED IN PERSON BY THE BOARD OF DIRECTORS AND THE CANDIDATE WITH THE MAJORITY OF VOTES SHALL BE DECLARED THE APPOINTED DIRECTOR. 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 PER DISTRICT. Form 990, Part VI, Section A, line 7b THE FOLLOWING ACTS REQUIRE APPROVAL OF THE MEMBERS OF THE COOPERATIVE. 1. DISSOLUTION/LIQUIDATION OF THE COOPERATIVE. 2. MERGER OR CONSOLIDATION OF THE COOPERATIVE WITH ANOTHER ORGANIZATION. 3. THE DISPOSAL OF A SUBSTANTIAL PORTION OF THE COOPERATIVE'S ASSETS. Form 990, Part VI, Section A, line 8b FROM TIME TO TIME THE ENTIRE BOARD WILL GO INTO EXECUTIVE SESSION FOR DISCUSSING ITEMS OF A SENSITIVE AND CONFIDENTIAL NATURE. WHEN THIS OCCURS MANAGEMENT AND OTHERS IN ATTENDANCE ARE REMOVED FROM THE MEETING ROOM. ITEMS DISCUSSED IN EXECUTIVE SESSION ARE NOT DOCUMENTED. HOWEVER, ACTIONS TAKEN BY THE BOARD AFTER EXECUTIVE SESSIONS ARE ADJOURNED ARE FULLY DOCUMENTED IN THE WRITTEN MINUTES. Form 990, Part VI, Section B, line 11 MANAGEMENT PRESENTED A COPY OF THE FORM 990 TO THE BOARD FOR DISCUSSION, REVIEW AND APPROVAL PRIOR TO FILING. THE DISCUSSION AND REVIEW WAS PERFORMED AT THE BOARD MEETING IMMEDIATELY BEFORE FILING THE FORM 990. Form 990, Part VI, Section B, line 12c THE BOARD OF DIRECTORS AND OFFICERS ARE REQUIRED TO REVIEW AND BE FAMILIAR WITH THE POLICIES OUTLINED IN THE COOPERATIVE'S CONFLICT OF INTEREST POLICY. THE BOARD OF DIRECTORS AND OFFICERS ARE REQUIRED TO DISCLOSE ANY ACTION OR SITUATION THAT MIGHT VIOLATE THE POLICY TO THE FULL BOARD OF DIRECTORS AS SOON AS POSSIBLE. THE CONFLICT OF INTEREST POLICY IS REVIEWED ON AN ANNUAL BASIS. Form 990, Part VI, Section B, line 15 THE BOARD OF DIRECTORS AND A COMPENSATION COMMITTEE COMPARE THE FORM 990S OF OTHER COOPERATIVES, EMPLOY AN INDEPENDENT COMPENSATION CONSULTANT AND USE A COMPENSATION SURVEY WHEN DETERMINING THE COMPENSATION OF THE GENERAL MANAGER. THE SURVEY SHOWS COMPARATIVE SALARIES FOR GENERAL MANAGERS FROM COOPERATIVES LOCATED IN TEXAS AND THE NATION. THE BOARD OF DIRECTORS AND THE GENERAL MANAGER EMPLOY AN INDEPENDENT COMPENSATION CONSULTANT, THE FORM 990 OF OTHER COOPERATIVES AND USE A COMPENSATION SURVEY WHEN DETERMINING THE COMPENSATION OF OTHER EMPLOYEES MEETING THE DEFINITION OF OFFICER AND KEY EMPLOYEES, IF ANY. THE SURVEY INCLUDES SALARIES FROM SIMILAR COOPERATIVES THROUGHOUT TEXAS AND THE NATION. Form 990, Part VI, Section C, line 19 THE COOPERATIVE PROVIDES A SUMMARIZED COPY OF THE AUDITED FINANCIAL STATEMENTS TO THE MEMBERS OF THE COOPERATIVE AT THE ANNUAL MEETING. THE COOPERATIVE WILL PROVIDE A COMPLETE COPY OF THE AUDITED FINANCIAL STATEMENTS, CONFLICT OF INTEREST POLICY, OR GOVERNING DOCUMENTS TO ANY MEMBER WHO REQUESTS A COPY. FINALLY, THE COOPERATIVE'S FINANCIAL STATEMENTS, GOVERNING DOCUMENTS, AND BYLAWS CAN BE FOUND ON THE COOPERATIVE'S WEBSITE. Form 990, Part VI, Section B, Line 14 THE COOPERATIVE DOES NOT HAVE A WRITTEN DOCUMENT RETENTION AND DESTRUCTION POLICY IN PLACE, BUT FOLLOWS THE RUS RECOMMMEDATIONS REGARDING DOCUMENT RETENTION AND DESTRUCTION. Form 990, Part VI, Section A, Line 1 THE COOPERATIVE HAS 8 BOARD MEMBERS; ALL 8 ARE ALLOWED TO VOTE, HOWEVER THE BOARD PRESIDENT VOTES ONLY IN THE CASE OF A TIE. 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 6% 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 AND LIFE INSURANCE TO ALL EMPLOYEES, 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 THE INSURANCE PREMIUMS PAID ON BEHALF OF AND FOR THEIR BENEFIT. 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 HAS NOT BEEN ESTIMATED. Form 990, Part VIII, Line 2 PATRONAGE DIVIDENDS RESULT FROM THE PAYMENT OF INTEREST FROM 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 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 MODIFIED FOR ELECTRIC BORROWERS OF THE NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION(CFC). 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 THEIR 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 TOTAL WAGES ACCRUED AND/OR PAID. TOTAL PER LINES 5-7 $4,139,768 LESS DIRECTORS FEES REPORTED ON 1099-MISC (221,524) LESS EMPLOYEE OFFICER BENEFITS INCLUDED IN LINE 5 (154,413) PLUS SALARIES & WAGES ALLOCATED TO NONOP MARGINS 4,102 PLUS SALARIES & WAGES CAPITALIZED DIRECTLY TO PLANT 2,565,833 PLUS SALARIES & WAGES CAPITALIZED/EXPENSED INDIRECTLY THROUGH CLEARING AND OTHER ACCOUNTS 1,272,418 TOTAL WAGES ACCRUED AND/OR PAID $7,606,184 Form 990, Part IX, Line 24e OTHER EXPENSES IS COMPRISED OF THE FOLLOWING: ADMINISTRATIVE & GENERAL OFFICE SUPPLIES AND EXPENSE $236,028 OUTSIDE SERVICES EMPLOYED 388,349 REGULATORY COMMISSION EXPENSE 121,970 DUPLICATE CHARGES (CREDIT) (51,507) DUES PAID ASSOCIATED ORGANIZATIONS 86,014 MAINTENANCE OF GENERAL PLANT 431,423 MISCELLANEOUS GENERAL EXPENSE 306,542 TAXES - PROPERTY & OTHER 290,283 TRANSMISSION EXPENSE 124,889 TOTAL OTHER EXPENSES PER FORM 990 LINE 24E $1,933,991 Form 990, Part IX, Line 4 THE FORM 990 INSTRUCTIONS SPECIFICALLY STATE 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 BASIS 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 THAT IS EITHER ALLOCATED OR TO BE 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 HAS BEEN OR IS TO BE 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: NET CHANGE IN MEMBERSHIPS -2,520. RETIREMENT OF PATRONAGE CAPITAL -1,451,721. OTHER COMPREHENSIVE INCOME-PROVISION FOR POST-RETIREMENT BENEFIT OBLIGATION 121,300. PATRONAGE CAPITAL ASSIGNABLE 5,307,886.