2011-01-10T12:54:44-06:00 2010-05-31 Deloitte Tax LLP 1750 TYSONS BOULEVARD MCLEAN VA 22102 990 2009-06-01 520891669 NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION NATI 7037096700 2201 COOPERATIVE WAY HERNDON VA 20171 Steven L Lilly 7037096700 2011-01-10 0 7032511000 2011-01-10 2009 2016-02-24 21:20:13Z Steven L Lilly 2201 COOPERATIVE WAY HERNDON VA 20171 1427576473 0 X WWW.NRUCFC.COOP X 1969 VA TAX EXEMPT COOPERATIVE ORGANIZATION PROVIDING FINANCING TO RURAL ELECTRIC COOPERATIVES 23 23 237 0 0 0 0 1662983282 1417317555 5700739 5240574 4827949 4789858 1673511970 1427347987 2003255 1630237 0 37189523 39415105 0 0 1544483607 1273737792 1583676385 1314783134 89835585 112564853 20920886545 19887235419 20405749889 19304447985 515136656 582787434 To bridge the financial needs of the rural electric network with the expectations of the global capital markets, one cooperative at a time. National Rural Utilities Cooperative Finance Corporation ("CFC") is a member- owned cooperative association incorporated under the laws of the District of Columbia in April 1969. CFC's principal purpose is to provide its members with financing to supplement the loan programs of the Rural Utilities Service ("RUS") of the United States Department of Agriculture. CFC makes loans primarily to its rural electric members so they can acquire, construct and operate electric distribution, generation, transmission and related facilities. CFC also provides its members with credit enhancements in the form of letters of credit and guarantees of debt obligations. 0 0 1244089238 1339178049 Interest Expense - CFC provides loans to its members, rural electric cooperatives and their related organizations. CFC raises funds in the capital markets and pays a rate of return commensurate with current economic conditions for the use of those funds. These borrowed funds permit CFC to meet the borrowing needs of its members so they can continue to provide electric and power service to the consumers and businesses in the rural territories serviced by those members/borrowers. CFC operates in such manner to achieve the lowest cost of funding available to it and passes the costs and resulting savings along to its borrowers. 1630237 1630237 Grants - As a cooperative formed under the laws of the District of Columbia, CFC is required to allocate a percentage of its net earnings to an educational fund. Cooperatives are required by this act to make grants in support of educating the public about cooperative principles. The Education Fund grants made by CFC are mainly to statewide membership organizations that use these grants to educate customers and citizens about cooperative principles. Additionally, CFC manages a voluntary fund established for the purpose of assisting cooperatives in defending their cooperative territories and protecting cooperative principles. 572807 Loss on Whole Loan Sale- CFC accounts for the sale of loans in securitization transactions by derecognizing financial assets when control has been surrendered. Deferred transaction costs and unamortized deferred loan origination costs related to the loans sold are included in the calculation of the gain or loss on the sale.Bank Fees Expense- Service fees charged by CFC's financial institution if the minimum balances required by the institutions are not maintain. Also, these fees cover stop payments fee impose by the financial institution. 1246292282 0 0 0 0 0 0 0 0 0 1 0 1 0 0 1 0 0 0 0 0 0 1 0 1 0 0 0 0 0 0 0 1 0 0 0 0 1 0 0 0 1 91 0 1 237 1 0 0 0 0 0 0 0 0 0 0 0 23 23 0 0 0 0 1 1 0 1 1 0 0 1 1 1 1 1 1 1 0 1 1 VA DC AZ GA X THE CONTROLLER 7037096700 2201 COOPERATIVE WAY HERNDON VA 201713025 Frederick C Anderson 6.60 X 41650 0 0 Roger Arthur 1.00 X 16300 0 0 Charles Ayers 6.00 X 16000 0 0 Roger ABall 1.00 X 16150 0 0 Ray Beavers 1.00 X 0 0 0 FRED BROG 8.60 X 32000 0 0 Raphael Brumbeloe 8.30 X 37650 0 0 Delbert Marvin Cranford 8.30 X 37350 0 0 Walter K Crook 1.00 X 12000 0 0 JOEL CUNNINGHAM 13.30 X 32900 0 0 James Doerstler 9.30 X 37800 0 0 Joseph Ewing Jr 4.70 X 37650 0 0 MICHAEL J GUIDRY 5.60 X 18000 0 0 CHRISTOPHER L HAMON 11.90 X 32300 0 0 SCOTT W HANDY 3.20 X 32600 0 0 Jim C Herron 5.70 X 32300 0 0 Martin A Hillert Jr 14.30 X 41350 0 0 William A Kopacz 8.20 X 37650 0 0 Lyle Korver 1.00 X 0 0 0 Reuben B McBride 10.10 X 37650 0 0 Burns Mercer 5.20 X 37350 0 0 GLENN MILLER 8.60 X 32600 0 0 RANDY D RENTH 16.30 X 32450 0 0 Dwight Rossow 11.10 X 40900 0 0 Ronald P Salyer 1.30 X 12000 0 0 Darryl Schriver 6.50 X 37500 0 0 R WAYNE STRATTON 12.90 X 38000 0 0 J David Wasson Jr 6.80 X 37500 0 0 Charles Wayne Whitaker 2.50 X 24150 0 0 Francis Wolski 9.80 X 28750 0 0 Sheldon Petersen 65.00 X 2150432 0 459663 John List 60.00 X 1106409 0 410190 Steven Lilly 60.00 X 917597 0 232142 Richard Larochelle 60.00 X 678771 0 289480 John Evans 55.00 X 627891 0 194929 John Borak 60.00 X 322423 0 97974 Lawrence Zawalick 55.00 X 444909 0 153703 Lynn Midgette 55.00 X 265209 0 76606 Krishna Murthy 45.00 X 264601 0 139348 John Suter 40.00 X 225943 0 109552 Roberta Aronson 50.00 X 290330 0 87270 Michael Carr 55.00 X 281194 0 67336 Joseph Siekierski 50.00 X 250124 0 66110 Allyn Amato 47.00 X 237554 0 83571 Robin Reed 60.00 X 237141 0 69448 9171028 0 2537322 118 0 1 1 Hogan & LOVELLS LLP 555 Thirteenth Street NW Washington DC 200041109 Legal 4826512 The Whiting Turner Contracting Company 14900 Conference Center Drive Ste Chantilly VA 20151 New Building Contractors 3077697 Idea Integration PO BOX 1020220 Atlanta GA 303680220 IS Contractors 2766519 Deloitte & Touche LLP PO Box 277694 Atlanta GA 303847894 Auditors 1264338 Kishimoto Gordon Dalaya PC 1300 Wilson Blvd Ste 250 Rosslyn VA 22209 Architectural Consulting 956998 24 Prog.serv.revenue-Rela 522200 1339178049 1339178049 OP INC-FEES - related 522200 41261270 41261270 RECOVERY FOR LOAN LOSS 552200 30317711 30317711 RECOVERY FOR GUARANTEE 552200 5281000 5281000 RESULTS FROM FORECLOSE 552200 1079217 1079217 200308 200308 1417317555 5244757 5244757 224303 228486 -4183 -4183 -4183 Management Fees 522200 4789858 4789858 4789858 1427347987 1422107413 0 5240574 1630237 1630237 10038272 10038272 19540121 19540121 6121318 6121318 1972658 1972658 1742736 1742736 8904198 8904198 1491820 1491820 4255295 4255295 347311 347311 955996 955996 1658133 1658133 3613995 3613995 1964029 1964029 1778641 1778641 1244089238 1244089238 1983608 1983608 475336 475336 REAL ESTATE TAX 969603 969603 BANK FEES EXPENSE 442237 442237 REPAIRS & MAINTENANCE 266085 266085 FILING AND RECORDING FE 131326 131326 WHOLE LOAN SALE 130570 130570 280371 280371 1314783134 1246292282 68490852 0 58864311 57549415 450435606 469495112 179626710 158711042 19600142590 18562998141 3908046 4074452 69272810 13590826 43162279 55681984 47000000 58607370 48721160 42251874 489025843 477866029 20920886545 19887235419 2559516638 2312569167 18628506 15625092 6378408371 7056444679 10946624716 9434296799 502571658 485512248 20405749889 19304447985 X 990400 991400 0 0 514146256 581796034 515136656 582787434 20920886545 19887235419 X 0 0 0 14215885 21559556 35775441 33497369 13590826 19906543 55681984 DERIVATIVE LIABILITY -SFAS133 462853466 GUARANTEE LIABILITY 22651782 MEMB APP FEES-MEMBERSHIP APPL 7000 485512248 Europe Program Services Legal fees related to the European Medium Term Notes program (England) 96135 Europe Program Services Listing Agent/Paying Agent/Transfer Agentfees related to the European Medium Term Notes program (Luxembourg) 11880 Europe Program Services Luxembourg Stock Exchange Application/Listing/Program fees related to the European Medium Term Notes program (Luxembourg) 6295 Europe Program Services Legal fees related to the European Medium Term Notes program (Luxembourg) 4833 Central America and the Caribbean Program Services LOAN SERVICES 149808 Central America and the Caribbean Program Services LOAN SERVICES 126179 0 0 395130 Schedule F, Part IV Other Information CFC FOLLOWS GAAP ACCOUNTING. 1 Alabama Rural Electric Association of Cooperatives PO Box 244014 Montgomery AL 361244014 630264081 501 (c) 14800 Director training conference Alabama Rural Electric Association of Cooperatives PO Box 244014 Montgomery AL 361244014 630264081 501 (c) 14800 Director training conference Alaska Power Association 703 West Tudor Road West Tudor Road AK 99503 920069880 501 (c) 11600 Cooperative youth leadership conference and Washington Youth Tour Alaska Power Association 703 West Tudor Road West Tudor Road AK 99503 920069880 501 (c) 11600 Cooperative youth leadership conference and Washington Youth Tour Arkansas Electric Cooperatives Inc PO Box 194208 Little Rock AR 722194208 710219756 501 (c) 11600 Employee training and orientation Association of Missouri Electric Cooperatives PO Box 1645 Jefferson City MO 65102 430631824 501 (c) 24800 Cooperative youth leadership conference and Washington Youth Tour Colorado Rural Electric Association 5400 North Washington Street Denver CO 80216 840411220 501 (c) 14000 Director and employee training Electric Power Associations of Mississippi PO Box 3300 Ridgeland MS 391583300 640200697 501 (c) 14400 Cooperative Youth Leadership Workshop Florida Electric Cooperatives Association Inc 2916 Apalachee Parkway Tallahassee FL 32301 590633990 501 (c) 11200 Leadership conference for directors & managerial staff Georgia Electric Membership Corporation PO Box 1707 Tucker GA 300851707 580530279 501 (c) 22400 Education booth at Sunbelt Agricultural Exposition Golden State Power Cooperative 14619 Hamlin Street Van Nuys CA 91411 680441905 501 (c) 5200 Assistance to start-up co-ops with seminars and speakers Grand Canyon State Electric Cooperative Association 120 North 44th Street Phoenix AZ 85034 866056759 501 (c) 11200 Cooperative youth leadership conference and Washington Youth Tour Idaho Consumer-Owned Utilities Assn PO Box 1898 Boise ID 837011891 820502739 501 (c) 9600 Youth cooperative education rally Idaho Consumer-Owned Utilities Assn PO Box 1898 Boise ID 837011891 820502739 501 (c) 9600 Youth cooperative education rally Indiana Statewide Association of Rural Electric Cooperatives Inc PO Box 24517 Indianapolis IN 46224 351499808 501 (c) 25200 Safety educations program for school children and community Indiana Statewide Association of Rural Electric Cooperatives Inc PO Box 24517 Indianapolis IN 46224 351499808 501 (c) 25200 Training programs for employees and co-op board members Iowa Assn of Electric Cooperatives 8525 Douglas Avenue Urbandale IA 503222992 420662488 501 (c) 24800 Monthly magazine to membership Kansas Electric Cooperatives Inc PO Box 4267 Topeka KS 666044267 480541902 501 (c) 16400 Informational publication for distribution to co-op members and public Kentucky Association of Electric Cooperatives Inc PO Box 32170 Louisville KY 40232 610420165 501 (c) 13600 Training on climate change impact to Kentucky cooperatives Michigan Electric Cooperative Association 2859 W Jolly Road Okemos MI 488641182 382214287 501 (c) 9600 Youth Tour to Washington and Michigan Electric Teen Days summer camp Minnesota Rural Electric Association 11640 - 73rd Avenue North Maple Grove MN 55369 410417193 501 (c) 24400 Training and education for new cooperative board members Montana Electric Cooperatives' Association PO Box 1306 Great Falls MT 59403 810229220 501 (c) 14400 Rural Electric Youth Tour program National Rural Electric Cooperative Association 4301 Wilson Boulevard Arlington VA 222031860 530116145 501 (c) 33872 for operation and capital expenditures associated with cooperative.com Web site National Rural Electric Cooperative Association 4301 Wilson Boulevard Arlington VA 222031860 530116145 501 (c) 35105 for operation and capital expenditures associated with cooperative.com Web site National Rural Electric Cooperative Association 4301 Wilson Boulevard Arlington VA 222031860 530116145 501 (c) 45747 for operation and capital expenditures associated with cooperative.com Web site National Rural Electric Cooperative Association 4301 Wilson Boulevard Arlington VA 222031860 530116145 501 (c) 30153 for operation and capital expenditures associated with cooperative.com Web site National Rural Electric Cooperative Association 4301 Wilson Boulevard Arlington VA 222031860 530116145 501 (c) 33134 for operation and capital expenditures associated with cooperative.com Web site National Rural Electric Cooperative Association 4301 Wilson Boulevard Arlington VA 222031860 530116145 501 (c) 34346 for operation and capital expenditures associated with cooperative.com Web site National Rural Electric Cooperative Association 4301 Wilson Boulevard Arlington VA 222031860 530116145 501 (c) 61742 for operation and capital expenditures associated with cooperative.com Web site National Rural Electric Cooperative Association 4301 Wilson Boulevard Arlington VA 222031860 530116145 501 (c) 38156 for operation and capital expenditures associated with cooperative.com Web site National Rural Electric Cooperative Association 4301 Wilson Boulevard Arlington VA 222031860 530116145 501 (c) 70046 for operation and capital expenditures associated with cooperative.com Web site National Rural Electric Cooperative Association 4301 Wilson Boulevard Arlington VA 222031860 530116145 501 (c) 33316 for operation and capital expenditures associated with cooperative.com Web site Nebraska Rural Electric Association PO Box 82048 Lincoln NE 68501 470394033 501 (c) 16400 Youth Energy Camp Nevada Rural Electric Association PO Box 365 Wells NV 89835 880237046 501 (c) 7600 training on "How to Influence Nevada's Legislative or Regulatory Bodies" New Mexico Rural Electric Cooperative Association Inc 614 Don Gaspar Avenue Santa Fe NM 87501 850155370 501 (c) 10400 Training to organize co-op members for grassroots action New York State Rural Electric Cooperative Association Inc 9 Wilson Avenue Hartwick NY 14810 161264464 501 (c) 5600 Rural Electric Youth Tour to Washington NORTH CAROLINA ASSOCIATION OF ELECTRIC COOPERATIVES INC PO Box 27306 Raleigh NC 27611 561189186 501 (c) 15600 Bright Ideas program -- classroom support for teachers North Dakota Association of Rural Electric Cooperatives P O Box 727 Mandan ND 585540727 450231058 501 (c) 11600 New director and new employee orientation Northeast Association of Electric Cooperatives Inc 9 Wilson Avenue Bath NY 148101633 222153529 501 (c) 14400 Education/training for directors & employees Ohio Rural Electric Cooperatives PO Box 26036 Columbus OH 432260036 510174617 501 (c) 19600 booklet publication, director & employee training, scholarships Oklahoma Association of Electric Cooperatives Incorporated PO Box 54309 Oklahoma City OK 731541309 730556236 501 (c) 17200 Regional Energy Efficiency Workshops Oregon Rural Electric Cooperative Association 1750 Liberty St SE Salem OR 97302 930593238 501 (c) 14400 Urban legislators' tour of co-ops Pennsylvania Rural Electric Association PO Box 1266 Harrisburg PA 171081266 236291530 501 (c) 17200 Cooperative communication workshop South Dakota Rural Electric Association Inc PO Box 1138 Pierre SD 57501 460231254 501 (c) 15600 Co-op Youth Conference Tennessee Electric Cooperative Association PO Box 100912 Nashville TN 37224 620461379 501 (c) 13200 Youth Leadership Conference Texas Electric Cooperatives Inc 1122 Colorado St Ste 2400 Austin TX 787012167 741007829 501 (c) 39600 Communications workshop The Association of Illinois Electric Cooperatives PO Box 3787 Springfield IL 627083787 370159736 501 (c) 21200 Training programs for employees and co-op board members The Association of Illinois Electric Cooperatives PO Box 3787 Springfield IL 627083787 370159736 501 (c) 21200 Training programs for employees and co-op board members The Association of Louisiana Electric Cooperatives Inc 10725 Airline Highway Baton Rouge LA 708164299 720400467 501 (c) 8400 Rural Electric Youth Tour to Washington The Electric Cooperatives of South Carolina Inc 808 Knox Abbott Drive Cayce SC 29033 570308664 501 (c) 13100 Training workshops for cooperative board members and staff Utah Rural Electric Association 10714 South Jordan Gateway South Jordan UT 84095 870402010 501 (c) 8000 Youth Leadership Conference Virginia Maryland & Delaware Association of Electric Cooperatives PO Box 2340 Glen Allen VA 230582340 540553861 501 (c) 18400 Supervisory Leadership Certification Program Washington Rural Electric Cooperative Association PO Box 7219 Olympia WA 985077219 911236389 501 (c) 10800 Annual meeting program Wisconsin Electric Cooperative Association 131 West Wilson Street Madison WI 537033269 391163563 501 (c) 14400 Youth Leadership Conference Wyoming Rural Electric Association 2312 Carey Avenue Cheyenne WY 820013627 830207211 501 (c) 10000 Lineman training scholarships, Publication of Energy Share, Washington Youth Tour Aiken Electric Cooperative Inc P O Box 417 Aiken SC 298020417 570113065 501 (c) 10169 Integrity Fund Grant to support member's right to provide service in a dispute with another entity. Arizona Electric Power Cooperative PO Box 670 Benson AZ 85602 860176697 501 (c) 7413 Integrity Fund Grant to support member's right to provide service in a dispute with another entity. Cherryland Electric Cooperative P O Box 298 Grawn MI 49637 380416525 501 (c) 13821 Integrity Fund Grant to support member's right to provide service in a dispute with another entity. East Central Energy P O Box 39 Braham MN 550060039 410480748 501 (c) 9511 Integrity Fund Grant to support member's right to provide service in a dispute with another entity. Gibson Electric Membership Corp P O Box 47 Trenton TN 38382 620212280 501 (c) 32981 Integrity Fund Grant to support member's right to provide service in a dispute with another entity. Graham County EC Inc P O Drawer B Pima AZ 855430290 860079733 501 (c) 6849 Integrity Fund Grant to support member's right to provide service in a dispute with another entity. Graham County EC Inc P O Drawer B Pima AZ 855430290 860079733 501 (c) 5190 Integrity Fund Grant to support member's right to provide service in a dispute with another entity. Graham County EC Inc P O Drawer B Pima AZ 855430290 860079733 501 (c) 7086 Integrity Fund Grant to support member's right to provide service in a dispute with another entity. Iowa Assn of Electric Cooperatives 8525 Douglas Avenue Urbandale IA 503222992 420662488 501 (c) 24800 Integrity Fund Grant to support member's right to provide service in a dispute with another entity. Iowa Assn of Electric Cooperatives 8525 Douglas Avenue Urbandale IA 503222992 420662488 501 (c) 26851 Integrity Fund Grant to support member's right to provide service in a dispute with another entity. Kosciusko Rural Electric Mem Corp 370 S 250 E Warsaw IN 46582 350449575 501 (c) 11807 Integrity Fund Grant to support member's right to provide service in a dispute with another entity. Laurens Electric Coop Inc P O Box 700 Laurens SC 29360 570196563 501 (c) 7676 Integrity Fund Grant to support member's right to provide service in a dispute with another entity. Michigan Electric Cooperative Association 2859 W Jolly Road Okemos MI 488641182 382214287 501 (c) 12275 Integrity Fund Grant to support member's right to provide service in a dispute with another entity. Rock Energy Cooperative PO Box 1758 Janesville WI 53547 390574424 501 (c) 108896 Integrity Fund Grant to support member's right to provide service in a dispute with another entity. Sumter Electric Membership Corp P O Box 1048 Americus GA 317091048 580452284 501 (c) 150000 Integrity Fund Grant to support member's right to provide service in a dispute with another entity. The Association of Louisiana Electric Cooperatives Inc 10725 Airline Highway Baton Rouge LA 708164299 720400467 501 (c) 9509 Integrity Fund Grant to support member's right to provide service in a dispute with another entity. The Association of Louisiana Electric Cooperatives Inc 10725 Airline Highway Baton Rouge LA 708164299 720400467 501 (c) 15060 Integrity Fund Grant to support member's right to provide service in a dispute with another entity. The Association of Louisiana Electric Cooperatives Inc 10725 Airline Highway Baton Rouge LA 708164299 720400467 501 (c) 18356 Integrity Fund Grant to support member's right to provide service in a dispute with another entity. The Association of Louisiana Electric Cooperatives Inc 10725 Airline Highway Baton Rouge LA 708164299 720400467 501 (c) 16675 Integrity Fund Grant to support member's right to provide service in a dispute with another entity. The Association of Louisiana Electric Cooperatives Inc 10725 Airline Highway Baton Rouge LA 708164299 720400467 501 (c) 12399 Integrity Fund Grant to support member's right to provide service in a dispute with another entity. West Kentucky RECC P O Box 589 Mayfield KY 42066 610378848 501 (c) 11474 Integrity Fund Grant to support member's right to provide service in a dispute with another entity. 56 Procedure for Monitoring Grants in the U.S.: Part I, Line 2: Schedule I, Part I, Line 2: Integrity Fund In order to be approved for a grant from the Integrity Fund, a rural electric system must establish that a significant portion of its service territory, or present or anticipated consumers, or its facilities face a threat of acquisition by a competing utility. A rural electric system must submit copies of paid invoices supporting the requested amount for each disbursement from the grant. In addition, a cover letter must accompany each request, saying that management has reviewed the disbursement request and stating that (1) true and correct copies of paid invoices supporting the amount of this request are being submitted, (2) such costs have been incurred and paid by the rural electric cooperative in connection with the purpose for which the Integrity Fund Grant was approved, and (3) the expenses are reimbursable under the Terms and Conditions of the Integrity Fund. Education Fund Each statewide association submits an application form describing the program for which the grant will be used. Earlier in the year, they submit a membership list of the association verified by the general manager. CFC uses that list as well as its own membership to calculate how much each association is allotted during the Fiscal Year. Our formula is based upon the number of states within an association, the total co-ops which are members of CFC and the association, and the number of co-ops that are 100% CFC borrowers. The Senior Vice President of the Corporate Relations Group, CFC, approves the applications made by the associations. The checks are disbursed publicly before the Association Board of Directors or at the association's annual meeting. X 1 0 X X X X X X 0 1 0 0 0 0 0 1 0 Sheldon Petersen 1904455 0 162289 0 83688 0 452984 0 24193 0 2627609 0 0 0 John List 964036 0 91084 0 51289 0 400299 0 22503 0 1529211 0 0 0 Steven Lilly 811042 0 91084 0 15471 0 251259 0 22534 0 1191390 0 0 0 Richard Larochelle 546281 0 81244 0 51246 0 284137 0 13005 0 975913 0 0 0 John Evans 484874 0 91084 0 51933 0 189521 0 21074 0 838486 0 0 0 John Borak 213399 0 58416 0 50608 0 77157 0 18599 0 418179 0 0 0 Lawrence Zawalick 332393 0 66408 0 46108 0 150925 0 9689 0 605523 0 0 0 Lynn Midgette 192916 0 42955 0 29338 0 77692 0 16679 0 359580 0 0 0 Krishna Murthy 178009 0 42475 0 44117 0 118296 0 18164 0 401061 0 0 0 John Suter 161923 0 37515 0 26505 0 97582 0 22700 0 346225 0 0 0 Roberta Aronson 217352 0 47233 0 25745 0 76146 0 24640 0 391116 0 0 0 Michael Carr 205992 0 47490 0 27712 0 60799 0 24127 0 366120 0 0 0 Joseph Siekierski 180369 0 40910 0 28845 0 107229 0 12486 0 369839 0 0 0 Allyn Amato 184665 0 36340 0 16549 0 70167 0 10133 0 317854 0 0 0 Robin Reed 178802 0 38395 0 19944 0 63542 0 8402 0 309085 0 0 0 Part I, Line 1a The perquisites provided to the CEO are limited to an annual automobile allowance as well as an annual spousal air travel allowance. Additionally, the CEO receives an annual executive physical paid for by CFC. Part I, Line 1b To provide these perquisites in an efficient fashion, the Board authorizes an annual allowance rather than providing unlimited reimbursement or use of a company-owned vehicle. The amount of each allowance is authorized annually by the Board and is determined based on the estimated cost for operation and maintenance of an automobile and the anticipated cost of air travel by the CEO's spouse. These are taxable wages. Part I, Line 4a CFC also offers a Pension Restoration Plan which is a component of the Retirement Security Plan to officers of the company. The Pension Restoration Plan, which is a 457(f) plan, restores the value of the Retirement Security Plan for each officer to the level it would be if the IRS limits on annual pay and annual annuity benefits were not in place. Prior to December 31, 2004, there were two components of the Pension Restoration Plan - a deferred compensation component ("Deferred Compensation Pension Restoration Plan") and a severance pay component ("Pension Restoration Severance Plan"). The Pension Restoration Severance Plan was frozen, effective December 31, 2004. The funds accrued by each named executive officer under the Pension Restoration Severance Plan prior to December 31, 2004 were frozen and did not increase in value since that date. Effective as of May 21, 2009, the Board of Directors of CFC approved the termination of the Pension Restoration Severance Plan. All benefits accrued under the Pension Restoration Severance Plan prior to the effective date of the termination were paid to each participant in a single lump sum in May 2009. The Deferred Compensation Pension Restoration Plan remains in place. The benefit and payout formula under this restoration component of the Retirement Security Plan is similar to that under the qualified plan component. However, each of the named executive officers has satisfied the provisions established to receive the benefit from this plan. Since there is no longer a risk of forfeiture of the benefit under the Pension Restoration Plan, distributions will be made from the plan to each named executive officer annually. For 2009 the following distributions, which include the lump sum payment from the frozen Pension restoration Severance Plan and the annual distribution from the Pension Restoration Plan, were made: John Borak $ 3,088 John Evans $ 133,613 Richarh Larochelle $ 189,777 Steven Lilly $ 421,970 John List $ 377,668 Sheldon Petersen $ 1,215,165 Lawrence Zawalick $ 80,949 Part I, Line 7 CFC's short-term cash incentive program is a one-year cash incentive that is tied to the annual performance of the organization as a whole. We believe that by paying a short-term incentive tied to the achievement of annual operating goals, all employees, including named executive officers, will focus their efforts on the most important strategic objectives which help us to fulfill our mission to our members and our obligations to the financial markets. The short-term incentive program provides annual cash incentive opportunities based upon the level of the position within our base pay structure, ranging from 15 percent - 25 percent of base pay. Executive officers are eligible to receive short-term cash incentive compensation up to 25 percent of their base pay. Key employees and highly compensated employees are eligible to receive short-term cash incentive compensation up to 20% of their base pay. The long-term incentive program is a three-year plan that is tied to CFC's long-term strategic objectives. The long-term incentive program was implemented to create dynamic tension between short-term objectives and long-term goals. Executive officers, key employees and highly compensated employees are eligible to participate in the plan and receive performance units that are calculated at 20% - 25% of base pay. The value of the performance units will range from $0 to $150 per performance unit according to the level of CFC's secured debt ratings by the rating agencies. Part VII, Line 5 Prior to the May 19, 2009 amendment to the Amended and Restated Supplemental Benefit Agreement, Rural Telephone Finance Cooperative ("RTF"), an unrelated organization, contributed a sum of $30,000 annually to a non-qualified deferred compensation account for Mr. Petersen on January 1 of each year that Mr. Petersen provided executive services to RTFC. Interest was credited to the account on December 31 of each such year at a rate equal to CFC's 20-year medium-term note rate on that date. The amount of this contribution and annual interest (total $76,358) is included in the deferred compensation amount disclosed for Mr. Petersen on Schedule J, Column C. NATIONAL RURAL TELECOMMUNICATIONS COOPERATIVE MEMBER/BORROWER w/ Common Board Member 429379 INTEREST EARNED ON INVESTMENTS/CERTIFICATES 0 NATIONAL RURAL TELECOMMUNICATIONS COOPERATIVE MEMBER/BORROWER w/ Common Board Member 64500 COMMITMENT FEES 0 NATIONAL COOPERATIVE SERVICES CORPORATION INC MEMBER/BORROWER w/ Common Board Member 8545457 INTEREST EARNED ON INVESTMENTS/ CERTIFICATES 0 NATIONAL COOPERATIVE SERVICES CORPORATION INC MEMBER/BORROWER w/ Common Board Member 315295 GUARANTEE FEES 0 nATIONAL COOPERATIVE SERVICES CORPORATION INC mEMBER/BORROWER w/ Common Board Member 2008858 MANAGEMENT FEES 0 Form 990, Part VI, Section A, line 6 National Rural Utilities Cooperative Finance Corporation is a non-stock, membership organization. As of May 31, 2010, there were 1,027 members. Membership included: Class A. There were 832 Class A members - Cooperative or nonprofit corporations, public corporations, utility districts, and other public bodies, which have received or are eligible to receive a loan or commitment for a loan from the Rural Utilities Service or any successor agency, and which are engaged or planning to engage in the furnishing of utility services to their members and patrons for their use as ultimate consumers. Class B. There were 68 Class B members - Cooperative or nonprofit corporations which are federations of Class A members or of other Class B members, or both, or which are owned and controlled by Class A members or by other Class B members, or both, and which are engaged or planning to engage in the furnishing of utility services primarily to Class A members or other Class B members. Class C. There were 66 Class C members - Statewide and regional associations which are wholly-owned or controlled by Class A members or Class B members, or both, or which are wholly-owned subsidiaries of a CFC member, and which do not furnish utility services but which supply other forms of service to their members. Class D There was 1 Class D Member. Class D members are national associations of cooperatives comprised of Class A, Class B and Class C members. In order to be eligible for membership to CFC, a national association must have, at the time of admission to CFC, member cooperatives domiciled in at least 80% of the states of the United States. In addition to members, associates (numbering 60) are not-for-profit entities organized on a cooperative basis which are owned, controlled or operated by Class A, B or C members and which provide non-electric services primarily for the benefit of consumers. Associates are not entitled to vote at any meeting of the members and are not eligible to be represented on our board of directors. Form 990, Part VI, Section A, line 7a The directors that comprise CFC's Board of Directors are divided into three classes; two consisting of seven directors each and the third of eight directors. Directors in each class serve for terms of three years and the expiration of each class of directors' terms occur in different years. Upon expiration of the term of a director, members from that director's region elect a director to represent them on CFC's Board. Elections for those directors whose terms are expiring are held annually. A director may not be elected to serve more than two consecutive terms on the CFC Board. Form 990, Part VI, Section B, line 11 The board of directors of National Rural Utilities Cooperative Finance Corporation (CFC) reviewed the 2009 Form 990 for fiscal year ended May 31, 2010 at a regularly scheduled Board meeting prior to filing the Form 990 with the Internal Revenue Service. A draft of the Form 990 was prepared by CFC staff, reviewed by internal counsel and senior management, reviewed by external tax advisors, Deloitte Tax LLP and presented to the Board for review. A detailed presentation about the Form 990 was made by CFC staff to the Board at a regularly scheduled Board meeting. Form 990, Part VI, Section B, line 12c Conflicts of Interests are addressed by CFC through its Related Person Transactions and Related Credits Policy (the "Policy"). CFC established the Policy in May 2007, as amended from time to time, to facilitate disclosure with respect to transactions in which its executive officers, directors and key employees have a substantial interest. A Related Person Transaction is defined as any transaction in which (i) CFC was, is, or proposes to be a participant,(ii) the amount involved exceeds $120,000 and (iii) a Related Person has or will have a direct or indirect material interest in question. The Policy applies to all executive officers, directors and key employees of CFC ("Covered Employees") and requires similar disclosure to that required by Item 404 of Regulation S-K of the Securities Act of 1933, as amended. The Policy is consistently monitored and enforced at each regularly scheduled meeting of CFC's Board. Pursuant to the Policy, each Covered Employee that is aware of a potential conflict of interest between themselves and CFC is required to complete a Related Person Disclosure Notice at each Board meeting describing such conflict. Outside of regularly scheduled Board meetings, Covered Employees are required to complete Related Person Disclosure Notices whenever they become aware of a potential conflict of interest. The Related Person Disclosure Notice requires a description of the parties involved in the transaction, the approximate dollar amount of the transaction, as well as an update with respect to the timing and status of the transaction. Upon receipt of a Related Person Disclosure Notice, CFC's General Counsel is responsible for the review, approval and ratification of any Related Person Transaction. Those Related Person Transactions involving a substantial interest of CFC's General Counsel are required to be referred to the Board for review, approval and ratification. In reviewing and approving Related Person Transactions, the General Counsel, and when applicable, the Board, must take into account the business purpose of the transaction, whether the transaction is entered into on an arms-length basis on terms fair to CFC and whether such transaction would violate CFC's Code of Ethics. Director compensation arrangements, Executive Officer compensation arrangements and Key Employee compensation arrangements are each excluded from the definition of Related Person Transactions, as well as transactions in which the Related Person's interest arises only from the person's position as a director of another entity that is a party to the transactions. Finally, Related Credits are also excluded from the definition of a Related Person Transaction. A Related Credit is defined as the extension of credit to or for the benefit of Covered Employees (defined as Related Persons under the Policy) or Related Entities that are made on substantially the same terms and follow the underwriting procedures that are no less stringent than those prevailing at the time for comparable transactions generally offered by CFC. The Policy prohibits CFC from extending credit in the form of a personal loan to a Related Person. Related Entities include CFC's member cooperatives as well as any cooperative, partnership, corporation, limited liability company or trust for which a Related Person serves as an officer, director, employee or in any other fiduciary capacity or which is controlled by a Related Person. The Board has delegated to the CEO, with authority to redelegate to such officer of CFC as the CEO deems appropriate, the authority to approve all Related Credits in an amount equal to or less than $250,000, any emergency lines of credit and all line of credit loans that are used solely as support for CFC's corporate credit card program. Related Credits in excess of $250,000 must be approved by the Board. All Related Persons are required to abstain from participating, directly or indirectly, in the credit approval process involving a Related Credit. Additionally, all Related Person are required to leave the Board meeting while the Related Credit is being considered and discussed and Related Persons are not provided with any written materials pertaining to such Related Credit. Form 990, Part VI, Section B, line 15a CFC's Executive Compensation Committee (the "Committee"), which is comprised of CFC Executive Committee Board members, determines and approves the compensation of CFC's Governor and Chief Executive Officer (the "CEO"). The Committee annually reviews and approves appropriate corporate goals and objectives related to the CEO's compensation and evaluates performance in light of those goals and objectives. The CEO's compensation is comprised of base pay, short and long term incentive compensation and perquisites. In fiscal year 2010, an independent compensation consultant was engaged by the Compensation Committee to provide compensation data for the CEO position using peer organizations identified by the independent consultant through interviews with each member of the Compensation Committee. The independent consultant included in the compensation comparison group companies that were similar to CFC in asset size, industry and business description. The group included financial institutions that are private market, commercial and/or mission-driven lenders, offering full service financing, investment and related services. The peer companies included three Farm Credit banks and 10 regional banks or financial services companies. These companies were chosen because their businesses are similar to CFC's and the Compensation Committee believes that they employ executives that have skills and expertise consistent with what CFC would seek if the Company had to replace the CEO. The comparison group companies had assets ranging from 50 percent to 200 percent of CFC's December 2008 total assets, and included seven companies with greater total assets than ours. The comparison group consisted of New York Community Bancorp, Inc., Student Loan Corp., Astoria Financial Corp, Nelnet, Inc., Hudson City Bancorp, Inc., People's United Financial Corp., Washington Federal Inc., TFS Financial Corp., Webster Financial Corp., and Flagstar Bancorp, as well as three Farm Credit banks. The independent Consultant led the Compensation Committee through an assessment of CEO compensation data at the comparison group companies using both a one-year and a three-year compensation analysis. The independent consultant's data included both actual compensation and target compensation based on information obtained from each comparator group company's most recent annual report or proxy statement. The elements of compensation reviewed include: . current base salary; . actual bonus paid for fiscal year 2008*; . three-year average actual long-term incentive paid-includes restricted stock awards (valued at face value on the date of grant), stock option awards (valued at grant date utilizing the Black-Scholes option pricing model), other long-term incentive target awards (valued at target value on date of award), and cash long-term incentive payouts (valued at actual payout on date of award if target value is not disclosed); and . sign-on awards, special awards and mega-grants annualized over the term of employment contract or the vesting schedule. * For targeted compensation the target bonus for 2009 was used. The Compensation Committee reviewed total compensation data for the comparator group for informational purposes and used this data solely to determine the competitiveness of the CEO's base pay. Given the challenging business environment during 2009 and 2010, at the CEO's request and in spite of his strong performance and consistent with the organization's approach to executive compensation during the last year, the Compensation Committee did not award a performance increase for the CEO for 2010. The Compensation Committee did approve, in recognition of the termination of the RTFC Supplemental Benefits Agreement which provided the CEO $30,000 of deferred compensation, annually, a $30,000 increase in the CEO's base salary. CFC's short-term cash incentive program is a one-year cash incentive that is tied to the annual performance of the organization as a whole. Corporate performance is measured using a balanced scorecard approved by the Board of Directors prior to the start of the fiscal year. The balanced scorecard is a performance management tool that articulates the corporate strategy into specific, quantifiable, measurable goals. The scorecard is divided into four quadrants, reflecting crucial areas of business performance. Specific goals are established within those quadrants to focus all employees on the target results and measures that must be achieved if we are to succeed at realizing our strategic plan. The intent is to align organizational, departmental and individual initiatives to achieve a common set of goals. Every employee participates in the short-term incentive program, and the corporate strategic goals are the same for all employees, including the named executive officers. The Board of Directors establishes corporate goals and measures that they believe are achievable only if each individual performs well in his or her role and CFC meets its internal business plan goals. The short-term incentive program provides annual cash incentive opportunities based upon the level of the position within CFC's base pay structure, ranging from 15 percent - 25 percent of base pay. The CEO is eligible for an annual incentive opportunity at 25% of his base pay. The long-term incentive program is a three-year plan that is tied to CFC's long-term strategic objectives. The measure for all active long-term incentive plans is the achievement of bond rating targets for CFC's senior secured debt by rating agencies: Standard & Poor's Corporation and Moody's Investors Service. Eligible participants in the plan cycle will receive performance units that are calculated at 15% - 25% of base pay, divided by the target objective, currently $100. The CEO's performance units are calculated at 25% of his base pay divided by the target objective. The Committee also considers perquisites for the CEO in connection with its annual review of the CEO's total compensation package described above. The perquisites provided to CFC's CEO are limited to an annual automobile allowance as well as an annual spousal air travel allowance. To provide these perquisites in an efficient fashion, the Board authorizes an annual allowance rather than providing unlimited reimbursement or use of a company-owned vehicle. The amount of each allowance is authorized annually by the Board and is determined based on the estimated cost for operation and maintenance of an automobile and the anticipated cost of air travel by the CEO's spouse. Additionally, CFC's CEO receives an annual executive physical paid for by CFC. The Committee delegates the authority to review and approve all employee compensation to the CEO, who exercises his judgment to set the annual base pay for the other named executive officers and key employees, as well as each employee based on general market data, overall performance and leadership accomplishments. In determining the base compensation paid to CFC's executive officers and key employees, the CEO reviewed national, credible compensation surveys for financial services organizations of similar asset size to obtain a general understanding of current compensation practices and to ensure that the base pay component of compensation for the other named executive officers and key employees is competitive, meaning generally within the 50th percentile of comparative pay for similar positions. The CEO did not review or consider the underlying organizations comprising the survey information, but instead considered only the aggregate compensation data. Because of the challenging business environment, particularly for financial services organizations, the CEO did not provide performance increases to the executive officers for fiscal year 2010. In 2010, because each of the key employees were performing well in their individual roles, they received increases of 5% - 6.5%. Each executive officer and key employee is eligible to participate in CFCs short term and long term incentives plans as described above with respect to CFC's CEO. CFC does not provide significant perquisites or personal benefits to its executive officers or key employee. Form 990, Part VI, Section C, line 19 CFC's bylaws, as amended, and annual and periodic financial statements are available to the public through the Securities and Exchange Commission's (SEC) website. CFC's articles of incorporation and bylaws, as amended, are also available on CFC's website at www.nrucfc.coop. CFC's conflict of interest policy, titled the Related Person Transactions and Related Credits Policy, is also available on CFC's website at www.nrucfc.coop. CFC's bylaws are filed as Exhibit 3.2 to the Form 10-Q for the quarter ended February 28, 2005, filed on April 14, 2005. CFC's annual and periodic financial statements are periodically filed with the SEC on Form 10-K and Form 10-Q. CFC's articles of incorporation are filed as Exhibit 3.1 to Registration Statement No. 2-46018, filed on October 12, 1972, however, this filing is currently not publicly available. Form 990, Part XI, Line 2c Organization's financial statements audited by independent accountant. While there is no audit performed of the CFC financial statements, the CFC financial statements are consolidated with the statements of National Cooperative Services Corporation and Rural Telephone Finance Cooperative. The consolidated financial statements are audited. CFC's Audit Committee is solely responsible for the nomination, approval, compensation, evaluation and discharge of the independent public accountants. The independent registered public accountants report directly to the Audit Committee and the Audit Committee is responsible for the resolution of disagreements between management and the independent registered public accountants. Consistent with Securities and Exchange Commission requirements, the Audit Committee has adopted a policy to pre-approve all audit and permissible non-audit services provided by the independent registered public accountants. The policy provides that pre-approval is not required for certain permissible non-audit services of a de minimis amount. The Committee meets with our independent registered public accounting firm, internal auditors, Chief Executive Officer and financial management executives to review the scope and results of audits and recommendations made by those persons with respect to internal and external accounting controls and specific accounting and financial reporting issues and to assess corporate risk. The Board has adopted a written charter for the Audit Committee which may be found on our website, www.nrucfc.coop. The process has not changed from the prior period. Form 990, Part VI, Question 16b Policy or procedure regarding joint venture arrangements Part VI., Section B., Question 16. As a lender, CFC, from time to time, may have to foreclose on a borrower. As part of such actions, the Company may receive interests in joint ventures with taxable entities. CFC takes such interests only in the interest of maximizing its recovery on the loan receivable. CFC does not enter into joint ventures with taxable entities as part of its core lending business. To date, the Company's investment in these joint ventures has been nominal. CFC has developed a written policy that requires the Company to evaluate its participation in joint venture arrangements and take steps to safeguard the Company's 501(c)(4) tax exempt status. 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