2024-11-15T15:14:06-06:00 2023-12-31 750882037 BOLINGER SEGARS GILBERT AND MOSS LLP 8215 NASHVILLE AVENUE LUBBOCK TX 79423 990 2023-01-01 740683625 HILCO ELECTRIC COOPERATIVE INC HILC 2546872331 115 E MAIN STREET ITASCA TX 76055 THOMAS CHEEK GENERAL MANAGER/CEO 2546872331 2024-11-13 1 0 WILLIAM M MILLER P00439459 8067473806 2024-11-13 X 2023 2024-10-15 13:58:12Z THOMAS CHEEK 115 E MAIN STREET ITASCA TX 76055 112317808 0 X WWW.HILCO.COOP X 1936 TX TO PROVIDE QUALITY AND RELIABLE ELECTRIC SERVICE TO MEMBERS OF THE COOPERATIVE. 7 7 99 0 176246 50567 0 0 101832695 111486746 253740 125699 207753 281881 102294188 111894326 15588 21293 5090009 4526884 7351631 8065982 0 0 0 89752510 98929440 102209738 111543599 84450 350727 206251275 215381610 114311658 119931752 91939617 95449858 THE AIM OF THE COOPERATIVE IS TO PROVIDE ELECTRIC ENERGY AND OTHER GOODS AND SERVICES AVAILABLE TO ITS MEMBERS AT THE LOWEST COST CONSISTENT WITH SOUND ECONOMY AND GOOD MANAGEMENT. 0 0 PROVIDING ELECTRIC ENERGY TO OUR MEMBERS ON A COOPERATIVE BASIS THROUGH THE ALLOCATION OF PATRONAGE CAPITAL. THERE WERE 34,291 ACTIVE SERVICES AT YEAR END. 0 0 0 0 0 0 0 1 0 1 0 1 0 1 1 0 1 0 0 0 0 0 0 0 0 0 1 0 1 0 0 0 0 1 0 0 0 0 0 0 1 1 1 0 1 82 0 99 1 1 1 0 0 0 0 112230235 3318322 0 0 0 X 7 7 0 0 1 0 1 1 1 1 0 0 0 1 1 1 1 1 1 1 1 0 X PAULA FARQUHAR CFO 2546872331 115 E MAIN ST ITASCA TX 76055 X WILLIAM ALLEN VICE PRESIDENT 6.50 X X 28792 0 0 RICHARD WHITE DIRECTOR (OCT-DEC) 4.90 X 4797 0 0 MARGARET HILL DIRECTOR 3.90 X 25175 0 0 RONALD ROBERTS DIRECTOR 3.90 X 28823 0 0 JOSEPH TEDESCO PRESIDENT 8.80 X X 29781 0 0 JANET SMITH SECRETARY/TREASURER 8.40 X X 28450 0 0 EDWARD HARRISON DIRECTOR 3.90 X 27308 0 0 THOMAS CHEEK GM/CHIEF EXECUTIVE OFFICER 55.00 X 199391 0 138227 PAULA FARQUHAR CHIEF FINANCIAL OFFICER 40.00 X 214134 0 95239 DANIEL TAYLOR CHIEF OPERATIONS OFFICER 40.00 X 191720 0 49322 LEA SANDERS CHIEF HR OFFICER 45.00 X 203810 0 42321 CHARLES HENKELMAN CONSTRUCTION FOREMAN 40.00 X 145565 0 56046 TRAVIS SANDERS OPERATIONS MANAGER 40.00 X 153439 0 109950 MATTHEW FEHNEL DIRECTOR OF IS/IT 40.00 X 143478 0 46972 MICHAEL ZAMZOW FIRST CLASS LINEMAN 52.00 X 139584 0 39312 CLAYTON THOMPSON LEAD CONSTRUCTION LINEMAN 43.00 X 124605 0 47974 1688852 0 625363 21 0 1 0 TRINITY UTILITIES & BORING 501 AIRFIELD RD AURORA TX 76078 UNDERGROUND CONSTRUCTION 3301734 TEXAR LINE CLEARANCE 617 EAST STREET TEXARKANA AR 71854 RIGHT OF WAY CLEARING 1471426 AXIS POWER LLC 48 BAYOU BRANDT BEAUMONT TX 77706 OVERHEAD CONSTRUCTION 1340904 HORTON TREE SERVICE PO BOX 1185 KENEDALE TX 76060 RIGHT OF WAY CLEARING 1040347 NISC PO BOX 1147 MANDAN ND 58554 SOFTWARE/BILLING 644191 10 X SALES OF ELECTRICITY 221000 96250284 96250284 SERVICE FEES 221000 14250941 14250941 PATRONAGE DIVIDENDS 221000 985521 985521 111486746 118999 46202 72797 50380 124505 1287 422195 49093 -297690 -248597 -289290 40693 6700 0 6700 6700 6700 MANAGEMENT SERVICES 561000 419334 419334 POLE ATTACHMENT INCOME 221000 105816 105816 MISCELLANEOUS REVENUE 221000 5328 5328 530478 111894326 111498774 176246 219306 X 21293 4526884 1307290 4556202 861390 946018 395082 4332847 5805485 PURCHASED POWER 80897572 DISTRIBUTION EXPENSE 3618991 CONSUMER EXPENSE 1646179 UNRELATED BUSINESS INCO 10619 2617747 111543599 2270209 1684333 4047988 77312 2921343 3432955 7087694 6708877 841201 922997 1029228 790150 217852787 59951012 144409184 157901775 37878200 39442663 5766228 4420548 206251275 215381610 12487851 9183559 815841 243121 92473797 105012429 8534169 5492643 114311658 119931752 X 69525 67075 0 0 91870092 95382783 91939617 95449858 206251275 215381610 X 350727 3159514 X X 0 1 X 1 0 0 1 X 89500 573343 662843 12221069 4610214 7610855 190161202 55340798 134820404 14807673 14807673 157901775 PATRONAGE CAPITAL - CFC 1309322 C PATRONAGE CAPITAL - COBANK 3526641 C PATRONAGE CAPITAL - TEC 505017 C PATRONAGE CAPITAL - BEC 31367390 C PATRONAGE CAPITAL - NISC 178175 C CAPITAL TERM CERTIFICATES - CFC 664581 C MEMBER CAPITAL SECURITIES - CFC 25000 C MEMBERSHIPS IN ASSOCIATED ORGANIZATIONS 1000 C INVESTMENT IN BOND SECURITIZATION PARTNERSHIP 1337359 C OTHER INVESTMENTS 528178 C 39442663 CONSUMER DEPOSITS 2119946 DEFERRED CREDIT - OTHER 96951 DEFERRED CREDIT - AID TO CONSTRUCTION 169147 DEFERRED CREDIT - UNCLAIMED CAPITAL CREDITS 1922851 ACCRUED OPERATING TAXES 1183748 5492643 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 DESIGNED 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 AND SUBSIDIARIES FOLLOW 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 AND SUBSIDIARIES DETERMINED THAT IT IS MORE LIKELY THAN NOT THAT ITS TAX POSITIONS WILL BE SUSTAINED UPON EXAMINATION BY THE INTERNAL REVENUE SERVICE, OR OTHER STATE TAXING AUTHORITY, AND THAT ALL TAX BENEFITS ARE LIKELY TO BE REALIZED UPON SETTLEMENT WITH TAXING AUTHORITIES. PART IX: THE AMOUNT OF OTHER ASSETS ON FORM 990, PAGE 11, PART X, LINE 15 DOES NOT EQUAL OR EXCEED 5% OF THE TOTAL ASSETS ON FORM 990, PAGE 11, PART X, LINE 16, COLUMN B. CONSEQUENTLY, IN ACCORDANCE WITH IRS INSTRUCTIONS, SCHEDULE D, PART IX HAS BEEN LEFT BLANK. 0 HILCO ELECTRIC TRUST 115 E MAIN STREET ITASCA TX 76055 756602612 501(C)(3) 10000 0 CONTRIBUTION FOR SHARING SUCCESS PROGRAM 1 X 0 0 X X X 0 0 0 THOMAS CHEEK GM/CHIEF EXECUTIVE OFFICER 188399 0 2000 0 8992 0 104376 0 33851 0 337618 0 0 0 PAULA FARQUHAR CHIEF FINANCIAL OFFICER 179219 0 15855 0 19060 0 69041 0 26198 0 309373 0 0 0 TRAVIS SANDERS OPERATIONS MANAGER 139911 0 7448 0 6080 0 96583 0 13367 0 263389 0 0 0 LEA SANDERS CHIEF HR OFFICER 180797 0 13662 0 9351 0 28209 0 14112 0 246131 0 0 0 DANIEL TAYLOR CHIEF OPERATIONS OFFICER 170848 0 14137 0 6735 0 27922 0 21400 0 241042 0 0 0 CHARLES HENKELMAN CONSTRUCTION FOREMAN 131012 0 7453 0 7100 0 36981 0 19065 0 201611 0 0 0 MATTHEW FEHNEL DIRECTOR OF IS/IT 127493 0 6139 0 9846 0 37416 0 9556 0 190450 0 0 0 MICHAEL ZAMZOW FIRST CLASS LINEMAN 136598 0 2669 0 317 0 13407 0 25905 0 178896 0 0 0 CLAYTON THOMPSON LEAD CONSTRUCTION LINEMAN 118028 0 2890 0 3687 0 26939 0 21035 0 172579 0 0 0 PART I, LINE 1A TRAVEL FOR COMPANIONS - PURSUANT TO APPLICABLE TRAVEL POLICIES, THE COOPERATIVE WILL REIMBURSE DIRECTORS AND EMPLOYEES FOR THE COST OF HIS/HER SPOUSE TO ACCOMPANY HIM/HER ON OFFICIAL BUSINESS OF THE COOPERATIVE. ONE INDIVIDUAL REPORTED ON FORM 990 PART VII (DIRECTOR ALLEN) RECEIVED THIS BENEFIT DURING THE YEAR. ADDITIONALLY, THE VALUE OF THE BENEFIT WAS INCLUDED IN THE RESPECTIVE REPORTABLE COMPENSATION OF THE INDIVIDUAL. 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, YEARS OF SERVICE AND THE CURRENT INTEREST RATE ENVIRONMENT. 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. THOMAS CHEEK: TOTAL REPORTED IN COLUMN C $ 104,376 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (104,376) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 44,663 EXPENSE TO THE COOPERATIVE $ 44,663 PAULA FARQUHAR: TOTAL REPORTED IN COLUMN C $ 69,041 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (69,041) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 39,379 EXPENSE TO THE COOPERATIVE $ 39,379 TRAVIS SANDERS: TOTAL REPORTED IN COLUMN C $ 96,583 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (96,583) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 30,172 EXPENSE TO THE COOPERATIVE $ 30,172 LEA SANDERS: TOTAL REPORTED IN COLUMN C $ 28,209 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (28,209) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 39,257 EXPENSE TO THE COOPERATIVE $ 39,257 DANIEL TAYLOR: TOTAL REPORTED IN COLUMN C $ 27,922 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (27,922) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 37,224 EXPENSE TO THE COOPERATIVE $ 37,224 CHARLES HENKELMAN: TOTAL REPORTED IN COLUMN C $ 36,981 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (36,981) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 29,112 EXPENSE TO THE COOPERATIVE $ 29,112 MATTHEW FEHNEL: TOTAL REPORTED IN COLUMN C $ 37,416 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (37,416) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 27,838 EXPENSE TO THE COOPERATIVE $ 27,838 MICHAEL ZAMZOW: TOTAL REPORTED IN COLUMN C $ 13,407 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (13,407) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 21,459 EXPENSE TO THE COOPERATIVE $ 21,459 CLAYTON THOMPSON: TOTAL REPORTED IN COLUMN C $ 26,939 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (26,939) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 23,934 EXPENSE TO THE COOPERATIVE $ 23,934 DARRELL SULAK FAMILY RELATIONSHIP - OFFICER (P. FARQUHAR) 95171 EMPLOYMENT 0 FORM 990, PART I: IN GENERAL, WHEN AN ELECTRIC COOPERATIVE BASES THE PATRONAGE DIVIDEND CALCULATION ON ITS NET BOOK INCOME/(LOSS), PAGE 1, PART I, LINE 19 - REVENUE LESS EXPENSES - WILL BE $0. FOR THE CURRENT YEAR, PAGE 1, PART I, LINE 19 REPORTS NET INCOME OF $350,727, WHICH IS THE INCOME STATEMENT EFFECT OF THE EQUITY METHOD INCOME FROM THE SUBSIDIARY. THE FOLLOWING SCHEDULE IS PROVIDED TO FURTHER EXPLAIN THE IMPACT OF THIS TRANSACTION: (A) - NET INCOME ON PAGE 1, PART I, LINE 19 $ 350,727 (B) - BENEFITS PAID TO MEMBERS (I.E. PATRONAGE DIVIDENDS), PART I, LINE 14 $ 4,526,884 (C) - EQUITY METHOD INCOME (LOSS) FROM SUBSIDIARY $ 1,004,419 2023 NET MARGINS PER FINANCIAL STATEMENTS (A + B + C) $ 5,882,030 FORM 990, PART VI, SECTION A, LINE 4 DURING THE YEAR, THE COOPERATIVE'S BYLAWS WERE AMENDED. THE FOLLOWING IS A SUMMARY OF THE CHANGES: ARTICLE II - MEETINGS OF MEMBERS SECTION 6. ORDER OF BUSINESS, WAS AMENDED TO STATE "THE PRESIDENT OR AN INDIVIDUAL DESIGNATED BY THE PRESIDENT SUCH AS THE CORPORATE ATTORNEY: (1) SHALL PRESIDE AT THE MEMBER MEETINGS; (2) MAY REMOVE A PERSON FROM THE MEMBER MEETING FOR UNRULY, DISRUPTIVE, OR SIMILAR BEHAVIOR; AND (3) MAY EXERCISE POWER REASONABLY NECESSARY FOR EFFICIENTLY AND EFFECTIVELY CONDUCTING THE MEMBER MEETING. NEITHER MEMBERS NOR NON-MEMBERS WILL BE ALLOWED TO SPEAK WITHOUT BEING ON THE AGENDA. AFTER THE GENERAL MANAGER'S REPORT, A MEMBER MAY QUESTION THE GENERAL MANAGER WITH A TIME LIMIT OF FIVE MINUTES." ARTICLE III - DIRECTORS SECTION 3. DIRECTOR ELECTIONS, PART A. APPLICATIONS, WAS AMENDED TO STATE "(2) THE APPLICATION MUST CONTAIN THE APPLICANT'S PHYSICAL RESIDENCE ADDRESS WITHIN THE COOPERATIVE'S SERVICE AREA FOR THE REQUIRED PERIOD OF RESIDENCY, TELEPHONE NUMBER AND MEMBER ACCOUNT NUMBER THAT CAN BE VERIFIED BY THE COOPERATIVE RECORDED, SUPPORTED BY A NOMINATING PETITION COMPOSED OF SIGNATURES OF AT LEAST 25 MEMBERS RESIDING IN THE ELECTING DISTRICT, AND A WRITTEN CONSENT EXECUTED BY THE APPLICANT FOR THE RELEASE OF BACKGROUND INFORMATION AND CONFLICT OF INTEREST CERTIFICATION." PART B. NOMINATIONS, WAS AMENDED TO STATE "(1) THE APPLICATION MUST BE SUPPORTED BY A NOMINATING PETITION CONTAINING SIGNATURES OF AT LEAST TWENTY-FIVE (25) MEMBERS RESIDING AND WHOSE MASTER ACCOUNT IS IN THE ELECTING DISTRICT. THE NOMINATION PETITION MUST CONTAIN THE SIGNATURES OF THE MEMBERS OF THE COOPERATIVE, PHYSICAL RESIDENTIAL ADDRESS WITHIN THE ELECTING DISTRICT AND MEMBER ACCOUNT NUMBER THAT CAN BE VERIFIED BY COOPERATIVE RECORDS." PART E. ELECTION COMMITEE, AMENDED SECTION (1) TO STATE "(1) APPOINTMENT OF COMMITTEE: AT LEAST 10 DAYS BEFORE THE ANNUAL MEETING, THE BOARD OF DIRECTORS SHALL APPOINT THE ELECTION COMMITTEE COMPOSED OF MEMBERS RECOMMENDED BY THE DIRECTORS FROM EACH ELECTING DISTRICT TO ASSURE THE MEMBERSHIP OF THE INTEGRITY OF THE ELECTION. THE ELECTION COMMITTEE SHALL CONSIST OF AN UNEVEN NUMBER OF THREE TO FIVE MEMBERS WHO ARE NOT COOPERATIVE EMPLOYEES, AGENTS, OFFICERS, DIR ECTORS, OR CANDIDATES FOR DIRECTOR, OR RELATIVES, OR PERSONS WITH CLOSE PERSONAL RELATIONS OF CURRENT COOPERATIVE EMPLOYEES, AGENTS, OFFICERS, DIRECTORS, OR CANDIDATES FOR DIRECTOR AND WHO ARE MEMBERS FROM EACH ELECTING DISTRICT; THIS DOES NOT EXCLUDE APPOINTING CASUAL ACQUAINTANCES OF THESE NAMED PERSONS. IF THE DIRECTOR POSITION OF AN ELECTING DISTRICT IS VACANT OR IF AN EVEN NUMBER OF DISTRICTS IS HAVING ELECTIONS, ONE DISTRICT WILL HAVE AN ADDITIONAL REPRESENTATIVE AS DETERMINED BY COIN TOSS." PART L. RUNOFF, WAS AMENDED TO STATE "WITHIN 21 DAYS OF THE ELECTION, THE COOPERATIVE WILL MAIL NEW BALLOTS WITH THE NAMES OF THE CANDIDATES FROM THE ELECTING DISTRICT THAT HAD THE TIED VOTES TO ALL MEMBERS FOR RETURN MAIL VOTING ONLY. THE RUNOFF ELECTION WILL BE DETERMINED BY GREATER NUMBER OF VOTES RECEIVED IN THE ELECTION POST OFFICE BOX BY 5 P.M. ON THE 15TH CALENDAR DAY AFTER MAILING, AS COUNTED BY THE ACCOUNTANT AND REPORTED TO THE COOPERATIVE'S ELECTION COMMITTEE AND ELECTION ADMINISTRATOR." A COMPLETE COPY OF THE BYLAWS CAN BE FOUND ON THE COOPERATIVE'S WEBSITE: HTTPS://HILCO.COOP. 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. DISSOLUTION/LIQUIDATION OF THE COOPERATIVE 2. MERGER OR CONSOLIDATION OF THE COOPERATIVE WITH ANOTHER ORGANIZATION 3. DISPOSAL OF A SUBSTANTIAL PORTION OF THE COOPERATIVE'S ASSETS 4. AMENDMENT TO THE ARTICLES OF INCORPORATION FORM 990, PART VI, SECTION A, LINE 8B THE COOPERATIVE HAS NO COMMITTEES WITH AUTHORITY TO ACT ON BEHALF OF THE GOVERNING BODY. THEREFORE, AND PURSUANT TO FORM 990 INSTRUCTIONS, THE QUESTION HAS BEEN ANSWERED "NO". FORM 990, PART VI, SECTION B, LINE 11B MANAGEMENT PRESENTED A COPY OF THE FORM 990 TO THE BOARD FOR DISCUSSION AND REVIEW PRIOR TO FILING. FORM 990, PART VI, SECTION B, LINE 12C ON AN ANNUAL BASIS, THE COOPERATIVE REQUIRES THE BOARD OF DIRECTORS, PRINCIPAL OFFICERS, AND COMMITTEE MEMBERS TO COMPLETE AND SIGN A CONFLICT OF INTEREST CERTIFICATION AND DISCLOSURE FORM. THE BOARD OF DIRECTORS ALSO COMPLETE AND SIGN THE FORM 990 DISCLOSURE QUESTIONNAIRE. ALL INDIVIDUALS ARE REQUIRED TO DISCLOSE ANY ACTION OR SITUATION THAT MIGHT VIOLATE THE POLICY TO THE FULL BOARD OF DIRECTORS AS SOON AS POSSIBLE. ADDITIONALLY, PERIODIC REVIEWS ARE CONDUCTED TO ENSURE COMPLIANCE WITH THE COOPERATIVE CONFLICT OF INTEREST POLICIES. FORM 990, PART VI, SECTION B, LINE 15 THE BOARD OF DIRECTORS UTILIZE COMPENSATION SURVEYS AND STUDIES, INTERNALLY GENERATED QUANTITATIVE GOALS, INFORMATION FROM OTHER FORMS 990, AND THE GENERAL MANAGER'S SELF-APPRAISAL WHEN DETERMINING THE COMPENSATION OF THE GENERAL MANAGER. THE COMPENSATION SURVEY SHOWS COMPARATIVE SALARIES FOR GENERAL MANAGERS FROM COOPERATIVES LOCATED IN TEXAS AND THE NATION. THE GENERAL MANAGER PERIODICALLY USES A COMPENSATION SURVEY AND INDEPENDENT CONSULTANT WHEN DETERMINING THE COMPENSATION OF THE COOPERATIVE'S OTHER EMPLOYEES MEETING THE DEFINITION OF OFFICERS AND KEY EMPLOYEES, IF ANY. THE SURVEY INCLUDES SALARIES FROM SIMILAR COOPERATIVES THROUGHOUT TEXAS AND THE NATION. ANNUALLY, ALL OFFICERS AND KEY EMPLOYEES ARE ADDITIONALLY REQUIRED TO HAVE A PERFORMANCE APPRAISAL ADMINISTERED BY THE GENERAL MANAGER. 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 (1) AT THE ANNUAL MEETING AND (2) ONCE ANNUALLY IN THE MEMBER-PROVIDED CO-OP POWER MAGAZINE. THE COOPERATIVE BYLAWS ARE ALSO AVAILABLE ON THE COOPERATIVE'S WEBSITE. ADDITIONALLY, A COPY OF THE COOPERATIVE'S CONFLICT OF INTEREST POLICY IS AVAILABLE UPON REQUEST. FORM 990, PART VII, COLUMN F: 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 ARE AVAILABLE TO PARTICIPATING EMPLOYEES, INCLUDING OFFICERS, MEETING THE ELIGIBILITY REQUIREMENTS OF THE PLAN. THE COOPERATIVE ALSO PROVIDES HEALTH AND LIFE INSURANCE TO ALL EMPLOYEES, INCLUDING OFFICERS, THROUGH A QUALIFIED PLAN. THE AMOUNTS REPORTED ON PART VII, COLUMN (F) FOR THE OFFICERS IS COMPRISED OF THE ACTUARIAL INCREASE IN THE DEFINED BENEFIT PLAN AND INSURANCE PAID ON BEHALF OF AND FOR THEIR BENEFIT. 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 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: ALTHOUGH THE COOPERATIVE IS NO LONGER AN RUS BORROWER, ITS ACCOUNTING RECORDS ARE MAINTAINED IN ACCORDANCE WITH THE RUS UNIFORM SYSTEM OF ACCOUNTS (USOA) PRESCRIBED FOR RUS ELECTRIC BORROWERS. THE USOA DOES NOT RECORD EXPENSES IN THE GENERAL EXPENSE CATEGORIES PROVIDED ON PART IX LINES 1-23. THE COOPERATIVE SEPARATELY REPORTS SALARIES AND WAGES, EMPLOYEE BENEFITS AND PAYROLL TAXES THAT ARE ALLOCATED IN ACCORDANCE WITH ITS ACCOUNTING SYSTEM, BUT OTHER EXPENSES THAT ARE DESCRIBED IN LINES 1-23 ARE REPORTED ON LINE 24 UNDER THE EXPENSE CATEGORIES REQUIRED BY THE USOA. FORM 990, PART IX, LINES 5-7: SALARIES AND WAGES ARE ALLOCATED TO ASSET, LIABILITY, AND EXPENSE ACCOUNTS BASED ON THE ACCOUNTING SYSTEM DESCRIBED ABOVE. THE FOLLOWING SCHEDULE RECONCILES AMOUNTS REPORTED ON LINES 5-7 TO TOTAL WAGES ACCRUED AND/OR PAID: TOTAL PER LINES 5-7 $ 5,850,444 LESS: DIRECTOR FEES REPORTED ON FORMS 1099-NEC (173,126) LESS: OFFICER EMPLOYEE BENEFITS REPORTED ON LINE 5 (312,061) PLUS: SALARIES AND WAGES ALLOCATED TO NONOPERATING MARGIN 377,629 PLUS: SALARIES AND WAGES CAPITALIZED DIRECTLY TO PLANT 1,465,126 PLUS: SALARIES AND WAGES CAPITALIZED/EXPENSED INDIRECTLY THROUGH CLEARING AND OTHER ACCOUNTS 178,937 TOTAL WAGES ACCRUED AND/OR PAID $ 7,386,949 FORM 990, PART IX, LINE 24E: OTHER EXPENSES IS COMPRISED OF THE FOLLOWING: ADMINISTRATIVE AND GENERAL EXPENSES $ 1,391,335 OPERATING TAXES 954,382 EXPENSES RECLASSIFIED FROM NONOPERATING MARGINS 272,030 TOTAL OTHER EXPENSES PER FORM 990, LINE 24E $ 2,617,747 FORM 990, PART IX, LINE 4: PURSUANT TO THE FORM 990 INSTRUCTIONS, THE AMOUNT OF PATRONAGE DIVIDENDS PAID TO THE MEMBERS (HEREINAFTER REFERRED TO AS "PATRONS") SHOULD BE REPORTED ON PART IX, LINE 4. THE PHRASE "PATRONAGE DIVIDENDS PAID" REFERS TO THE PROCESS, SUBSEQUENT TO YEAR-END, BY WHICH THE COOPERATIVE ALLOCATES PATRONAGE CAPITAL TO AND, THEREFORE, OPERATES AT COST WITH ITS PATRONS. THE COOPERATIVE'S TAX EXEMPT PURPOSE IS TO PROVIDE ELECTRICITY TO ITS PATRONS AND TO DO SO ON A COOPERATIVE BASIS. TAX LAW DEFINES "OPERATING ON A COOPERATIVE BASIS" AS SUBORDINATION OF CAPITAL, DEMOCRATIC CONTROL, AND OPERATION AT COST. THE COOPERATIVE OPERATES AT COST THROUGH THE ALLOCATION OF TRUE PATRONAGE DIVIDENDS (ALSO REFERRED TO AS ALLOCATIONS OF PATRONAGE CAPITAL) TO ITS PATRONS. PATRONAGE DIVIDENDS ARE CONSIDERED PAID IF THE ALLOCATION IS MADE (1) PURSUANT TO A PRE-EXISTING OBLIGATION, (2) FROM THE MARGINS PRODUCED FROM THE TRANSACTIONS DONE WITH OR FOR PATRONS, AND (3) IN A FAIR AND EQUITABLE MANNER ON THE BASIS OF PATRONAGE (I.E. PURCHASES). ADDITIONALLY, THE ALLOCATION OF PATRONAGE DIVIDENDS SHOULD BE MADE WITHIN A REASONABLE TIME PERIOD AFTER THE CLOSE OF THE COOPERATIVE'S YEAR-END OF DECEMBER 31. EACH ONE OF THESE REQUIREMENTS FOR A TRUE PATRONAGE DIVIDEND IS PROVIDED FOR IN THE NON-PROFIT OPERATION ARTICLE OF THE COOPERATIVE'S BYLAWS. THE AMOUNT REPORTED ON PART IX, LINE 4 REPRESENTS THE AMOUNT OF PATRONAGE CAPITAL THAT IS EITHER ALLOCATED OR TO BE ALLOCATED TO THE PATRONS RESULTING FROM THEIR PURCHASE OF ELECTRICITY FROM THE COOPERATIVE FOR THE 2022 CALENDAR YEAR. BECAUSE PATRONAGE DIVIDENDS ARE THE PROCESS BY WHICH THE COOPERATIVE OPERATES AT COST WITH ITS PATRONS AND THEREBY A KEY COMPONENT TO ACCOMPLISHING ITS EXEMPT PURPOSE, THE COOPERATIVE HAS REPORTED SUCH AMOUNTS AS AN EXPENSE FOR FORM 990 REPORTING. PATRONAGE DIVIDENDS ARE NOT AN EXPENSE FOR FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, HOWEVER. FORM 990, PART IX, LINE 24: ADMINISTRATIVE AND GENERAL EXPENSE IS COMPRISED OF THE FOLLOWING: ADMINISTRATIVE & GENERAL SALARIES, BENEFITS & OTHER $ 1,612,746 OFFICE SUPPLIES 563,740 OUTSIDE SERVICES EMPLOYED 90,019 INSURANCES 244,197 REGULATORY COMMISSION 162,655 DIRECTORS 215,255 MAINTENANCE OF GENERAL PLANT 260,971 MISCELLANEOUS GENERAL 192,167 TOTAL ADMIN & GENERAL EXP PER FINANCIAL STATEMENTS $ 3,341,750 LESS: RECLASS OF DONATIONS TO PART IX, LINE 1 (21,293) LESS: RECLASS OF DIRECTOR FEES TO PART IX, LINE 5 (173,126) LESS: RECLASS OF LABOR TO PART IX, LINES 5 & 7 (1,193,659) LESS: RECLASS OF BENEFITS TO PART IX, LINES 8-10 (562,337) TOTAL ADMIN & GENERAL EXPENSE PER FORM 990, PART IX $ 1,391,335 FORM 990, PART XI, LINE 9: PATRONAGE CAPITAL ALLOCATED OR TO BE ALLOCATED 4,526,884. PATRONAGE CAPITAL RETIRED -2,369,339. EQUITY METHOD INCOME(LOSS) FROM SUBSIDIARY 1,004,419. NET CHANGE IN MEMBERSHIPS -2,450. NET CHANGE IN OTHER EQUITIES FORM 990, PART XII, LINE 2C: THE BOARD OF DIRECTORS HAVE ASSIGNED MEMBERS TO AN AUDIT COMMITTEE TO OVERSEE THE FINANCIAL STATEMENT AUDIT AND SELECT THE INDEPENDENT FINANCIAL STATEMENT AUDITOR. NO PROCEDURAL CHANGES OCCURED. HILCO ELECTRIC TRUST 115 EAST MAIN STREET ITASCA TX 76055 756602612 PROVIDING ASSISTANCE TO NON-PROFIT, NON-PARTISAN CHARITABLE ORGANIZATIONS TX 501(C)(3) 7 HILCO ELECTRIC COOPERATIVE 1 HILCO UNITED SERVICES INC AND SUBSIDIARY 115 EAST MAIN STREET ITASCA TX 76055 752672050 ORGANIZED TO DELIVER PROPANE AND WATER SERVICES TX HILCO ELECTRIC COOPERATIVE C 5430167 8734502 1.00000 1 1 1 0 0 0 0 1 0 0 1 0 1 0 0 0 1 1 0 1 HILCO UNITED SERVICES INC AND SUBSIDIARY A 419562 SCHEDULES & AGREEMENTS HILCO UNITED SERVICES INC AND SUBSIDIARY G N/A - LESS THAN $50,000 HILCO UNITED SERVICES INC AND SUBSIDIARY J N/A - LESS THAN $50,000 HILCO UNITED SERVICES INC AND SUBSIDIARY L 419335 INVOICES & OTHER DOCUMENTATION HILCO UNITED SERVICES INC AND SUBSIDIARY P N/A - LESS THAN $50,000 HILCO UNITED SERVICES INC AND SUBSIDIARY Q 127990 INVOICES & OTHER DOCUMENTATION HILCO UNITED SERVICES INC AND SUBSIDIARY S 378817 SCHEDULES & AGREEMENTS HILCO ELECTRIC TRUST B N/A - LESS THAN $50,000 HILCO ELECTRIC TRUST Q N/A - LESS THAN $50,000