2023-10-12T12:43:22-05:00 2022-12-31 750882037 BOLINGER SEGARS GILBERT AND MOSS LLP 8215 NASHVILLE AVENUE LUBBOCK TX 79423 990 2022-01-01 740964933 VICTORIA ELECTRIC COOPERATIVE INC VICT 3615732428 PO BOX 2178 VICTORIA TX 77902 BLAINE WARZECHA GENERAL MANAGER 3615732428 2023-10-03 1 BLAINE WARZECHA 999009999 0 WILLIAM M MILLER P00439459 8067473806 2023-10-03 X 2 AAL1 IAL1 2022 2023-04-26 12:10:37Z BLAINE WARZECHA PO BOX 2178 VICTORIA TX 77902 73692757 0 X WWW.VICTORIAELECTRIC.COOP X 1938 TX TO PROVIDE ELECTRIC & BROADBAND INTERNET GOODS & SERVICES TO MEMBERS ON A COOPERATIVE BASIS. 8 8 102 0 447085 0 0 0 62215808 73265767 119811 88147 1729327 338843 64064946 73692757 2404 1800 2965798 4230843 6109985 6156846 0 0 0 54062736 63729359 63140923 74118848 924023 -426091 152267427 159062957 67580076 71171382 84687351 87891575 TO EXCEED OUR MEMBER'S EXPECTATIONS OF PROVIDING SAFE, RELIABLE, AFFORDABLE ELECTRICITY, AND CONTINUE TO IMPROVE THE QUALITY OF LIFE OF EACH MEMBER THROUGH LOYAL EMPLOYEES, WITH A FOCUS ON SERVICE AND COMMUNITY. 0 0 ELECTRIC DIVISION:PROVIDING ELECTRIC ENERGY TO OUR MEMBERS ON A COOPERATIVE BASIS THROUGH THE ALLOCATION OF PATRONAGE CAPITAL. THERE WERE 24,537 ACTIVE SERVICES AT YEAR END. INFINIUM DIVISION:PROVIDING BROADBAND INTERNET SERVICES THROUGH THE CONSTRUCTION OF A FIBER OPTIC NETWORK. WHEN CUMULATIVE NET MARGINS DERIVED FROM MEMBER SALES OF BROADBAND INTERNET SERVICES EXCEED CUMULATIVE NET LOSSES FROM SUCH SALES, THE COOPERATIVE WILL ALLOCATE PATRONAGE CAPITAL TO THE MEMBERS. THERE WERE 2,102 SUBSCRIBERS OF THE INFINIUM DIVISION AT YEAR END. 0 0 0 0 0 0 0 0 0 1 0 1 0 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 11 0 102 1 1 1 0 0 0 0 72334568 927852 0 0 0 X 8 8 0 0 0 0 1 1 1 1 0 0 0 1 1 1 1 1 1 1 1 0 X JESSICA GRAY CFO 3615732428 5502 US HWY 59 NORTH VICTORIA TX 77905 X SAMUEL F RUSCHHAUPT III PRESIDENT 2.40 X X 23688 0 0 BYRON HAUSMANN VICE PRESIDENT 5.30 X X 25698 0 0 TAMMIE BOYD SECRETARY/TREASURER 7.80 X X 22398 0 0 RAYMOND BRANDL JR DIRECTOR 2.00 X 23478 0 0 MICHAEL MARAGGIA DIRECTOR 2.80 X 17566 0 0 TODD ADAMS DIRECTOR 3.60 X 16848 0 0 JOHN BECK ASSISTANT SECRETARY 3.90 X X 16652 0 0 JAMES HAYES DIRECTOR (APR-DEC) 2.50 X 14462 0 0 BLAINE WARZECHA GENERAL MANAGER 55.00 X 228505 0 102320 JESSICA GRAY CHIEF FINANCIAL OFFICER 52.00 X 132681 0 39682 DAVID NERADA SERVICE LINE SUPERVISOR 48.00 X 136548 0 57746 ROBERT FRANCIS ENGINEERING MANAGER 48.00 X 136699 0 58764 NINA CAMPOS BROADBAND INTERNET MANAGER 48.00 X 126066 0 35801 LADDY BROWN OPERATIONS MANAGER 48.00 X 114155 0 80468 ADAM ESTRADA INFORMATION TECH MANAGER 48.00 X 111512 0 28299 1146956 0 403080 15 0 1 0 JC COMMUNICATIONS 16504-1 RED WAGON LANE LEANDER TX 78641 FIBER CONTRACTOR 1758872 ABC PROFESSIONAL TREE SERVICE 201 FLINT RIDGE RD STE 201 WEBSTER TX 77598 TREE TRIMMING CONTRACTOR 870875 JAMES POWER LINE CONSTRUCTION 43 SHOOTING CLUB ROAD BOERNE TX 78006 CONSTRUCTON CONTRACTOR 682573 URBAN ELECTRICAL SERVICES PO BOX 219 CARRIZO SPRINGS TX 78834 CONSTRUCTON CONTRACTOR 494537 CARTER DOZER SERVICE 894 FM 237 VICTORIA TX 77905 ROW CONTRACTOR 257675 7 X SALES OF ELECTRICITY 221000 67707373 67707373 PATRONAGE DIVIDENDS 221000 2900928 2900928 BROADBAND ACCESS 517000 2149595 1702510 447085 SERVICE FEES 221000 507871 507871 73265767 86002 86002 28600 0 28600 28600 28600 2145 0 2145 2145 2145 6501 0 6501 6501 POLE ATTACHMENT INCOME 221000 278068 278068 MISC. NON OPERATING INCOME 221000 25674 25674 303742 73692757 72853002 447085 392670 X 1800 4230843 663978 3875110 448868 866435 302455 1989285 5081177 PURCHASED POWER 51597859 DISTRIBUTION EXPENSE 2231202 ADMINISTRATIVE AND GENE 1047795 BROADBAND EXPENSES 916478 865563 74118848 2791533 2336665 5802 3115468 4071751 1909529 3039767 629777 529275 146431412 48617835 94377981 97813577 46574045 49348770 2863292 1923152 152267427 159062957 5441664 6474018 59296081 61505948 2842331 3191416 67580076 71171382 X 85895 87230 82785493 86926173 1815963 878172 84687351 87891575 152267427 159062957 X -426091 3630315 X X 0 1 X 1 0 617818 617818 13424057 2654138 10769919 125906436 45963697 79942739 6483101 6483101 97813577 PATRONAGE CAPITAL - CFC CAPITAL TERM CERT 572479 C PATRONAGE CAPITAL - COBANK 572132 C PATRONAGE CAPITAL - NEC 2773 C PATRONAGE CAPITAL - NRTC 20317 C PATRONAGE CAPITAL - NRUCFC 334363 C PATRONAGE CAPITAL - SEDC 97718 C PATRONAGE CAPITAL - SOUTH TEXAS ELECTRIC COOP 47162126 C PATRONAGE CAPITAL - TEXAS ELECTRIC COOPS 586862 C 49348770 DEFERRED CREDITS 123285 ADVANCES FOR CONSTRUCTION 1049730 ACCRUED LIABILITIES 1307766 CONSUMER DEPOSITS 710635 3191416 X 74571261 932724 932724 73638537 54220 54220 73692757 70820729 932724 932724 69888005 4230843 4230843 74118848 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 ITS FILING STATUS AS A TAX EXEMPT ENTITY. THE COOPERATIVE DETERMINED THAT IT IS MORE LIKELY THAN NOT THAT THEIR TAX POSITIONS WILL BE SUSTAINED UPON EXAMINATION BY THE INTERNAL REVENUE SERVICE (IRS), OR OTHER STATE TAXING AUTHORITY AND THAT ALL TAX BENEFITS ARE LIKELY TO BE REALIZED UPON SETTLEMENT WITH TAXING AUTHORITIES. PART XI, LINE 2D - OTHER ADJUSTMENTS: ELIMINATION OF INTERDIVISIONAL MISC INCOME 932,724. PART XI, LINE 4B - OTHER ADJUSTMENTS: NON-MEMBER INFINIUM CIAC 54,220. PART XII, LINE 2D - OTHER ADJUSTMENTS: ELIMINATION OF INTERDIVISIONAL EXPENSE 932,724. PART XII, LINE 4B - OTHER ADJUSTMENTS: PATRONAGE CAPITAL ALLOCATED OR TO BE ALLOCATED 4,230,843. PART IX: THE AMOUNT OF OTHER ASSETS ON FORM 990, PAGE 11, PART X, LINE 15 DOES NOT EQUAL OR EXCEED 5% OF THE TOTAL ASSETS ON FORM 990, PAGE 11, PART X, LINE 16, COLUMN B. CONSEQUENTLY, IN ACCORDANCE WITH IRS INSTRUCTIONS, SCHEDULE D, PART IX HAS BEEN LEFT BLANK. 1 X X X 0 0 0 BLAINE WARZECHA GENERAL MANAGER 221670 0 6835 0 0 0 73239 0 29081 0 330825 0 0 0 ROBERT FRANCIS ENGINEERING MANAGER 132521 0 4178 0 0 0 29226 0 29538 0 195463 0 0 0 LADDY BROWN OPERATIONS MANAGER 110658 0 3497 0 0 0 50930 0 29538 0 194623 0 0 0 DAVID NERADA SERVICE LINE SUPERVISOR 133217 0 3331 0 0 0 36722 0 21024 0 194294 0 0 0 JESSICA GRAY CHIEF FINANCIAL OFFICER 128607 0 4074 0 0 0 27360 0 12322 0 172363 0 0 0 NINA CAMPOS BROADBAND INTERNET MANAGER 122394 0 3672 0 0 0 23539 0 12262 0 161867 0 0 0 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. BLAINE WARZECHA: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 59,145 EMPLOYER CONTRIBUTION TO 401(K) PLAN 14,094 TOTAL REPORTED IN COLUMN C $ 73,239 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (59,145) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 32,143 EXPENSE TO THE COOPERATIVE $ 46,237 ROBERT FRANCIS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 20,673 EMPLOYER CONTRIBUTION TO 401(K) PLAN 8,553 TOTAL REPORTED IN COLUMN C $ 29,226 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (20,673) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 19,458 EXPENSE TO THE COOPERATIVE $ 28,011 LADDY BROWN: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 43,670 EMPLOYER CONTRIBUTION TO 401(K) PLAN 7,260 TOTAL REPORTED IN COLUMN C $ 50,930 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (43,670) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 16,523 EXPENSE TO THE COOPERATIVE $ 23,783 DAVID NERADA: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 28,325 EMPLOYER CONTRIBUTION TO 401(K) PLAN 8,397 TOTAL REPORTED IN COLUMN C $ 36,722 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (28,325) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 13,647 EXPENSE TO THE COOPERATIVE $ 22,044 JESSICA GRAY: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 19,388 EMPLOYER CONTRIBUTION TO 401(K) PLAN 7,972 TOTAL REPORTED IN COLUMN C $ 27,360 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (19,388) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 17,411 EXPENSE TO THE COOPERATIVE $ 25,383 NINA CAMPOS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 20,435 EMPLOYER CONTRIBUTION TO 401(K) PLAN 3,104 TOTAL REPORTED IN COLUMN C $ 23,539 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (20,435) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 17,438 EXPENSE TO THE COOPERATIVE $ 20,542 SCHEDULE O - PART I, LINE 19 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 LOSS OF $426,091, WHICH CONSISTS OF THE FOLLOWING: BROADBAND DIVISION NET LOSS $ (629,233) NONOPERATING MARGINS 148,922 NON-MEMBER INFINIUM CIAC 54,220 NET LOSS ON PAGE 1, PART I, LINE 19 $ 426,091 PURSUANT TO THE BYLAWS, THE BROADBAND DIVISION LOSSES WILL BE ACCUMULATED UNTIL CUMULATIVE NET INCOME EXCEEDS CUMULATIVE LOSSES. AT THAT TIME, NET INCOME OF THE DIVISION WILL BE ALLOCATED TO THE MEMBERS. NONOPERATING MARGINS ARE RETAINED BY THE COOPERATIVE AS AN UNALLOCATED RESERVE. 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 PROVIDED A COPY OF THE FORM 990 TO THE BOARD FOR DISCUSSION AND REVIEW PRIOR TO FILING. THE DISCUSSION AND REVIEW TOOK PLACE AT THE BOARD MEETING IMMEDIATELY BEFORE FILING THE RETURN. FORM 990, PART VI, SECTION B, LINE 12C ON AN ANNUAL BASIS, THE COOPERATIVE WILL REQUIRE THE BOARD OF DIRECTORS AND OFFICERS TO COMPLETE AND SIGN A CONFLICT OF INTEREST CERTIFICATION AND DISCLOSURE FORM. 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. FORM 990, PART VI, SECTION B, LINE 15 THE COMPENSATION COMMITTE OF THE BOARD OF DIRECTORS USES THE EXPERTISE OF A COMPENSATION SURVEY WHEN DETERMINING THE COMPENSATION OF THE GENERAL MANAGER. THE SURVEY SHOWS COMPARATIVE SALARIES FOR GENERAL MANAGERS FROM SIMILARLY SITUATED COOPERATIVES LOCATED IN TEXAS AND THE NATION. INTERNAL AND/OR EXTERNAL RESOURCES ARE ALSO USED TO COMPARE ANNUAL COMPENSATION WITHIN THE INDUSTRY. THE ENTIRE BOARD OF DIRECTORS APPROVES THE GENERAL MANAGER'S COMPENSATION. THE BOARD AND THE GENERAL MANAGER USE THE EXPERTISE OF A COMPENSATION SURVEY WHEN DETERMINING THE COMPENSATION OF THE COOPERATIVE'S OTHER EMPLOYEES MEETING THE DEFINITION OF OFFICER AND KEY EMPLOYEES, IF ANY. THE SURVEY INCLUDES SALARIES FROM SIMILARLY SITUATED COOPERATIVES THROUGHOUT TEXAS AND THE NATION. FORM 990, PART VI, SECTION C, LINE 19 THE COOPERATIVE WILL PROVIDE A COMPLETE COPY OF ITS GOVERNING DOCUMENTS, CONFLICT OF INTEREST POLICY, AND AUDITED FINANCIAL STATEMENTS TO ANY MEMBER WHO REQUESTS A COPY OF ANY SUCH DOCUMENT. ANNUALLY, THE COOPERATIVE PROVIDES A COPY OF THE AUDITED BALANCE SHEET AND INCOME STATEMENT TO THE MEMBERS OF THE COOPERATIVE WITH THE ANNUAL REPORT. THE BYLAWS CAN ALSO BE FOUND UNDER MEMBER RESOURCES ON THE COOPERATIVE'S WEBSITE. FORM 990, PART VII, COLUMN F: IN ORDER TO PROVIDE RETIREMENT BENEFITS TO ITS EMPLOYEES, THE COOPERATIVE HAS ESTABLISHED A DEFINED CONTRIBUTION PLAN UNDER SECTION 401(K) OF THE INTERNAL REVENUE CODE. EMPLOYER CONTRIBUTIONS TO THE PLAN ARE MADE PURSUANT TO THE PLAN DOCUMENT. ADDITIONALLY, THE COOPERATIVE PARTICIPATES IN A MULTI-EMPLOYER DEFINED BENEFIT PLAN. CONTRIBUTIONS TO THIS PLAN ARE BASED ON THE FULL FUNDING LIMITATION OF SUCH PLAN. EMPLOYER CONTRIBUTIONS FOR BOTH PLANS ARE AVAILABLE TO PARTICIPATING EMPLOYEES, INCLUDING OFFICERS AND HIGHLY COMPENSATED EMPLOYEES, MEETING THE ELIGIBILITY REQUIREMENTS OF SUCH PLANS. THE COOPERATIVE ALSO PROVIDES HEALTH AND LIFE INSURANCE TO ALL ELIGIBLE EMPLOYEES THROUGH A QUALIFIED PLAN. THE AMOUNTS REPORTED ON PART VII, COLUMN (F) FOR THE OFFICERS AND HIGHLY COMPENSATED EMPLOYEES IS COMPRISED OF ACTUARIAL INCREASE IN THE DEFINED BENEFIT PLAN, THE TOTAL AMOUNT CONTRIBUTED BY THE COOPERATIVE TO THE DEFINED CONTRIBUTION PLAN AND INSURANCE PAID ON BEHALF OF AND FOR THEIR BENEFIT. FORM 990, PART VIII, LINE 2B: PATRONAGE DIVIDENDS RESULT FROM THE PURCHASE OF WHOLESALE POWER FROM GENERATION & TRANSMISSION COOPERATIVES. 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, 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 $ 4,539,088 LESS: TRUSTEE FEES REPORTED ON FORMS 1099-NEC (160,790) LESS: EMPLOYEE OFFICER BENEFITS REPORTED ON LINE 5 (142,002) PLUS: SALARIES AND WAGES CAPITALIZED DIRECTLY TO PLANT 1,266,020 PLUS: SALARIES AND WAGES CAPITALIZED/EXPENSED INDIRECTLY THROUGH CLEARING AND OTHER ACCOUNTS 251,065 TOTAL WAGES ACCRUED AND/OR PAID $ 5,753,381 FORM 990, PART IX, LINE 24: ADMINISTRATIVE AND GENERAL EXPENSE IS COMPRISED OF THE FOLLOWING: ADMINISTRATIVE & GENERAL SALARIES, BENEFITS, & OTHER $ 1,112,450 OFFICE SUPPLIES 355,919 OUTSIDE SERVICES 172,838 REGULATORY COMMISSION 115,834 DIRECTORS 177,961 MISCELLANEOUS GENERAL 371,969 MAINTENANCE OF GENERAL PLANT 684,528 TOTAL ADMIN & GENERAL EXP PER FINANCIAL STATEMENTS $ 2,991,500 LESS: RECLASS OF TRUSTEE FEES TO PART IX, LINE 5 (160,790) LESS: RECLASS OF LABOR TO PART IX, LINES 5 & 7 (1,259,659) LESS: RECLASS OF BENEFITS TO PART IX, LINES 8-10 (523,256) TOTAL ADMIN & GENERAL EXPENSE PER FORM 990, PART IX $ 1,047,795 FORM 990, PART IX, LINE 24E: OTHER EXPENSES IS COMPRISED OF THE FOLLOWING: CUSTOMER ACCOUNTS $ 931,187 OTHER DEDUCTIONS 40,818 TAXES 455,463 TOTAL OTHER EXPENSES REPORTED ON FINANCIAL STATEMENTS $ 1,427,468 LESS: RECLASS OF LABOR AND OVERHEAD (561,905) TOTAL OTHER EXPENSES PER FORM 990, PART IX $ 865,563 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 AND BROADBAND INTERNET RELATED GOODS AND SERVICES 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 AND BROADBAND INTERNET RELATED GOODS AND SERVICES 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 1: ALL GRANTS, SPONSORSHIPS, AND/OR DONATIONS ARE MADE TO NON-PROFIT AND CIVIC ORGANIZATIONS THAT ARE LOCATED IN THE COOPERATIVE'S SERVICE AREA, AND ARE INTENDED TO IMPROVE THE COMMUNITIES IN WHICH OUR MEMBERS RESIDE. EACH GRANT, SPONSORSHIP, AND/OR DONATION MADE DURING THE YEAR WAS BELOW THE REPORTING THRESHOLD OF SCHEDULE I, PART II. FORM 990, PART IX: THE ACCOUNTING RECORDS OF THE COOPERATIVE ARE MAINTAINED IN ACCORDANCE WITH THE RUS UNIFORM SYSTEM OF ACCOUNTS (USOA) PRESCRIBED BY RUS FOR 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 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 USOA. FORM 990, PART XI, LINE 9: PATRONAGE CAPITAL ALLOCATED OR TO BE ALLOCATED 4,230,843. PATRONAGE CAPITAL RETIRED -547,643. NET CHANGE IN MEMBERSHIPS 1,335. NON-MEMBER INFINIUM CIAC -54,220. FORM 990, PART XII, LINE 2C: THE BOARD OF DIRECTORS HAS ASSIGNED MEMBERS OF THE BOARD TO AN AUDIT COMMITTEE TO OVERSEE THE FINANCIAL STATEMENT AUDIT AND SELECT THE INDEPENDENT FINANCIAL STATEMENT AUDITOR. PROCEDURAL CHANGES DID NOT OCCUR DURING THE YEAR.