2022-11-14T15:03:20-06:00 2021-12-31 750882037 BOLINGER SEGARS GILBERT AND MOSS LLP 8215 NASHVILLE AVENUE LUBBOCK TX 79423 990 2021-01-01 740683625 HILCO ELECTRIC COOPERATIVE INC HILC 2546872331 115 E MAIN STREET ITASCA TX 76055 THOMAS CHEEK GENERAL MANAGER/CEO 2546872331 2022-10-28 1 THOMAS CHEEK 999009999 WILLIAM M MILLER P00439459 8067473806 2022-10-28 X 3 AAL1 IAL1 2021 2022-09-23 18:48:47Z THOMAS CHEEK 115 E MAIN STREET ITASCA TX 76055 74488358 0 X WWW.HILCO.COOP X 1936 TX TO PROVIDE QUALITY AND RELIABLE ELECTRIC SERVICE TO MEMBERS OF THE COOPERATIVE. 6 6 93 0 21478 66049 0 0 63455646 73713574 218584 149093 12896 77144 63687126 73939811 18100 22250 7185155 6260016 6645851 6686798 0 0 0 49985788 61047822 63834894 74016886 -147768 -77075 179717909 192701564 96394296 103360487 83323613 89341077 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 31,569 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 79 0 93 1 1 1 0 0 0 0 73359397 2671510 0 0 0 X 6 6 0 0 0 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 JANET SMITH SECRETARY 6.40 X X 30670 0 0 WILLIAM ALLEN VICE PRESIDENT 5.70 X X 29751 0 0 MARGARET HILL DIRECTOR 4.10 X 29650 0 0 RONALD ROBERTS DIRECTOR 5.30 X 29179 0 0 GEORGE THIESS DIRECTOR 1.60 X 27926 0 0 JOSEPH TEDESCO PRESIDENT 6.90 X X 27306 0 0 LEROY HUFF JAN-OCT DIRECTOR 1.00 X 18883 0 0 THOMAS CHEEK GENERAL MANAGER/CEO 55.00 X 185790 0 153957 PAULA FARQUHAR CFO 40.00 X 186962 0 104247 LEA SANDERS CHIEF HR OFFICER 45.00 X 183844 0 50371 DANIEL TAYLOR COO 40.00 X 168354 0 54574 TRAVIS SANDERS OPERATIONS MANAGER 40.00 X 138212 0 119722 CHARLES HENKELMAN CONSTRUCTION FOREMAN 40.00 X 123599 0 69676 MATTHEW FEHNEL DIRECTOR OF IS/IT 40.00 X 127443 0 62300 CLAYTON THOMPSON LEAD CONSTRUCTION FOREMAN 40.00 X 104524 0 50975 BILLY JOE WILLIAMS URD FOREMAN 40.00 X 104697 0 18499 1516790 0 684321 9 0 1 0 TRINITY UTILITIES & BORING 501 AIRFIELD RD AURORA TX 76078 UNDERGROUND CONSTRUCTION 2079247 TEXAR LINE CLEARANCE 617 EAST STREET TEXARKANA AR 71854 RIGHT OF WAY CLEARING 1251836 TECHLINE CONSTRUCTION LLC PO BOX 674086 DALLAS TX 75267 OVERHEAD CONSTRUCTION 986667 HORTON TREE SERVICE PO BOX 1185 KENEDALE TX 76060 RIGHT OF WAY CLEARING 746334 NISC PO BOX 1147 MANDAN ND 58554 SOFTWARE/BILLING 455099 6 X SALES OF ELECTRICITY 221000 70926168 70926168 PATRONAGE DIVIDENDS 221000 1729158 1729158 SERVICE FEES 221000 1058248 1058248 73713574 96767 66178 30589 26000 140249 1172 543383 24828 -403134 -378306 -394734 16428 56318 3992 52326 52326 52326 MANAGEMENT SERVICES 561000 350034 350034 POLE ATTACHMENT INCOME 221000 105416 105416 455450 73939811 73765900 21478 152433 X 22250 6260016 1281464 3560661 712372 820639 311662 3285182 5352034 PURCHASED POWER 45792254 DISTRIBUTION EXPENSE 2803143 CONSUMER EXPENSE 1418121 UNRELATED BUSINESS INCO 12560 2384528 74016886 1024676 1784944 3793167 1710214 2995476 7795677 7449704 270336 529638 1446624 1182185 186724706 51769475 128975455 134955231 35548646 36875636 2946281 3135583 179717909 192701564 6161029 8429360 85137 149068 83001102 88185547 7147028 6596512 96394296 103360487 X 76220 73000 0 0 83247393 89268077 83323613 89341077 179717909 192701564 X -77075 6094539 X X 0 1 X 1 0 0 1 X 89500 573343 662843 12161879 3882516 8279363 169358074 47886959 121471115 4541910 4541910 134955231 PATRONAGE CAPITAL - CFC 1228006 C PATRONAGE CAPITAL - COBANK 3324705 C PATRONAGE CAPITAL - TEC 395590 C PATRONAGE CAPITAL - BEC 31035777 C PATRONAGE CAPITAL - NISC 175025 C CAPITAL TERM CERTIFICATES - CFC 690533 C MEMBER CAPITAL SECURITIES - CFC 25000 C MEMBERSHIPS IN ASSOCIATED ORGANIZATIONS 1000 C 36875636 NEGATIVE EQUITY INVESTMENT IN AFFILIATED COMPANY 19548 UNBILLED POWER COST 1231743 POWER COST ADJUSTMENT - OVER COLLECTED 60164 CONSUMER DEPOSITS 1673964 DEFERRED CREDIT - OTHER 91096 DEFERRED CREDIT - AID TO CONSTRUCTION 103727 DEFERRED CREDIT - UNCLAIMED CAPITAL CREDITS 2283791 ACCRUED OPERATING TAXES 1132479 6596512 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 GENERAL MANAGER/CEO 170021 0 7500 0 8269 0 123889 0 30068 0 339747 0 0 0 PAULA FARQUHAR CFO 160395 0 15375 0 11192 0 81913 0 22334 0 291209 0 0 0 TRAVIS SANDERS OPERATIONS MANAGER 125235 0 7572 0 5405 0 108468 0 11254 0 257934 0 0 0 LEA SANDERS CHIEF HR OFFICER 165098 0 13165 0 5581 0 38214 0 12157 0 234215 0 0 0 DANIEL TAYLOR COO 149365 0 13590 0 5399 0 36417 0 18157 0 222928 0 0 0 CHARLES HENKELMAN CONSTRUCTION FOREMAN 109790 0 7335 0 6474 0 45552 0 24124 0 193275 0 0 0 MATTHEW FEHNEL DIRECTOR OF IS/IT 113838 0 5779 0 7826 0 45926 0 16374 0 189743 0 0 0 CLAYTON THOMPSON LEAD CONSTRUCTION FOREMAN 99765 0 2060 0 2699 0 33885 0 17090 0 155499 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. NO INDIVIDUALS REPORTED ON FORM 990 PART VII RECEIVED THIS BENEFIT DURING THE YEAR. ADDITIONALLY, THE VALUE OF THE BENEFIT WAS INCLUDED IN THE RESPECTIVE REPORTABLE COMPENSATION OF EACH. 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 $ 123,889 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (123,889) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 38,376 EXPENSE TO THE COOPERATIVE $ 38,376 PAULA FARQUHAR: TOTAL REPORTED IN COLUMN C $ 81,913 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (81,913) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 34,367 EXPENSE TO THE COOPERATIVE $ 34,367 TRAVIS SANDERS: TOTAL REPORTED IN COLUMN C $ 108,468 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (108,468) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 25,477 EXPENSE TO THE COOPERATIVE $ 25,477 LEA SANDERS: TOTAL REPORTED IN COLUMN C $ 38,214 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (38,214) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 34,257 EXPENSE TO THE COOPERATIVE $ 34,257 DANIEL TAYLOR: TOTAL REPORTED IN COLUMN C $ 36,417 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (36,417) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 31,061 EXPENSE TO THE COOPERATIVE $ 31,061 CHARLES HENKELMAN: TOTAL REPORTED IN COLUMN C $ 45,552 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (45,552) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 24,286 EXPENSE TO THE COOPERATIVE $ 24,286 MATTHEW FEHNEL: TOTAL REPORTED IN COLUMN C $ 45,926 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (45,926) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 24,286 EXPENSE TO THE COOPERATIVE $ 24,286 CLAYTON THOMPSON: TOTAL REPORTED IN COLUMN C $ 33,885 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (33,885) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 18,470 EXPENSE TO THE COOPERATIVE $ 18,470 DARRELL SULAK FAMILY RELATIONSHIP - OFFICER (P. FARQUHAR) 81088 EMPLOYMENT 0 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, PARTS VI & VII: THE COOPERATIVE ANNUALLY PROVIDES EACH OFFICER/DIRECTOR A QUESTIONNAIRE AND TIME LOG. THE COMPLETED QUESTIONNAIRES AND TIME LOGS ARE USED TO COMPLETE THE APPLICABLE QUESTIONS ON THE FORM 990 PERTAINING TO BUSINESS RELATIONSHIPS AMONG DIRECTORS, OFFICERS, AND KEY EMPLOYEES, AS WELL AS TO DETERMINE IF THERE ARE ANY TRANSACTIONS WHICH MUST BE REPORTED IN DETAIL ON SCHEDULE L - "TRANSACTIONS WITH INTERESTED PERSONS". IF THE COOPERATIVE WAS UNABLE TO OBTAIN A COMPLETED QUESTIONNAIRE AND/OR TIME LOG, THE COOPERATIVE RELIED UPON THE COMPLETED INFORMATION FOR THE PRIOR YEAR. LEROY HUFF PASSED AWAY IN OCTOBER OF 2021; THEREFORE, THE INFORMATION FROM THE 2020 QUESTIONNAIRE HAS BEEN RELIED UPON FOR THE COMPLETION OF THE 2021 FORM 990. THERE WERE NO KNOWN CHANGES BETWEEN 2020 AND 2021. 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 $ 4,842,125 LESS: DIRECTOR FEES REPORTED ON FORMS 1099-NEC (193,365) LESS: OFFICER EMPLOYEE BENEFITS REPORTED ON LINE 5 (363,149) PLUS: SALARIES AND WAGES ALLOCATED TO NONOPERATING MARGIN 343,208 PLUS: SALARIES AND WAGES CAPITALIZED DIRECTLY TO PLANT 1,199,548 PLUS: SALARIES AND WAGES CAPITALIZED/EXPENSED INDIRECTLY THROUGH CLEARING AND OTHER ACCOUNTS 352,446 TOTAL WAGES ACCRUED AND/OR PAID $ 6,180,813 FORM 990, PART IX, LINE 24E: OTHER EXPENSES IS COMPRISED OF THE FOLLOWING: ADMINISTRATIVE AND GENERAL EXPENSES $ 1,224,716 OPERATING TAXES 974,476 OTHER DEDUCTIONS (12,429) RECLASSED EXPENSES FROM NONOPERATING MARGINS 197,765 TOTAL OTHER EXPENSES PER FORM 990, LINE 24E $ 2,384,528 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 2021 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 $ 1,471,957 OFFICE SUPPLIES 547,438 OUTSIDE SERVICES EMPLOYED 83,071 INSURANCES 221,999 REGULATORY COMMISSION 117,811 DIRECTORS 203,852 MAINTENANCE OF GENERAL PLANT 234,727 MISCELLANEOUS GENERAL 143,442 TOTAL ADMIN & GENERAL EXP PER FINANCIAL STATEMENTS $ 3,024,297 LESS: RECLASS OF DONATIONS TO PART IX, LINE 1 (22,250) LESS: RECLASS OF DIRECTOR FEES TO PART IX, LINE 5 (193,365) LESS: RECLASS OF LABOR TO PART IX, LINES 5 & 7 (1,045,405) LESS: RECLASS OF BENEFITS TO PART IX, LINES 8-10 (538,561) TOTAL ADMIN & GENERAL EXPENSE PER FORM 990, PART IX $ 1,224,716 FORM 990, PART XI, LINE 9: PATRONAGE CAPITAL ALLOCATED OR TO BE ALLOCATED 6,260,016. PATRONAGE CAPITAL RETIRED -322,498. EQUITY METHOD INCOME(LOSS) FROM SUBSIDIARY 159,688. NET CHANGE IN MEMBERSHIPS -3,220. NET CHANGE IN OTHER EQUITIES 553. 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 3753507 8691811 1.00000 1 1 1 0 1 0 0 1 0 0 1 0 1 0 0 0 1 1 0 1 HILCO UNITED SERVICES INC AND SUBSIDIARY A 407406 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 350034 INVOICES & OTHER DOCUMENTATION HILCO UNITED SERVICES INC AND SUBSIDIARY P N/A - LESS THAN $50,000 HILCO UNITED SERVICES INC AND SUBSIDIARY Q INVOICES & OTHER DOCUMENTATION HILCO UNITED SERVICES INC AND SUBSIDIARY S SCHEDULES & AGREEMENTS HILCO ELECTRIC TRUST B N/A - LESS THAN $50,000 HILCO ELECTRIC TRUST Q N/A - LESS THAN $50,000