2020-06-04T14:06:07-05:00 2019-12-31 750882037 BOLINGER SEGARS GILBERT AND MOSS LLP 8215 NASHVILLE AVENUE LUBBOCK TX 79423 990 2019-01-01 730375825 NORTHWESTERN ELECTRIC COOPERATIVE INC NORT 5802567425 PO BOX 2707 WOODWARD OK 73802 TYSON LITTAU CEO 5802567425 2020-06-01 1 WILLIAM M MILLER P00439459 8067473806 2020-05-28 X 65.182.80.152 2020-06-01 11:09:36 CD P 954CA8D01CFBC3DD23DC63FC91DC923EB9CBFAF9 587A88673713A033F58E04FDF6801CBB1F7DD2F2 2019 2020-09-23 17:36:50Z TYSON LITTAU PO BOX 2707 WOODWARD OK 73802 34151054 0 X WWW.NWECOK.COOP X 1940 OK TO PROVIDE ELECTRIC POWER TO RURAL AREAS AT COST ON A COOPERATIVE BASIS. 9 9 59 0 73135 -282 0 0 34937298 33908232 61185 106062 87536 90551 35086019 34104845 23520 27146 1143263 1480957 5497594 5470570 0 0 0 27718844 27126172 34383221 34104845 702798 0 97792991 102650185 67003200 71125365 30789791 31524820 THE COOPERATIVE'S RESPONSIBILITY AND AIM IS TO PROVIDE EXCELLENT AND INNOVATIVE CUSTOMER SERVICE AS REFLECTED IN TOP QUALITY ELECTRIC SERVICE RELIABILITY, AFFORDABLE RATES, EMPLOYEE TEAMWORK AND THE HIGHEST DEGREE OF INTEGRITY IN ALL COOPERATIVE ENDEAVORS. 0 0 PROVIDING ELECTRIC ENERGY TO OUR MEMBERS - 11,868 ACTIVE SERVICES AT YEAR END WERE PROVIDED ELECTRICITY ON A COOPERATIVE BASIS THROUGH THE ALLOCATION OF PATRONAGE CAPITAL. 0 0 0 0 0 0 0 0 0 1 0 1 0 1 1 1 0 0 0 0 0 0 0 0 0 0 0 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 46 0 59 1 1 1 0 0 0 0 34532987 777582 0 0 0 X 9 9 0 0 1 0 1 1 1 1 0 0 0 1 1 1 1 1 1 1 0 0 OK X TYSON LITTAU CEO 5802567425 2925 WILLIAMS AVENUE WOODWARD OK 73801 X TYSON LITTAU CEO 55.00 X 222051 0 128958 JOHN KIRKWOOD DIRECTOR OF OPERATIONS 50.00 X 184140 0 28064 BRENT MCDOWELL DIRECTOR OF SAFETY 55.00 X 107242 0 90246 JAMIE RUBLE DIRECTOR OF FINANCE & ADMIN 50.00 X 116098 0 71728 JARET DOWLER DIRECTOR OF ENGINEERING/OPS 55.00 X 119132 0 62046 MARVIN WILKINSON TRUSTEE 4.70 X 26946 0 0 KENNETH KNOWLES PRESIDENT 7.20 X X 25538 0 0 DARLA YOUNG TRUSTEE 5.20 X 23588 0 0 JOHN BRUCE JR SECRETARY/TREASURER 5.70 X X 22558 0 0 CLAIR CRAIGHEAD TRUSTEE 5.00 X 21988 0 0 RAY SMITH VICE PRESIDENT 4.00 X X 21488 0 0 JEFF MCINTOSH TRUSTEE 5.60 X 18275 0 0 DUANE HENDERSON TRUSTEE 2.30 X 17458 0 0 GILBERT PERKINS TRUSTEE 4.30 X 6750 0 0 WAYNE HALL TRUSTEE (JAN-MAR) 3.30 X 993 0 0 934245 0 381042 5 0 1 0 RES SYSTEM 3 LLC 1610 ARDEN WAY STE 280 SACRAMENTO CA 95815 ELECTRIC DIST. CONST. CONTRACTOR 8376434 RIGGS TREE SERVICE INC PO BOX 453225 GROVE OK 74345 TREE TRIMMING AND RIGHT OF WAY MAINT. 617753 R&R POWERLINE CONSTRUCTION INC PO BOX 246 SAYRE OK 73662 ELECTRIC DIST. CONST. CONTRACTOR 598572 POWER CONSULTING ASSOCIATES 880 GREEN LEA BLVD STE B GALLATIN TN 37066 INSPECTIONS 507018 RMA ENGINEERING LLC 2975 BLOSSER DR CONCORDIA KS 66901 ENGINEERING/STAKING 480180 6 X SALES OF ELECTRICITY 221000 33141767 33141767 PATRONAGE DIVIDENDS 221000 647074 647074 DISTRIBUTION LINE LEASE 221000 71810 71810 SERVICE FEES 221000 44893 44893 OTHER PROGRAM REVENUE 221000 2688 2688 33908232 58422 58422 51 51 80071 32431 47640 47640 47640 21305 13778 7527 7527 BILLING REVENUE 561499 73135 73135 POLE ATTACHMENT INCOME 221000 9838 9838 82973 34104845 33915759 73135 115951 X 21146 6000 1480957 536591 3063170 746764 893973 230072 2168196 2932084 PURCHASED POWER 18533669 DISTRIBUTION EXPENSE 1283048 ADMIN & GENERAL EXPENSE 950802 OPERATING TAXES 754582 503791 34104845 932588 1721200 5708986 4098136 469993 375201 1039921 928364 1153930 966334 102649578 23332492 73481363 79317086 14101315 14371206 904895 872658 97792991 102650185 2517935 2814267 61990199 65858490 2495066 2452608 67003200 71125365 X 0 0 4579568 4895717 26210223 26629103 30789791 31524820 97792991 102650185 X 0 735029 X X 0 1 X 0 1 1 243185 243185 7074332 2109055 4965277 91461368 21223437 70237931 3870693 3870693 79317086 PATRONAGE CAPITAL - WFEC 12650025 C PATRONAGE CAPITAL - CFC 183848 C PATRONAGE CAPITAL - AEC 249330 C PATRONAGE CAPITAL - SEDC 112933 C PATRONAGE CAPITAL - COBANK 359551 C PATRONAGE CAPITAL - OTHER 139059 C MEMBERSHIPS IN ASSOCIATED ORGANIZATIONS 11700 C CAPITAL TERM CERTIFICATES - CFC 664760 C 14371206 CONSUMER DEPOSITS 89900 ACCUMULATED PROVISION FOR PENSIONS & BENEFITS 1514495 DEFERRED CREDITS - LINE EXTENSIONS 848213 2452608 X 34035678 0 34035678 69167 69167 34104845 32554721 0 32554721 1550124 1550124 34104845 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 4B - OTHER ADJUSTMENTS: EXPENSES IN NON-OPERATING MARGINS RECLASSED TO EXPENSES 69,167. PART XII, LINE 4B - OTHER ADJUSTMENTS: EXPENSES IN NON-OPERATING MARGINS RECLASSED TO EXPENSES 69,167. PATRONAGE CAPITAL ALLOCATED OR TO BE ALLOCATED 1,480,957. 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. PART XII, LINE 4B: FOR THE AUDITED FINANCIAL STATEMENTS, THE AMOUNT OF PATRONAGE DIVIDENDS PAID OR ALLOCATED TO THE MEMBERS IS REPORTED AS AN INCREASE IN EQUITY AND NOT AS AN EXPENSE. THEREFORE, NET INCOME PER THE AUDITED FINANCIAL STATEMENTS IS REPORTED GROSS OF THE AMOUNT OF PATRONAGE DIVIDENDS THAT ARE EITHER ALLOCATED OR TO BE ALLOCATED AT THE TIME THE AUDITED FINANCIAL STATEMENTS ARE PREPARED. HOWEVER, BECAUSE THE ALLOCATION OF PATRONAGE DIVIDENDS IS ONE ASPECT OF HOW THE COOPERATIVE FULFILLS ITS TAX EXEMPT PURPOSE OF OPERATING ON A COOPERATIVE BASIS, THE AMOUNT OF PATRONAGE DIVIDENDS EITHER ALLOCATED OR TO BE ALLOCATED TO THE MEMBERS IS REPORTED ON FORM 990, PART IX, LINE 4 AS "BENEFITS PAID TO MEMBERS". PATRONAGE DIVIDENDS ARE ALLOCATED ON A PATRONAGE BASIS AND DONE SO PURSUANT TO A PRE-EXISTING OBLIGATION AS PROVIDED FOR IN THE "NON-PROFIT OPERATION" ARTICLE OF THE COOPERATIVE'S BYLAWS. 1 SCHOLARSHIPS TO AREA STUDENTS 12 6000 PART I, LINE 2: THE COOPERATIVE AWARDS SCHOLARSHIPS TO APPLICANTS WHO SATISFY THE ELIGIBILITY REQUIREMENTS AND ARE SELECTED BY THE SCHOLARSHIP COMMITTEE OF THE COOPERATIVE'S BOARD OF TRUSTEES. TO BE ELIGIBLE, STUDENTS MUST BE A SENIOR AND RESIDE IN A HOUSEHOLD SERVED BY THE COOPERATIVE. X 1 1 X X 0 0 0 TYSON LITTAU CEO 212835 0 1530 0 7686 0 98189 0 30769 0 351009 0 0 0 JOHN KIRKWOOD DIRECTOR OF OPERATIONS 83420 0 89376 0 11344 0 1833 0 26231 0 212204 0 0 0 BRENT MCDOWELL DIRECTOR OF SAFETY 101302 0 1650 0 4290 0 66536 0 23710 0 197488 0 0 0 JAMIE RUBLE DIRECTOR OF FINANCE & ADMIN 113142 0 1530 0 1426 0 42016 0 29712 0 187826 0 0 0 JARET DOWLER DIRECTOR OF ENGINEERING/OPS 111355 0 1650 0 6127 0 32223 0 29823 0 181178 0 0 0 PART I, LINE 1A PURSUANT TO APPLICABLE TRAVEL POLICIES, THE COOPERATIVE WILL ONLY PAY FOR REGISTRATION FEES INCURRED BY A TRUSTEES' SPOUSE. TRUSTEES MAY ONLY ATTEND ONE NATIONAL MEETING PER YEAR. ALSO PURSUANT TO THE CURRENT POLICY, THE COOPERATIVE WILL PAY FOR REGISTRATION FEES, TRAVEL AND MEALS INCURRED BY AN EMPLOYEE'S SPOUSE IF INVITED TO ATTEND AN NRECA REGIONAL OR NATIONAL MEETING. NO EMPLOYEES RECEIVED THIS BENEFIT DURING THE YEAR. PURSUANT TO THE EMPLOYEE WELLNESS PROGRAM, EMPLOYEES PARTICIPATING IN THE COOPERATIVE SPONSORED HEALTH INSURANCE PLAN RECEIVE UP TO $50 PER MONTH, LIMITED TO $600 PER YEAR, FOR THE COST OF HEALTH CLUB DUES. PART II, COLUMN B (II): PURSUANT TO THE COOPERATIVE'S EMPLOYEE RETIREMENT POLICY, EMPLOYEES RETIRING AT NORMAL RETIREMENT WILL RECEIVE A RETIREMENT BONUS/INCENTIVE ON THEIR OFFICIAL RETIREMENT DATE. THE AMOUNT REPORTED ON SCHEDULE J, PART II, COLUMN B (II) REPRESENTS THE RETIREMENT BONUS JOHN KIRKWOOD RECEIVED UPON HIS RETIREMENT. 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. TYSON LITTAU: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 93,764 EMPLOYER CONTRIBUTION TO 401(K) PLAN 4,425 TOTAL REPORTED IN COLUMN C $ 98,189 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (93,764) ADD: CASH CONTRIBUTED TO DEFINED BENEFIT PLAN 63,135 EXPENSE TO THE COOPERATIVE $ 67,560 JOHN KIRKWOOD: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ -0- EMPLOYER CONTRIBUTION TO 401(K)PLAN 1,833 TOTAL REPORTED IN COLUMN C $ 1,833 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN -0- ADD: CASH CONTRIBUTED TO DEFINED BENEFIT PLAN 28,499 EXPENSE TO THE COOPERATIVE $ 30,332 BRENT MCDOWELL: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 64,367 EMPLOYER CONTRIBUTION TO 401(K) PLAN 2,169 TOTAL REPORTED IN COLUMN C $ 66,536 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (64,367) ADD: CASH CONTRIBUTED TO DEFINED BENEFIT PLAN 30,946 EXPENSE TO THE COOPERATIVE $ 33,115 JAMIE RUBLE: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 39,579 EMPLOYER CONTRIBUTION TO 401(K) PLAN 2,437 TOTAL REPORTED IN COLUMN C $ 42,016 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (39,579) ADD: CASH CONTRIBUTED TO DEFINED BENEFIT PLAN 34,709 EXPENSE TO THE COOPERATIVE $ 37,146 JARET DOWLER: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 29,818 EMPLOYER CONTRIBUTION TO 401(K)PLAN 2,405 TOTAL REPORTED IN COLUMN C $ 32,223 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (29,818) ADD: CASH CONTRIBUTED TO DEFINED BENEFIT PLAN 33,401 EXPENSE TO THE COOPERATIVE $ 35,806 FORM 990, PART III, LINES 1 & 4: THE COOPERATIVE FULFILLS ITS MISSION AND EXEMPT PURPOSE BY OPERATING ACCORDING TO ITS MEMBER APPROVED BYLAWS AND BOARD APPROVED OPERATING POLICIES. THE BOARD AND MANAGEMENT STRIVE TO ADHERE TO THESE DOCUMENTS IN A FAIR AND EQUITABLE MANNER FOR MEMBERS, EMPLOYEES, AND TRUSTEES. FORM 990, PART VI, SECTION A, LINE 4 DURING THE YEAR, THE BYLAWS OF THE COOPERATIVE WERE AMENDED. MEMBERS OF THE COOPERATIVE WHO ATTENDED THE 2019 ANNUAL MEETING APPROVED BY A MAJORITY VOTE TO AMEND ARTICLE III, SECTION 6 OF THE BYLAWS. ARTICLE III - MEETING OF MEMBERS, SECTION 6 - VOTING DISTRICTS, WAS AMENDED TO ADJUST THE NUMBER OF MEMBERS IN EACH VOTING DISTRICT TO A MORE EQUITABLE RATIO AMONG ALL DISTRICTS. 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 TRUSTEES. 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. AMENDMENTS TO THE ARTICLES OF INCORPORATION 5. AMENDMENTS TO THE BYLAWS 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. THE DISCUSSION AND REVIEW WAS PERFORMED AT THE BOARD MEETING IMMEDIATELY BEFORE FILING THE FORM 990. FORM 990, PART VI, SECTION B, LINE 12C THE BOARD OF TRUSTEES AND OFFICERS ARE REQUIRED TO REVIEW AND BE FAMILIAR WITH THE POLICIES OUTLINED IN THE COOPERATIVE'S CONFLICT OF INTEREST POLICY. THE BOARD OF TRUSTEES AND OFFICERS ARE REQUIRED TO DISCLOSE ANY ACTION OR SITUATION THAT MIGHT VIOLATE THE POLICY TO THE FULL BOARD OF TRUSTEES AS SOON AS POSSIBLE. THE CONFLICT OF INTEREST POLICY IS REVIEWED AND REDISTRIBUTED TO EACH EMPLOYEE, OFFICER, AND DIRECTOR AT LEAST ANNUALLY. FORM 990, PART VI, SECTION B, LINE 15A THE BOARD OF TRUSTEES USE A COMPENSATION SURVEY WHEN DETERMINING THE COMPENSATION OF THE CEO. THE SURVEY SHOWS COMPARATIVE SALARIES FOR CEOS FROM SIMILARLY SITUATED COOPERATIVES LOCATED IN OKLAHOMA AND THE NATION. OTHER THAN THE CEO, THE COOPERATIVE DID NOT HAVE ANY EMPLOYEES MEETING THE DEFINITION OF OFFICER OR KEY EMPLOYEE. THEREFORE, AND PURSUANT TO FORM 990 INSTRUCTIONS, LINE 15B HAS BEEN ANSWERED "NO". FORM 990, PART VI, SECTION C, LINE 19 THE COOPERATIVE WILL PROVIDE A COMPLETE COPY OF ITS GOVERNING DOCUMENTS, EXTERNAL POLICIES, AND AUDITED FINANCIAL STATEMENTS TO ANY MEMBER WHO REQUESTS A COPY OF ANY SUCH DOCUMENT. ANNUALLY, THE COOPERATIVE PROVIDES THE YEAR END BALANCE SHEET AND INCOME STATEMENT TO THE MEMBERS OF THE COOPERATIVE WITH THE ANNUAL MEETING NOTICE AND ANNUAL REPORT. ADDITIONALLY, AN OPERATING REPORT WHICH SUMMARIZES VARIOUS FINANCIAL STATISTICS IS PUBLISHED IN AND DISTRIBUTED TO THE MEMBERS VIA MONTHLY NEWSLETTER. THE COOPERATIVE'S BYLAWS ARE ALSO MADE AVAILABLE ON THE COOPERATIVE'S WEBSITE. FORM 990, PART VII: THE BOARD OF TRUSTEES CONSIDERS THE CEO TO BE BOTH THE TOP MANAGEMENT OFFICIAL AND THE TOP FINANCIAL OFFICIAL. THEREFORE, ONLY THE CEO IS LISTED AS AN EMPLOYEE OFFICER. 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, DENTAL AND LIFE INSURANCE TO ALL ELIGIBLE EMPLOYEES THROUGH A QUALIFIED PLAN. THE AMOUNTS REPORTED ON PART VII, COLUMN (F) FOR THE OFFICER 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. IN ADDITION TO THE ABOVE BENEFIT PLANS, THE COOPERATIVE ALSO PROVIDES POST-RETIREMENT HEALTH INSURANCE BENEFITS THROUGH AN UNFUNDED WELFARE BENEFIT PLAN. THE VALUE OF THESE BENEFITS HAS NOT BEEN ESTIMATED. FORM 990, PART VIII, LINE 2: PATRONAGE DIVIDENDS RESULT FROM THE 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 ORGANIZATION TO ITS MEMBERS. FORM 990, PART IX: THE ACCOUNTING RECORDS OF THE COOPERATIVE ARE MAINTAINED IN ACCORDANCE WITH THE RURAL UTILITIES SERVICE (RUS) UNIFORM SYSTEM OF ACCOUNTS (USOA) AS PRESCRIBED 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 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 IX, LINES 1 & 2: ALL GRANTS, DONATIONS, AND/OR SCHOLARSHIPS ARE MADE TO NON-PROFIT, CIVIC ORGANIZATIONS, AND INDIVIDUALS THAT ARE LOCATED IN THE COOPERATIVE'S SERVICE AREA. ALL DONATIONS ARE INTENDED TO IMPROVE THE COMMUNITIES IN WHICH OUR MEMBERS RESIDE. EACH DONATION MADE DURING THE YEAR WAS BELOW THE REPORTING THRESHOLD OF SCHEDULE I, PART II. 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 2019 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, 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 $ 3,599,761 LESS: TRUSTEE FEES REPORTED ON FORMS 1099-MISC (185,582) LESS: EMPLOYEE OFFICER BENEFITS INCLUDED IN LINE 5 (128,958) PLUS: SALARIES AND WAGES ALLOCATED TO NONOPERATING MARGINS 2,773 PLUS: SALARIES AND WAGES CAPITALIZED DIRECTLY TO PLANT 868,742 PLUS: SALARIES AND WAGES CAPITALIZED/EXPENSED INDIRECTLY THROUGH CLEARING AND OTHER ACCOUNTS 193,154 TOTAL WAGES ACCRUED AND/OR PAID $ 4,349,890 FORM 990, PART IX, LINE 24: ADMINISTRATIVE & GENERAL EXPENSE IS COMPRISED OF THE FOLLOWING: ADMINISTRATIVE & GENERAL $ 1,158,207 OFFICE SUPPLIES 341,844 OUTSIDE SERVICES 74,207 EMPLOYEES 125,588 TRUSTEES 248,929 INSURANCES 93,240 DUES 106,570 DONATIONS 21,146 ANNUAL & DISTRICT MEETINGS 76,708 MISCELLANEOUS GENERAL 52,383 MAINTENANCE OF GENERAL PLANT 38,604 TOTAL ADMIN & GENERAL EXP PER FINANCIAL STATEMENTS $ 2,337,426 LESS: RECLASS OF DONATIONS TO PART IX, LINE 1 (21,146) LESS: RECLASS OF TRUSTEES FEES TO PART IX, LINE 5 (185,582) LESS: RECLASS OF LABOR TO PART IX, LINES 5 & 7 (733,440) LESS: RECLASS OF BENEFITS TO PART IX, LINES 8-10 (446,456) TOTAL ADMIN & GENERAL EXPENSE PER FORM 990, PART IX $ 950,802 FORM 990, PART XI, LINE 9: PATRONAGE CAPITAL ALLOCATED OR TO BE ALLOCATED 1,480,957. PATRONAGE CAPITAL RETIRED - TOTAL -1,117,894. PATRONAGE CAPITAL RETIRED - DISCOUNT 42,764. PATRONAGE CAPITAL RETIRED - UNCLAIMED 273,385. NET CHANGE IN POST-RETIREMENT BENEFIT 55,817. FORM 990, PART XII, LINE 2C: THE BOARD AS A WHOLE IS RESPONSIBLE FOR OVERSEEING THE FINANCIAL STATEMENT AUDIT AND SELECTING THE INDEPENDENT FINANCIAL STATEMENT AUDITOR. PROCEDURAL CHANGES DID NOT OCCUR DURING THE YEAR.