2020-11-13T09:57:06-06:00 2019-12-31 750882037 BOLINGER SEGARS GILBERT AND MOSS LLP 8215 NASHVILLE AVENUE LUBBOCK TX 79423 990 2019-01-01 740667584 HAMILTON COUNTY ELECTRIC COOPERATIVE ASSOCIATION HAMI 2543863123 PO BOX 753 HAMILTON TX 76531 STEVE YOUNG GENERAL MANAGER/CEO 2543863123 2020-11-11 1 WILLIAM M MILLER P00439459 8067473806 2020-11-06 X 65.182.80.152 2020-11-11 14:33:51 CS P 954CA8D01CFBC3DD23DC63FC91DC923EB9CBFAF9 587A88673713A033F58E04FDF6801CBB1F7DD2F2 2019 2021-04-22 16:20:28Z STEVE YOUNG PO BOX 753 HAMILTON TX 76531 28925304 0 X WWW.HAMILTONELECTRIC.COOP X 1938 TX TO PROVIDE QUALITY AND RELIABLE ELECTRIC SERVICE TO MEMBERS OF THE COOPERATIVE. 7 7 54 0 0 0 0 0 27155409 27860500 673473 528263 25907 474702 27854789 28863465 6737 9318 1478854 1990379 2631949 2562498 0 0 0 23063776 23401902 27181316 27964097 673473 899368 85294031 88665563 46186312 46317669 39107719 42347894 TO PROVIDE SAFE, RELIABLE, QUALITY ELECTRIC SERVICE TO OUR MEMBERS AT AN AFFORDABLE PRICE. ADDITIONALLY, WE STRIVE TO PROVIDE SERVICE AND LEADERSHIP THAT WILL HAVE A POSITIVE INFLUENCE ON THE LIVES OF THE MEMBERS THAT WE SERVE. 0 0 PROVIDING ELECTRIC ENERGY TO OUR MEMBERS ON A COOPERATIVE BASIS THROUGH THE ALLOCATION OF PATRONAGE CAPITAL. THERE WERE 18,511 ACTIVE SERVICES AT YEAR END. 0 0 0 0 0 0 0 1 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 79 0 54 1 0 0 0 0 0 27919424 1531945 0 0 0 X 7 7 0 0 0 0 1 1 1 1 0 0 0 1 1 1 1 1 1 1 1 0 X CODY LASATER ASST GENERAL MANAGER 2543863123 420 NORTH RICE HAMILTON TX 76531 X STEVE YOUNG GENERAL MANAGER/CEO 40.00 X 180951 0 61722 WILLIAM A PAFFORD LINE SUPERINTENDENT 42.00 X 165208 0 53235 BRIAN GEESLIN MANAGER OF ENGINEERING 42.00 X 128239 0 51322 CODY LASATER ASST. GENERAL MANAGER 40.00 X 129439 0 39651 JAMES G BELCHER SERVICE FOREMAN 40.00 X 110339 0 48627 RANDALL DENNING SERVICE FOREMAN 40.00 X 106768 0 40827 JAMES HORTON CONSTRUCTION FOREMAN 40.00 X 117988 0 18256 DUSTIN DUNCAN VICE PRESIDENT 2.00 X X 5423 0 0 SAM CAMPBELL PRESIDENT 1.40 X X 5100 0 0 BOB GARDNER SECRETARY/TREASURER 1.10 X X 5100 0 0 MELVIN EILERS JR DIRECTOR 1.30 X 5100 0 0 ERVIN KOERTH DIRECTOR 1.40 X 5100 0 0 HENRY LANGFORD DIRECTOR 1.40 X 5100 0 0 JACK CALDWELL DIRECTOR 4.20 X 3418 0 0 PM GERALD JR PRESIDENT (JAN-JUL) 1.10 X X 2850 0 0 976123 0 313640 9 0 1 0 NORTHEAST SERVICES INC PO BOX 1185 KENNEDALE TX 76060 TREE TRIMMING 829969 NISC PO BOX 1147 MANDAN ND 58554 BILLING & IT SERVICES 192193 CHEMICAL WEED CONTROL INC PO BOX 519 WEATHERFORD TX 76086 RIGHT OF WAY SPRAYING 134300 HAVLAK INSPECTION PO BOX 33 GARDEN CITY TX 79739 POLE INSPECTIONS 131203 4 X SALES OF ELECTRICITY 221000 26383126 26383126 PATRONAGE DIVIDENDS 221000 1305960 1305960 SERVICE FEES 221000 171414 171414 27860500 492477 492477 97625 61839 35786 35786 35786 APBO PLAN BUYOUT 221000 383890 383890 POLE ATTACHMENT INCOME 221000 90812 90812 474702 28863465 28244390 0 619075 X 9318 1990379 448954 1496361 293597 200534 123052 1815049 2469197 PURCHASED POWER 15892947 DISTRIBUTION EXPENSES 2138855 ADMIN & GENERAL EXPENSE 595696 CONSUMER EXPENSE 484568 5590 27964097 X 1022850 2798746 1018326 695709 2315449 2868400 158419 182906 696777 751445 84377722 17330853 66552034 67046869 13501041 14287775 29135 33713 85294031 88665563 2094007 2355113 42401 35537 41658955 41525171 2390949 2401848 46186312 46317669 X 117435 119260 0 0 38990284 42228634 39107719 42347894 85294031 88665563 X 899368 349988 1990819 X X 0 1 X 0 0 0 1 X 53576 53576 1557581 565311 992270 82557736 16765542 65792194 208829 208829 67046869 PATRONAGE CAPITAL - CFC 214502 C PATRONAGE CAPITAL - TEC 652407 C PATRONAGE CAPITAL - BEC 12845033 C PATRONAGE CAPITAL - NISC 127835 C PATRONAGE CAPITAL - CTTC 12144 C MEMBERSHIPS IN ASSOCIATED ORGANIZATIONS 3140 C CAPITAL TERM CERTIFICATES - CFC 432714 C 14287775 CUSTOMER DEPOSITS 309121 DEFERRED CREDITS - UNCLAIMED CAPITAL CREDITS 572328 DEFERRED CREDITS - OTHER 83653 ACCRUED OPERATING TAXES 341155 UNINVOICED POWER COST 504558 POWER COST OVERCOLLECTED 591033 2401848 X 28863465 0 28863465 0 28863465 25973718 0 25973718 1990379 1990379 27964097 PART IV, LINE 2B: PURSUANT TO SECTION 74.3013 OF THE TEXAS PROPERTY CODE, THE COOPERATIVE HAS ESTABLISHED A RURAL SCHOLARSHIP FUND WITH AMOUNTS DESIGNATED 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. 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 ITS TAX POSITION 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 XII, LINE 4B - OTHER ADJUSTMENTS: PATRONAGE CAPITAL ALLOCATED OR TO BE ALLOCATED 1,990,379. 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. X X 0 0 0 STEVE YOUNG GENERAL MANAGER/CEO 162128 0 51 0 18772 0 47397 0 14325 0 242673 0 0 0 WILLIAM A PAFFORD LINE SUPERINTENDENT 124080 0 151 0 40977 0 43171 0 10064 0 218443 0 0 0 BRIAN GEESLIN MANAGER OF ENGINEERING 107885 0 154 0 20200 0 37754 0 13568 0 179561 0 0 0 CODY LASATER ASST. GENERAL MANAGER 128774 0 54 0 611 0 26930 0 12721 0 169090 0 0 0 JAMES G BELCHER SERVICE FOREMAN 92095 0 154 0 18090 0 36408 0 12219 0 158966 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. STEVE YOUNG: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 42,436 EMPLOYER CONTRIBUTION TO 401(K) PLAN 4,961 TOTAL REPORTED IN COLUMN C $ 47,397 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (42,436) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 54,114 EXPENSE TO THE COOPERATIVE $ 59,075 WILLIAM A PAFFORD: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 39,433 EMPLOYER CONTRIBUTION TO 401(K) PLAN 3,738 TOTAL REPORTED IN COLUMN C $ 43,171 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (39,433) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 39,984 EXPENSE TO THE COOPERATIVE $ 43,722 BRIAN GEESLIN: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 34,353 EMPLOYER CONTRIBUTION TO 401(K) PLAN 3,401 TOTAL REPORTED IN COLUMN C $ 37,754 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (34,353) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 36,652 EXPENSE TO THE COOPERATIVE $ 40,053 CODY LASATER: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 22,992 EMPLOYER CONTRIBUTION TO 401(K) PLAN 3,938 TOTAL REPORTED IN COLUMN C $ 26,930 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (22,992) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 42,483 EXPENSE TO THE COOPERATIVE $ 46,421 JAMES G BELCHER: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 34,151 EMPLOYER CONTRIBUTION TO 401(K) PLAN 2,257 TOTAL REPORTED IN COLUMN C $ 36,408 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (34,151) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 24,486 EXPENSE TO THE COOPERATIVE $ 26,743 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 BY DISTRICT. 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 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. FORM 990, PART VI, SECTION B, LINE 15 THE BOARD OF DIRECTORS USE A COMPENSATION SURVEY WHEN DETERMINING THE COMPENSATION OF THE GENERAL MANAGER/CEO. THE SURVEY SHOWS COMPARATIVE SALARIES FOR GENERAL MANAGERS FROM COOPERATIVES LOCATED IN TEXAS AND THE NATION. THE BOARD OF DIRECTORS MAY ALSO CONSIDER THE CONSUMER PRICE INDEX WHEN DETERMING THE GENERAL MANAGER/CEO'S COMPENSATION. THE BOARD USES A COMPENSATION SURVEY WHEN DETERMINING THE COMPENSATION OF THE COOPERATIVE'S OTHER EMPLOYEES MEETING THE DEFINITION OF OFFICER AND KEY EMPLOYEE, IF ANY. THE SURVEY INCLUDES SALARIES FROM SIMILAR COOPERATIVES THROUGHOUT TEXAS AND THE NATION. THE BOARD OF DIRECTORS MAY ALSO CONSIDER THE CONSUMER PRICE INDEX WHEN DETERMINING OTHER OFFICERS' COMPENSATION. FORM 990, PART VI, SECTION C, LINE 19 THE BYLAWS OF THE COOPERATIVE ARE AVAILABLE ON ITS WEBSITE. THE COOPERATIVE ALSO PROVIDES A SUMMARIZED COPY OF THE AUDITED FINANCIAL STATEMENTS TO MEMBERS OF THE COOPERATIVE AT ITS ANNUAL MEETING. ADDITIONALLY, THE COOPERATIVE WILL PROVIDE A COPY OF ITS GOVERNING DOCUMENTS, CONFLICT OF INTEREST POLICY, AND AUDITED FINANCIAL STATEMENTS TO ANY MEMBER WHO REQUESTS A COPY OF ANY SUCH DOCUMENT. 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, MEETING THE ELIGIBILITY REQUIREMENTS OF SUCH PLANS. THE COOPERATIVE ALSO PROVIDES HEALTH, LONG TERM DISABILITY, VISION AND LIFE INSURANCE TO ALL ELIGIBLE EMPLOYEES, THROUGH A QUALIFIED PLAN. THE AMOUNTS REPORTED ON PART VII, COLUMN (F) FOR THE OFFICERS 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 THE 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: THE ACCOUNTING RECORDS OF THE COOPERATIVE ARE MAINTAINED IN ACCORDANCE WITH THE RURAL UTILITIES SERVICES (RUS) UNIFORM SYSTEM OF ACCOUNTS (USOA) AS 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 $ 1,945,315 LESS: DIRECTOR FEES REPORTED ON FORMS 1099-MISC (37,191) LESS: EMPLOYEE OFFICER BENEFITS INCLUDED IN LINE 5 (101,373) PLUS: SALARIES AND WAGES CAPITALIZED DIRECTLY TO PLANT 1,040,710 PLUS: SALARIES AND WAGES CAPITALIZED/EXPENSED INDIRECTLY THROUGH CLEARING OR OTHER ACCOUNTS 1,123,120 TOTAL WAGES ACCRUED AND/OR PAID $ 3,970,581 FORM 990, PART IX, LINE 24: ADMINISTRATIVE & GENERAL EXPENSE IS COMPRISED OF THE FOLLOWING: ADMINISTRATIVE & GENERAL $ 770,686 OFFICE SUPPLIES 89,450 OUTSIDE SERVICES EMPLOYED 69,517 DIRECTOR'S FEES 38,256 ASSOCIATED DUES 42,351 MISCELLANEOUS GENERAL 266,704 UTLITY COMMISSION RELATED 44,550 MAINTENANCE OF GENERAL PLANT 11,398 TOTAL ADMIN & GENERAL EXP PER FINANCIAL STATEMENTS $ 1,332,912 LESS: RECLASS OF DONATIONS TO PART IX, LINE 1 (9,318) LESS: RECLASS OF DIRECTOR FEES TO PART IX, LINE 5 (37,191) LESS: RECLASS OF LABOR TO PART IX, LINES 5 & 7 (494,173) LESS: RECLASS OF BENEFITS TO PART IX, LINES 8-10 (196,534) TOTAL ADMIN & GENERAL EXPENSE PER FORM 990, PART IX $ 595,696 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, 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 XI, LINE 8: DURING 2019, THE COOPERATIVE IMPLEMENTED A NEW REVENUE RECOGNITION FRAMEWORK TO ACCRUE REVENUE EARNED, BUT NOT YET BILLED AT THE END OF EACH PERIOD. THE COOPERATIVE BELIEVES THAT THE NEW REVENUE RECOGNITION METHOD MORE ACCURATELY REFLECTS PERIODIC RESULTS OF OPERATIONS AND ITS ACCRUED REVENUE POSITION AT YEAR END. FORM 990, PART XI, LINE 9: PATRONAGE CAPITAL ALLOCATED OR TO BE ALLOCATED 1,990,379. NET CHANGE IN MEMBERSHIPS 1,825. OTHER COMPREHENSIVE INCOME - PROVISION FOR POST-RETIREMENT HEALTH BENEFITS -1,385. 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.