2020-11-10T12:59:44-06:00 2019-12-31 750882037 BOLINGER SEGARS GILBERT AND MOSS LLP 8215 NASHVILLE AVENUE LUBBOCK TX 79423 990 2019-01-01 750261611 FANNIN COUNTY ELECTRIC COOPERATIVE INC FANN 9035832117 PO BOX 250 BONHAM TX 75418 JOHN ED SHINPAUGH GENERAL MANAGER 9035832117 2020-11-10 1 WILLIAM M MILLER P00439459 8067473806 2020-11-04 X 65.182.80.152 2020-11-10 11:43:27 CS P 954CA8D01CFBC3DD23DC63FC91DC923EB9CBFAF9 587A88673713A033F58E04FDF6801CBB1F7DD2F2 2019 2021-04-22 16:20:28Z JOHN ED SHINPAUGH PO BOX 250 BONHAM TX 75418 23720127 0 X WWW.FCEC.COOP X 1939 TX TO PROVIDE QUALITY AND RELIABLE ELECTRIC SERVICE TO MEMBERS AT COST ON A COOPERATIVE BASIS. 7 7 35 0 0 0 0 0 22883644 22740720 -695444 734180 18898 6524 22207098 23481424 5135 5167 1467266 1422535 2533350 2977531 0 0 0 17715941 18342011 21721692 22747244 485406 734180 86763876 75848219 62774898 50058221 23988978 25789998 NONE 0 0 PROVIDING ELECTRIC ENERGY TO OUR MEMBERS ON A COOPERATIVE BASIS THROUGH THE ALLOCATION OF PATRONAGE CAPITAL. THERE WERE 10,589 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 29 0 35 1 0 0 0 0 0 22617238 1033464 0 0 0 X 7 7 0 0 1 0 1 1 1 1 0 0 0 1 0 1 1 1 1 0 X KAREN RINTELMANN CFO 9035832117 PO BOX 250 BONHAM TX 75418 X JOHN ED SHINPAUGH GENERAL MANAGER 50.00 X 177676 0 85590 RODNEY GAMMONS LINE SUPERINTENDENT 40.00 X 109922 0 105056 TIM KIDWELL ASST. MANAGER 40.00 X 132448 0 66055 BARRY MURCHISON ENGINEER MANAGER 40.00 X 111418 0 57363 KAREN RINTELMANN CFO 40.00 X 93707 0 31959 STEPHEN COLLIDA PRESIDENT 1.10 X X 6575 0 0 ROBERT MILTON SECRETARY/TREASURER 1.00 X X 6575 0 0 RODNEY BRENT DIRECTOR 1.00 X 6575 0 0 JOHN SKOTNIK VICE PRESIDENT 3.60 X 6575 0 0 LOYD COOPER DIRECTOR 0.80 X 6375 0 0 ALFRED SCOTT DIRECTOR 1.00 X 6375 0 0 SCOTT GIBBS DIRECTOR 1.00 X X 6175 0 0 670396 0 346023 4 0 1 0 SOUTHERN ELECTRIC CORPORATION PO BOX 320398 FLOWOOD MS 39232 ELECTRICAL CONTRACTOR 5359061 LINETEC PO BOX 13650 ALEXANDRIA LA 71315 ELECTRICAL CONTRACTOR 3885581 CANYON POWER SOLUTIONS 8300 WINTERSTEIN DR AUSTIN TX 78745 ELECTRICAL CONTRACTOR 1973793 M&S ENGINEERING PO BOX 970 SPRING BRANCH TX 78070 ENGINEERING 1806686 BACCO TREE SERVICE 20400 E 103RD ST N CLAREMORE OK 74019 TREE TRIMMING 887217 10 X SALES OF ELECTRICITY 221000 21597209 21597209 PATRONAGE DIVIDENDS 221000 654722 654722 SERVICE FEES 221000 316752 316752 WHOLESALE TRANSMISSION ACCESS 221000 172037 172037 22740720 940583 940583 32300 238703 -206403 -206403 -206403 POLE ATTACHMENT INCOME 221000 6524 6524 6524 23481424 22740720 0 740704 X 5167 1422535 632660 1306863 236000 671206 130802 611368 1807518 PURCHASED POWER 12795259 DISTRIBUTION EXPENSE 2127315 ADMIN & GENERAL EXPENSE 741075 CONSUMER EXPENSE 254717 4759 22747244 1799205 520452 45166192 30971733 783698 817424 215428 118716 1193890 2254221 52981876 19128219 31275621 33853657 5424022 6028521 905820 1283495 86763876 75848219 2114530 3708444 36623 39982 13759121 13859535 46864624 32450260 62774898 50058221 X 72805 74385 0 0 23916173 25715613 23988978 25789998 86763876 75848219 X 734180 1066840 X X 0 1 X 0 0 0 1 X 83157 83157 844359 360941 483418 48916758 18767278 30149480 3137602 3137602 33853657 PATRONAGE CAPITAL-NISC 70142 C PATRONAGE CAPITAL-TEC 198069 C PATRONAGE CAPITAL-CFC 521839 C PATRONAGE CAPITAL-RCEC 4849626 C PATRONAGE CAPITAL-CRC 10988 C MEMBERSHIPS IN ASSOC ORGS 3585 C CAPITAL TERM CERTIFICATES-CFC 374272 C 6028521 ACCUMULATED PROVISION FOR PENSION & BENEFITS 1858404 CONSUMER DEPOSITS 189251 ACCRUED OPERATING TAXES 167166 POWER COST RECOVERY - OVERBILLED 502346 DEFERRED CREDITS - OTHER 23374 DEFERRED CREDITS - ADVANCES FOR CONSTRUCTION 29234904 DEFERRED CREDITS - UNCLAIMED CAPITAL CREDITS 474815 32450260 X 23481424 0 23481424 0 23481424 21324709 0 21324709 1422535 1422535 22747244 PART IV, LINE 2B: PURSUANT TO SECTION 74.3013 OF THE TEXAS PROPERTY CODE, THE COOPERATIVE HAS ESTABLISHED A RURAL SCHOLARSHIP FUND WITH AMOUNTS DETERMINED 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 HAS DETERMINED THAT IT IS MORE LIKELY THAN NOT THAT ITS TAX POSITION 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 XII, LINE 4B - OTHER ADJUSTMENTS: PATRONAGE CAPITAL ALLOCATED OR TO BE ALLOCATED 1,422,535. 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 ALLOCATED OR TO BE 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 X 0 0 0 JOHN ED SHINPAUGH GENERAL MANAGER 164968 0 220 0 12488 0 51768 0 33822 0 263266 0 0 0 RODNEY GAMMONS LINE SUPERINTENDENT 106395 0 660 0 2867 0 71618 0 33438 0 214978 0 0 0 TIM KIDWELL ASST. MANAGER 128609 0 180 0 3659 0 32454 0 33601 0 198503 0 0 0 BARRY MURCHISON ENGINEER MANAGER 109327 0 140 0 1951 0 23903 0 33460 0 168781 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. JOHN ED SHINPAUGH: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 50,118 EMPLOYER CONTRIBUTION TO 401(K) PLAN 1,650 TOTAL REPORTED IN COLUMN C $ 51,768 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (50,118) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 31,157 EXPENSE TO THE COOPERATIVE $ 32,807 RODNEY GAMMONS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 70,584 EMPLOYER CONTRIBUTION TO 401(K) PLAN 1,034 TOTAL REPORTED IN COLUMN C $ 71,618 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (70,584) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 20,093 EXPENSE TO THE COOPERATIVE $ 21,127 TIM KIDWELL: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 31,217 EMPLOYER CONTRIBUTION TO 401(K) PLAN 1,237 TOTAL REPORTED IN COLUMN C $ 32,454 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (31,217) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 24,722 EXPENSE TO THE COOPERATIVE $ 25,959 BARRY MURCHISON: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 22,810 EMPLOYER CONTRIBUTION TO 401(K) PLAN 1,093 TOTAL REPORTED IN COLUMN C $ 23,903 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (22,810) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 20,647 EXPENSE TO THE COOPERATIVE $ 21,740 FORM 990, PART VI, SECTION A, LINE 4 DURING THE YEAR, THE COOPERATIVE AMENDED ITS BYLAWS. THE FOLLOWING IS A SUMMARY OF CHANGES MADE: ARTICLE 5 - BOARD MEETINGS AND DIRECTOR VOTING, SECTION 5.5 - BOARD ACTION BY WRITTEN CONSENT, WAS EXPANDED TO STATE: A) EXCEPT FOR ANY ACTION UNDER SECTION 4.8.A OF THESE BYLAWS (DIRECTOR REMOVAL BY THE BOARD), THE BOARD MAY TAKE ACTION REQUIRED OR PERMITTED TO BE TAKEN AT A BOARD MEETING, WITHOUT A BOARD MEETING, IF THE ACTION IS EVIDENCED BY ONE OR MORE WRITTEN CONSENTS ("DIRECTOR WRITTEN CONSENT"): (I) DESCRIBING THE ACTION TAKEN; (II) SIGNED BY THE NUMBER OF DIRECTORS NECESSARY TO TAKE THAT ACTION AT A MEETING AT WHICH ALL OF THE DIRECTORS ARE PRESENT AND VOTING; AND (III) INCLUDED WITH THE BOARD MEETING MINUTES. EXCEPT AS A DIFFERENT EFFECTIVE DATE IS STATED OR PROVIDED IN THE DIRECTOR WRITTEN CONSENT, ACTION TAKEN BY DIRECTOR WRITTEN CONSENT IS EFFECTIVE WHEN THE LAST DIRECTOR SIGNS THE DIRECTOR WRITTEN CONSENT. A DIRECTOR WRITTEN CONSENT MAY BE SIGNED IN COUNTERPARTS. A DIRECTOR WRITTEN CONSENT HAS THE EFFECT OF, AND MAY BE DESCRIBED AS, A BOARD MEETING VOTE; B) DIRECTOR WRITTEN CONSENT" SHALL INCLUDE A DIRECTOR'S CONSENT TO THE ACTION BY ELECTRONIC TRANSMISSION, INCLUDING BUT LIMITED TO PDF OR FACSIMILE OF AN EXECUTED SIGNATURE PAGE, E-SIGNATURE (SUCH AS DOCUSIGN) OR AN EMAIL TRANSMISSION INDICATING APPROVAL; AND C) PROMPT NOTICE OF THE TAKING OF AN ACTION BY DIRECTOR'S WITHOUT A MEETING BY LESS THAN UNANIMOUS WRITTEN CONSENT SHALL BE GIVEN TO EACH DIRECTOR WHO DID NOT CONSENT IN WRITING TO THE ACTION. A COMPLETE COPY OF THE BYLAWS CAN BE FOUND ON THE COOPERATIVE'S WEBSITE AT: HTTPS://WWW.FCEC.COOP/FCEC-BYLAWS 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. THE 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 15 THE BOARD OF DIRECTORS USE THE EXPERTISE OF AN INDEPENDENT CONSULTANT AND 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. THE GENERAL MANAGER USES THE EXPERTISE OF AN INDEPENDENT CONSULTANT AND 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 PROVIDES A SUMMARIZED COPY OF THE AUDITED BALANCE SHEET AND INCOME STATEMENT TO THE MEMBERS OF THE COOPERATIVE AT THE ANNUAL MEETING. THE COOPERATIVE WILL PROVIDE A COMPLETE COPY OF THE BYLAWS, TARIFFS, AND AUDITED FINANCIAL STATEMENTS TO ANY MEMBER WHO REQUESTS A COPY. 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, VISION 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 AND THE TOTAL AMOUNT CONTRIBUTED BY THE COOPERATIVE TO THE DEFINED CONTRIBUTION PLAN ON BEHALF OF AND FOR THEIR BENEFIT. IN ADDITION TO THE ABOVE PENSION 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 COOPERATIVE TO ITS MEMBERS. FORM 990, PART IX: ALTHOUGH THE COOPERATIVE IS NO LONGER A RURAL UTILITIES SERVICE (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 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, LINE 1: ALL GRANTS AND/OR DONATIONS ARE MADE TO NON-PROFIT AND CIVIC ORGANIZATIONS THAT ARE LOCATED IN THE COOPERATIVE'S SERVICE AREA, AND INTENDED TO IMPROVE THE COMMUNITIES IN WHICH OUR MEMBERS RESIDE. EACH GRANT AND/OR DONATION MADE DURING THE YEAR WAS BELOW THE REPORTING THRESHOLD OF SCHEDULE I, PART II. FORM 990, PART IX, LINE 4: PURSUANT TO 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 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 $ 1,939523 LESS: DIRECTOR FEES REPORTED ON FORMS 1099-MISC (45,225) LESS: EMPLOYEE OFFICER BENEFITS REPORTED ON LINE 5 (183,604) PLUS: SALARIES AND WAGES CAPITALIZED DIRECTLY TO PLANT 749,276 TOTAL WAGES ACCRUED AND/OR PAID $ 2,459,970 FORM 990, PART IX, LINE 24: ADMINISTRATIVE & GENERAL EXPENSE IS COMPRISED OF THE FOLLOWING: ADMINISTRATIVE & GENERAL $ 888,945 OFFICE SUPPLIES 213,523 OUTSIDE SERVICES 149,352 INSURANCES AND DAMAGES 102,764 REGULATORY COMMISSION 36,990 MISCELLANEOUS GENERAL 78,095 DIRECTORS 83,497 DUES & SUBSCRIPTIONS 30,552 MAINTENANCE OF GENERAL PLANT 19,800 TOTAL ADMIN & GENERAL EXP PER FINANCIAL STATEMENTS $ 1,603,518 LESS: RECLASS OF DIRECTOR FEES TO PART IX, LINE 5 (45,225) LESS: RECLASS OF LABOR TO PART IX, LINES 5 & 7 (476,761) LESS: RECLASS OF BENEFITS TO PART IX, LINES 8-10 (340,457) TOTAL ADMIN & GENERAL EXPENSE PER FORM 990, PART IX $ 741,075 FORM 990, PART XI, LINE 9: PATRONAGE CAPITAL ALLOCATED OR TO BE ALLOCATED 1,422,535. PATRONAGE CAPITAL RETIRED -799,739. NET CHANGE IN OTHER EQUITIES 4,894. NET CHANGE IN UNALLOCATED ACCRUED UNBILLED REVENUE 366,100. OTHER COMPREHENSIVE INCOME - PENSION & BENEFITS 71,470. NET INCREASE IN MEMBERSHIPS 1,580. 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.