2020-11-12T10:42:29-06:00 2019-12-31 750882037 BOLINGER SEGARS GILBERT AND MOSS LLP 8215 NASHVILLE AVENUE LUBBOCK TX 79423 990 2019-01-01 750273171 LIGHTHOUSE ELECTRIC COOPERATIVE INC LIGH 8069832814 PO BOX 600 FLOYDADA TX 79235 ALBERT DANIEL GENERAL MANAGER 8069832814 2020-11-11 1 WILLIAM M MILLER P00439459 8067473806 2020-11-06 X 65.182.80.152 2020-11-11 17:15:56 CS P 587A88673713A033F58E04FDF6801CBB1F7DD2F2 587A88673713A033F58E04FDF6801CBB1F7DD2F2 2019 2021-04-22 16:20:28Z ALBERT DANIEL PO BOX 600 FLOYDADA TX 79235 30267881 0 X WWW.LIGHTHOUSE.COOP X 1939 TX TO PROVIDE ELECTRIC ENERGY TO RURAL AREAS AT COST ON A COOPERATIVE BASIS. 9 9 48 0 47495 42992 0 0 31190224 29395381 203962 72890 22969 36191 31417155 29504462 34147 36698 3685851 4323659 3537893 3575597 0 0 0 24159264 21568508 31417155 29504462 0 0 87453822 87146286 39496678 37066570 47957144 50079716 NONE 0 0 SALE OF ELECTRIC POWER TO MEMBERS ON A COOPERATIVE BASIS THROUGH THE ALLOCATION OF PATRONAGE CAPITAL. THERE WERE 9,332 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 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 26 0 48 1 1 1 0 0 0 0 26638245 1723476 0 0 0 X 9 9 0 0 0 0 1 1 1 1 0 0 0 1 0 1 0 1 0 0 X ALBERT DANIEL GENERAL MANAGER 8069832814 703A HWY 70 EAST FLOYDADA TX 79235 X ALBERT DANIEL GENERAL MANAGER 50.00 X 146576 0 61267 DANNY NIXON OPERATIONS MANAGER 50.00 X 105053 0 60162 RICHARD CLOYD DISTRIBUTION LINE SUPERINTENDENT 42.00 X 101409 0 58567 LARRY OGDEN MEMBER SERVICES DIRECTOR 40.00 X 112311 0 31768 CHAD BLUE ENGINEER 45.00 X 100940 0 22722 MARK APPLING PRESIDENT 3.80 X X 21830 0 0 JOHN DUNLAP VICE PRESIDENT 5.10 X X 21130 0 0 PAUL SCHACHT DIRECTOR 2.50 X 21060 0 0 WD THORNBERRY SECRETARY/TREASURER 3.00 X X 20780 0 0 ROBERT NIXON DIRECTOR 3.00 X 20780 0 0 DEAN YARBROUGH DIRECTOR 1.00 X 20780 0 0 WESLEY CAMPBELL DIRECTOR 1.30 X 20710 0 0 RONALD MULLIN DIRECTOR 1.50 X 20570 0 0 MARK HEGI DIRECTOR 1.40 X 13830 0 0 GAYLORD GROCE DIRECTOR (JAN-APR) 1.00 X 6950 0 0 754709 0 234486 5 0 1 0 HARGRAVE POWER INC PO BOX 849828 DALLAS TX 75284 CONSTRUCTION 792836 HI RANGE ELECTRIC INC PO BOX 2688 HEREFORD TX 79045 ELECTRIC UTILITY CONTRACTOR 661569 B&B TRUCKING 1621 NOEL MEMPHIS TX 79245 TRUCKING 206179 SGS ENGINEERING LLC 401 50TH STREET LUBBOCK TX 79404 ENGINEERING SERVICES 179851 4 X SALES OF ELECTRICITY 221000 25130976 25130976 PATRONAGE DIVIDENDS 221000 3912921 3912921 SERVICE FEES 221000 351484 351484 29395381 111526 111526 2400 0 2400 2400 2400 350000 280650 610427 58859 -260427 221791 -38636 -38636 77021 94133 -17112 -17112 INTERNET COMMISSION 517000 47495 47495 MISCELLANEOUS INCOME 221000 1923 1923 POLE ATTACHMENT INCOME 221000 1485 1485 50903 29504462 29380192 47495 76775 X 36698 4323659 396263 2096510 251448 664629 166747 1332193 2693354 PURCHASED POWER 14920391 DISTRIBUTION EXPENSE 1306805 ADMIN & GENERAL EXPENSE 496728 UNRELATED BUS. INC. TAX 9800 809237 29504462 1610969 1096750 1991666 600000 1628232 1149883 719997 1006999 4126176 3539864 83336766 34021921 49326552 49314845 28036046 30426283 14184 11662 87453822 87146286 1057768 1260612 111044 123827 32633147 34031857 5694719 1650274 39496678 37066570 X 0 0 0 0 47957144 50079716 47957144 50079716 87453822 87146286 X 0 2122572 X X 0 1 X 0 0 0 1 X 96067 96067 2201757 1678146 523611 80326582 32343775 47982807 712360 712360 49314845 PATRONAGE CAPITAL - CFC 272406 C PATRONAGE CAPITAL - COBANK 9533 C PATRONAGE CAPITAL - TEC 344175 C PATRONAGE CAPITAL - GSEC 28874067 C PATRONAGE CAPITAL - NISC 64321 C OTHER INVESTMENTS IN ASSOCIATED ORGS. 14516 C MEMBERSHIPS IN ASSOCIATED ORGS. 2695 C CAPITAL TERM CERTIFICATES - CFC 844570 C 30426283 CONSUMER DEPOSITS 505796 DEFERRED CREDITS - UNCLAIMED PROPERTY 218020 POWER COST OVER COLLECTED 926375 ACCRUED OPERATING TAXES 83 1650274 X 29494662 0 29494662 9800 9800 29504462 25171003 0 25171003 4333459 4333459 29504462 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 (IRS), AND THAT ALL TAX BENEFITS ARE LIKELY TO BE REALIZED UPON SETTLEMENT WITH TAXING AUTHORITIES. PART XI, LINE 4B - OTHER ADJUSTMENTS: EXPENSES RECLASSIFIED FROM NON-OPERATING MARGINS 9,800. PART XII, LINE 4B - OTHER ADJUSTMENTS: PATRONAGE CAPITAL ALLOCATED OR TO BE ALLOCATED 4,323,659. EXPENSES RECLASSIFIED FROM NON-OPERATING MARGINS 9,800. 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. 0 FLOYD COUNTY STOCK SHOW ASSOCIATION PO BOX 364 LOCKNEY TX 79241 752395820 501(C)(3) 5750 STOCK SHOW DONATION FOR ANIMAL SALES 1 PART II: 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. X 1 1 X 0 0 0 ALBERT DANIEL GENERAL MANAGER 135894 0 804 0 9878 0 49295 0 11972 0 207843 0 0 0 DANNY NIXON OPERATIONS MANAGER 100177 0 1200 0 3676 0 39073 0 21089 0 165215 0 0 0 RICHARD CLOYD DISTRIBUTION LINE SUPERINTENDENT 96136 0 1200 0 4073 0 37708 0 20859 0 159976 0 0 0 PART I, LINE 1A TRAVEL FOR COMPANIONS - PURSUANT TO APPLICABLE TRAVEL POLICIES, THE COOPERATIVE WILL PAY THE TRAVEL EXPENSES OF A BOARD MEMBER'S SPOUSE WHO ACCOMPANIES HIM/HER ON OFFICIAL BUSINESS OF THE COOPERATIVE AUTHORIZED BY THE PRESIDENT OR BY THE BOARD. THE COOPERATIVE WILL ALSO REIMBURSE AN EMPLOYEE FOR AUTHORIZED EXPENSES OF A SPOUSE WHO ACCOMPANIES HIM/HER ON OFFICIAL BUSINESS OF THE COOPERATIVE WITH APPROVAL FROM THE GENERAL MANAGER OR IN THE CASE OF THE GENERAL MANAGER'S SPOUSE, APPROVAL FROM THE BOARD OF DIRECTORS. NO INDIVIDUALS REPORTED ON PART VII RECEIVED THIS BENEFIT DURING THE YEAR. 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. ALBERT DANIEL: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 45,909 EMPLOYER CONTRIBUTION TO 401(K) PLAN 3,386 TOTAL REPORTED IN COLUMN C $ 49,295 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (45,909) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 20,042 EXPENSE TO THE COOPERATIVE $ 23,428 DANNY NIXON: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 36,410 EMPLOYER CONTRIBUTION TO 401(K) PLAN 2,663 TOTAL REPORTED IN COLUMN C $ 39,073 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (36,410) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 15,713 EXPENSE TO THE COOPERATIVE $ 18,376 RICHARD CLOYD: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 35,535 EMPLOYER CONTRIBUTION TO 401(K) PLAN 2,173 TOTAL REPORTED IN COLUMN C $ 37,708 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (35,535) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 12,905 EXPENSE TO THE COOPERATIVE $ 15,078 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. DISPOSAL OF A SUBSTANTIAL PORTION OF THE COOPERATIVE'S ASSETS 2. DISSOLUTION/LIQUIDATION OF THE COOPERATIVE 3. MERGER OR CONSOLIDATION WITH ANOTHER COOPERATIVE ORGANIZATION 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. THE DISCUSSION AND REVIEW OCURRED AT THE BOARD MEETING BEFORE FILING THE FORM 990. FORM 990, PART VI, SECTION B, LINE 15A THE BOARD OF DIRECTORS PERFORM AN ANNUAL REVIEW AND UTILIZE INTERNAL RESOURCES WHEN DETERMINING AND APPROVING COMPENSATION FOR THE GENERAL MANAGER. OTHER THAN THE GENERAL MANAGER, 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 AND AUDITED FINANCIAL STATEMENTS TO ANY MEMBER WHO REQUESTS A COPY OF ANY SUCH DOCUMENTS. ANNUALLY, THE COOPERATIVE PROVIDES A COPY OF THE AUDITED BALANCE SHEET AND INCOME STATEMENT TO THE MEMBERS OF THE COOPERATIVE WITH THE ANNUAL REPORT. ADDITIONALLY, A COMPLETE COPY OF THE BYLAWS CAN BE FOUND 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, MEETING THE ELIGIBILITY REQUIREMENTS OF SUCH PLANS. THE COOPERATIVE ALSO PROVIDES HEALTH AND LIFE INSURANCE TO ALL EMPLOYEES, THROUGH A QUALIFIED PLAN. THE AMOUNTS REPORTED ON PART VII, COLUMN (F) FOR 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 BEHALF OF AND FOR THEIR BENEFIT. FORM 990, PART VII, SECTION A: THE BOARD OF DIRECTORS CONSIDER THE GENERAL MANAGER TO BE BOTH THE TOP MANAGEMENT OFFICIAL AND THE TOP FINANCIAL OFFICIAL. THEREFORE, ONLY THE GENERAL MANAGER IS LISTED AS AN EMPLOYEE OFFICER. FORM 990, PART VIII, LINE 2B: 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: 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, 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 $ 2,492,773 LESS: DIRECTOR FEES REPORTED ON FORMS 1099-MISC (188,420) LESS: EMPLOYEE OFFICER BENEFITS INCLUDED IN LINE 5 (61,267) PLUS: SALARIES AND WAGES ALLOCATED TO NONOPERATING MARGIN 10,980 PLUS: SALARIES AND WAGES CAPITALIZED DIRECTLY TO PLANT 642,912 PLUS: SALARIES AND WAGES CAPITALIZED/EXPENSED INDIRECTLY THROUGH CLEARING AND OTHER ACCOUNTS 273,259 TOTAL WAGES ACCRUED AND/OR PAID $ 3,170,237 FORM 990, PART IX, LINE 24: ADMINISTRATIVE AND GENERAL EXPENSE IS COMPRISED OF THE FOLLOWING: ADMINISTRATIVE & GENERAL $ 946,546 OFFICE SUPPLIES 46,968 OUTSIDE SERVICES 94,392 INJURIES & DAMAGES 129,530 DIRECTORS 271,721 UTILITY COMMISSION 43,946 MISCELLANEOUS GENERAL 106,173 ADVERTISING 28,365 ANNUAL & DISTRICT MEETINGS 70,500 CAPITAL CREDIT ALLOCATION 14,448 UNIFORMS - EMPLOYEES 34,489 MAINTENANCE OF GENERAL PLANT 20,606 TOTAL ADMIN & GENERAL EXP PER FINANCIAL STATEMENTS $ 1,807,684 LESS: RECLASS OF DIRECTOR FEES TO PART IX, LINE 5 (188,420) LESS: RECLASS OF LABOR TO PART IX, LINES 5 & 7 (743,375) LESS: RECLASS OF BENEFITS TO PART IX, LINES 8-10 (379,161) TOTAL ADMIN & GENERAL EXP PER FORM 990, PART IX $ 496,728 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 XI, LINE 9: PATRONAGE CAPITAL ALLOCATED OR TO BE ALLOCATED 4,323,659. PATRONAGE CAPITAL RETIRED -2,199,988. NET CHANGE IN OTHER EQUITIES -1,099. FORM 990, PART XII, LINE 2C: THE BOARD AS A WHOLE IS RESPONSIBLE FOR OVERSEEING THE AUDIT AND SELECTING THE CPA WHO WILL PERFORM THE AUDIT. PROCEDURAL CHANGES DID NOT OCCUR DURING THE YEAR.