2017-11-13T15:31:40-06:00 2016-12-31 750882037 BOLINGER SEGARS GILBERT AND MOSS LLP 8215 NASHVILLE AVENUE LUBBOCK TX 79423 990 2016-01-01 480499309 THE VICTORY ELECTRIC COOPERATIVE ASSOCIATION INC VICT 6202272139 PO BOX 1335 DODGE CITY KS 678011335 SHANE LAWS CEO 6202272139 2017-11-12 1 WILLIAM M MILLER P00439459 8067473806 2017-11-12 X 65.182.80.152 2017-11-12 15:14:02 CS P BB0A6EFF21CE0653C6B3B49029A3E11A3F81D504 587910E538FB33049B4D87AFCCD061243FC33F22 2016 2017-02-10 21:41:12Z SHANE LAWS PO BOX 1335 DODGE CITY KS 678011335 71124777 0 X WWW.VICTORYELECTRIC.NET X 1945 KS TO PROVIDE QUALITY AND RELIABLE ELECTRIC SERVICE TO MEMBERS OF THE COOPERATIVE. 12 12 75 0 0 0 0 0 68510315 70566663 444777 452086 2047 20059 68957139 71038808 48833 57605 1661554 4090649 5274087 5806164 0 0 0 61940262 60415232 68924736 70369650 32403 669158 145730540 150357763 113010372 112920611 32720168 37437152 TO PROVIDE A SAFE, RELIABLE SERVICE AT A COMPETITIVE RATE, PROVIDE ECONOMIC DEVELOPMENT OPPORTUNITIES AND SERVICES FOR OUR MEMBERS, AND TO ENSURE THE FINANCIAL STABILITY OF THE COOPERATIVE THROUGH THE USE OF PRUDENT BUSINESS PRACTICES AND THE LATEST TECHNOLOGY. 0 0 PROVIDING ELECTRIC ENERGY TO OUR MEMBERS - 19,737 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 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 53 0 75 1 0 0 0 0 0 65748345 1024307 0 X 12 12 1 0 0 0 1 1 1 1 0 0 0 1 1 1 1 1 0 1 1 0 X ANGELA UNRUH CFO 6202272139 3230 N 14TH AVE DODGE CITY KS 67801 X JOHN LEIS PRESIDENT 5.00 X X 29035 0 0 PATRICK MORSE VICE PRESIDENT 8.00 X X 25203 0 0 JAMES DARYL TIEBEN SECRETARY/TREASURER 12.00 X X 26804 0 0 KENNY WEHKAMP TRUSTEE 6.00 X 27003 0 0 RANDY QUINT TRUSTEE 7.00 X 25803 0 0 JIM IMEL TRUSTEE 7.00 X 24292 0 0 KENNETH SCHULTE TRUSTEE 3.00 X 5528 0 0 GARY GILLESPIE TRUSTEE 4.50 X 24303 0 0 RICHARD LIGHTNER TRUSTEE 3.80 X 13737 0 0 CEDRIC DREWES TRUSTEE 7.00 X 32504 0 0 TERRI LARSON TRUSTEE 6.50 X 33535 0 0 JAMES L OCHS TRUSTEE 15.00 X 29635 0 0 SHANE LAWS CEO 50.00 X 269107 0 99534 ANGELA K UNRUH CFO 47.50 X 152076 0 49502 THOMAS LOWERY MANAGER OF SPECIAL PROJECTS 40.00 X 132664 0 71113 RYAN MILLER MANAGER OF OPERATIONS 45.00 X 113776 0 73206 GREG UNDERWOOD MANAGER OF ENGINEERING 44.00 X 125447 0 88432 DAVID MASDEN CREW CHIEF 48.00 X 112671 0 50264 DENZIL MCGILL MANAGER OF IT 40.00 X 105476 0 35595 1308599 0 467646 10 0 1 0 NISC PO BOX 728 MANDAN ND 58554 SOFTWARE SUPPORT SERVICES 602785 ALTEC INDUSTRIESINC 1730 VANDERBILT ROAD BIRMINGHAM AL 35234 CONSTRUCTION CONTRACTOR 207159 AMERINE UTILITIES CONSTRUCTION INC PO BOX 1546 GREAT BEND KS 67530 CONSTRUCTION CONTRACTOR 128936 WKI OPERATIONS INC 1301 MINNEOLA RD DODGE CITY KS 67801 CONSTRUCTION CONTRACTOR 126217 CH GUERNSEY & COMPANY 5555 N GRAND BLVD OKLAHOMA CITY OK 73112 ENGINEERING & CONSULTING SERVICES 110029 5 X SALES OF ELECTRICITY 221000 65204121 65204121 POWER SUPPLY PARTNERSHIP INCOME 221000 3871259 3871259 PATRONAGE DIVIDENDS 221000 664905 664905 TRANSMISSION/WHEELING 221000 577088 577088 SERVICE FEES 221000 249290 249290 70566663 399931 399931 1147 0 1147 1147 1147 75343 48059 63176 8071 12167 39988 52155 52155 13769 14722 -953 -953 POLE ATTACHMENT INCOME 221000 19865 19865 19865 71038808 70566857 0 471951 X 57605 4090649 867601 2859572 983414 851117 244460 3917776 4400157 PURCHASED POWER 47442022 DISTRIBUTION EXPENSE 2796773 ADMIN & GENERAL EXPENSE 1064395 TRANSMISSION EXPENSE 396161 397948 70369650 6913467 7520437 5200000 1303570 5566077 5569476 177883 129605 2022554 2042568 5637259 5121766 153979098 49486745 100424329 104492353 928087 875681 18830099 23273672 30785 28635 145730540 150357763 4643161 5595363 105845292 104817207 2521919 2508041 113010372 112920611 X 660 660 0 0 32719508 37436492 32720168 37437152 145730540 150357763 X 669158 12091 4035735 X X 0 1 X 1 0 841724 841724 7698075 1411294 6286781 132639876 44406235 88233641 12799423 3669216 9130207 104492353 CFC MEMBER CAPITAL SECURITIES 100000 C CFC CAPITAL TERM CERTIFICATES 310038 C PATRONAGE CAPITAL - COBANK 69563 C PATRONAGE CAPITAL - NRUCFC 274432 C PATRONAGE CAPITAL - NISC 109649 C PATRONAGE CAPITAL - NRTC 35769 C PATRONAGE CAPITAL - KEPCO 5008995 C PATRONAGE CAPITAL - SEPCO 2769834 C PATRONAGE CAPITAL - OTHER 428403 C INVESTMENT IN ASSOC - MKEC 14046989 C INVESTMENT IN ASSOC - SUNFLOWER CAPITAL 90000 C OTHER INVESTMENTS 30000 C 23273672 CONSUMER DEPOSITS 999409 ACCRUED OPERATING TAXES & FEES 1405974 DEFERRED CREDITS 102658 2508041 X 71063149 24341 24341 71038808 0 71038808 66303342 24341 24341 66279001 4090649 4090649 70369650 PART X, LINE 2: THE COOPERATIVE UTILIZES 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 XI, LINE 2D - OTHER ADJUSTMENTS: OWN USE OF ELECTRICITY RECLASSIFIED TO EXPENSE 24,341. PART XII, LINE 2D - OTHER ADJUSTMENTS: OWN USE OF ELECTRICITY RECLASSIFIED TO EXPENSE 24,341. PART XII, LINE 4B - OTHER ADJUSTMENTS: PATRONAGE CAPITAL ASSIGNABLE 4,090,649. SCHEDULE D PART IX: THE AMOUNT OF OTHER ASSETS ON FORM 990, PAGE 11, PART X, LINE 15 DOES NOT EQUAL OR EXCEED 5 PERCENT 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. SCHEDULE D, PART XII, LINE 4B: PATRONAGE CAPITAL ASSIGNABLE - $4,090,649 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. BECAUSE THE ALLOCATION OF PATRONAGE DIVIDENDS IS ONE ASPECT OF HOW THE COOPERATIVE FULFILLS ITS TAX EXEMPT PURPOSE OF OPERATING ON A COOPERATIVE BASIS, HOWEVER, THE AMOUNT OF PATRONAGE DIVIDENDS EITHER ALLOCATED OR TO BE ALLOCATED TO THE MEMBERS IS EXPENSED 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 1 1 X X X X 0 0 0 SHANE LAWS CEO 267262 0 0 0 1845 0 74560 0 24974 0 368641 0 0 0 ANGELA K UNRUH CFO 149041 0 2500 0 535 0 24978 0 24524 0 201578 0 0 0 THOMAS LOWERY MANAGER OF SPECIAL PROJECTS 127377 0 0 0 5287 0 54267 0 16846 0 203777 0 0 0 RYAN MILLER MANAGER OF OPERATIONS 112748 0 0 0 1028 0 47432 0 25774 0 186982 0 0 0 GREG UNDERWOOD MANAGER OF ENGINEERING 123031 0 0 0 2416 0 64658 0 23774 0 213879 0 0 0 DAVID MASDEN CREW CHIEF 108971 0 0 0 3700 0 34522 0 15742 0 162935 0 0 0 PART I, LINE 1A TRAVEL FOR COMPANIONS - PURSUANT TO APPLICABLE TRAVEL POLICIES, THE COOPERATIVE WILL REIMBURSE TRUSTEES THE COST OF HIS/HER SPOUSE TO ACCOMPANY HIM/HER ON OFFICIAL BUSINESS OF THE COOPERATIVE. REIMBURSABLE COSTS INCLUDE TRAVEL AND MEAL ALLOWANCES. THE COOPERATIVE WILL ALSO REIMBURSE AN EMPLOYEE FOR TRANSPORTATION AND LODGING COSTS OF HIS/HER SPOUSE FOR APPROVED TRAVEL. DURING THE YEAR, EIGHT INDIVIDUALS REPORTED ON FORM 990, PART VII - WEHCAMP, LARSON, MORSE, IMEL, QUINT, TIEBEN, DREWES, AND OCHS- RECEIVED THIS BENEFIT. SINCE THE COOPERATIVE CONSIDERS THE REIMBURSEMENT TO BE CONSISTENT WITH A BONA FIDE BUSINESS PURPOSE, SUCH REIMBURSEMENTS WERE TREATED AS EXPENSES EXCLUDED FROM THE REPORTABLE COMPENSATION OF EACH. FORM 990, 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. 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 CONTRIBUTION TO THE PLAN IN LIEU OF THE ACTUARIAL INCREASE ARE EXPENSED IN THE FINANCIAL STATEMENTS. SHANE LAWS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 61,018 EMPLOYER CONTRIBUTION TO 401(K) PLAN 13,542 TOTAL REPORTED IN COLUMN C $ 74,560 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (61,018) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 66,308 EXPENSE TO THE COOPERATIVE $ 79,850 ANGELA UNRUH: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 15,292 EMPLOYER CONTRIBUTION TO 401(K) PLAN 9,686 TOTAL REPORTED IN COLUMN C $ 24,978 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (15,292) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 34,043 EXPENSE TO THE COOPERATIVE $ 43,729 THOMAS LOWERY: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 45,286 EMPLOYER CONTRIBUTION TO 401(K) PLAN 8,981 TOTAL REPORTED IN COLUMN C $ 54,267 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (45,286) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 31,930 EXPENSE TO THE COOPERATIVE $ 40,911 RYAN MILLER: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 39,483 EMPLOYER CONTRIBUTION TO 401(K) PLAN 7,949 TOTAL REPORTED IN COLUMN C $ 47,432 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (39,483) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 28,026 EXPENSE TO THE COOPERATIVE $ 35,975 GREG UNDERWOOD: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 56,191 EMPLOYER CONTRIBUTION TO 401(K) PLAN 8,467 TOTAL REPORTED IN COLUMN C $ 64,658 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (56,191) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 30,022 EXPENSE TO THE COOPERATIVE $ 38,489 DAVID MASDEN: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 28,904 EMPLOYER CONTRIBUTION TO 401(K) PLAN 5,618 TOTAL REPORTED IN COLUMN C $ 34,522 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (28,904) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 19,046 EXPENSE TO THE COOPERATIVE $ 24,664 FORM 990, PART VI, SECTION A, LINE 1 THE COOPERATIVE HAS 12 BOARD MEMBERS; ALL 12 ARE ALLOWED TO VOTE, HOWEVER, THE BOARD PRESIDENT VOTES ONLY IN THE CASE OF A TIE SHOULD ALL MEMBERS OF THE BOARD NOT BE PRESENT AT ANY GIVEN MEETING. FORM 990, PART VI, SECTION A, LINE 2 A BUSINESS RELATIONSHIP EXISTS BETWEEN JIM IMEL (TRUSTEE) AND SHANE LAWS (CEO). BOTH SERVE ON THE BOARD OF SUNFLOWER ELECTRIC POWER CORPORATION AT THE REQUEST OF AND FOR THE BENEFIT OF THE COOPERATIVE. A BUSINESS RELATIONSHIP EXISTS BETWEEN SHANE LAWS (CEO) AND KENNY WEHKAMP (TRUSTEE). BOTH SERVE ON THE BOARD OF MID-KANSAS ELECTRIC COMPANY, LLC AT THE REQUEST OF AND FOR THE BENEFIT OF THE COOPERATIVE. 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. AMENDMENT TO THE ARTICLES OF INCORPORATION; AND 5. AMENDMENT 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 DRAFT COPY OF THE FORM 990 TO THE BOARD FOR REVIEW AND DISCUSSION. THIS DISCUSSION AND REVIEW OCCURRED AT THE BOARD MEETING IMMEDIATELY PRECEDING THE FILING OF THE RETURN. FORM 990, PART VI, SECTION B, LINE 12C ANNUAL REVIEW OF ALL AFFECTED PARTIES AND ANY CONFLICT IS REPORTED TO THE CEO AND BOARD PRESIDENT. FORM 990, PART VI, SECTION B, LINE 15 THE BOARD OF TRUSTEES USE THE EXPERTISE OF AN INDEPENDENT COMPENSATION CONSULTANT, THE FORM 990 OF OTHER COOPERATIVES AND A COMPENSATION SURVEY WHEN DETERMINING THE COMPENSATION OF THE CEO. THE SURVEY SHOWS COMPARATIVE SALARIES FOR CEO'S AND GENERAL MANAGERS FROM SIMILARLY SITUATED COOPERATIVES LOCATED IN KANSAS AND THE NATION. THE BOARD AND CEO USE THE EXPERTISE OF AN INDEPENDENT COMPENSATION CONSULTANT AND A COMPENSATION SURVEY 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 SIMILARLY SITUATED COOPERATIVES THROUGHOUT KANSAS AND THE NATION. FORM 990, PART VI, SECTION C, LINE 19 THE COOPERATIVE WILL PROVIDE A COMPLETE COPY OF ITS GOVERNING DOCUMENTS, CONFLICT OF INTEREST POLICY, AND AUDITED FINANCIAL STATEMENTS TO ANY MEMBER WHO REQUESTS A COPY OF ANY SUCH DOCUMENT. ANNUALLY THE COOPERATIVE PROVIDES A COPY OF THE UNAUDITED BALANCE SHEET AND INCOME STATEMENT TO THE MEMBERS OF THE COOPERATIVE WITH THE ANNUAL REPORT. FINALLY, THE ANNUAL REPORT AND 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 LIMIATION OF THE PLAN. EMPLOYER CONTRIBUTIONS ARE AVAILABLE TO PARTICIPATING EMPLOYEES, INCLUDING OFFICERS AND HIGHLY COMPENSATED EMPLOYEES, MEETING THE ELIGIBILITY REQUIREMENTS OF THE PLAN. THE COOPERATIVE ALSO PROVIDES HEALTH AND LIFE INSURANCE TO ALL ELIGIBLE EMPLOYEES THROUGH A QUALIFIED PLAN. THE AMOUNTS REPORTED ON PART VII, COLUMN (F) FOR THE OFFICERS 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. 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 TO 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 RUS UNIFORM SYSTEM OF ACCOUNTS AS PRESCRIBED FOR ELECTRIC BORROWERS OF THE RURAL UTILITIES SERVICES (RUS). THE UNIFORM SYSTEM OF ACCOUNTS 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 WILL BE 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 UNIFORM SYSTEM OF ACCOUNTS. FORM 990, PART IX, LINE 24 ADMINISTRATIVE AND GENERAL EXPENSE IS COMPRISED OF THE FOLLOWING: ADMINISTRATIVE AND GENERAL TRAINING $ 19,924 OFFICE SUPPLIES EXPENSE 173,673 MISCELLANEOUS GENERAL EXPENSE 170,721 TRUSTEES' FEES AND EXPENSE 46,989 OUTSIDE SERVICES EMPLOYED 226,034 OTHER INSURANCE 81,236 MAINTENANCE OF GENERAL PLANT 128,764 REGULATORY COMMISSION EXPENSE 1,271 MEMBER MEETING EXPENSE 198,802 ADVERTISING EXPENSE 16,981 TOTAL ADMINISTRATIVE AND GENERAL EXPENSE PER 990 $ 1,064,395 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 THE TOTAL WAGES ACCRUED AND/OR PAID: TOTAL PER LINES 5-7 $ 3,727,173 LESS TRUSTEES' FEES REPORTED ON 1099-MISC (297,382) LESS EMPLOYEE OFFICER BENEFITS INCLUDED IN LINE 5 (149,036) PLUS SALARIES AND WAGES CAPITALIZED DIRECTLY TO PLANT 2,070,212 PLUS SALARIES AND WAGES CAPITALIZED/EXPENSED INDIRECTLY THROUGH CLEARING & OTHER ACCOUNTS 438,800 TOTAL WAGES ACCRUED AND/OR PAID $ 5,789,767 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 2016 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 ASSIGNABLE 4,090,649. PATRONAGE CAPITAL RETIRED - TOTAL -100,477. PATRONAGE CAPITAL RETIRED - RECLAIMED -74. MKEC OCI ALLOCATION 45,637. FORM 990, PART XII, LINE 2C THE BOARD OF TRUSTEES HAVE ASSIGNED MEMBERS TO AN AUDIT COMMITTEE TO OVERSEE THE FINANCIAL STATEMENT AUDIT AND TO RECOMMEND TO THE BOARD AN INDEPENDENT CPA FIRM TO PERFORM THE AUDIT. MID-KANSAS ELECTRIC COMPANY LLC 301 W 13TH STREET HAYS KS 67601 203153418 POWER GENERATION AND TRANSMISSION KS RELATED 0 3682389 14046988 0 0 0.24920