2017-11-14T09:53:01-06:00 2016-12-31 750882037 BOLINGER SEGARS GILBERT AND MOSS LLP 8215 NASHVILLE AVENUE LUBBOCK TX 79423 990 2016-01-01 750405473 LYNTEGAR ELECTRIC COOPERATIVE INC LYNT 8065614588 PO BOX 970 TAHOKA TX 79373 RAY BOX CFO 8065614588 2017-11-14 1 WILLIAM M MILLER P00439459 8067473806 2017-11-02 X 65.182.80.152 2017-11-14 08:59:13 CS P BB0A6EFF21CE0653C6B3B49029A3E11A3F81D504 587910E538FB33049B4D87AFCCD061243FC33F22 2016 2017-02-10 21:41:12Z GREG HENLEY PO BOX 970 TAHOKA TX 79373 65990626 0 X WWW.LYNTEGAR.COOP X 1938 TX TO PROVIDE QUALITY AND RELIABLE ELECTRIC SERVICE TO MEMBERS OF THE COOPERATIVE. 7 6 125 0 62720 0 0 0 61409145 64804554 1436616 650084 532192 248527 63377953 65703165 4935 4080 2869989 3335460 7729893 7461960 0 0 0 52073900 54505045 62678717 65306545 699236 396620 226576725 230262682 119604094 120595405 106972631 109667277 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 - 22,448 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 1 0 1 1 1 0 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 1 0 0 0 0 0 1 0 0 0 1 X 38 0 125 1 1 1 0 0 0 0 63803061 2101415 0 X 7 6 0 0 0 0 1 1 1 1 0 0 0 1 1 1 1 1 1 1 1 0 X RAY BOX CFO 8065614588 1701 US HIGHWAY 87 TAHOKA TX 79373 X EARL J BROWN JR PRESIDENT 9.50 X X 23346 0 0 WAYNE T HOWARD VICE PRESIDENT 1.70 X X 20973 0 0 BILLY WEAVER SECRETARY-TREASURER 3.00 X X 23397 0 0 BENJAMIN FRANKLIN DIRECTOR 2.00 X 21572 0 0 RICKY DAY DIRECTOR 2.60 X 20172 0 0 HR BARRON DIRECTOR 2.00 X 20809 0 0 KEVIN MITCHELL DIRECTOR 1.90 X 19472 0 0 GREG HENLEY CEO 50.00 X 196602 0 53841 RAY BOX CFO 45.00 X 130825 0 40996 BARRY PITTMAN MANAGER OF MEMBER SERVICES 45.00 X 117586 0 37969 WILLIAM ATEN MANAGER OF ENGINEERING 45.00 X 121887 0 39818 GLENN ANDERSON MANAGER OF OPERATIONS 40.00 X 119356 0 24735 MENFORD R GANDY MANAGER OPERATIONS 45.00 X 122880 0 37579 958877 0 234938 6 0 1 0 PLASKA PO BOX 7630 AMARILLO TX 79114 SUBSTATION CONSTRUCTION 4203913 SGS ENGINEERING LLC 401 50TH STREET LUBBOCK TX 79404 ENGINEERING SERVICES 150463 2 X SALES OF ELECTRICITY 221000 63188679 63188679 PATRONAGE DIVIDENDS 221000 1615875 1611740 4135 64804554 829561 829561 17007 9866 18127 0 -1120 9866 8746 9866 -1120 69394 206332 42539 -206332 26855 -179477 -179477 33926 20463 13463 13463 OTHER PASS-THRU INVESTMENT INCOME 523000 218731 45122 173609 OTHER INVESTMENT INCOME 523000 3950 3950 POLE ATTACHMENT INCOME 221000 3637 3637 226318 65703165 64810285 62720 830160 X 4080 3335460 572005 5269118 405927 848709 366201 4067202 6734466 PURCHASED POWER 37527319 DISTRIBUTION EXPENSE 4012780 ADMIN & GENERAL EXPENSE 1406370 CONSUMER EXPENSE 320695 436213 65306545 368380 581124 1050475 787937 3832171 4513016 2473713 3773334 135419 133727 195046543 51192036 137729053 143854507 18502451 19254706 61744312 56830933 740751 533398 226576725 230262682 6787174 7263602 135554 127218 104120995 110867238 8560371 2337347 119604094 120595405 X 26650 26820 0 0 106945981 109640457 106972631 109667277 226576725 230262682 X 396620 721465 1576561 X X 0 1 X 0 0 0 1 X 314489 314489 8744268 1136569 7607699 182925399 50055467 132869932 3062387 3062387 143854507 COMMON STOCKS 656424 F ALTERNATIVE INVESTMENTS 4241903 F MUTUAL FUNDS 7487464 F EXCHANGE-TRADED FUNDS (ETF) & CLOSED-END FUNDS (CEF) 6868915 F 19254706 PATRONAGE CAPITAL - CFC 2056292 C PATRONAGE CAPITAL - NISC 50126 C PATRONAGE CAPITAL - NRTC 453376 C PATRONAGE CAPITAL - TEC 657982 C PATRONAGE CAPITAL - GSEC 41463395 C PATRONAGE CAPITAL - OTHER 3642 C CONTRIBUTED CAPITAL - GSEC 4599615 C CAPITAL TERM CERTIFICATES - CFC 2541845 C MEMBER CAPITAL SECURITIES - CFC 5000000 C OTHER INVESTMENTS - MEMBERSHIPS 4660 C 56830933 POWER COST OVER RECOVERY 566183 ACCUMULATED POST RETIREMENT BENEFIT OBLIGATION 761885 UNCLAIMED PATRONAGE CAPITAL 907790 OTHER DEFERRED CREDITS 75676 ACCRUED TAXES 25813 2337347 X 65130038 0 65130038 573127 573127 65703165 61478462 0 61478462 3828083 3828083 65306545 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 TEXAS 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. ALSO PURSUANT TO SECTION 74.3013 OF THE TEXAS PROPERTY CODE, THE COOPERATIVE HAS ESTABLISHED AN ECONOMIC DEVELOPMENT FUND WITH AMOUNTS DESIGNATED UNCLAIMED UNDER TEXAS STATE LAW. THE AMOUNTS DEPOSITED INTO THE ECONOMIC DEVELOPMENT FUND ARE APPROVED BY THE STATE OF TEXAS AND CAN ONLY BE USED FOR THE STIMULATION AND IMPROVEMENT OF BUSINESS AND COMMERCIAL ACTIVITY FOR ECONOMIC DEVELOPMENT IN RURAL COMMUNITIES. ANY AMOUNTS SO DEPOSITED INTO THE ECONOMIC DEVELOPMENT FUND ARE STILL PAYABLE TO THE PERSON TO WHOM THE ORIGINAL PAYMENT WAS MADE BUT UNCLAIMED. ALSO PURSUANT TO SECTION 74.3013 OF THE TEXAS PROPERTY CODE, THE COOPERATIVE HAS ESTABLISHED AN ENERGY EFFICIENCY ASSISTANCE FUND WITH AMOUNTS DESIGNED UNCLAIMED UNDER TEXAS STATE LAW. THE AMOUNTS DEPOSITED INTO THE ENERGY EFFICIENCY ASSISTANCE FUND ARE APPROVED BY THE STATE OF TEXAS AND CAN ONLY BE USED TO ASSIST MEMBERS OF AN ELECTRIC COOPERATIVE IN REDUCING THEIR ENERGY CONSUMPTION AND ELECTRICITY BILLS. ANY AMOUNTS SO DEPOSITED INTO THE ENERGY EFFICIENCY ASSISTANCE 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 THEIR TAX POSITIONS WILL BE SUSTAINED UPON EXAMINATION BY THE INTERNAL REVENUE SERVICE OR OTHER STATE TAX AUTHORITY, AND THAT ALL TAX BENEFITS ARE LIKELY TO BE REALIZED UPON SETTLEMENT WITH TAXING AUTHORITIES. PART XI, LINE 4B - OTHER ADJUSTMENTS: INVESTEMENT EXPENSES NETTED WITH INVESTMENT INCOME ON FINANCIAL STATEMENTS 492,623. BOOK TO TAX ADJUSTMENTS FOR INCOME REPORTED ON PARTNERSHIP K-1'S 80,504. PART XII, LINE 4B - OTHER ADJUSTMENTS: PATRONAGE CAPITAL ASSIGNABLE 3,335,460. INVESTEMENT EXPENSES NETTED WITH INVESTMENT INCOME ON FINANCIAL STATEMENTS 492,623. 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. 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 GREG HENLEY CEO 187770 0 2783 0 6049 0 20333 0 33508 0 250443 0 0 0 RAY BOX CFO 125288 0 2454 0 3083 0 13533 0 27463 0 171821 0 0 0 BARRY PITTMAN MANAGER OF MEMBER SERVICES 111029 0 1437 0 5120 0 12001 0 25968 0 155555 0 0 0 WILLIAM ATEN MANAGER OF ENGINEERING 120521 0 518 0 848 0 13004 0 26814 0 161705 0 0 0 MENFORD R GANDY MANAGER OPERATIONS 115632 0 3362 0 3886 0 12636 0 24943 0 160459 0 0 0 CODY HOGG FAMILY RELATIONSHIP 55572 CODY HOGG RECEIVED COMPENSATION AS AN EMPLOYEE OF THE COOPERATIVE. HE AND BOARD MEMBER, KEVIN MITCHELL, ARE FAMILY MEMBERS PER THE 990 DEFINITION OF FAMILY MEMBERS. 0 0 FORM 990, PART VI, SECTION A, LINE 1 THE BOARD OF DIRECTORS IS COMPRISED OF 7 VOTING MEMBERS. HOWEVER, THE BOARD PRESIDENT VOTES ONLY IN THE CASE OF A TIE. 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. 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, REVIEW AND APPROVAL 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 ON AN ANNUAL BASIS, LEGAL COUNSEL IS REQUIRED TO REVIEW THE CONFLICT OF INTEREST POLICY WITH THE DIRECTORS AND OFFICERS AT THE FIRST MEETING OF THE BOARD OF DIRECTORS FOLLOWING ELECTIONS. EACH DIRECTOR AND OFFICER MUST ALSO COMPLETE AND SIGN A CONFLICT OF INTEREST CERTIFICATION AND DISCLOSURE FORM. THEREAFTER, DIRECTORS AND OFFICERS ARE REQUIRED TO DISCLOSE ANY ACTION OR SITUATION THAT MIGHT VIOLATE THE POLICY TO THE FULL BOARD OF DIRECTORS AS SOON AS POSSIBLE. 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/CEOS FROM COOPERATIVES LOCATED IN TEXAS AND THE NATION. THE BOARD AND THE GENERAL MANAGER/CEO USE A COMPENSATION SURVEY WHEN DETERMINING THE COMPENSATION OF THE COOPERATIVE'S OTHER EMPLOYEES MEETING THE DEFINITION OF OFFICER AND HIGHLY COMPENSATED EMPLOYEES, IF ANY. THE SURVEY INCLUDES SALARIES FROM SIMILAR COOPERATIVES THROUGHOUT TEXAS AND THE NATION. FORM 990, PART VI, SECTION C, LINE 19 THE COOPERATIVE PROVIDES A SUMMARIZED COPY OF THE AUDITED FINANCIAL STATEMENTS TO THE MEMBERS OF THE COOPERATIVE AT THE ANNUAL MEETING AND THE COOPERATIVE BY-LAWS ARE AVAILABLE ON THE COOPERATIVE'S WEBSITE. THE COOPERATIVE WILL PROVIDE A COMPLETE COPY OF THE AUDITED FINANCIAL STATEMENTS, CONFLICT OF INTEREST POLICY, OR GOVERNING DOCUMENTS 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. AS PART OF THE PLAN DOCUMENT, THE COOPERATIVE PROVIDES A BASE AND A MATCHING CONTRIBUTION. EMPLOYER CONTRIBUTIONS TO THIS PLAN ARE AVAILABLE TO PARTICIPATING EMPLOYEES, INCLUDING OFFICERS AND HIGHLY COMPENSATED EMPLOYEES, MEETING THE ELIGIBILITY REQUIREMENTS OF SUCH PLAN. THE COOPERATIVE ALSO PROVIDES HEALTH, DENTAL, VISION AND LIFE INSURANCE TO ALL EMPLOYEES THROUGH A QUALIFIED PLAN. THE AMOUNTS REPORTED ON PART VII, COLUMN (F) FOR THE OFFICERS AND HIGHLY COMPENSATED EMPLOYEES ARE COMPRISED OF THE TOTAL AMOUNT CONTRIBUTED TO THE 401(K) PENSION PLAN AND THE INSURANCE PAID 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 PER PERSON 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 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 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 UNIFORM SYSTEM OF ACCOUNTS. 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 $ 5,841,123 LESS DIRECTORS FEES REPORTED ON 1099-MISC (149,741) LESS EMPLOYEE OFFICER BENEFITS INCLUDED IN LINE 5 (94,837) PLUS SALARIES AND WAGES CAPITALIZED DIRECTLY TO PLANT 2,009,708 PLUS SALARIES AND WAGES CAPITALIZED/EXPENSED INDIRECTLY THROUGH CLEARING AND OTHER ACCOUNTS 939,858 TOTAL WAGES ACCRUED AND/OR PAID $ 8,546,111 FORM 990, PART IX, LINE 24 ADMINISTRATIVE AND GENERAL EXPENSE IS COMPRISED OF THE FOLLOWING: SAFETY AND TRAINING $ 138,774 OFFICE SUPPLIES AND EXPENSE 397,262 OUTSIDE SERVICES EMPLOYED 98,070 INJURIES AND DAMAGES 152,383 REGULATORY COMMISSION EXPENSE 105,471 DIRECTOR'S EXPENSES 13,201 DUES PAID ASSOCIATED ORGANIZATIONS 86,715 ANNUAL MEETING 77,520 GENERAL ADVERTISING 87,360 MAINTENANCE OF GENERAL PLANT 249,614 TOTAL ADMINISTRATIVE AND GENERAL EXPENSE PER 990 $ 1,406,370 FORM 990, PART IX, LINE 24E OTHER EXPENSE IS COMPRISED OF THE FOLLOWING: SALES EXPENSE $ 58,437 BROKERAGE FEES ON INVESTMENTS 140,329 TRANSMISSION EXPENSE 16,251 SATELLITE AND INTERNET OPERATING EXPENSES 8,015 INVESTMENT EXPENSES AND DEDUCTIONS 213,181 TOTAL OTHER EXPENSES PER FORM 990 LINE 24E $ 436,213 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 IX, LINE 1 ALL GRANTS, SPONSORSHIPS AND DONATIONS ARE MADE TO NON-PROFIT AND CIVIC ORGANIZATIONS THAT ARE LOCATED IN THE COOPERATIVE'S SERVICE AREA. ALL DONATIONS ARE INTENDED TO IMPROVE THE COMMUNITIES IN WHICH OUR MEMBERS RESIDE. EACH GRANT, SCHOLARSHIP AND/OR DONATION MADE DURING THE YEAR WAS BELOW THE REPORTING THRESHOLD OF SCHEDULE I, PART II. FORM 990, PART XI, LINE 9: PATRONAGE CAPITAL ASSIGNABLE 3,335,460. PATRONAGE CAPITAL RETIRED -1,641,865. NET CHANGE IN MEMBERSHIPS 170. OTHER COMPREHENSIVE INCOME - POST RETIREMENT HEALTH BENEFITS -36,700. OTHER - BOOK/TAX DIFFERENCE ON OTHER INVESTMENT INCOME -80,504. FORM 990, PART XII, LINE 2 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. 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