2017-11-08T10:28:30-06:00 2016-12-31 750882037 BOLINGER SEGARS GILBERT AND MOSS LLP 8215 NASHVILLE AVENUE LUBBOCK TX 79423 990 2016-01-01 850096243 LEA COUNTY ELECTRIC COOPERATIVE INC LEAC 5753963631 PO BOX 1447 LOVINGTON NM 882601447 GARY HURSE EVP & GENERAL MANAGER 5753963631 2017-10-30 1 WILLIAM M MILLER P00439459 8067473806 2017-10-30 X 65.182.80.152 2017-10-30 07:57:33 CD P BB0A6EFF21CE0653C6B3B49029A3E11A3F81D504 F209397801A578BBC6965567C9535F5B1AD51342 2016 2021-01-29 14:40:06Z GARY HURSE PO BOX 1447 LOVINGTON NM 882601447 84873501 0 X WWW.LCECNET.COM X 1949 NM TO PROVIDE ELECTRIC ENERGY TO RURAL AREAS AT COST ON A COOPERATIVE BASIS. 9 9 92 0 6900 5400 0 0 85704369 83689450 391105 882124 156470 159471 86251944 84731045 18687 21513 4084485 3318439 6314930 6844284 0 0 0 75833842 74546809 86251944 84731045 0 0 196124466 197895517 107647518 107670510 88476948 90225007 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 SALE OF ELECTRIC POWER TO MEMBERS - 15,688 CONNECTED METERS WERE PROVIDED POWER AT YEAR END AT COST ON A COOPERATIVE BASIS THROUGH THE ALLOCATION OF PATRONAGE CAPITAL. 0 0 0 0 0 0 0 0 0 1 0 1 1 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 1 1 0 0 1 59 0 92 1 1 1 0 0 0 0 83112650 2189504 0 X 9 9 0 0 0 0 1 1 1 1 0 1 0 1 0 0 0 1 1 0 X GARY HURSE EVP & GM 5753963631 1300 W AVENUE D LOVINGTON NM 882601447 X JOHN GRAHAM PRESIDENT 8.90 X X 29209 0 0 ROBERT CAUDLE VICE-PRESIDENT 9.40 X X 35352 0 0 DAN HARDIN SECRETARY/TREASURER 2.20 X X 25883 0 0 RANDALL MCCORMICK TRUSTEE 5.90 X 21126 0 0 KENNY WALLACE TRUSTEE 2.80 X 27310 0 0 TERRY DAVIS TRUSTEE 3.50 X 26721 0 0 CHARLES KINSOLVING TRUSTEE 4.30 X 29529 0 0 CHARLES GARNER JR TRUSTEE 4.10 X 26768 0 0 TRAVIS GLENN TRUSTEE 2.00 X 10744 0 0 JOHN INGLE TRUSTEE (JAN-APRIL) 10.60 X 16195 0 0 RAY HILBURN TRUSTEE (JAN-APRIL) 6.80 X 10515 0 0 GARY HURSE EVP & GENERAL MANAGER 60.00 X 454858 0 34969 BOBBY KIMBRO ASSISTANT GENERAL MANAGER 60.00 X 183795 0 86624 JOHN BENARD DISTRIBUTION MANAGER 50.00 X 139031 0 86707 MICHAEL FARIS ACCOUNTING MANAGER 50.00 X 146877 0 104099 JANETTE FARIS ADMIN SERVICE MANAGER 50.00 X 131146 0 95596 DOUG GRUENWALD LINE FOREMAN 50.00 X 118773 0 66666 ARTHUR PANDO LINE FOREMAN 50.00 X 116161 0 35972 DEAN KINSOLVING FORMER TRUSTEE (2015) 0.00 X 15456 0 0 1565449 0 510633 10 1 1 0 GREAT SOUTHWESTERN CONSTRUCTION 1100 TOPEKA WAY CASTLE ROCK CO 80109 SUBSTATION MAINTENANCE 546035 ARC POWER LINE CONSTRUCTION 6551-4 SEVEN RIVERS HWY ARTESIA NM 88210 DISTRIBUTION LINE CONSTRUCTION 468481 BIRD ELECTRIC ENTERPRISES 8787 IH 20 EASTLAND TX 76470 DISTRIBUTION LINE CONSTRUCTION 391414 HARGRAVE POWER 1608 MARGARET STREET HOUSTON TX 77093 SUBSTATION MAINTENANCE 192940 CBR SERVICES PO BOX 1450 EAGAR AZ 85925 DISTRIBUTION LINE CONSTRUCTION 136342 5 X SALES OF ELECTRICITY 221000 82134241 82134241 PATRONAGE DIVIDENDS 221000 1364700 1364700 SERVICE FEES 221000 108262 108262 OTHER PROGRAM REVENUE 221000 82247 82247 83689450 790805 790805 6900 0 6900 6900 6900 4634 200168 2763 110720 1871 89448 91319 91319 28801 28973 -172 -172 POLE ATTACHMENT INCOME 221000 152743 152743 152743 84731045 83689278 6900 1034867 X 21513 3318439 1019598 4047925 813355 644958 318448 1857597 3663246 PURCHASED POWER 63513101 DISTRIBUTION EXPENSE 2185008 ADMIN AND GENERAL 1372965 COST OF REVMOVAL EXP, N 1086315 868577 84731045 X 623389 1364454 15342063 14239348 7217304 9286873 2384439 2261262 3723072 1976120 150571951 67034627 84915024 83537324 46671999 44475851 734392 799110 26921382 28176451 7591402 11778724 196124466 197895517 11511023 8433787 275147 194100 51259545 54579021 44601803 44463602 107647518 107670510 X 35185 35215 0 0 88441763 90189792 88476948 90225007 196124466 197895517 X 0 1748059 X X 0 1 X 0 0 74537 379322 453859 6075248 2378136 3697112 143326652 64656491 78670161 716192 716192 83537324 EQUITY CONTRIBUTION - WFEC 23972730 C PATRONAGE CAPITAL - WFEC 2922102 C PATRONAGE CAPITAL - FEDERATED 602893 C PATRONAGE CAPITAL - CFC 205769 C PATRONAGE CAPITAL - TEC 192302 C PATRONAGE CAPITAL - COBANK 67233 C CAPITAL TERM CERTIFICATES - CFC 146814 C OTHER INVESTMENTS IN ASSOCIATED ORGANIZATIONS 66608 C 28176451 ACCRUED UNBILLED REVENUE 6363722 POWER COST - UNDER COLLECTED 3822030 POST RETIREMENT BENEFIT 1171900 INTEREST RECEIVABLE 421072 11778724 COST OF REMOVAL LIABILITY 37870007 CONSUMER DEPOSITS 2704160 DEFERRED CREDITS 3147150 ACCRUED OPERATING TAXES 742285 44463602 X 84731045 0 84731045 0 84731045 81412606 0 81412606 3318439 3318439 84731045 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 ASSIGNABLE 3,318,439. SCHEDULE D 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. PART VII THE AMOUNT OF INVESTMENTS - OTHER SECURITIES ON FORM 990, PAGE 11, PART X, LINE 12 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 VII HAS BEEN LEFT BLANK. 1 UNIVERSITY OF THE SOUTHWEST 6610 N LOVINGTON HWY HOBBS NM 88240 850164940 501(C)(3) 6000 HIGHER EDUCATION 1 SCHEDULE I, PART II 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. X X 1 1 X X 0 0 0 GARY HURSE EVP & GENERAL MANAGER 435835 0 1639 0 17384 0 22029 0 12940 0 489827 0 0 0 BOBBY KIMBRO ASSISTANT GENERAL MANAGER 174901 0 1624 0 7270 0 73684 0 12940 0 270419 0 0 0 JOHN BENARD DISTRIBUTION MANAGER 131328 0 1733 0 5970 0 73767 0 12940 0 225738 0 0 0 MICHAEL FARIS ACCOUNTING MANAGER 140621 0 1624 0 4632 0 92423 0 11676 0 250976 0 0 0 JANETTE FARIS ADMIN SERVICE MANAGER 125161 0 1733 0 4252 0 94938 0 658 0 226742 0 0 0 DOUG GRUENWALD LINE FOREMAN 114040 0 1733 0 3000 0 50490 0 16176 0 185439 0 0 0 ARTHUR PANDO LINE FOREMAN 106719 0 1733 0 7709 0 19715 0 16257 0 152133 0 0 0 DEAN KINSOLVING FORMER TRUSTEE (2015) 15456 0 0 0 0 0 0 0 0 0 15456 0 0 0 PART I, LINE 1A TRAVEL FOR COMPANIONS - PURSUANT TO APPLICABLE TRAVEL POLICIES, THE COOPERATIVE WILL REIMBURSE TRUSTEES AND EMPLOYEES FOR THE COST OF HIS/HER SPOUSE TO ACCOMPANY HIM/HER ON OFFICIAL BUSINESS OF THE COOPERATIVE. NO REIMBURSEMENTS WERE REPORTED DURING 2016. 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, 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. GARY HURSE: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 8,767 EMPLOYER CONTRIBUTION TO 401(K) PLAN 13,262 TOTAL REPORTED IN COLUMN C $ 22,029 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (8,767) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 106,570 EXPENSE TO COOPERATIVE $ 119,832 BOBBY KIMBRO: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 68,437 EMPLOYER CONTRIBUTION TO 401(K) PLAN 5,247 TOTAL REPORTED IN COLUMN C $ 73,684 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (68,437) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 32,603 EXPENSE TO COOPERATIVE $ 37,850 JOHN BENARD: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 69,827 EMPLOYER CONTRIBUTION TO 401(K) PLAN 3,940 TOTAL REPORTED IN COLUMN C $ 73,767 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (69,827) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 31,659 EXPENSE TO COOPERATIVE $ 35,599 MICHAEL FARIS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 88,204 EMPLOYER CONTRIBUTION TO 401(K) PLAN 4,219 TOTAL REPORTED IN COLUMN C $ 92,423 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (88,204) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 33,900 EXPENSE TO COOPERATIVE $ 38,119 JANETTE FARIS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 91,183 EMPLOYER CONTRIBUTION TO 401(K) PLAN 3,755 TOTAL REPORTED IN COLUMN C $ 94,938 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (91,183) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 30,173 EXPENSE TO COOPERATIVE $ 33,928 DOUG GRUENWALD: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 47,069 EMPLOYER CONTRIBUTION TO 401(K) PLAN 3,421 TOTAL REPORTED IN COLUMN C $ 50,490 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (47,069) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 27,492 EXPENSE TO COOPERATIVE $ 30,913 ARTHUR PANDO: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 16,513 EMPLOYER CONTRIBUTION TO 401(K) PLAN 3,202 TOTAL REPORTED IN COLUMN C $ 19,715 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (16,513) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 25,727 EXPENSE TO COOPERATIVE $ 28,929 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; 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 COPY OF THE FORM 990 TO THE BOARD FOR DISCUSSION, REVIEW AND APPROVAL PRIOR TO FILING. FORM 990, PART VI, SECTION B, LINE 15 THE BOARD OF DIRECTORS USE 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 NEW MEXICO AND THE NATION. A COMPENSATION SURVEY IS USED WHEN DETERMINING THE COMPENSATION OF KEY EMPLOYEES OF THE COOPERATIVE. THE SURVEY SHOWS COMPARATIVE SALARIES FOR SIMILAR POSITIONS FROM SIMILARLY SITUATED COOPERATIVES LOCATED IN NEW MEXICO AND THE NATION. FORM 990, PART VI, SECTION C, LINE 19 THE COOPERATIVE PROVIDES A COMPLETE COPY OF ITS GOVERNING DOCUMENTS AND AUDITED FINANCIAL STATEMENTS TO ANY MEMBER WHO REQUESTS A COPY OF ANY SUCH DOCUMENT. ANNUALLY THE COOPERATIVE MAILS A COPY OF THE AUDITED BALANCE SHEET AND INCOME STATEMENT TO THE MEMBERS OF THE COOPERATIVE WITH THE ANNUAL REPORT. FORM 990, PART VI, SECTION A, LINE 9 THE NAMES AND ADDRESSES OF DIRECTORS WHO CAN NO LONGER BE REACHED AT THE COOPERATIVE ARE AS FOLLOWS: JOHN INGLE P.O. BOX 684 TATUM, NM 88267 RAY HILBURN P.O. BOX 978 TATUM, NM 88267 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 PALN 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, KEY EMPLOYEES 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 OFFICERS, KEY EMPLOYEES AND HIGHLY COMPENSATED EMPLOYEES ARE COMPRISED OF THE ACTUARIAL INCREASE IN THE DEFINED BENEFIT PLAN, THE EMPLOYER CONTRIBUTIONS 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 A FUNDED WELFARE BENEFIT PLAN. THE VALUE OF THESE BENEFITS HAS NOT BEEN ESTIMATED. FORM 990, PART VII, SECTION A THE BOARD OF DIRECTORS CONSIDERS 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 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 SERVICE (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 STATES 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 $ 5,067,523 LESS DIRECTORS FEES REPORTED ON 1099-MISC (259,352) LESS EMPLOYEE OFFICER BENEFITS INCLUDED IN LINE 5 (121,593) PLUS SALARIES AND WAGES ALLOCATED TO NONOPERATING MARGINS 292 PLUS SALARIES AND WAGES CAPITALIZED DIRECTLY TO PLANT 632,215 PLUS SALARIES AND WAGES CAPITALIZED/EXPENSED INDIRECTLY THROUGH CLEARING & OTHER ACCOUNTS 1,150,060 TOTAL WAGES ACCRUED AND/OR PAID $ 6,469,145 FORM 990, PART IX, LINE 24 ADMINISTRATIVE AND GENERAL EXPENSE IS COMPRISED OF THE FOLLOWING: OFFICE AND SUPPLIES $ 332,351 OUTSIDE SERVICES EMPLOYED 130,716 INJURY AND DAMAGES 36,837 REGULATORY COMISSION EXPENSE 296,087 TRUSTEE'S FEES AND EXPENSES 61,536 ASSOCIATION DUES 149,891 MISCELLANEOUS AND GENERAL 3,080 ADVERTISING - CONSERVATION AND SAFETY 288,203 ANNUAL MEETING EXPENSE 69,653 CAPITAL CREDIT EXPENSE 4,611 TOTAL ADMINISTRATIVE AND GENERAL EXPENSE PER 990 $ 1,372,965 FORM 990, PART IX, LINE 24E OTHER EXPENSES ARE COMPRISED OF THE FOLLOWING: TRANSMISSION EXPENSE $ 406,938 CUSTOMER ACCOUNTS & SERVICE 397,675 TAXES - PROPERTY & OTHER 47,724 SALES EXPENSE 16,240 TOTAL OTHER EXPENSES PER FORM 990 LINE 24E $ 868,577 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 X, LINES 9 AND 15 THE COOPERATIVE PREVIOUSLY INCLUDED INTEREST RECEIVABLE AS A COMPONENT OF PREPAID EXPENSES AND DEFERRED CHARGES ON LINE 9 OF PART X. HOWEVER, FOR THE 2016 CALENDAR YEAR, THE COOPERATIVE BEGAN REPORTING THIS AMOUNT ON LINE 15. TO INCREASE CONSISTENCY, INTEREST RECEIVABLE IN THE AMOUNT OF $424,331 FOR THE 2015 CALENDAR YEAR HAS BEEN RECLASSED FROM LINE 9 TO LINE 15. FORM 990, PART X, LINES 11, 12, AND 15 THE COOPERATIVE PREVIOUSLY INCLUDED PUBLICLY TRADED INVESTMENTS AS COMPONENTS OF INVESTMENTS-OTHER AND OTHER ASSETS ON LINE 12 AND 15 OF PART X. HOWEVER, FOR THE 2016 CALENDAR YEAR, THE COOPERATIVE BEGAN REPORTING THESE AMOUNTS ON LINE 11. TO INCREASE CONSISTENCY, PUBLICLY TRADED INVESTMENTS IN THE AMOUNT OF $45,160,040 AND $1,511,958 FOR THE 2015 CALENDAR YEAR HAVE BEEN RECLASSED FROM LINES 12 AND 15 TO LINE 11. FORM 990, PART XI, LINE 9: NET CHANGE IN MEMBERSHIPS 30. OTHER COMPREHENSIVE INCOME PROVISION FOR PENSIONS AND BENEIFTS -206,800. PATRONAGE CAPITAL ASSIGNABLE 3,318,439. PATRONAGE CAPITAL RETIRED -1,363,610. FORM 990, PART XII, LINE 2C THE BOARD AS A WHOLE IS RESPONSIBLE FOR OVERSEEING THE AUDIT AND SOLICITING THE CPA WHO WILL PERFORM THE AUDIT. PROCEDURAL CHANGES DID NOT OCCUR DURING THE YEAR. LEA COUNTY ELECTRIC EDUCATION FOUNDATION PO BOX 1447 LOVINGTON NM 88260 850351147 TO PROVIDE COLLEGE SCHOLARSHIPS TO MEMBERS OF THE COOPERATIVE. NM 501(C)(3) PF LEA COUNTY ELECTRIC COOPERTIVE INC 1 ENERGY RESEARCH AND DEVELOPMENT INC PO BOX 1447 LOVINGTON NM 88260 850228936 REAL ESTATE NM LEA COUNTY ELECTRIC COOPERTIVE INC C 52 1.00000 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 1 LEA COUNTY ELECTRIC EDUCATION FOUNDATION O N/A - LESS THAN $50,000 ENERGY RESEARCH AND DEVELOPMENT INC S N/A - LESS THAN $50,000