2016-11-01T16:50:36-05:00 2015-12-31 750882037 BOLINGER SEGARS GILBERT AND MOSS LLP 8215 NASHVILLE AVENUE LUBBOCK TX 79423 990 2015-01-01 740758801 MAGIC VALLEY ELECTRIC COOPERATIVE INC MAGI 9565141200 P O DRAWER 267 MERCEDES TX 785700267 JOHN W HERRERA GENERAL MANAGER 9565141200 2016-10-25 1 Matt R Willis P00419741 8067473806 2016-10-25 X 2015 2017-02-10 21:41:12Z JOHN W HERRERA P O DRAWER 267 MERCEDES TX 785700267 211861419 0 X WWW.MAGICVALLEY.COOP X 1937 TX TO PROVIDE QUALITY AND RELIABLE ELECTRIC SERVICE TO MEMBERS OF THE COOPERATIVE. 7 7 284 0 0 0 0 0 221817203 211328916 121724 97215 515080 406696 222454007 211832827 122513 125915 22385564 20563639 12101178 12960145 0 0 0 187844752 178183128 222454007 211832827 0 0 360687036 379629971 150865928 154814881 209821108 224815090 TO ENHANCE PEOPLE'S LIVES BY SAFELY PROVIDING THE MOST RELIABLE AND AFFORDABLE ELECTRIC SERVICE BY KEEPING OUR MEMBER'S BEST INTEREST IN MIND. 0 0 PROVIDING ELECTRIC ENERGY TO OUR MEMBERS - 107,229 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 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 8 0 284 1 0 0 0 0 0 199609002 740756 0 X 7 7 0 0 0 0 1 1 1 1 0 0 0 1 1 1 1 1 0 1 1 0 X JOHN W HERRERA 9565141200 1 3/4 MILES WEST HWY 83 MERCEDES TX 785700267 X MARTIN GARCIA PRESIDENT 6.90 X X 29321 0 0 REYNALDO LOPEZ VICE-PRESIDENT 6.71 X X 34821 0 0 BARBARA S MILLER SECRETARY/TREASURER 6.44 X X 27821 0 0 MG DYER ASST SECRETARY/TREASURER 1.60 X X 9822 0 0 DOUGLAS MARTIN DIRECTOR 5.40 X 23722 0 0 ROLANDO ALANIZ DIRECTOR 7.85 X 26922 0 0 NILA T WIPF DIRECTOR 6.90 X 27922 0 0 JOHN W HERRERA GENERAL MANAGER 45.00 X 274858 0 157235 DANE HOCOTT SERVICES DIVISION MGR 40.00 X 128853 0 64646 FELIPE AMAYA TECHNICAL SERVICES MANAGER 40.00 X 115764 0 30211 ATANACIO HINOJOSA WESTERN DIVISION MANAGER 40.00 X 128726 0 28603 BRIAN ACOSTA EASTERN DIVISION MANAGER 40.00 X 127447 0 47802 JESUS S ALANIS LEAD LINEMAN 56.00 X 114713 0 39967 ABRAHAM QUIROGA BUSINESS & EMPLOYEE DEVELOPMENT MGR 40.00 X 108874 0 26631 1179586 0 395095 10 0 1 0 T & D SOLUTIONS PO BOX 11948 ALEXANDRIA LA 71315 CONSTRUCTION 3643329 ASPLUNDH TREE EXPERT CO PO BOX 532729 ATLANTA GA 30353 TREE TRIMMING 1221454 UTILITEC 1911 WOODSLEE DRIVE TROY MI 48083 BILLING SERVICES 806153 D-WILSON CONSTRUCTION PO BOX 3455 MCALLEN TX 78502 BUILDING CONSTRUCTION SERVICES 499460 QPI&M INC PO BOX 947 EDNA TX 77957 POLE INSPECTION & MAINTENANCE 460951 11 X ELECTRICITY SALES 221000 196003575 196003575 PATRONAGE DIVIDENDS 221000 12760047 12760047 SERVICE FEES 221000 2565294 2565294 211328916 79360 79360 5000 0 5000 5000 5000 31364 13509 17855 17855 17855 9905 15083 -5178 -5178 POLE ATTACHMENT INCOME 221000 406874 406874 406874 211832827 211323738 0 509089 X 125915 20563639 805943 7967724 1668760 1877034 640684 4504285 9620180 PURCHASED POWER 149398558 DISTRIBUTION EXPENSE 5919228 ADMIN & GENERAL EXP 5812744 CONSUMER EXPENSE 2864901 63232 211832827 X 2793820 2459784 6456792 1376684 8700847 9336331 3682754 3955553 8031285 6778324 321552938 57171806 252456214 264381132 78550286 91113050 15038 229113 360687036 379629971 16809532 17563784 902034 906980 122700347 126060615 10454015 10283502 150865928 154814881 X 464855 472400 0 0 209356253 224342690 209821108 224815090 360687036 379629971 X 0 14993982 X X 0 1 X 1 0 0 1 X 214094 214094 10085470 3781569 6303901 294747226 53390237 241356989 16506148 16506148 264381132 PATRONAGE CAPITAL - CFC 3206807 C PATRONAGE CAPITAL - TEC 1324323 C CAPITAL TERM CERTIFICATES - CFC 3418855 C INVESTMENT IN CFC MEMBERSHIP 1000 C OTHER INVESTMENTS 1060 C NON UTILITY PROPERTY 30846 C CONTRIBUTED CAPITAL - STEC 11199850 C PATRONAGE CAPITAL - STEC 71671574 C MEMBER CAPITAL SECURITIES - CFC 100000 C PATRONAGE CAPITAL - COBANK 140316 C PATRONAGE CAPITAL - NRTC 18419 C 91113050 CUSTOMER DEPOSITS 6805894 PATRONAGE CAPITAL PAYABLE 3477608 10283502 X 211851302 18475 18475 211832827 0 211832827 191287663 18475 18475 191269188 20563639 20563639 211832827 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. ALSO PURSUANT TO SECTION 74.3013 OF THE TEXAS PROPERTY CODE, THE COOPERATIVE HAS ESTABLISHED AN ECONOMIC DEVELOPMENT FUND WITH AMOUNTS DESIGNATED UNCLAIMED UNDER 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. Part X, Line 2: THE COOPERATIVE 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) 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: EXPENSES RECORDED IN NON-OPERATING MARGINS RECLASSED TO EXPENSES 18,475. Part XII, Line 2d - Other Adjustments: EXPENSES RECORDED IN NON-OPERATING MARGINS RECLASSED TO EXPENSES 18,475. Part XII, Line 4b - Other Adjustments: PATRONAGE CAPITAL ASSIGNABLE 20,563,639. 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 - $20,563,639 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. 0 UNITED WAY OF SOUTH TEXAS PO BOX 187 MCALLEN TX 78501 742052527 501(C)(3) 5500 ANNUAL SPONSORSHIP RIO GRANDE COUNCIL BOY SCOUTS OF AMERICA 6912 W EXPRESSWAY 83 HARLINGEN TX 78552 741143104 501(C)(3) 6500 ANNUAL SPONSORSHIP RIO GRANDE VALLEY LIVESTOCK SHOW PO BOX 867 MERCEDES TX 78570 741016713 501(C)(3) 6000 SPONSORSHIP OF LIVESTOCK SHOW. 3 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 0 0 0 JOHN W HERRERA GENERAL MANAGER 251418 0 9335 0 14105 0 150237 0 6998 0 432093 0 0 0 DANE HOCOTT SERVICES DIVISION MGR 112302 0 4261 0 12290 0 49501 0 15145 0 193499 0 0 0 ATANACIO HINOJOSA WESTERN DIVISION MANAGER 112310 0 4261 0 12155 0 16466 0 12137 0 157329 0 0 0 BRIAN ACOSTA EASTERN DIVISION MANAGER 110993 0 4261 0 12193 0 31348 0 16454 0 175249 0 0 0 JESUS S ALANIS LEAD LINEMAN 111815 0 2791 0 107 0 24678 0 15289 0 154680 0 0 0 FROM 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. JOHN W HERRERA ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 138,918 EMPLOYER CONTRIBUTION TO 401(K) PLAN 11,319 TOTAL REPORTED IN COLUMN C: 150,237 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN: (138,918) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN: 56,851 EXPENSE TO THE COOPERATIVE $ 68,170 DANE HOCOTT ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 44,324 EMPLOYER CONTRIBUTION TO 401(K) PLAN 5,177 TOTAL REPORTED IN COLUMN C: 49,501 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN: (44,324) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN: 26,290 EXPENSE TO THE COOPERATIVE $ 31,467 ATANACIO HINOJOSA ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 11,289 EMPLOYER CONTRIBUTION TO 401(K) PLAN 5,177 TOTAL REPORTED IN COLUMN C: 16,466 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN: (11,289) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN: 26,284 EXPENSE TO THE COOPERATIVE $ 31,461 BRIAN ACOSTA ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 26,171 EMPLOYER CONTRIBUTION TO 401(K) PLAN 5,177 TOTAL REPORTED IN COLUMN C: 31,348 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN: (26,171) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN: 26,228 EXPENSE TO THE COOPERATIVE $ 31,405 JESUS S ALANIS ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 21,287 EMPLOYER CONTRIBUTION TO 401(K) PLAN 3,391 TOTAL REPORTED IN COLUMN C: 24,678 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN: (21,287) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN: 18,626 EXPENSE TO THE COOPERATIVE $ 22,017 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. 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 EXECUTIVE SESSION FROM TIME TO TIME THE ENTIRE BOARD WILL GO INTO EXECUTIVE SESSION FOR DISCUSSING ITEMS OF A SENSITIVE AND CONFIDENTIAL NATURE. WHEN THIS OCCURS MANAGEMENT AND OTHERS IN ATTENDANCE ARE REMOVED FROM THE MEETING ROOM. ITEMS DISCUSSED IN EXECUTIVE SESSION ARE NOT DOCUMENTED. HOWEVER, ACTIONS TAKEN BY THE BOARD AFTER EXECUTIVE SESSIONS ARE ADJOURNED ARE FULLY DOCUMENTED IN THE WRITTEN MINUTES. Form 990, Part VI, Section B, line 11 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 THE BOARD OF DIRECTORS AND OFFICERS ARE REQUIRED TO REVIEW AND BE FAMILIAR WITH THE POLICIES OUTLINED IN THE COOPERATIVE'S CONFLICT OF INTEREST POLICY. THE BOARD OF 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. THE CONFLICT OF INTEREST POLICY IS REVIEWED ON AN ANNUAL BASIS. 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 COOPERATIVES LOCATED IN TEXAS AND THE NATION. THE BOARD AND THE GENERAL MANAGER USE 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 SIMILAR COOPERATIVES THROUGHOUT TEXAS AND THE NATION. Form 990, Part VI, Section C, line 19 THE COOPERATIVE PROVIDES A SUMMARIZED AUDITED FINANCIAL STATEMENT TO THE MEMBERS OF THE COOPERATIVE AT THE ANNUAL MEETING. 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. 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 AND LIFE INSURANCE TO ALL ELIGIBLE EMPLOYEES, INCLUDING OFFICERS AND HIGHLY COMPENSATED EMPLOYEES, THROUGH A QUALIFIED PLAN. THE AMOUNTS REPORTED ON PART VII, COLUMN (F) FOR THE OFFICERS AND HIGHLY COMPENSATED EMPLOYEES IS COMPRISED OF THE 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 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 ACCOUNTING 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. IN AN EFFORT TO EXPLAIN WHY THE AMOUNTS REPORTED ON LINES 5-7 DO NOT AGREE TO THE TOTAL WAGES ACCRUED AND/OR PAID THE FOLLOWING RECONCILIATION IS PROVIDED. TOTAL PER LINES 5-7 $ 8,773,667 LESS DIRECTORS FEES REPORTED ON 1099-MISC (180,351) LESS EMPLOYEE OFFICER BENEFITS REPORTED ON LINE 5 (221,881) PLUS SALARIES AND WAGES ALLOCATED TO NONOPERATING MARGINS 3,703 PLUS SALARIES AND WAGES CAPITALIZED DIRECTLY TO PLANT 2,165,880 PLUS SALARIES AND WAGES CAPITALIZED/EXPENSED INDIRECTLY THROUGH CLEARING & OTHER ACCOUNTS 2,969,081 TOTAL WAGES ACCRUED AND/OR PAID $13,510,099 Form 990, Part IX, Line 24 ADMINISTRATIVE AND GENERAL EXPENSE IS COMPRISED OF THE FOLLOWING: OFFICE SUPPLIES AND EXPENSE $2,707,904 OUTSIDE SERVICES EMPLOYED 311,931 INJURIES AND DAMAGES 444,045 PROPERTY INSURANCE 111,472 DIRECTORS EXPENSES 17,414 REGULATORY COMMISSION EXPENSE 326,761 DUES IN ASSOCIATED ORGANIZATIONS 11,356 ANNUAL AND DISTRICT MEETING EXPENSE 65,236 OUT OF TOWN BUSINESS MEETINGS 160,883 MAINTENANCE OF GENERAL PLANT 1,655,742 TOTAL ADMINISTRATIVE AND GENERAL EXPENSE PER 990 $5,812,744 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 2015 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 17 AND 25 THE COOPERATIVE PREVIOUSLY INCLUDED ACCRUED EXPENSES (COMPRISED OF "ACCRUED COMPENSATED ABSENCES", "ACCRUED TAXES", "ACCRUED INTEREST AND "OTHER CURRENT & ACCRUED LIABILITES")AS COMPONENTS OF OTHER LIABILITIES ON LINE 25 OF PART X. HOWEVER, FOR THE 2015 CALENDAR YEAR, THE COOPERATIVE BEGAN REPORTING THESE AMOUNTS ON LINE 17 IN ACCORDANCE WITH FORM 990 INSTRUCTIONS. TO INCREASE CONSISTENCY, ACCRUED EXPENSES IN THE AMOUNT OF $5,775,638 FOR THE 2014 CALENDAR YEAR HAVE BEEN RECLASSED FROM LINE 25 TO LINE 17. Form 990, Part XI, line 9: PATRONAGE CAPITAL RETIRED -5,577,202. NET INCREASE IN MEMBERSHIPS 7,545. PATRONAGE CAPITAL ASSIGNABLE 20,563,639. Form 990, Part XII, Line 2C THE BOARD OF DIRECTORS HAVE ASSIGNED MEMBERS TO AN AUDIT COMMITTEE TO OVERSEE THE FINANCIAL STATEMENT AUDIT AND SELECTING THE INDEPENDENT FINANCIAL STATEMENT AUDITOR. PROCEDURAL CHANGES DID NOT OCCUR DURING THE YEAR.