2013-11-12T14:50:13-06:00 2012-12-31 750882037 BOLINGER SEGARS GILBERT AND MOSS LLP 8215 NASHVILLE AVENUE LUBBOCK TX 79423 990 2012-01-01 850027414 CENTRAL VALLEY ELECTRIC COOPERATIVE INC CENT 5757463571 PO BOX 230 ARTESIA NM 88211 CHARLES PINSON 5757463571 2013-10-31 1 Matt R Willis P00419741 8067473806 2013-10-31 2012 2016-03-07 17:11:31Z CHARLES PINSON PO BOX 230 ARTESIA NM 88211 58417446 0 X WWW.CVECOOP.ORG X 1937 NM TO PROVIDE ELECTRIC ENERGY TO RURAL AREAS AT COST ON A COOPERATIVE BASIS 7 6 97 0 0 0 0 0 56224754 57920959 508097 464687 30363 31800 56763214 58417446 12973 9775 10858713 12189238 4212662 4483717 0 0 0 41678866 41734716 56763214 58417446 0 0 114000459 126694240 53297639 55068624 60702820 71625616 CENTRAL VALLEY ELECTRIC IS A MEMBER-FOCUSED ELECTRIC COOPERATIVE DEDICATED TO PERSONALIZED QUALITY SERVICE FOR ITS MEMBERS AND THE ECONOMIC VITALITY IN THE SURROUNDING COMMUNITIES. 0 0 PROVIDING ELECTRIC ENERGY TO OUR MEMBERS - 14,306 ACTIVE SERVICES 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 0 1 1 0 0 0 0 0 0 0 0 0 0 0 1 0 1 0 0 0 0 0 1 0 0 0 0 0 1 1 1 0 1 54 0 1 97 1 0 0 0 0 0 72615202 740443 0 X 7 6 0 0 0 0 1 1 1 1 0 0 0 1 0 1 0 1 1 0 X CHARLES PINSON 5757463571 1505 N 13TH STREET ARTESIA NM 88211 X DARRELL ATKINS 6.50 0.50 X X 2447 0 0 CHARLES WAGNER 7.30 0.50 X X 23460 0 0 WESLEY PILLEY 6.70 0.50 X X 23460 0 0 JACK CASE 4.30 0.00 X 23450 0 0 MICHAEL BENNETT 7.20 0.00 X 23934 0 0 JASON CIEMPA 6.40 0.00 X 22745 0 0 LARRY BENEDICT 7.30 0.00 X 23213 0 0 CHARLES PINSON 43.50 0.50 X 167563 0 149220 MICHAEL ANDERSON 42.00 0.00 X 127670 0 131893 PHILIP RUSSELL MCKEE 40.00 0.00 X 101068 0 90778 539010 0 371891 3 0 1 0 DEANS INC 409 COMMERCE ROAD ARTESIA NM 88210 CONSTRUCTION CONTRACT - LABOR 2365394 ARC POWER-LINE CONSTRUCTION PO BOX 1745 ARTESIA NM 88211 CONSTRUCTION CONTRACT - LABOR 1379170 MUNSON CONSTRUCTION LLC PO BOX 610 HAGERMAN NM 88232 DIRT WORK & CONSTRUCTION 1203241 INTERSTATE ELECTRICAL CONTRACTORS INC 12421 W 49TH AVE UNIT 8 WHEAT RIDGE CO 80033 CONSTRUCTION CONTRACT - LABOR 849404 SGS ENGINEERING LLC 401 50TH STREET LUBBOCK TX 794043633 CONSULTING ENGINEER 782444 11 X ELECTRIC ENERGY 221000 54177493 54177493 POWER SUPPLY EQUITY 221000 3534397 3534397 PATRONAGE DIVIDENDS 221000 209069 209069 57920959 464687 464687 31800 0 31800 31800 5414 26386 58417446 57926373 0 491073 X 9775 12189238 459492 2606151 457732 754702 205640 1128694 3252500 COST OF PURCHASED POWER 34031043 DISTRIBUTION EXPENSE 1498599 ADMIN AND GEN EXPENSE 1146923 CUSTOMER ACCOUNTS 580647 96310 58417446 13012398 9122758 9231598 18136148 2668792 2565414 225585 215517 2143850 2864235 86795 254144 111316187 25094788 83075684 86221399 1688 1688 3388807 7002129 165262 310808 114000459 126694240 4267842 4346269 36803306 34786456 12226491 15935899 53297639 55068624 X 0 0 0 0 60702820 71625616 60702820 71625616 114000459 126694240 X 0 10922796 X X 0 0 0 214468 214468 2103773 1045720 1058053 103640089 24049068 79591021 5357857 5357857 86221399 CAPITAL CREDITS - COBANK 596527 C FEDERATED RURAL ELECTRIC INSURANCE 127019 C CAPITAL CREDITS - PVT COOPERATIVE 634 C CAPITAL CREDITS - NRTC 8133 C CAPITAL CREDITS - NRUCFC 24544 C CAPITAL CREDITS - LEACO RURAL TELEPHONE 12805 C OTHER INVESTMENTS IN ASSOCIATED ORGANIZATIONS 2111 C CAPITAL CREDITS - NISC 7611 C WFEC G&T - DONATED CAPITAL 6222745 C 7002129 ACCRUED EMPLOYEE COMPENSATED ABSENCES 516078 CUSTOMER DEPOSITS 73262 UNCLAIMED PATRONAGE CAPITAL CHECKS 487024 ACCRUED TAXES 574304 DEFERRED CREDITS 13885371 ACCUMULATED PROVISION FOR PENSIONS AND BENEFITS 371258 OTHER CURRENT AND ACCRUED LIABILITIES 28602 15935899 X Description of Uncertain Tax Positions Under FIN 48: 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 TAXING AUTHORITY AND THAT ALL TAX BENEFITS ARE LIKELY TO BE REALIZED UPON SETTLEMENT WITH TAXING AUTHORITIES. 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 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. 0 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 CHARLES PINSON 165173 0 0 0 2390 0 121978 0 27242 0 316783 0 0 0 MICHAEL ANDERSON 122003 0 0 0 5667 0 106315 0 25578 0 259563 0 0 0 PHILIP RUSSELL MCKEE 98516 0 0 0 2552 0 79974 0 10804 0 191846 0 0 0 Supplemental Information Part III 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 CONTRIBUTION TO THE PLAN IN LIEU OF THE ACTUARIAL INCREASE ARE EXPENSED IN THE FINANCIAL STATEMENTS AND REPRESENT THE TRUE COST TO THE COOPERATIVE. CHARLES PINSON ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $118,883 401(K) EMPLOYER MATCH 3,095 TOTAL COLUMN C: $121,978 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN: (118,883) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN: 34,925 TOTAL COOPERATIVE CASH CONTRIBUTION $ 38,020 MICHAEL ANDERSON ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $103,932 401(K) EMPLOYER MATCH 2,383 TOTAL COLUMN C: $106,315 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN: (103,932) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN: 26,884 TOTAL COOPERATIVE CASH CONTRIBUTION $ 29,267 PHILIP RUSSELL MCKEE ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 78,051 401(K) EMPLOYER MATCH 1,923 TOTAL COLUMN C: $ 79,974 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN: (78,051) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN: 21,697 TOTAL COOPERATIVE CASH CONTRIBUTION $ 23,620 WESTERN FARMERS ELECTRIC COOPERATIVE A COOPERATIVE BOARD MEMBER IS ON WESTERN FARMERS BOARD OF DIRECTORS 645420 THE COOPERATIVE ENTERED INTO AN AGREEMENT TO PURCHASE ELECTRIC POWER FROM WESTERN FARMERS ELECTRIC COOPERATIVE. 0 Form 990, Part VI, Section A, line 1 INDEPENDENT DIRECTORS CHARLES WAGNER PER IRS FORM 990 INSTRUCTIONS IS NOT AN INDEPENDENT DIRECTOR BECAUSE HE IS ON THE BOARD OF WESTERN FARMERS ELECTRIC COOPERATIVE, INC, A TAXABLE COOPERATIVE. THE COOPERATIVE HAS ENTERED INTO AN AGREEMENT TO PURCHASE ITS ELECTRIC ENERGY FROM WESTERN FARMERS AND THE COOPERATIVE IS A MEMBER OF WESTERN FARMERS. AS SUCH, MR. WAGNER IS THE COOPERATIVE'S REPRESENTATIVE ON WESTERN FARMERS'S BOARD. MR. WAGNER HAS NO OWNERSHIP INTEREST IN WESTERN FARMERS AND RECEIVES NO DIRECT OR INDIRECT BENEFIT FROM THE COOPERATIVE DOING BUSINESS WITH WESTERN FARMERS. 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. THE DISPOSAL OF A SUBSTANTIAL PORTION OF THE COOPERATIVE'S ASSETS; 2. THE DISSOLUTION/LIQUIDATION OF THE COOPERATIVE; AND 3. THE MERGER OR CONSOLIDATION OF THE COOPERATIVE WITH ANOTHER ORGANIZATION. Form 990, Part VI, Section A, line 8b EXECUTIVE SESSION MINUTES 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 THE FILING OF THE FORM 990. Form 990, Part VI, Section B, line 15 THE BOARD OF DIRECTORS USE A COMPENSATION SURVEY WHEN DETERMINING THE COMPENSATION OF THE COOPERATIVE'S EXECUTIVE VICE PRESIDENT. THE SURVEY INCLUDES SALARIES FROM SIMILAR COOPERATIVES THROUGHOUT NEW MEXICO AND THE NATION. THE EXECUTIVE VICE PRESIDENT USES A COMPENSATION SURVEY WHEN DETERMINING THE COMPENSATION OF THE ORGANIZATION'S OTHER EMPLOYEES MEETING THE DEFINITION OF OFFICER AND KEY EMPLOYEES, IF ANY. THE SURVEY INCLUDES SALARIES FROM SIMILAR COOPERATIVES THROUGHOUT NEW MEXICO AND THE NATION. 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 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. BOARD MEMBERS Form 990, Part VI, Section A, Line 1 THE COOPERATIVE HAS 7 BOARD MEMBERS; ALL 7 ARE ALLOWED TO VOTE, HOWEVER THE BOARD PRESIDENT ONLY VOTES IN THE CASE OF A TIE. TO PROVIDE DETAIL REGARDING OFFICER EMPLOYEE BENEFITS 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 MATCHING CONTRIBUTION UP TO 2% OF A PARTICIPATING EMPLOYEE'S SALARY. 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, DENTAL, VISION AND LIFE INSURANCE TO ALL EMPLOYEES, INCLUDING OFFICERS, THROUGH A QUALIFIED PLAN. THE AMOUNTS REPORTED ON PART VII, COLUMN (F) FOR THE OFFICER IS COMPRISED OF THE ACTUARIAL INCREASE IN THE DEFINED BENEFIT PLAN FOR THE OFFICER, THE TOTAL AMOUNT CONTRIBUTED TO THE 401(K) PENSION PLAN AND THE INSURANCE PREMIUMS PAID FOR THE BENEFIT OF THE OFFICER. IN ADDITION TO THE ABOVE PENSION PLANS, THE COOPERATIVE ALSO PROVIDES POST-RETIREMENT HEALTH INSURANCE BENEFITS THROUGH AN UNFUNDED WELFARE BENEFIT PLAN. THE VALUE OF THESE BENEFITS HAS NOT BEEN ESTIMATED. EXECUTIVE VICE PRESIDENT RESPONSIBILITIES Form 990, Part VII, Section A THE BOARD OF DIRECTORS CONSIDERS THE EXECUTIVE VICE PRESIDENT TO BE BOTH THE TOP MANAGEMENT OFFICIAL AND THE TOP FINANCIAL OFFICIAL. THEREFORE, ONLY THE EXECUTIVE VICE PRESIDENT IS LISTED AS AN EMPLOYEE OFFICER. PATRONAGE DIVIDENDS Form 990, Part VIII, Line 2 PATRONAGE DIVIDENDS 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. POWER SUPPLY EQUITY Form 990, PART VIII, LINE 2 THE COOPERATIVE AND WESTERN FARMERS ELECTRIC COOPERATIVE (WFEC), A RURAL ELECTRIC GENERATION AND TRANSMISSION COOPERATIVE, HAVE ENTERED INTO A WHOLESALE POWER CONTRACT WHERE WFEC WILL PROVIDE THE COOPERATIVE WITH ELECTRIC POWER. AS PART OF THE AGREEMENT THE COOPERATIVE MUST CONTRIBUTE EQUITY TO WFEC IN A MANNER AND AMOUNT SUCH THAT, AS OF JUNE 1, 2026, THE COOPERATIVE HAS CONTRIBUTED EQUITY TO WFEC COMPARABLE TO THE AMOUNT OF EQUITY CONTRIBUTED TO WFEC BY PRIOR EXISTING MEMBERS. THE PURPOSE OF THE CONTRIBUTION IS TO OBTAIN A POWER SUPPLY IN ORDER TO MEET THE TERMS OF THE WHOLESALE PURCHASE CONTRACT. PURSUANT TO APPROVAL BY THE NEW MEXICO PUBLIC REGULATION COMMISSION, THE EQUITY CONTRIBUTION IS RECOVERED MONTHLY FROM THE MEMBERS THROUGH THE SALE OF ELECTRICITY. ACCOUNTING SYSTEM Form 990, Part IX THE ACCOUNTING RECORDS OF THE COOPERATIVE ARE MAINTAINED IN ACCORDANCE WITH THE UNIFORM SYSTEM OF ACCOUNTS AS PRESCRIBED BY THE FEDERAL ENERGY REGULATORY COMMISSION FOR CLASS A AND B ELECTRIC UTILITIES MODIFIED 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 WILL BREAK OUT 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 WILL BE REPORTED ON LINE 24 UNDER THE EXPENSE CATEGORIES REQUIRED BY THE UNIFORM SYSTEM OF ACCOUNTS. RECONCILIATION OF WAGES PER RETURN TO FORM W-3 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 W-3 THE FOLLOWING RECONCILIATION IS PROVIDED. TOTAL PER LINES 5-7 $ 3,065,643 LESS DIRECTORS FEES REPORTED ON 1099-MISC (142,709) LESS EMPLOYEE OFFICER BENEFITS INCLUDED IN LINE 5 (149,220) PLUS SALARIES AND WAGES ALLOCATED TO ASSET ACCOUNTS 2,014,107 RECONCILIATION TO W-3 $ 4,787,821 BREAKDOWN OF EXPENSES INCLUDED IN ADMINISTRATIVE AND GENERAL Form 990, Part IX, Line 24 THE FOLLOWING IS A BREAKDOWN OF THE EXPENSES REPORTED AS ADMINISTRATIVE AND GENERAL EXPENSE ON FORM 990, PART IX, LINE 24 OFFICE AND SUPPLIES $ 68,644 OFFICE EXPENSE - JANITOR 27,806 OUTSIDE SERVICES 155,122 INJURIES AND DAMAGES 71,743 REGULATORY COMMISSION EXPENSE 270,109 DIRECTORS EXPENSES 77,434 ADVERTISING 29,308 ANNUAL MEETING 21,746 DUES & MEMBERSHIP FEES 115,410 CAPITAL CREDITS 9,763 RENTS 22,369 MAINTENANCE OF GENERAL PLANT 39,306 MAINTENANCE OF SCADA EQUIPMENT 6,667 MISCELLANEOUS GENERAL EXPENSE 231,496 TOTAL ADMINISTRATIVE AND GENERAL EXPENSE PER 990 $1,146,923 BENEFITS PAID TO MEMBERS FORM 990, PART IX, LINE 4 THE FORM 990 INSTRUCTIONS SPECIFICALLY STATE THAT 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 BASIS 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 AND IS SUMMARIZED AS FOLLOWS: (A) IN ORDER TO INDUCE PATRONAGE AND TO ASSURE THAT THE COOPERATIVE WILL OPERATE ON A NONPROFIT BASIS, THE COOPERATIVE IS OBLIGATED TO ACCOUNT ON A PATRONAGE BASIS TO ALL ITS PATRONS FOR ALL AMOUNTS RECEIVED AND RECEIVABLE FROM THE FURNISHING OF ELECTRIC ENERGY IN EXCESS OF OPERATING COSTS AND EXPENSES PROPERTY CHARGEABLE AGAINST SUCH SERVICES (I.E. MARGINS FROM THE PROVISION OF ELECTRIC ENERGY). (B) THE MARGINS FROM THE PROVISION OF ELECTRIC ENERGY ARE RECEIVED WITH THE UNDERSTANDING THAT THEY ARE FURNISHED BY THE PATRONS AS CAPITAL. (C) THE COOPERATIVE IS OBLIGATED TO PAY BY CREDITS TO A CAPITAL ACCOUNT FOR EACH PATRON FOR ALL SUCH MARGINS. AND (D) ALL SUCH AMOUNTS CREDIT TO THE CAPITAL ACCOUNT OF ANY PATRON SHALL HAVE THE SAME STATUS AS THOUGH THEY HAD BEEN PAID TO THE PATRON IN CASH IN PURSUANCE OF A LEGAL OBLIGATION TO DO SO AND THE PATRON HAD THEN FURNISHED TO THE COOPERATIVE CORRESPONDING AMOUNTS OF CAPITAL. 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 2012 CALENDAR YEAR. AS NOTED ABOVE, SUCH AMOUNTS ARE ALLOCATED SUBSEQUENT TO YEAR-END IN A FAIR AND EQUITABLE MANNER ON THE BASIS OF PATRONAGE (I.E. PURCHASES). THE AMOUNTS ALLOCATED ARE REPRESENTATIVE OF THE MARGINS FROM THE PROVISION OF ELECTRIC ENERGY TO THE PATRONS AND ARE DONE PURSUANT TO THE OLBIGATION THAT EXISTED IN THE BYLAWS PRIOR TO THE COOPERATIVE PROVIDING ELECTRICITY TO ITS PATRONS. THEREFORE, THESE AMOUNTS MEET THE DEFINITION OF THE TERM "PATRONAGE DIVIDENDS PAID". PLEASE NOTE, HOWEVER, THAT BECAUSE PATRONAGE DIVIDENDS IS 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 THE AMOUNT OF ITS 2012 MARGIN THAT HAS BEEN OR IS TO BE ALLOCATED TO THE PATRONS SUBSEQUENT TO YEAR-END. SUCH AMOUNTS ARE AN EXPENSE FOR FORM 990 REPORTING AND IS NOT AN EXPENSE FOR FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. AS A RESULT, THE DIFFERENCE BETWEEN THE COOPERATIVE'S GAAP BASIS FINANCIAL STATEMENTS AND THE REVENUE LESS EXPENSES REPORTED ON PART I, LINE 19 IS THE AMOUNT OF PATRONAGE DIVIDENDS REPORTED AS BENEFITS PAID TO PATRONS. Changes in Net Assets or Fund Balances: Form 990, Part XI, line 9: PATRONAGE CAPITAL RETIREMENT -1,279,961. OTHER COMPREHENSIVE INCOME PROVISION FOR PENSIONS & BENEFITS 13,519. PATRONAGE CAPITAL ASSIGNABLE 12,189,238. INDEPENDENT AUDIT Form 990, Part XII, Line 2B AUDITED FINANCIAL STATEMENTS WERE PREPARED BY AN INDEPENDENT ACCOUNTANT FOR THE COOPERATIVE'S FISCAL YEAR END OF JUNE 30TH. THE TAX RETURN HAS BEEN AND CONTINUES TO BE PREPARED BASED ON A CALENDAR YEAR END OF DECEMBER 31. THE BOARD AS A WHOLE IS RESPONSIBLE FOR OVERSEEING THE FINANCIAL STATEMENT AUDIT AND SELECTING THE INDEPENDENT FINANCIAL STATEMENT AUDITOR. CENTRAL VALLEY ELECTRIC EDUCATION FOUNDATION PO BOX 230 ARTESIA NM 88211 850323120 SCHOLARSHIPS TO MEMBERS AND CHILDREN TO GO TO NEW MEXICO COLLEGE/UNIVERSITY NM 501(C)(3) PF N/A 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 CENTRAL VALLEY ELECTRIC EDUCATION FOUNDATION NA - LESS THAN 50000 O EMPLOYEE HOURS X HOURLY RATE