2012-11-15T10:28:54-06:00 2011-12-31 750882037 BOLINGER SEGARS GILBERT AND MOSS LLP 8215 NASHVILLE AVENUE LUBBOCK TX 79423 990 2011-01-01 860059728 SULPHUR SPRINGS VALLEY ELECTRIC COOPERATIVE INC SULP 5203842221 350 N HASKELL WILLCOX AZ 85643 CREDEN HUBER 5203842221 2012-11-09 1 Matt R Willis P00419741 8067473806 2012-11-09 2011 2016-02-24 21:20:13Z X CREDEN HUBER 350 N HASKELL WILLCOX AZ 85643 108860472 0 X WWW.SSVEC.ORG X 1938 AZ TO PROVIDE QUALITY AND RELIABLE ELECTRIC SERVICE TO MEMBERS OF THE COOPERATIVE. 12 12 257 0 303830 185405 0 0 107070319 107516179 308464 254159 1175962 1008451 108554745 108778789 167913 177327 6846525 7057710 11030166 10440820 0 0 0 89992497 90805579 108037101 108481436 517644 297353 258026051 268533992 185158218 189053918 72867833 79480074 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 - 50,983 ACTIVE SERVICES AT YEAR END WERE PROVIDED ELECTRICITY ON A COOPERATIVE BASIS THROUGH THE ALLOCATION OF PATRONAGE CAPITAL. ELECTRIC DISTRIBUTION SERVICES (THE DELIVERY, BUT NOT THE SALE OF ELECTRICITY, TO A CUSTOMER OVER LINES OWNED, OPERATED AND MAINTAINED BY THE COOPERATIVE) WERE PROVIDED TO THE CLASS B MEMBERSHIP ON A COOPERATIVE BASIS. 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 1 304 0 257 1 1 1 0 0 0 0 104277952 1022906 0 X 12 12 0 0 0 0 1 1 1 1 1 0 0 1 1 1 1 1 1 1 1 0 AZ X CREDEN HUBER 5203842221 350 N HASKELL AVE WILLCOX AZ 85643 X DANIEL BARRERA 8.00 X X 6675 0 0 PAT ENGLISH 6.00 X X 12075 0 0 JOSEPH FURNO 6.00 X X 12225 0 0 HAROLD HINKLEY 6.00 X X 10275 0 0 DONALD GENE MANRING 7.50 X 11200 0 0 KATHRYN THATCHER 15.00 X 12325 0 0 DONALD KYTE 8.00 X 4550 0 0 CECIL CARLILE 8.00 X 12525 0 0 ANDREW MAYBERRY 6.00 X 12600 0 0 DAVID LUNA 8.00 X 13025 0 0 CURTIS NOLAN 8.00 X 7400 0 0 ARCHIE SMITH 8.00 X 12875 0 0 CREDEN HUBER 48.00 X 320235 0 36258 KIRBY CHAPMAN 50.00 X 190504 0 25017 ANSELMO TORRES 45.00 X 177492 0 26417 JACK BLAIR 45.00 X 157844 0 17280 RON OROZCO 45.00 X 139706 0 17753 EILEEN BRIEN 45.00 X 118454 0 17870 MARK ROLL 45.00 X 121828 0 17529 JOHN JACOBS 45.00 X 114387 0 14022 RICARDO GARCIA 45.00 X 112374 0 19482 1580574 0 191628 23 0 1 0 POWER ENGINEERS 3940 GLENBROOK DR HAILEY ID 83333 ENGINEERING & CONSULTING SERVICES 827195 DONALD A FEDERICO ENTERPRISES LLC 4201 E BEVERS ST SIERRA VISTA AZ 85650 EXCAVATION AND EARTHWORK SERVICES 516560 OSMOSE UTILITIES SERVICES INC PO BOX 8000 BUFFALO NY 14267 POLE INSPECTION AND TREATMENT SERVICES 502514 UTILIX CORPORATION PO BOX 97009 KENT WA 98064 CABLE INJECTION SERVICES 434519 ASPLUNDH PO BOX 827464 PHILADELPHIA PA 19182 TREE TRIMMING SERVICES 357847 17 ELECTRICITY SALES 221000 101407213 101407213 PATRONAGE DIVIDENDS 221000 3364881 3364728 153 DISTRIBUTION SERVICES 221000 2267042 2267042 SERVICE FEES 221000 477043 477043 107516179 254159 254159 7535 698208 969 0 6566 698208 704774 704774 145142 80714 64428 64428 INTERNET COMMISSIONS 519100 214053 214053 OUTSIDE SERVICES 811000 24707 24707 PHONE CARD REVENUE 517000 489 489 239249 108778789 107516026 303830 958933 X 177327 7057710 1078797 5934132 1557917 1352925 517049 7276225 9490441 PURCHASED POWER 62639414 DISTRIBUTION EXPENSE 5826171 ADMIN & GENERAL EXP. 2379743 UNRELATED BUS. INC. TAX 89842 3103743 108481436 1045742 902356 2115000 6509818 5752048 206668 206433 3007529 2734735 2389358 2300509 302402362 97646970 197565549 204755392 36897370 39989515 10404017 9778004 258026051 268533992 4834139 5921582 154123758 163504282 26200321 19628054 185158218 189053918 X 192850 190305 0 0 72674983 79289769 72867833 79480074 258026051 268533992 X 297353 6314888 X X 0 0 1 1 2296554 2296554 11420757 3294366 8126391 264661295 94352604 170308691 24023756 24023756 204755392 PATRONAGE CAPITAL - AEPCO 31251930 C PATRONAGE CAPITAL - CFC 1887644 C PATRONAGE CAPITAL - NISC 13808 C PATRONAGE CAPITAL - NRTC 41992 C PATRONAGE CAPITAL - FEDERATED 242183 C PATRONAGE CAPITAL - CRC 12261 C COBANK EQUITY INVESTMENT 1000 C ASSOCIATED ORGANIZATIONS - GENERAL FUNDS 2001010 C ASSOCIATED ORGANIZATIONS - GCSECA BLDG 203931 C CAPITAL TERM CERTIFICATES-CFC 4333756 C 39989515 CONSUMER DEPOSITS 2722925 ACCUMULATED PROVISION - PENSIONS & BENEFITS 1478296 OTHER CURRENT & ACCRUED LIABILITIES 6659796 DEFERRED CREDITS 8767037 19628054 Description of Uncertain Tax Positions Under FIN 48: Part X: 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, 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 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. 0 BUENA HARMONY 4226 AVENIDA COCHISE SUITE 5 SIERRA VISTA AZ 85635 273382815 501(C)(3) 10610 WRESTLING FUNDRAISER: SPONSOR FOR PROFESSIONAL WRESTLING EVENT SIERRA VISTA CHAMBER OF COMMERCE 21 EAST WILCOX DRIVE SIERRA VISTA AZ 85635 742586694 501(C)(6) 15150 SPONSORING LOCAL ACTIVITIES HOSTED BY THE CHAMBER OF COMMERCE. SIERRA VISTA REGIONAL HEALTH INC 300 EL CAMINO REAL SIERRA VISTA AZ 85635 860186064 501(C)(3) 6400 SPONSORSHIP OF ACTIVITIES HOSTED BY SIERRA VISTA REGIONAL HEALTH INCLUDING THE KEY WEST NIGHT, CARTER CLASSIC GOLF TOURNAMENT, AND FESTIVAL OF TREES. 2 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. X 1 1 X X 0 0 0 CREDEN HUBER 277186 0 285 0 42764 0 16444 0 19814 0 356493 0 0 0 KIRBY CHAPMAN 142281 0 600 0 47623 0 10807 0 14210 0 215521 0 0 0 ANSELMO TORRES 140310 0 600 0 36582 0 13064 0 13353 0 203909 0 0 0 JACK BLAIR 128360 0 600 0 28884 0 7552 0 9728 0 175124 0 0 0 RON OROZCO 136186 0 1850 0 1670 0 7415 0 10338 0 157459 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. 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. CREDEN HUBER ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $7,935 401(K) EMPLOYER MATCH 8,509 TOTAL COLUMN C: 16,444 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN: (7,935) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN: 80,144 TOTAL COOPERATIVE CASH CONTRIBUTION 88,653 KIRBY CHAPMAN ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $6,371 401(K) EMPLOYER MATCH 4,436 TOTAL COLUMN C: 10,807 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN: (6,371) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN: 43,136 TOTAL COOPERATIVE CASH CONTRIBUTION 47,572 ANSELMO TORRES ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $8,700 401(K) EMPLOYER MATCH 4,364 TOTAL COLUMN C: 13,064 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN: (8,700) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN: 38,699 TOTAL COOPERATIVE CASH CONTRIBUTION 43,063 JACK BLAIR ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $3,649 401(K) EMPLOYER MATCH 3,903 TOTAL COLUMN C: 7,552 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN: (3,649) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN: 36,183 TOTAL COOPERATIVE CASH CONTRIBUTION 40,086 RON OROZCO ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $3,330 401(K) EMPLOYER MATCH 4,085 TOTAL COLUMN C: 7,415 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN: (3,330) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN: 36,858 TOTAL COOPERATIVE CASH CONTRIBUTION 40,943 FEDERATED RURAL ELECTRIC INSURANCE EXCHANGE THE COOPERATIVE'S CEO/GM, CREDEN HUBER, SERVES ON FEDERATED'S BOARD 346127 THE COOPERATIVE OBTAINED INSURANCE THROUGH FEDERATED RURAL ELECTRIC INSURANCE EXCHANGE AND PAYS INSURANCE PREMIUMS TO FEDERATED RURAL ELECRIC INSURANCE. 0 RECLASSIFICATION OF BENEFITS PAID TO MEMBERS Form 990, Part I, Line 14 THE INSTRUCTIONS FOR THE 2011 FORM 990 CLARIFY THAT "BENEFITS PAID TO MEMBERS" SHOULD INCLUDE THE AMOUNT OF PATRONAGE DIVIDENDS PAID TO THE MEMBERS OF SECTION 501(C)(12) COOPERATIVES. CONSISTENT WITH THIS CLARIFICATION IN THE INSTRUCTIONS, THE COOPERATIVE HAS REPORTED ON PART I, LINE 14 FOR THE CURRENT YEAR THE AMOUNT OF PATRONAGE DIVIDENDS PAID AND/OR ALLOCATED TO THE COOPERATIVE'S MEMBERS FOR THE 2011 CALENDAR YEAR. SINCE PART I SUMMARIZES BOTH PRIOR AND CURRENT YEAR DATA, THE COOPERATIVE HAS CHOSEN TO ALSO REPORT ON PART I, LINE 14 FOR THE PRIOR YEAR THE AMOUNT OF PATRONAGE DIVIDENDS PAID AND/OR ALLOCATED TO THE MEMBERS FOR THE 2010 CALENDAR YEAR. BECAUSE THE INSTRUCTIONS FOR THE 2010 FORM 990 DID NOT PROVIDE FOR SUCH A CLARIFICATION, THE 2010 FORM 990 WAS NOT PREPARED IN THIS MANNER. HOWEVER, SINCE THE COOPERATIVE DID IN FACT ALLOCATE PATRONAGE DIVIDENDS TO ITS MEMBERS FOR THE 2010 CALENDAR YEAR, IT BELIEVES THAT BOTH THE PRIOR YEAR AND CURRENT YEAR COLUMNS OF PART I SHOULD BE PREPARED CONSISTENTLY IN ORDER TO REFLECT THAT THE COOPERATIVE HAS A PRE-EXISTING OBLIGATION TO ALLOCATE, AND DOES ALLOCATE, PATRONAGE DIVIDENDS TO ITS MEMBERS FOR EACH YEAR THAT IT OPERATES FOR THE BENEFIT OF THE MEMBERS. 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, AND 4. CHANGES TO THE BYLAWS OR ARTICLES OF INCORPORATION. Form 990, Part VI, Section B, line 11 MANAGEMENT PRESENTED A COPY OF THE FORM 990 TO THE BOARD FOR REVIEW AND APPROVAL PRIOR TO FILING. Form 990, Part VI, Section B, line 12c THE DIRECTORS REVIEW THE CONFLICT OF INTEREST POLICY ANNUALLY, AND IMMEDIATELY ADDRESS ANY QUESTIONS OR CONCERNS IF THEY ARISE. THE BOARD OF DIRECTORS AND OFFICERS ARE ALSO 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 THE EXPERTISE OF AN INDEPENDENT COMPENSATION CONSULTANT WHEN DETERMINING THE COMPENSATION OF THE GENERAL MANAGER. THE BOARD AND THE GENERAL MANAGER USE THE EXPERTISE OF AN INDEPENDENT COMPENSATION CONSULTANT WHEN DETERMINING THE COMPENSATION OF THE COOPERATIVE'S OTHER EMPLOYEES MEETING THE DEFINITION OF OFFICER AND KEY EMPLOYEES, IF ANY. Form 990, Part VI, Section C, line 19 THE COOPERATIVE ANNUALLY MAILS A SUMMARIZED COPY OF THE AUDITED FINANCIAL STATEMENTS TO THE MEMBERS OF THE COOPERATIVE. THE COOPERATIVE ALSO PROVIDES COPIES OF THEIR CURRENT AND PAST ANNUAL REPORTS AND GOVERNING DOCUMENTS ON THEIR 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. TO PROVIDE DETAIL REGARDING OFFICER 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 3% 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 AND KEY EMPLOYEES, MEETING THE ELIGIBILITY REQUIREMENTS OF SUCH PLANS. THE COOPERATIVE ALSO PROVIDES HEALTH, DENTAL, VISION AND LIFE INSURANCE TO ALL EMPLOYEES, INCLUDING OFFICERS AND KEY EMPLOYEES, THROUGH A QUALIFIED PLAN. THE AMOUNTS REPORTED ON PART VII, COLUMN (F) FOR THE OFFICER OR KEY EMPLOYEE IS COMPRISED OF THE ACTUARIAL INCREASE IN THE DEFINED BENEFIT PLAN FOR THE OFFICER OR KEY EMPLOYEE, THE TOTAL AMOUNT CONTRIBUTED TO THE 401(K) PENSION PLAN AND THE INSURANCE PREMIUMS PAID FOR THE BENEFIT OF THE OFFICER OR KEY EMPLOYEE. 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. PATRONAGE DIVIDENDS 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. 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 $7,012,929 LESS DIRECTORS FEES REPORTED ON 1099-MISC (127,750) LESS EMPLOYEE OFFICER BENEFITS INCLUDED IN LINE 5 (61,275) LESS KEY EMPLOYEE BENEFITS INCLUDED IN LINE 5 (43,697) PLUS SALARIES AND WAGES ALLOCATED TO ASSET ACCOUNTS 7,909,728 RECONCILIATION TO W-3 $14,689,935 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 SUPPLIES AND EXPENSE $312,950 OUTSIDE SERVICES EMPLOYED 476,133 INSURANCE - INJURIES AND DAMAGES 88,774 DUES PAID ASSOCIATED ORGANIZATIONS 165,982 FORT HUACHUCA EXPENSES 76,718 SAFETY 36,216 DIRECTORS EXPENSES 91,132 EMPLOYEE ACTIVITIES 82,649 MAINTENANCE OF GENERAL PLANT 22,011 CAPITAL CREDITS 3,009 MISCELLANEOUS GENERAL EXPENSE 148,857 ADMINISTRATIVE & GENERAL EXPENSE -OTHER 875,312 TOTAL ADMINISTRATIVE AND GENERAL EXPENSE PER 990 $2,379,743 TO PROVIDE DETAIL REGARDING OTHER EXPENSES Form 990, Part IX, Line 24e THE FOLLOWING IS A BREAKDOWN OF THE EXPENSES REPORTED AS OTHER EXPENSES ON FORM 990, PART IX, LINE 24E. TAX - OTHER $1,037,623 CONSUMER ACCOUNT AND SERVICE 1,472,199 SALES EXPENSE 180,989 TRANSMISSION EXPENSE 325,573 INTERNET EXPENSES 87,018 PHONE CARD EXPENSES 341 TOTAL OTHER EXPENSES PER FORM 990 LINE 24E $3,103,743 BENEFITS PAID TO MEMBERS Form 990, Part IX, Line 4 THE FORM 990 INSTRUCTIONS FOR THE CURRENT YEAR CLARIFIES THAT THE AMOUNT OF PATRONAGE DIVIDENDS PAID TO THE MEMBERS 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 MEMBERS. THE COOPERATIVE'S TAX EXEMPT PURPOSE IS TO PROVIDE ELECTRICITY TO ITS MEMBERS 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 MEMBERS. 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 MEMBERS, 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 COOPERATIVES 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 MEMBERS FOR ALL AMOUNTS RECEIVED AND RECEIVABLE FROM THE FURNISHING OF ELECTRIC ENERGY IN EXCESS OF OPERATING COSTS AND EXPENSES PROPERLY 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 MEMBERS AS CAPITAL. (C) THE COOPERATIVE IS OBLIGATED TO PAY BY CREDITS TO A CAPITAL ACCOUNT FOR EACH MEMBER FOR ALL SUCH MARGINS. AND (D) ALL SUCH AMOUNTS CREDITED TO THE CAPITAL ACCOUNT OF ANY MEMBER SHALL HAVE THE SAME STATUS AS THOUGH THEY HAD BEEN PAID TO THE MEMBER IN CASH IN PURSUANCE OF A LEGAL OBLIGATION TO DO SO AND THE MEMBER 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 MEMBERS RESULTING FROM THEIR PURCHASE OF ELECTRICITY FROM THE COOPERATIVE FOR THE 2011 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 MEMBERS AND ARE DONE PURSUANT TO THE OLBIGATION THAT EXISTED IN THE BYLAWS PRIOR TO THE COOPERATIVE PROVIDING ELECTRICITY TO ITS MEMBERS. 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 MEMBERS AND THEREBY A KEY COMPONENT TO ACCOMPLISHING ITS EXEMPT PURPOSE, THE COOPERATIVE HAS REPORTED THE AMOUNT OF ITS 2011 MARGIN THAT HAS BEEN OR IS TO BE ALLOCATED TO THE MEMBERS 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 MEMBERS. Changes in Net Assets or Fund Balances: Form 990, Part XI, line 5: NET CHANGE IN MEMBERSHIPS -2,545. PATRONAGE CAPITAL CREDIT RETIREMENTS -792,392. GAIN ON RETIREMENT OF ESTATE CAPITAL CREDITS 52,115. PATRONAGE CAPITAL ASSIGNABLE 7,057,710. Total to Form 990, Part XI, Line 5: 6,314,888. INDEPENDENT AUDIT AND AUDIT COMMITTEE Form 990, Part XII, Line 2 AUDITED FINANCIAL STATEMENTS WERE PREPARED BY AN INDEPENDENT ACCOUNTANT FOR THE COOPERATIVE'S FISCAL YEAR END OF JUNE 30TH. ADDITIONALLY, AS A RESULT OF A FEDERAL AWARD, THE ORGANIZATION WAS REQUIRED AND UNDERWENT AN AUDIT AS SET FORTH IN THE SINGLE AUDIT ACT AND OMB CIRCULAR A-133 FOR THE 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 OF DIRECTORS HAVE ASSIGNED MEMBERS TO AN AUDIT COMMITTEE TO OVERSEE THE FINANCIAL STATEMENT AUDIT AND SELECT THE INDEPENDENT FINANCIAL STATEMENT AUDITOR. SULPHUR SPRINGS VALLEY ELECTRIC COOPERATIVE FOUNDATION PO BOX 820 WILLCOX AZ 856440820 860488826 FUND EDUCATIONAL YOUTH ACTIVIES AND QUALIFIED PROGRAMS AZ 501(c)(3) PF N/A 1 SULPHUR SPRINGS VALLEY ELECTRIC COOPERATIVE CHARITABLE TRUST 311 E WILCOX DRIVE SIERRA VISTA AZ 85635 860993649 ASSISTANCE TO NATURAL DISASTER VICTIMS AND FAMILIES AZ 501(c)(3) Line 7 N/A 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 SULPHUR SPRINGS VALLEY ELECTRIC COOP FOUNDATION - NA LESS THAN 50000 P CASH