2012-08-02T09:31:13-07:00 2011-12-31 990 2011-01-01 750384046 LAMAR COUNTY ELECTRIC COOPERATIVE ASSOCIATION LAMA 9037844303 PO Box 580 Paris TX 754610580 Jerry Williams 9037834914 2012-08-02 2011 2016-02-24 21:20:13Z LAMAR ELECTRIC COOPERATIVE Jerry Williams PO Box 580 Paris TX 754610580 22696796 0 X www.lamarelectric.coop X 1938 TX LAMAR ELECTRIC COOPERATIVE PROVIDES QUALITY AND RELIABLE ELECTRIC SERVICE TO MEMBERS OF THE COOPERATIVE. 9 9 36 0 219 0 0 0 22211981 22570105 39281 74119 40836 48526 22292098 22692750 0 0 0 1634368 1992609 2111571 0 0 0 18532188 18946811 20524797 22692750 1767301 0 44875750 45495233 25858543 25162264 19017207 20332969 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 0 0 PROVIDING ELECTRIC ENERGY TO OUR MEMBERS - 11,767 ACTIVE SERVICES AT YEAR END WERE PROVIDED ELECTRICITY ON A COOPERTIVE BASIS THROUGH THE ALLOCATION OF PATRONAGE CAPITAL. 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 1 0 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 35 0 1 36 1 0 0 0 0 0 22731757 330322 0 X 9 9 0 0 0 0 1 1 1 1 1 0 0 1 1 1 1 1 0 1 1 0 X X JERRY WILLIAMS 9037844303 1485 N MAIN STREET PO BOX 580 PARIS TX 754610580 X ALLEN BRANCH 2.71 X X 3800 0 0 CHARLES DOOLEY 1.52 X X 2500 0 0 BILLY R HINES 1.18 X X 2300 0 0 MICHAEL WILLIAMS 1.19 X 2800 0 0 MARK JONES 0.88 X 2400 0 0 GEORGE M WOOD 1.52 X 3100 0 0 RON E TIPPIT 1.17 X 2200 0 0 JAMES SAM COOPER 1.25 X 800 0 0 LYLE D YODER 1.38 X 3100 0 0 MATTHEW ALBUS 1.17 X 200 0 0 JERRY D WILLIAMS 40 X 145493 0 47973 168693 0 47973 1 0 1 0 C H GUERNSEY & COMPANY PO BOX 960012 OKLAHOMA CITY OK 731960017 ENGINEERING 321946 WHITMIRE LINE CLEARANCE INC 8171 HWY 377 S PILOT POINT TX 76258 RIGHT-OF-WAY CLEARING 258538 OSMOSE UTILITIES SERVICES INC 980 ELLICOTT STREET BUFFALO NY 14209 POLE INSPECTION AND TREATMENT 237282 TREES INC 1700 SOLUTIONS CENTER CHICAGO IL 606771077 RIGHT-OF-WAY CLEARING 214459 NISC PO BOX 1147 MANDAN ND 58554 INFORMATION SYSTEMS 169738 8 0 ELECTRIC ENERGY SALES 221000 22150950 22150950 0 0 PATRONAGE DIVIDENDS 221000 221856 221856 0 0 SERVICE CHARGES 221000 96430 96430 0 0 ELECTRIC WHEELING 221000 100869 100869 0 0 0 0 0 0 22570105 52433 0 0 52433 0 0 0 0 0 0 0 0 0 34892 0 0 0 34892 34892 0 0 34892 0 25508 0 3822 0 21686 21686 0 0 21686 13858 224 13634 29 219 13386 0 22692750 22570134 219 122397 X 0 0 0 1634368 168693 0 1217424 247020 374312 104122 1002235 1760433 Purchased Power 13171603 Distribution Expense 1978652 Admin & General Expense 620745 Customer Accounts Expense 252877 160266 22692750 0 0 0 2308929 6196139 2402950 3126454 1750437 1762256 205426 195998 1368 197436 91845 51006072 19597934 35436508 31408138 2566295 2705300 7769 7735 44875750 45495233 1531816 1161999 502675 448305 18117294 17342560 5706758 6209400 25858543 25162264 X 197048 197943 0 0 18820159 20135026 19017207 20332969 44875750 45495233 X 0 1315762 X 0 1 0 X 0 422527 0 422527 537450 0 431579 105871 0 0 0 0 55386290 0 19166355 36219935 -5340195 0 0 -5340195 31408138 PATRONAGE CAPITAL - CFC 551446 C PATRONAGE CAPITAL - RAYBURN COUNTRY 1107871 C PATRONAGE CAPITAL - TEXAS ELECTRIC COOPERATIVE 201282 C PATRONAGE CAPITAL - NATIONAL INFORMATION SOULUTIONS COOPERATIVE 54938 C CAPITAL TERM CERTIFICATES - CFC 744662 C OTHER PATRONAGE CAPITAL AND INVESTMENTS 10101 C INVESTMENT - CFC MEMBER CAPITAL SECURITIES 25000 C INVESTMENT - COOPERATIVE RESPONSE CENTER 10000 C 2705300 0 ACCRUED COMPENSATED ABSENCES 296463 POWER COST OVERBILLED 1319043 POST-RETIREMENT BENEFIT OBILIGATION 4038816 CONSUMER DEPOSITS 253025 OTHER ACCRUED EXPENSES 302053 6209400 22692750 22692750 0 0 0 0 0 1634368 1634368 1634368 22692736 0 0 0 -14 -14 22692750 0 0 0 22692750 21058368 0 0 0 -14 -14 21058382 0 1634368 1634368 22692750 SchD_P10_S00_L00 Schedule D, Part X THE COOPERATIVE IS EXEMPT UNDER SECTION 501(C)(12) OF THE INTERNAL REVENUE CODE FROM FEDERAL INCOME TAX FOR ANY YEAR IN WHICH AT LEAST 85% OF ITS GROSS INCOME IS DERIVED FROM MEMBERS BUT IS RESPONSIBLE FOR INCOME TAXES ON CERTAIN UNRELATED BUSINESS INCOME. SchD_P10_S00_L02 Schedule D, 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 (IRS) OR OTHER STATE TAXING AUTHORITY AND THAT ALL TAX BENEFITS ARE LIKELY TO BE REALIZED UPON SETTLEMENT WITH TAXING AUTHORITIES. THE COOPERATIVE FILES INCOME TAX RETURNS IN THE U.S. FEDERAL JURISDICTION. THE COOPERATIVE IS NO LONGER SUBJECT TO U.S. FEDERAL AND STATE INCOME TAX EXAMINATIONS BY FEDERAL TAXING AUTHORITIES FOR YEARS BEFORE 2008. THE COOPERATIVE RECOGNIZES INTEREST ACCRUED RELATED TO UNRECOGNIZED TAX BENEFITS IN INTEREST EXPENSE AND PENALTIES IN OPERATING EXPENSES. THERE WERE NO PENALITIES OR INTEREST RECOGNIZED DURING THE YEARS ENDING DECEMBER 31, 2011 AND 2010. SchD_P11_S00_L08 Schedule D, Part XI, Line 8 OTHER CHANGES IN NET ASSETS - PATRONAGE CAPITAL ASSIGNABLE - AUDITED FINANCIAL STATEMENTS ARE PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (US GAAP) ADAPTED IN ACCORDANCE WITH THE UNIFORM SYSTEM OF ACCOUNTS AS PRESCRIBED BY THE FEDERAL ENERGY REGULATORY COMMISSION FOR CLASS A AND B ELECTRIC UTILITIES. THE AMOUNT OF PATRONAGE DIVIDENDS PAID OR ALLOCATED TO THE MEMBERS IS REPORTED AS AN INCREASE IN EQUITY WHILE IT IS REPORTABLE AS EXPENSE ON FORM 990, PART IX, LINE 4 AS BENEFITS PAID TO MEMBERS. SchD_P12_S00_L02d Schedule D, Part XII, Line 2d -14 DISCOUNT ON SALES TAX REPORTED AS REVENUE ON FINANCIAL STATEMENTS SchD_P13_S00_L02d Schedule D, Part XIII, Line 2d -14 DISCOUNT ON SALES TAX REPORTED AS REVENUE ON FINANCIAL STATEMENTS SchD_P13_S00_L04b Schedule D, Part XIII, Line 4b PATRONAGE CAPITAL ASSIGNABLE - $1,634,368. 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 JERRY D WILLIAMS 145493 0 0 0 0 0 29228 0 18745 0 193466 0 178325 0 SchJ_P01_S00_L03 Schedule J, Part I, Line 3 COMPENSATION OF THE GENERAL MANAGER - THE BOARD OF DIRECTORS USES 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 COOPERATIVE OBTAINS AN UPDATED SURVEY EACH YEAR. F990_P01_S00_L14 Form 990, Part I, Line 14 BENEFITS PAID TO MEMBERS - THE INSTRUCTIONS FOR THE 2011 FORM 990 CLARIFY 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. BECAUSE THE INSTRUCTIONS FOR THE 2010 FORM 990 DID NOT PROVIDE SUCH A CLARIFICATION, THE 2010 FORM 990 WAS NOT PREPARED IN THIS MANNER. SINCE PART I SUMMARIZES BOTH PRIOR AND CURRENT YEAR DATA, THE COOPERATIVE HAS CHOSEN TO REPORT ON PART I, LINE 14 THE PRIOR YEAR AS FILED, NOT INCULDING THE AMOUNT OF PATRONAGE DIVIDENDS PAID AND/OR ALLOCATED TO THE MEMBERS FOR THE 2010 CALENDAR YEAR. THE COOPERATIVE DID IN FACT ALLOCATE PATRONAGE DIVIDENDS TO ITS MEMBERS FOR THE 2010 CALENDAR YEAR IN THE AMOUNT OF $1,767,301. 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. F990_P06_S0A_L06 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. F990_P06_S0A_L07a Form 990, Part VI, Section A, Line 7a THE MEMBERS OF THE COOPERATIVE VOTE TO ELECT THE BOARD OF DIRECTORS. ELECTIONS ARE HELD ON A ONE MEMBER ONE VOTE BASIS. F990_P06_S0A_L07b Form 990, Part VI, Section A, Line 7b THE FOLLOWING DECISIONS 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. F990_P06_S0B_L11b Form 990, Part VI, Section B, Line 11b MANAGEMENT PRESENTED A COPY OF THE FORM 990 TO THE BOARD OF DIRECTORS FOR REVIEW PRIOR TO FILING. F990_P06_S0B_L12c Form 990, Part VI, Section B, Line 12c CONFLICT OF INTEREST POLICY - OFFICERS, DIRECTORS AND ALL COOPERATIVE EMPLOYEES ARE REQUIRED TO REVIEW AND BE FAMILIAR WITH THE COOPERATIVE'S CONFLICT OF INTEREST POLICIES. OFFICERS, DIRECTORS AND ALL EMPLOYEES ARE REQUIRED TO DISCLOSE ANY ACTION OR SITUATION THAT MIGHT VIOLATE THE POLICY TO THEIR SUPERVISOR, THE GENERAL MANAGER OR THE FULL BOARD OF DIRECTORS AS SOON AS POSSIBLE. ADDITIONALLY, THE OFFICERS AND DIRECTORS REVIEW ANNUALLY THEIR DUTIES AND STANDARDS OF CONDUCT (INCLUDING CONFLICT OF INTEREST) IN THE PRESENCE OF THE COOPERATIVE'S LEGAL COUNCIL AND DISCUSS ANY PERSONAL LIABILITY IMPLICATIONS RESULTING FROM VIOLATIONS. F990_P06_S0B_L14 Form 990, Part VI, Section B, Line 14 DOCUMENT RETENTION AND DESTRUCTION POLICY - THE COOPERATIVE DOES NOT HAVE A FORMAL, WRITTEN DOCUMENT RETENTION AND DESTRUCTION POLICY IN PLACE, BUT IT DOES FOLLOW A SET OF GUIDELINES REGARDING DOCUMENT RETENTION AND DESTRUCTION. F990_P06_S0B_L15 Form 990, Part VI, Section B, Line 15 COMPARABILITY OF COMPENSATION - THE BOARD OF DIRECTORS USES 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 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. THE COOPERATIVE OBTAINS AN UPDATED SURVEY EACH YEAR. F990_P06_S0C_L19 Form 990, Part VI, Section C, Line 19 PUBLIC AVAILABILITY OF DOCUMENTS - THE COOPERATIVE PROVIDES A SUMMARIZED COPY OF THE AUDITED FINANCIAL STATEMENTS 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. F990_P07_S0A_L01a Form 990, Part VII, Section A, Line 1a GENERAL MANAGER RESPONSIBILITIES - 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. COLUMN F - ESTIMATED OTHER COMPENSATION FROM THE ORGANIZATION - 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, MEETING THE ELIGIBILITY REQUIREMENTS OF SUCH PLANS. THE COOPERATIVE ALSO PROVIDES HEALTH AND LIFE INSURANCE TO ALL EMPLOYEES, INCLUDING OFFICERS, THROUGH A QUALIFIED PLAN. THE AMOUNTS REPORTED IN 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. F990_P08_S00_L02a Form 990, Part VIII, Line 2a - 2e PATRONAGE DIVIDENDS - PATRONAGE DIVIDENDS RESULT FROM THE PURCHASE OF WHOLESALE POWER FROM A GENERATION AND 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 THE COST OF THE ELECTRIC SERVICE PROVIDED BY THE ORGANIZATION TO ITS MEMBERS. F990_P09_S00_L01 Form 990, Part IX, Line 1 ACCOUNTING SYSTEM - THE ACCOUNTING RECORDS OF THE COOPERATIVE ARE MAINTAINED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (US GAAP) ADAPTED IN ACCORDANCE WITH THE UNIFORM SYSTEM OF ACCOUNTS AS PRESCRIBED BY THE FEDERAL ENERGY REGLATORY COMMISSION FOR CLASS A AND B ELECTRIC UTILITIES MODIFIED FOR ELECTRIC BORROWERS OF THE NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION (CFC). THE UNIFORM SYSTEM OF ACCOUNTING DOES NOT RECORD EXPENSES IN THE GENERAL EXPENSE CATEGORIES PROVIDED ON PART IX LINES 1-13. 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. F990_P09_S00_L04 Form 990, Part IX, Line 4 BENEFITS PAID TO MEMBERS - THE FORM 990 INSTRUCTIONS FOR THE CURRENT YEAR CLARIFIES 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 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 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 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 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 OBLIGATION THAT EXISTED IN THE BYLAWS PRIOR TO THE COOPERATIVE PROVIDING ELECTRICITY TO ITS MEMBERS. THEREFORE, THESE AMOUNTS MEET THE DEFINITION OF PATRONAGE DIVIDENDS PAID. PLEASE NOTE, HOWEVER, 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 ARE NOT AN EXPENSE FOR FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (US GAAP). AS A RESULT, THE DIFFERENCE BETWEEN THE COOPERATIVE'S US GAAP BASIS FINANCIAL STATEMENTS AND THE REVENUE LESS EXPENSES REPORTED ON PART 1, LINE 19 IS THE AMOUNT OF PATRONAGE DIVIDENDS REPORTED AS BENEFITS PAID TO MEMBERS. F990_P09_S00_L07 Form 990, Part IX, Line 7 RECONCILIATION OF WAGES PER RETURN TO FORM W-3 - 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 WITH THE W-3, THE FOLLOWING RECONCILIATION IS PROVIDED: TOTAL PER LINES 5-7 OF $1,386,117, LESS DIRECTORS FEES REPORTED ON 1099-MISC OF $23,000, LESS DIRECTORS FEES NOT REPORTED ON 1099-MISC OF $200, PLUS BENEFITS ON PART VII $47,973, PLUS SALARIES AND WAGES ALLOCATED TO ASSET ACCOUNTS OF $352,532, LESS PRETAX BENEFITS OF $51,323 EQUALS $1,712,099 FROM FORM W-3, BOX 5. F990_P09_S00_L24a Form 990, Part IX, Line 24a - 24e BREAKDOWN OF EXPENSES INCLUDED IN ADMINISTRATIVE AND GENERAL - THE FOLLOWING IS A BREAKDOWN OF THE EXPENSES REPORTED AS ADMINISTRATIVE AND GENERAL EXPENSE ON FORM 990, PART IX, LINE 24C: OFFICE SUPPLIES AND EXPENSE $134,185, OUTSIDE SERVICES EMPLOYEED $150,511, DIRECTORS EXPENSES $27,189, ASSOCIATED DUES $52,954, UTILITY COMMISSION RELATED EXPENSES $37,012, MAINTENANCE OF GENERAL PLANT $95,509, MISCELLANEOUS GENERAL EXPENSE $123,385 = $620,745 TOTAL ADMINISTRATIVE AND GENERAL EXPENSE PER FORM 990. F990_P11_S00_L05 Form 990, Part XI, Line 5 OTHER CHANGES IN NET ASSETS - 1,634,368 PATRONAGE CAPITAL ASSIGNABLE, 895 INCREASE IN MEMBERSHIPS, (319,500) OTHER COMPREHENSIVE INCOME/PROVISION FOR PENSION AND BENEFITS.