2012-11-15T16:10:01-06:00 2011-12-31 750882037 BOLINGER SEGARS GILBERT AND MOSS LLP 8215 NASHVILLE AVENUE LUBBOCK TX 79423 990 2011-01-01 740811772 NUECES ELECTRIC COOPERATIVE NUEC 3613872581 709 EAST MAIN ROBSTOWN TX 78380 JOHN SIMS 3613872581 2012-11-15 1 Matt R Willis P00419741 8067473806 2012-11-15 2011 2016-02-24 21:20:13Z JOHN SIMS 709 EAST MAIN ROBSTOWN TX 78380 70722236 0 X WWW.NUECESELECTRIC.ORG X 1939 TX TO PROVIDE QUALITY AND RELIABLE ELECTRIC SERVICE TO MEMBERS AT COST ON A COOPERATIVE BASIS. 10 10 93 0 0 0 0 0 81604393 70216034 526998 380514 2019311 38438 84150702 70634986 0 5112 8709387 4637034 4012566 4542778 0 0 0 71428749 61450062 84150702 70634986 0 0 118324671 123458325 66717675 72568347 51606996 50889978 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 - 17,848 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 1 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 1 1 1 0 1 59 0 93 1 0 0 0 0 0 68126585 836267 0 X 10 10 0 0 1 0 1 1 1 1 0 0 0 0 1 1 1 1 1 1 1 0 X JOHN SIMS 3613872581 709 E MAIN STREET ROBSTOWN TX 78380 BRIAN MENKING 4.60 X X 17525 0 0 LOUIS W HARTMAN 7.50 X X 25965 0 0 DAVID ROSSE 4.20 X X 21255 0 0 KENNETH GAJDOS 6.00 X X 23605 0 0 DONALD WAYNE HERRMANN 4.80 X 20555 0 0 MAXINE STEWART 4.50 X 20445 0 0 TOMMY ERMIS 5.80 X 17462 0 0 GREGG TRUESDALE 3.50 X 17320 0 0 GLADYS LIPPINCOTT 6.20 X 23510 0 0 JUAN ALVARADO 5.50 X 22300 0 0 JOHN SIMS 42.00 X 209988 0 87394 JANE BAHLER-HURT 45.00 X 121425 0 42291 VARZAVAND IRANI 50.00 X 104429 0 25410 SARAH MARIE PRATER FISHER 50.00 X 68074 0 30845 MANUEL MAYORGA 60.00 X 100843 0 27625 JUAN RIVERA 60.00 X 108923 0 27712 923624 0 241277 5 0 1 0 MOREHEAD DOTTS & ASSOCIATES 2767 SANTA FE CORPUS CHRISTI TX 78404 ADVERTISING 807401 ASPLUNDH TREE EXPERT CO 1700 SOLUTION CENTER CHICAGO IL 60677 TREE TRIMMING 560618 CHAIN ELECTRIC COMPANY PO BOX 2058 HATTIESBURG MS 39403 BUILD & RETIRE ELECTRICAL LINES 447643 PIKE ELECTRIC INC PO BOX 1000 DEPT 517 MEMPHIS TN 38148 BUILD & RETIRE ELECTRICAL LINES 345625 OSMOSE UTILITIES SERVICES INC PO BOX 8000 BUFFALO NY 14267 POLE INSPECTION 315279 11 ELECTRIC ENERGY 221000 65132916 65132916 PATRONAGE DIVIDENDS 221000 2611607 2611607 BASE PRIVATIZATION REV 221000 1773850 1773850 CONNECT/LATE FEES 221000 697661 697661 70216034 375713 375713 41759 0 41759 41759 41759 7995 3194 4801 4801 4801 80735 84056 -3321 -3321 70634986 70212713 0 422273 X 4454 658 4637034 899798 2291847 309540 826279 215314 2514264 3906022 COST OF PURCHASED POWER 45205436 CONSUMER EXPENSE 3009639 GENERAL AND ADMIN 2869846 DISTRIBUTION EXPENSE 2115014 1829841 70634986 8263213 7199681 99008 482008 588630 2453610 1488504 3252918 1237979 1219523 101649323 21370539 80939586 80278784 6744071 6659261 15958313 18256299 3005367 3656241 118324671 123458325 6205176 4963704 1735716 3683855 68114 86208 56444402 57023625 2264267 6810955 66717675 72568347 X 375645 395370 0 0 51231351 50494608 51606996 50889978 118324671 123458325 X 0 -717018 X X 0 1 1 X 0 0 1 1358370 1358370 4725762 779723 3946039 94015187 20590816 73424371 1550004 1550004 80278784 CERTIFICATES OF DEPOSIT 572000 C TREASURY STRIPS 6087261 C 6659261 NRUCFC CAPITAL TERM CERTIFICATES 738569 C PATRONAGE CAPITAL - SOUTH TEXAS ELECTRIC COOPERATIVE 16120111 C PATRONAGE CAPITAL - NRUCFC 119145 C PATRONAGE CAPITAL - TEC 381768 C PATRONAGE CAPITAL - NISC 57940 C PATRONAGE CAPITAL - COBANK 709725 C PATRONAGE CAPITAL - FEDERATED 115182 C PATRONAGE CAPITAL - COOPERATIVE RESPONSE CENTER 12724 C MEMBERSHIPS 1135 C 18256299 CONSUMER DEPOSITS 4537880 ACCRUED TAXES 105901 ACCRUED INTEREST 237241 UNCLAIMED CAPITAL CREDITS 802558 ACCRUED EMPLOYEE COMPENSATED ABSENCES 566934 OTHER CURRENT AND ACCRUED LIABILITIES 560441 6810955 70634986 70634986 0 -717018 -717018 -717018 69199723 0 69199723 1435263 1435263 70634986 64562690 0 64562690 6072296 6072296 70634986 Part IV, Line 2b: THE COOPERATIVE HAS PUT INTO PLACE AN "OPERATION ROUNDUP" PLAN. MEMBERS WHO WISH TO PARTICIPATE IN THE PLAN VOLUNTARILY ROUND THEIR ELECTRIC BILLS UP TO THE NEAREST WHOLE DOLLAR. THE DIFFERENCE IS USED TO FUND THE PLAN. THE "OPERATION ROUNDUP" FUNDS ARE MAINTAINED IN A SEPARATE ACCOUNT AND USED TO SUPPORT EDUCATION PROJECTS, YOUTH PROJECTS, COMMUNITY PROJECTS AND EMERGENCY ASSISTANCE WITHIN THE COMMUNITIES AND AREAS SERVED BY THE COOPERATIVE. PURSUANT TO SECTION 74.3013 OF THE TEXAS PROPERTY CODE, THE COOPERATIVE HAS ESTABLISHED A RURAL SCHOLARSHIP FUND WITH RETIREMENTS OF PATRONAGE CAPITAL, WHICH HAVE REMAINED UNCLAIMED FOR A PERIOD OF THREE YEARS. 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. Description of Uncertain Tax Positions Under FIN 48: Part X: ON JANUARY 1, 2009, 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 XI, Line 8 - Other Adjustments: NET CHANGE IN MEMBERSHIPS 19,725. GAIN ON RETIRED CAPITAL CREDITS 107,648. RETIREMENTS OF PATRONAGE CAPITAL -5,481,424. PATRONAGE CAPITAL ASSIGNABLE 4,637,033. Total to Schedule D, Part XI, Line 8: -717,018. Part XII, Line 4b - Other Adjustments: EXPENSES RECORDED IN NON-OPERATING MARGINS RECLASSED TO EXPENSE 1,435,263. Part XIII, Line 4b - Other Adjustments: EXPENSES RECORDED IN NON-OPERATING MARGINS RECLASSED TO EXPENSE 1,435,263. PATRONAGE CAPITAL ASSIGNABLE 4,637,033. SCHEDULE D, PAGE 3, 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 XIII, LINE 4B: PATRONAGE CAPITAL ASSIGNABLE - $4,637,033 Part XIII, 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. X X 0 0 0 JOHN SIMS 186936 0 4045 0 19007 0 66313 0 21081 0 297382 0 0 0 JANE BAHLER-HURT 116168 0 1947 0 3310 0 22120 0 20171 0 163716 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 CONTRIBUTIONS TO THE PLAN IN LIEU OF THE ACTUARIAL INCREASE ARE EXPENSED IN THE FINANCIAL STATEMENTS. JOHN SIMS ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 60,062 401(K) EMPLOYER MATCH 6,251 TOTAL COLUMN C: 66,313 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN: (60,062) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN: 31,375 TOTAL COOPERATIVE CASH CONTRIBUTION $ 37,626 JANE BAHLER-HURT ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 18,247 401(K) EMPLOYER MATCH 3,873 TOTAL COLUMN C: 22,120 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN: (18,247) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN: 20,012 TOTAL COOPERATIVE CASH CONTRIBUTION $ 23,885 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 (HEREINAFTER REFERRED TO AS PATRONS) 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 PATRONS 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 TO THE PATRONS 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 PATRONS 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 PATRONS FOR EACH YEAR THAT IT OPERATES FOR THE BENEFIT OF THE PATRONS. Form 990, Part VI, Section A, line 4 ARTICLE IV, SECTION 4 OF THE COOPERATIVE'S BYLAWS WAS AMENDED TO CHANGE THE NUMBER OF REQUIRED DIRECTOR CANDIDATE PETITION SIGNATURES FROM 20 TO 15. ARTICLE VII, SECTION 5 OF THE COOPERATIVE'S BYLAWS WAS AMENDED TO REQUIRE THE COOPERATIVE TO KEEP THEIR ACCOUNTING RECORDS IN ACCORDANCE WITH GAAP (GENERALLY ACCEPTED ACCOUNTING PRINCIPLES). 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; 3. THE MERGER OR CONSOLIDATION OF THE COOPERATIVE WITH ANOTHER ORGANIZATION; AND 4. CHANGES TO THE ARTICLES OF INCORPORATION. 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 THE BOARD DID NOT REVIEW THE FORM 990 PRIOR TO FILING, BUT WILL REVIEW THE FORM 990 AT THEIR NEXT SCHEDULED MEETING. Form 990, Part VI, Section B, line 12c OFFICERS, DIRECTORS, AND KEY EMPLOYEES ARE REQUIRED TO DISCLOSE IMMEDIATELY ANY RELATIONSHIPS CONSIDERED TO BE A POSSIBLE CONFLICT OF INTEREST. Form 990, Part VI, Section B, line 15 THE BOARD OF DIRECTORS USE THE EXPERTISE OF AN INDEPENDENT COMPENSATION CONSULTANT AND 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 TEXAS AND THE NATION. THE BOARD AND THE GENERAL MANAGER USE THE EXPERTISE OF AN INDEPENDENT COMPENSATION CONSULTANT AND 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 SIMILARLY SITUATED COOPERATIVES THROUGHOUT TEXAS AND THE NATION. Form 990, Part VI, Section C, line 19 THE COOPERATIVE WILL PROVIDE A COMPLETE COPY OF ITS GOVERNING DOCUMENTS, CONFLICT OF INTEREST POLICY AND AUDITED FINANCIAL STATEMENTS TO ANY MEMBER WHO REQUESTS A COPY OF ANY SUCH DOCUMENT. ANNUALLY THE COOPERATIVE PROVIDES A COPY OF THE AUDITED BALANCE SHEET AND INCOME STATEMENT TO THE MEMBERS OF THE COOPERATIVE WITH THE ANNUAL REPORT. ADDITIONALLY, THE BY-LAWS, ARTICLES OF INCORPORATION AND ANNUAL FINANCIAL REPORTS MAY BE FOUND ON THE COOPERATIVE'S WEBSITE. 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 (HEREINAFTER REFERRED TO AS PATRONS) SHOULD BE REPORTED ON PART IX, LINE 4 AS "BENEFITS PAID TO MEMBERS". 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 POWER AND ENERGY IN EXCESS OF OPERATING COSTS AND EXPENSES PROPERLY CHARGEABLE AGAINST SUCH SERVICES (I.E. MARGINS FROM THE PROVISION OF ELECTRIC POWER AND ENERGY). (B) THE MARGINS FROM THE PROVISION OF ELECTRIC POWER AND 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 CREDITED TO THE CAPITAL ACCOUNT OF ANY PATRONS 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 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 POWER AND ENERGY TO THE PATRONS AND ARE DONE PURSUANT TO THE OBLIGATION 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 2011 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 MEMBERS. Changes in Net Assets or Fund Balances: Form 990, Part XI, line 5: NET CHANGE IN MEMBERSHIPS 19,725. GAIN ON RETIRED CAPITAL CREDITS 107,648. RETIREMENTS OF PATRONAGE CAPITAL -5,481,424. PATRONAGE CAPITAL ASSIGNABLE 4,637,033. Total to Form 990, Part XI, Line 5: -717,018. AUDIT COMMITTEE Form 990, Part XII, Line 2c THE BOARD OF DIRECTORS HAVE ASSIGNED MEMBERS TO AN AUDIT COMMITTEE TO OVERSEE THE FINANCIAL STATEMENT AUDIT AND SELECT THE INDEPENDENT FINANCIAL STATEMENT AUDITOR. 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. PATRONAGE DIVIDENDS Form 990, Part VIII, Line 2B 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. 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 $ 3,191,645 LESS DIRECTORS FEES REPORTED ON 1099-MISC (209,942) PLUS SALARIES AND WAGES ALLOCATED TO ASSET ACCOUNTS 1,655,241 LESS EMPLOYEE OFFICER BENEFITS REPORTED ON LINE 5 (185,940) RECONCILIATION TO W-3 $ 4,451,004 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 $ 529,198 OUTSIDE SERVICES 205,556 INSURANCE 273,344 REGULATORY COMMISSION EXPENSES 444,049 ADVERTISING 1,080,607 ANNUAL MEETING EXPENSES 138,301 MAINTENCANCE OF GENERAL PLANT 69,386 MEMBERSHIPS AND DUES 85,767 MISCELLANEOUS GENERAL AND ADMINISTRATIVE 43,638 TOTAL ADMINISTRATIVE AND GENERAL EXPENSE PER 990 $2,869,846 TO PROVIDE DETAIL REGARDING OTHER EXPENSES FORM 990, PART IX, LINE 24(E) THE FOLLOWING IS A BREAKDOWN OF THE EXPENSES REPORTED ON FORM 990, PART IX, LINE 24E AS OTHER EXPENSE DISTRIBUTION EXPENSE - OTHER CONTRACT $1,432,591 PROPERTY TAXES 364,674 OTHER DEDUCTIONS 32,576 TOTAL OTHER EXPENSES PER FORM 990 $1,829,841 TO PROVIDE DETAIL REGARDING THE 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 OF UP TO 3% TO 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 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. NUECES CHARITIES INCORPORATED 709 E MAIN AVE ROBSTOWN TX 78380 742756238 BETTERING THE QUALITY OF LIFE OF CITIZENS WITHIN THE SERVICE AREA. TX 501(C)(3) 7 N/A 1 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 1 0 0 NA - UNDER 50000 N 0 NA - UNDER 50000 P 0