2012-05-15T10:28:08-05:00 2011-12-31 750882037 BOLINGER SEGARS GILBERT AND MOSS LLP 8215 NASHVILLE AVENUE LUBBOCK TX 79423 990 2011-01-01 730375825 NORTHWESTERN ELECTRIC COOPERATIVE INC NORT 5802567425 PO BOX 2707 WOODWARD OK 73802 TYSON LITTAU 5802567425 2012-05-12 1 WILLIAM M MILLER P00439459 8067473806 2012-05-12 X 2011 2016-02-24 21:20:13Z TYSON LITTAU PO BOX 2707 WOODWARD OK 73802 29799255 0 X WWW.NWECOK.COOP X 1940 OK TO PROVIDE ELECTRIC POWER TO RURAL AREAS AT COST ON A COOPERATIVE BASIS. 9 8 60 0 78013 0 0 0 28096566 29517447 133704 107736 105051 113517 28335321 29738700 0 14926 2233241 1362103 3622331 3826502 0 0 0 22479749 24535169 28335321 29738700 0 0 60676419 62701471 38238359 39645266 22438060 23056205 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 - 11,359 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 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 1 0 0 0 0 0 0 0 0 0 1 37 0 60 1 1 1 0 0 0 0 29643450 305546 0 X 9 8 0 0 0 0 1 1 1 1 1 0 0 1 1 1 1 1 1 1 1 0 OK X TYSON LITTAU 5802567425 2925 WILLIAMS AVENUE WOODWARD OK 73801 KENNETH KNOWLES 6.40 X X 18162 0 0 RAY SMITH 2.70 X X 15263 0 0 JOHN BRUCE JR 7.50 X X 19739 0 0 GILBERT PERKINS 5.00 X 17563 0 0 LEE R HUCKABY 4.80 X 4300 0 0 DUANE HENDERSON 3.70 X 16239 0 0 CLAIR CRAIGHEAD 5.20 X 17363 0 0 DEAN STONE 3.90 X 11038 0 0 WAYNE HALL 4.30 X 5124 0 0 TYSON LITTAU 40.00 X 117777 0 35679 242568 0 35679 1 0 1 0 RIGGS TREE SERVICE PO BOX 453225 GROVE OK 74345 TREE SERVICE 533190 HAMLIN ELECTRICAL CONST LLC 1406 NEPTUNE DRIVE CLINTON OK 73601 CONSTRUCTION 193409 2 ELECTRIC ENERGY 221000 28885365 28885365 PATRONAGE DIVIDENDS 221000 486620 486620 CONNECT AND OTHER FEES 221000 87370 87370 DISTRIBUTION LINE LEAS 221000 58092 58092 29517447 110889 110889 1937 1937 9064 9064 9064 -774 9838 12651 15804 -3153 -3153 -3153 61469 44751 16718 16718 BILLING REVENUE 221000 78013 78013 MISCELLANEOUS 561499 7785 7785 85798 29738700 29541176 78013 119511 14926 1362103 278247 2048241 500699 839104 160211 1542352 1908411 PURCHASED POWER 17533951 DISTRIBUTION EXPENSE 1494813 ADMIN AND GENERAL 863330 OPERATING TAXES 664320 527992 29738700 3104905 3421606 3051218 2927301 528 417763 319517 580850 634501 701379 544050 68945529 22922805 44421384 46022724 8390082 8823522 8310 8250 60676419 62701471 1742056 1879755 35154817 36481340 1341486 1284171 38238359 39645266 X 73190 63200 1958845 2224846 20406025 20768159 22438060 23056205 60676419 62701471 X 0 618145 X X 0 1 0 X 0 241976 241976 1597472 741870 855602 66880776 22180935 44699841 225305 225305 46022724 PATRONAGE CAPITAL - WESTERN FARMERS ELECTRIC COOPERATIVE, INC. 7844468 C PATRONAGE CAPITAL - NRUCFC 36862 C PATRONAGE CAPITAL - ARKANSAS ELECTRIC COOPERATIVE, INC. 54553 C PATRONAGE CAPITAL - SEDC 61337 C PATRONAGE CAPITAL - COBANK 140072 C MEMBERSHIPS & OTHER 21470 C CAPITAL TERM CERTIFICANTS - CFC 664760 C 8823522 CONSUMER DEPOSITS 109060 ACCRUED EMPLOYEE COMPENSATED ABSENCES 404344 OTHER CURRENT ACCRUED LIABILITIES 12652 PATRONAGE CAPITAL PAYABLE 125248 ACCRUED INTEREST PAYABLE 8772 ACCUMULATED PROVISION FOR PENSIONS & BENEFITS 624095 1284171 29738700 29738700 0 618145 618145 618145 29664792 0 29664792 73908 73908 29738700 28302689 0 28302689 1436011 1436011 29738700 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 THEIR 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 8 - Other Adjustments: PATRONAGE CAPITAL ASSIGNABLE 1,362,103. PATRONAGE CAPITAL RETIRED - TOTAL -1,009,726. PATRONAGE CAPITAL RETIRED - DISCOUNT 36,485. UNCLAIMED PATRONAGE CAPITAL RETIREMENT CHECKS 229,516. NET DECREASE IN MEMBERSHIPS -9,990. OTHER COMPREHENSIVE INCOME - PROVISION FOR PENSION & BENEFITS 9,757. Total to Schedule D, Part XI, Line 8: 618,145. Part XII, Line 4b - Other Adjustments: RECLASSIFIED EXPENSES 73,908. Part XIII, Line 4b - Other Adjustments: RECLASSIFIED EXPENSES 73,908. PATRONAGE CAPITAL ASSIGNABLE 1,362,103. 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 XIII, LINE 4B PATRONAGE CAPITAL ASSIGNABLE FOR CURRENT YEAR - $1,362,103 FOR THE AUDITED FINANCIAL STATEMENTS, THE AMOUNT OF PATRONAGE CAPITAL ASSIGNABLE (HEREINAFTER REFERRED TO AS PATRONAGE DIVIDENDS PAID OR ALLOCATED) TO THE PATRONS 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 1 1 X X 0 0 0 TYSON LITTAU 113861 0 2738 0 1178 0 9446 0 26233 0 153456 0 0 0 WESTERN FARMERS ELECTRIC COOPERATIVE A BOARD MEMBER OF THE COOPERATIVE SERVES ON THE BOARD OF WESTERN FARMERS 17533951 COOPERATIVE PURCHASES ELECTRICITY FROM WESTERN FARMERS. 0 BENEFITS PAID TO MEMBERS FORM 990, PART 1, 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 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 BY VOTING DISTRICT. 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.AMENDMENTS TO THE COOPERATIVE'S BYLAWS. Form 990, Part VI, Section B, line 11 MANAGEMENT E-MAILED A COPY OF THE FORM 990 TO THE BOARD PRIOR TO FILING. MANAGEMENT PRESENTS THE FORM 990 TO THE BOARD FOR DISCUSSION AND APPROVAL AT THE MEETING SUBSEQUENT TO FILING. 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 AND REDISTRIBUTED TO EACH EMPLOYEE, OFFICER AND DIRECTOR AT LEAST ONCE EVERY THREE YEARS. Form 990, Part VI, Section B, line 15 THE BOARD OF DIRECTORS USE A COMPENSATION SURVEY WHEN DETERMINING THE COMPENSATION OF THE CEO. THE SURVEY SHOWS COMPARATIVE SALARIES FOR GENERAL MANAGERS FROM SIMILARLY SITUATED COOPERATIVES LOCATED IN OKLAHOMA AND THE NATION. THE CEO AND AN INDEPENDENT COMPENSATION COMMITTEE 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 SIMILARLY SITUATED COOPERATIVES THROUGHOUT OKLAHOMA AND THE NATION. Form 990, Part VI, Section C, line 19 THE COOPERATIVE WILL PROVIDE A COMPLETE COPY OF ITS GOVERNING DOCUMENTS, EXTERNAL POLICIES, AND AUDITED FINANCIAL STATEMENTS TO ANY MEMBER WHO REQUESTS A COPY OF ANY SUCH DOCUMENT. ANNUALLY THE COOPERATIVE PROVIDES THE YEAR END BALANCE SHEET AND INCOME STATEMENT TO THE MEMBERS OF THE COOPERATIVE WITH THE ANNUAL MEETING NOTICE AND ANNUAL REPORT. A SUMMARIZED OPERATING REPORT IS ALSO PROVIDED TO THE MEMBERS VIA MONTHLY NEWSLETTER. 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 RECEIVALBE 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 THE 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 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 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: PATRONAGE CAPITAL ASSIGNABLE 1,362,103. PATRONAGE CAPITAL RETIRED - TOTAL -1,009,726. PATRONAGE CAPITAL RETIRED - DISCOUNT 36,485. UNCLAIMED PATRONAGE CAPITAL RETIREMENT CHECKS 229,516. NET DECREASE IN MEMBERSHIPS -9,990. OTHER COMPREHENSIVE INCOME - PROVISION FOR PENSION & BENEFITS 9,757. Total to Form 990, Part XI, Line 5: 618,145. AUDIT COMMITTEE Form 990, Part XI, Line 2C THE BOARD AS A WHOLE IS RESPONSIBLE FOR OVERSEEING THE FINANCIAL STATEMENT AUDIT AND SELECTING THE INDEPENDENT FINANCIAL STATEMENT AUDITOR. INDEPENDENT DIRECTORS Form 990, Part VI, Line 1b RAY SMITH PER IRS FORM 990 INSTRUCTIONS IS NOT AN INDEPENDENT DIRECTOR BECAUSE HE IS ON THE BOARD OF WESTERN FARMERS COOPERATIVE, INC. THE COOPERATIVE PURCHASES ITS ELECTRIC ENERGY FROM WESTERN FARMERS AND IS ALSO A MEMBER OF WESTERN FARMERS. AS SUCH, MR. SMITH IS THE COOPERATIVE'S REPRESENTATIVE ON WESTERN FARMERS BOARD. MR. SMITH HAS NO OWNERSHIP INTEREST IN WESTERN FARMERS AND RECEIVES NO DIRECT OR INDIRECT BENEFIT FROM THE COOPERATIVE DOING BUSINESS WITH WESTERN FARMERS. 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 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 ORGANIZATION 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 $ 2,326,488 LESS DIRECTORS FEES REPORTED ON 1099-MISC (124,791) LESS BENEFITS INCLUDED IN OFFICER COMPENSATION ( 35,679) PLUS SALARIES AND WAGES ALLOCATED TO ASSET ACCOUNTS 910,462 RECONCILIATION TO W-3 $ 3,076,480 CEO RESPONSIBILITIES Form 990, Part VII, Section A THE BOARD OF DIRECTORS CONSIDERS THE CEO TO BE BOTH THE TOP MANAGEMENT OFFICIAL AND THE TOP FINANCIAL OFFICIAL. THEREFORE, ONLY THE CEO IS LISTED AS AN EMPLOYEE OFFICER. 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 $ 213,078 OUTSIDE SERVICES EMPLOYED 116,427 EMPLOYEE EXPENSE 138,304 TRUSTEE EXPENSE 64,622 PROPERTY & GENERAL LIABILITY INSURANCE 66,832 INJURIES AND DAMAGES 45,902 DUES TO ASSOCIATED ORGANIZATIONS 95,502 ANNUAL AND DISTRICT MEETINGS 64,671 MAINTENANCE OF GENERAL PLANT 21,220 MISCELLANEOUS EXPENSE 36,772 TOTAL ADMINISTRATIVE AND GENERAL EXPENSE PER 990 $ 863,330 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. 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 ORGANIZATION 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. IN ADDITION TO THE ABOVE PENSION PLANS, THE ORGANIZATION ALSO PROVIDES POST-RETIREMENT HEALTH INSURANCE BENEFITS THROUGH AN UNFUNDED WELFARE BENEFIT PLAN. THE VALUE OF THESE BENEFITS HAS NOT BEEN ESTIMATED.