2023-11-15T19:20:30-06:00 2022-12-31 750882037 BOLINGER SEGARS GILBERT AND MOSS LLP 8215 NASHVILLE AVENUE LUBBOCK TX 79423 990 2022-01-01 750261611 FANNIN COUNTY ELECTRIC COOPERATIVE INC FANN 9035832117 PO BOX 250 BONHAM TX 75418 JOHN ED SHINPAUGH GENERAL MANAGER 9035832117 2023-11-15 1 JOHN ED SHINPAUGH 999009999 0 WILLIAM M MILLER P00439459 8067473806 2023-11-07 X 2 AAL1 IAL1 2022 2023-04-26 12:10:37Z FANNIN ELECTRIC COOPERATIVE JOHN ED SHINPAUGH PO BOX 250 BONHAM TX 75418 32800203 0 X WWW.FCEC.COOP X 1939 TX TO PROVIDE QUALITY AND RELIABLE ELECTRIC SERVICE TO MEMBERS AT COST ON A COOPERATIVE BASIS. 7 7 37 0 0 0 0 0 22532802 32344486 116524 271399 24704 172553 22674030 32788438 6775 4268 512715 1514762 3321412 3358391 0 0 0 18716204 27488182 22557106 32365603 116924 422835 61910277 82496559 36008552 54641792 25901725 27854767 NONE 0 0 PROVIDING ELECTRIC ENERGY TO OUR MEMBERS ON A COOPERATIVE BASIS THROUGH THE ALLOCATION OF PATRONAGE CAPITAL. THERE WERE 11,606 ACTIVE SERVICES AT YEAR END. 0 0 0 0 0 0 0 1 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 1 37 0 37 1 0 0 0 0 0 32203032 459908 0 0 0 X 7 7 0 0 0 0 1 1 1 1 0 0 0 1 0 1 1 1 1 0 X KAREN RINTELMANN CFO 9035832117 PO BOX 250 BONHAM TX 75418 X RODNEY BRENT VICE-PRESIDENT 0.60 X X 7500 0 0 STEPHEN COLLIDA PRESIDENT 2.20 X X 7500 0 0 SCOTT GIBBS DIRECTOR 0.80 X 7600 0 0 ROBERT MILTON SECRETARY/TREASURER 1.00 X X 7800 0 0 JOHN SKOTNIK DIRECTOR 2.40 X 7800 0 0 ALFRED SCOTT DIRECTOR 0.70 X 7500 0 0 J SETH MAHLER DIRECTOR 0.70 X 7500 0 0 JOHN ED SHINPAUGH CHIEF EXECUTIVE OFFICER 55.00 X 262244 0 116206 KAREN RINTELMANN CHIEF FINANCIAL OFFICER 45.00 X 213438 0 76101 TIM KIDWELL VICE-PRESIDENT 40.00 X 157944 0 77423 BARRY MURCHISON ENGINEER MANAGER 40.00 X 149035 0 95759 RODNEY GAMMONS LINE SUPERINTENDENT 42.00 X 136308 0 122990 CORY PATTON LINE FOREMAN 47.00 X 128399 0 32377 BRANDON LYLES LINE FOREMAN 47.00 X 122120 0 68005 1222688 0 588861 12 0 1 0 TECHLINE PO BOX 674005 DALLAS TX 75267 SUPPLIER 4254306 LINETEC SERVICES LLC 19820 N 7TH STE 120 PHOENIX AZ 85027 ELECTRICAL CONTRACTOR 4229551 MOSS FARMS 135 CR 36950 ARTHUR CITY TX 75411 TREE TRIMMING 589726 HORTON TREE SERVICE PO BOX 1185 KENNEDALE TX 76060 TREE TRIMMING 551641 M&S ENGINEERING PO BOX 970 SPRING BRANCH TX 78070 ENGINEERING CONTRACTOR 443421 7 X SALES OF ELECTRICITY 221000 30951148 30951148 PATRONAGE DIVIDENDS 221000 892321 892321 SERVICE FEES 221000 346632 346632 WHOLESALE TRANSMISSION ACCESS 221000 154385 154385 32344486 274498 274498 8490 11589 -3099 -3099 -3099 176 -176 -176 BOND SECURITIZATION P'SHIP INCOME 221000 142652 142652 POLE ATTACHMENT INCOME 221000 21119 21119 MISCELLANEOUS REVENUE 221000 8958 8958 172729 32788438 32492821 0 295617 X 4268 1514762 721189 1598807 255140 631185 152070 1084584 2232247 PURCHASED POWER 20024506 DISTRIBUTION EXPENSE 3044014 ADMIN & GENERAL EXPENSE 838564 CONSUMER EXPENSE 256076 8191 32365603 656064 545963 10050316 21430903 427981 901468 148791 191991 2007312 1866690 70816797 23097503 40765653 47719294 6611726 7836736 1242434 2003514 61910277 82496559 3123240 8914366 63199 66153 18009249 38459548 14812864 7201725 36008552 54641792 X 80350 82285 0 0 25821375 27772482 25901725 27854767 61910277 82496559 X 422835 1530207 X X 0 1 X 0 0 0 1 X 335578 335578 850359 428627 421732 63577137 22668876 40908261 6053723 6053723 47719294 PATRONAGE CAPITAL-NISC 76654 C PATRONAGE CAPITAL-TEC 205458 C PATRONAGE CAPITAL-CFC 587035 C PATRONAGE CAPITAL-RCEC 6216325 C PATRONAGE CAPITAL-CRC 16799 C CAPITAL TERM CERTIFICATES-CFC 350699 C INVESTMENT IN BOND SECURITIZATION PARTNERSHIP 383766 C 7836736 ACCUMULATED PROVISION FOR PENSION & BENEFITS 1435042 CONSUMER DEPOSITS 227764 ACCRUED OPERATING TAXES 212113 POWER COST RECOVERY - OVERBILLED 1117120 DEFERRED CREDITS - OTHER 1140 DEFERRED CREDITS - ADVANCES FOR CONSTRUCTION 3479635 DEFERRED CREDITS - UNCLAIMED CAPITAL CREDITS 724963 OTHER LIABILITIES 3948 7201725 X 32788438 0 32788438 0 32788438 30850841 0 30850841 1514762 1514762 32365603 PART IV, LINE 2B: PURSUANT TO SECTION 74.3013 OF THE TEXAS PROPERTY CODE, THE COOPERATIVE HAS ESTABLISHED A RURAL SCHOLARSHIP FUND WITH AMOUNTS DETERMINED UNCLAIMED UNDER STATE LAW. 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. 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 HAS DETERMINED THAT IT IS MORE LIKELY THAN NOT THAT ITS 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 XII, LINE 4B - OTHER ADJUSTMENTS: PATRONAGE CAPITAL ALLOCATED OR TO BE ALLOCATED 1,514,762. 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 XII, LINE 4B: FOR THE AUDITED FINANCIAL STATEMENTS, THE AMOUNT OF PATRONAGE DIVIDENDS ALLOCATED OR TO BE 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". X X X X 0 0 0 JOHN ED SHINPAUGH CHIEF EXECUTIVE OFFICER 209946 0 17255 0 35043 0 83322 0 32884 0 378450 0 0 0 KAREN RINTELMANN CHIEF FINANCIAL OFFICER 172576 0 14160 0 26702 0 59626 0 16475 0 289539 0 0 0 RODNEY GAMMONS LINE SUPERINTENDENT 122915 0 10114 0 3279 0 91606 0 31384 0 259298 0 0 0 BARRY MURCHISON ENGINEER MANAGER 131538 0 11025 0 6472 0 62875 0 32884 0 244794 0 0 0 TIM KIDWELL VICE-PRESIDENT 141906 0 11872 0 4166 0 44539 0 32884 0 235367 0 0 0 BRANDON LYLES LINE FOREMAN 114150 0 7593 0 377 0 36372 0 31633 0 190125 0 0 0 CORY PATTON LINE FOREMAN 119777 0 8266 0 356 0 30068 0 2309 0 160776 0 0 0 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 CONTRIBUTIONS TO THE PLAN IN LIEU OF THE ACTUARIAL INCREASE ARE EXPENSED IN THE FINANCIAL STATEMENTS. JOHN ED SHINPAUGH: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 74,812 EMPLOYER CONTRIBUTION TO 401(K) PLAN 8,510 TOTAL REPORTED IN COLUMN C $ 83,322 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (74,812) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 43,159 EXPENSE TO THE COOPERATIVE $ 51,669 KAREN RINTELMANN: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 57,126 EMPLOYER CONTRIBUTION TO 401(K) PLAN 2,500 TOTAL REPORTED IN COLUMN C $ 59,626 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (57,126) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 35,514 EXPENSE TO THE COOPERATIVE $ 38,014 RODNEY GAMMONS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 86,954 EMPLOYER CONTRIBUTION TO 401(K) PLAN 4,652 TOTAL REPORTED IN COLUMN C $ 91,606 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (86,954) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 23,681 EXPENSE TO THE COOPERATIVE $ 28,333 BARRY MURCHISON: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 57,501 EMPLOYER CONTRIBUTION TO 401(K) PLAN 5,374 TOTAL REPORTED IN COLUMN C $ 62,875 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (57,501) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 27,358 EXPENSE TO THE COOPERATIVE $ 32,732 TIM KIDWELL: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 38,751 EMPLOYER CONTRIBUTION TO 401(K) PLAN 5,788 TOTAL REPORTED IN COLUMN C $ 44,539 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (38,751) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 29,431 EXPENSE TO THE COOPERATIVE $ 35,219 BRANDON LYLES: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 32,704 EMPLOYER CONTRIBUTION TO 401(K) PLAN 3,668 TOTAL REPORTED IN COLUMN C $ 36,372 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (32,704) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 18,595 EXPENSE TO THE COOPERATIVE $ 22,263 CORY PATTON: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN $ 26,233 EMPLOYER CONTRIBUTION TO 401(K) PLAN 3,835 TOTAL REPORTED IN COLUMN C $ 30,068 LESS: ACTUARIAL INCREASE IN DEFINED BENEFIT PLAN (26,233) ADD: CASH CONTRIBUTION TO DEFINED BENEFIT PLAN 19,450 EXPENSE TO THE COOPERATIVE $ 23,285 FORM 990, PART I: IN GENERAL, WHEN AN ELECTRIC COOPERATIVE BASES THE PATRONAGE DIVIDEND CALCULATION ON ITS NET BOOK INCOME/(LOSS), PAGE 1, PART I, LINE 19 - REVENUE LESS EXPENSES - WILL BE $0. FOR THE CURRENT YEAR, PAGE 1, PART I, LINE 19 REPORTS NET INCOME OF $422,835, WHICH IS THE EFFECT OF NON-OPERATING MARGINS RETAINED. THE FOLLOWING SCHEDULE IS PROVIDED TO FURTHER EXPLAIN THE IMPACT OF THIS TRANSACTION: (A) - NET INCOME ON PAGE 1, PART I, LINE 19 $ 422,835 (B) - BENEFITS PAID TO MEMBERS (I.E. PATRONAGE DIVIDENDS), PART I, LINE 14 $1,514,762 TOTAL 2022 NET MARGIN PER FINANCIAL STATEMENTS (A + B) $1,937,597 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 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 4. AMENDMENT TO THE ARTICLES OF INCORPORATION FORM 990, PART VI, SECTION A, LINE 8B THE COOPERATIVE HAS NO COMMITTEES WITH AUTHORITY TO ACT ON BEHALF OF THE GOVERNING BODY. THEREFORE, AND PURSUANT TO FORM 990 INSTRUCTIONS, THE QUESTION HAS BEEN ANSWERED "NO". FORM 990, PART VI, SECTION B, LINE 11B MANAGEMENT PRESENTED A COPY OF THE FORM 990 TO THE BOARD FOR DISCUSSION AND REVIEW PRIOR TO FILING. FORM 990, PART VI, SECTION B, LINE 15 THE BOARD OF DIRECTORS USE A COMPENSATION SURVEY AND COMPARATIVE INFORMATION FROM FORM 990'S OF OTHER ORGANIZATIONS 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 GENERAL MANAGER USES A COMPENSATION SURVEY AND COMPARATIVE INFORMATION FROM FORM 990'S OF OTHER ORGANIZATIONS 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 PROVIDES A SUMMARIZED COPY OF THE AUDITED BALANCE SHEET AND INCOME STATEMENT TO THE MEMBERS OF THE COOPERATIVE AT THE ANNUAL MEETING. THE COOPERATIVE WILL PROVIDE A COMPLETE COPY OF THE BYLAWS, TARIFFS, AND AUDITED FINANCIAL STATEMENTS TO ANY MEMBER WHO REQUESTS A COPY. 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. EMPLOYER CONTRIBUTIONS TO THE PLAN ARE MADE PURSUANT TO THE PLAN DOCUMENT. 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 HIGHLY COMPENSATED EMPLOYEES, MEETING THE ELIGIBILITY REQUIREMENTS OF SUCH PLANS. THE COOPERATIVE ALSO PROVIDES HEALTH, DENTAL, VISION AND LIFE INSURANCE TO ALL ELIGIBLE EMPLOYEES THROUGH A QUALIFIED PLAN. THE AMOUNTS REPORTED ON PART VII, COLUMN (F) FOR THE OFFICER AND HIGHLY COMPENSATED EMPLOYEES IS COMPRISED OF ACTUARIAL INCREASE IN THE DEFINED BENEFIT PLAN AND THE TOTAL AMOUNT CONTRIBUTED BY THE COOPERATIVE TO THE DEFINED CONTRIBUTION PLAN ON BEHALF OF AND FOR THEIR BENEFIT. 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. 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. FORM 990, PART IX: ALTHOUGH THE COOPERATIVE IS NO LONGER A RURAL UTILITIES SERVICE (RUS) BORROWER, ITS ACCOUNTING RECORDS ARE MAINTAINED IN ACCORDANCE WITH THE RUS UNIFORM SYSTEM OF ACCOUNTS (USOA) PRESCRIBED FOR RUS ELECTRIC BORROWERS. THE USOA DOES NOT RECORD EXPENSES IN THE GENERAL EXPENSE CATEGORIES PROVIDED ON PART IX LINES 1-23. THE COOPERATIVE SEPARATELY REPORTS 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 ARE REPORTED ON LINE 24 UNDER THE EXPENSE CATEGORIES REQUIRED BY THE USOA. FORM 990, PART IX, LINE 1: ALL GRANTS AND/OR DONATIONS ARE MADE TO NON-PROFIT AND CIVIC ORGANIZATIONS THAT ARE LOCATED IN THE COOPERATIVE'S SERVICE AREA, AND INTENDED TO IMPROVE THE COMMUNITIES IN WHICH OUR MEMBERS RESIDE. EACH GRANT AND/OR DONATION MADE DURING THE YEAR WAS BELOW THE REPORTING THRESHOLD OF SCHEDULE I, PART II. FORM 990, PART IX, LINE 4: PURSUANT TO FORM 990 INSTRUCTIONS, 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 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 BYLAWS. 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 2022 CALENDAR YEAR. BECAUSE PATRONAGE DIVIDENDS ARE 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 SUCH AMOUNTS AS AN EXPENSE FOR FORM 990 REPORTING. PATRONAGE DIVIDENDS ARE NOT AN EXPENSE FOR FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, HOWEVER. 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. THE FOLLOWING SCHEDULE RECONCILES AMOUNTS REPORTED ON LINES 5-7 TO TOTAL WAGES ACCRUED AND/OR PAID: TOTAL PER LINES 5-7 $ 2,319,996 LESS: DIRECTOR FEES REPORTED ON FORMS 1099-NEC (53,200) LESS: EMPLOYEE OFFICER BENEFITS REPORTED ON LINE 5 (192,307) PLUS: SALARIES AND WAGES CAPITALIZED DIRECTLY TO PLANT 1,083,326 PLUS: SALARIES AND WAGES CAPITALIZED/EXPENSED INDIRECTLY THROUGH CLEARING AND OTHER ACCOUNTS 322,928 TOTAL WAGES ACCRUED AND/OR PAID $ 3,480,743 FORM 990, PART IX, LINE 24: ADMINISTRATIVE & GENERAL EXPENSE IS COMPRISED OF THE FOLLOWING: ADMINISTRATIVE & GENERAL SALARIES, BENEFITS, & OTHER $ 1,249,957 OFFICE SUPPLIES 166,363 OUTSIDE SERVICES 126,593 INSURANCES AND DAMAGES 187,788 REGULATORY COMMISSION 45,903 MISCELLANEOUS GENERAL 37,770 DIRECTORS 171,518 MAINTENANCE OF GENERAL PLANT 72,448 TOTAL ADMIN & GENERAL EXP PER FINANCIAL STATEMENTS $ 2,058,340 LESS: RECLASS OF DIRECTOR FEES TO PART IX, LINE 5 (53,200) LESS: RECLASS OF LABOR TO PART IX, LINES 5 & 7 (732,197) LESS: RECLASS OF BENEFITS TO PART IX, LINES 8-10 (434,379) TOTAL ADMIN & GENERAL EXPENSE PER FORM 990, PART IX $ 838,564 FORM 990, PART XI, LINE 9: PATRONAGE CAPITAL ALLOCATED OR TO BE ALLOCATED 1,514,762. PATRONAGE CAPITAL RETIRED -616,105. NET CHANGE IN OTHER EQUITIES OTHER COMPREHENSIVE INCOME - PENSION & BENEFITS 625,674. NET INCREASE IN MEMBERSHIPS 1,935. DONATED CAPITAL 3,941. FORM 990, PART XII, LINE 2C: THE BOARD AS A WHOLE IS RESPONSIBLE FOR OVERSEEING THE FINANCIAL STATEMENT AUDIT AND SELECTING THE INDEPENDENT FINANCIAL STATEMENT AUDITOR. PROCEDURAL CHANGES DID NOT OCCUR DURING THE YEAR.