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TIN:
SCHEDULE O
(Form 990 or 990-EZ)
Department of the Treasury
Internal Revenue Service
(Form 990 or 990-EZ)
Department of the Treasury
Internal Revenue Service
Supplemental Information to Form 990 or 990-EZ
Complete to provide information for responses to specific questions on
Form 990 or 990-EZ or to provide any additional information.
Attach to Form 990 or 990-EZ.
Information about Schedule O (Form 990 or 990-EZ) and its instructions is atwww.irs.gov/form990.
OMB No. 1545-0047
2015
Open to Public
Inspection
Inspection
Name of the organization
FIRST ELECTRIC COOPERATIVE CORPORATION
Employer identification number
71-0056715
71-0056715
| Return Reference | Explanation |
|---|---|
| Form 990, Part VI, Section A, line 2 | BUSINESS RELATIONSHIP DON CRABBE (PRESIDENT/CEO) AND ROBERT HILL (CHAIRMAN) BOTH SERVE ON THE BOARD OF ARKANSAS ELECTRIC COOPERATIVE CORPORATION (AECC) AT THE REQUEST OF AND FOR THE BENEFIT OF THE COOPERATIVE. DON CRABBE (PRESIDENT/CEO) AND RICK LOVE (DIRECTOR) BOTH SERVE ON THE BOARD OF ARKANSAS ELECTRIC COOPERATIVES, INC (AECI) AT THE REQUEST OF AND FOR THE BENEFIT OF THE COOPERATIVE. |
| Form 990, Part VI, Section A, line 4 | DURING THE YEAR, THE BYLAWS WERE AMENDED FOR THE FOLLOWING: MEMBERSHIP - APPLICABLE SECTIONS OF ARTICLE I WERE AMENDED IN ORDER TO CLARIFY THE PERSONS AND TYPES OF ENTITIES THAT ARE ELIGIBLE FOR MEMBERSHIP, THE GOVERNING DOCUMENTS TO WHICH SUCH MEMBERS AGREE TO BE BOUND, AND THE GRANT OF PROPERTY RIGHTS FOR INGRESS AND EGRESS RELATED TO THE COOPERATIVE'S ABILITY FOR INSTALLING, MAINTAINING AND OPERATING THE ELECTRIC DISTRIBUTION SYSTEM. THE DEFINITION OF JOINT MEMBERSHIP WAS ALSO AMENDED FOR USE OF THE TERM "MARRIED PERSONS". NON-PROFIT OPERATION - ARTICLE I WAS AMENDED TO CLARIFY THE OBLIGATION THE MEMBERS HAVE TO PUCHASE ELECTRICITY FROM THE COOPERATIVE AT RATES ESTABLISHED BY THE BOARD AND THE OBLIGATION THE COOPERATIVE HAS TO ALLOCATE PATRONAGE CAPITAL TO THE MEMBERS BASED ON THESE PURCHASES. ARTICLE VII CLARIFIED THE PRE-EXISTING OBLIGATION THE COOPERATIVE HAS TO ALLOCATE PATRONAGE CAPITAL TO INCLUDE ALL MARGINS FROM PATRONAGE BUSINESS (I.E. ALL AMOUNTS FROM AND DIRECTLY RELATED TO THE PROVISION OF ELECTRIC ENERGY). AUTHORITY WAS GIVEN TO THE BOARD TO DETERMINE THE BASIS ON WHICH MARGINS FROM PATRONAGE BUSINESS, INCLUDING LOSSES, ARE CALCULATED AND THE METHOD USED TO ALLOCATE SUCH MARGINS ON A FAIR AND EQUITABLE BASIS TO THE MEMBERS AS PATRONAGE CAPITAL. SUCH PRE-EXISTING OBLIGATION IS LIMITED TO MEMBER-PATRONS ONLY. THE AUTHORITY THE BOARD HAS TO RETIRE PATRONAGE CAPITAL WAS ALSO CLARIFIED TO INCLUDE DISCOUNTED RETIREMENTS AT NET PRESENT VALUE AND THE RIGHT TO OFFSET BOARD APPROVED RETIREMENTS WITH AMOUNTS OWED THE COOPERATIVE. MEETING OF THE MEMBERS - APPLICABLE SECTIONS OF ARTICLE III WERE AMENDED TO CLARIFY THE PROCESS BY WHICH THE BOARD OF DIRECTORS AND/OR THE MEMBERS MAY CALL A SPECIAL MEETING. THE PROCESS INVOVLES A WRITTEN REQUEST (FOR THE BOARD) AND WRITTEN PETITION SIGNED BY 10% OF THE MEMBERS WITH EITHER STATING THE PURPOSE OF THE MEETING WITH REASONABLE SPECIFICITY. MEMBERS CONTINUE TO HAVE THE RIGHT TO VOTE BY MAIL. THIS SECTION OF THE BYLAWS WAS AMENDED TO (1) GRANT THE OVERSIGHT OF THE MAIL VOTING PROCESS TO THE SECRETARY OF THE COOPERATIVE OR A PERSON WORKING AT THE SECRETARY'S DIRECTION AND (2) REQUIRE THAT THE MAIL VOTING PROCESS INCLUDE A POSTAGE PAID ENVELOPE. MEMBERS ALSO CONTINUE TO HAVE THE RIGHT TO BRING FORTH AND ADOPT PROPOSALS. HOWEVER, SUCH PROPOSALS MUST NOT TRANSCEND THE COOPERATIVE'S ORDINARY BUSINESS OPERATIONS. BOARD OF DIRECTORS - A NEW STANDING COMMITTEE ON COMPENSATION WAS CREATED. MEMBERS OF SUCH COMMITTEE ARE APPOINTED BY THE CHAIRMAN OF THE BOARD. THE RULES FOR THE CREATION OF STANDING COMMITTEES WERE ALSO CLARIFIED TO STATE THAT APPOINTMENTS TO SUCH COMMITTEES ARE MADE BY THE CHAIRMAN OF THE BOARD. OTHER - ALL OTHER AMENDMENTS WERE PRIMARILY TO CORRECT NAMES AND TITLES AND DO NOT CHANGE THE RIGHTS AND INTERESTS OF 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. DISPOSAL OF A SUBSTANTIAL PORTION OF THE COOPERATIVE'S ASSETS; 4. AMENDMENT TO THE ARTICLES OF INCORPORATION; AND 5. INCREASE IN BONDED INDEBTEDNESS |
| Form 990, Part VI, Section A, line 8b | 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 | MANAGEMENT PRESENTED A COPY OF THE FORM 990 TO THE BOARD FOR DISCUSSION, REVIEW AND APPROVAL PRIOR TO FILING. |
| Form 990, Part VI, Section B, line 12c | ON AN ANNUAL BASIS, THE COOPERATIVE WILL REQUIRE THE BOARD OF DIRECTORS AND ITS OFFICERS TO COMPLETE AND SIGN A CONFLICT OF INTEREST CERTIFICATION AND DISCLOSURE FORM AND SUBMIT THEM TO THE PRESIDENT/CEO AND BOARD CHAIRMAN. |
| Form 990, Part VI, Section B, line 15 | THE BOARD OF DIRECTORS USES A RETENTION AND COMPENSATION PLAN COMMITTEE AND THE EXPERTISE OF AN INDEPENDENT COMPENSATION CONSULTANT WHEN DETERMINING THE COMPENSATION OF THE PRESIDENT/CEO. THE INDEPENDENT COMPENSATION CONSULTANT ANALYZES THE COMPENSATION PAID TO THE CEOS OF ELECTRIC COOPERATIVES OF SIMILAR SIZE STATEWIDE AND NATIONWIDE. THE CEO USES 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 SIMILAR COOPERATIVES THROUGHOUT ARKANSAS AND THE NATION. |
| Form 990, Part VI, Section C, line 19 | THE COOPERATIVE PROVIDES A SUMMARIZED COPY OF THE AUDITED FINANCIAL STATEMENTS TO ALL MEMBERS OF THE COOPERATIVE PRIOR TO THE ANNUAL MEETING. THE COOPERATIVE'S BYLAWS AND ANNUAL REPORT ARE ALSO AVAILABLE ON THE COOPERATIVE'S WEBSITE. THE COOPERATIVE MAKES A COMPLETE COPY OF THE AUDITED FINANCIAL STATEMENTS AVAILABLE AT THE ANNUAL MEETING AND UPON REQUEST OF ANY MEMBER. |
| 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 10% OF A PARTICIPATING EMPLOYEE'S BASE SALARY FOR ALL EMPLOYEES HIRED IN 2006 OR LATER YEARS. FOR ALL EMPLOYEES HIRED PRIOR TO 2006 THE COOPERATIVE PROVIDES A MATCHING CONTRIBUTION OF UP TO 2% FOR ALL PARTICIPATING EMPLOYEES. 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, KEY EMPLOYEES AND HIGHLY COMPENSATED EMPLOYEES, MEETING THE ELIGIBILITY REQUIREMENTS OF SUCH PLANS. ONLY EMPLOYEES HIRED PRIOR TO 2006 ARE ELIGIBLE TO PARTICIPATE IN THE MULTI-EMPLOYER DEFINED BENEFIT PLAN. THE COOPERATIVE ALSO PROVIDES HEALTH, DENTAL, VISION AND LIFE INSURANCE TO ALL EMPLOYEES, INCLUDING OFFICERS, KEY EMPLOYEES AND HIGHLY COMPENSATED EMPLOYEES, THROUGH A QUALIFIED PLAN. THE AMOUNTS REPORTED ON PART VII, COLUMN (F) ARE COMPRISED OF THE ACTUARIAL INCREASE IN THE DEFINED BENEFIT PLAN, THE TOTAL AMOUNT CONTRIBUTED BY THE COOPERATIVE TO THE DEFINED CONTRIBUTION PLAN AND INSURANCE PAID 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 | THE ACCOUNTING RECORDS OF THE COOPERATIVE ARE MAINTAINED IN ACCORDANCE WITH THE RUS UNIFORM SYSTEM OF ACCOUNTS AS PRESCRIBED FOR ELECTRIC BORROWERS OF THE RURAL UTILITIES SERVICES (RUS). THE UNIFORM SYSTEM OF ACCOUNTS 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 ITS ACCOUNTING SYSTEM, BUT OTHER EXPENSES THAT ARE DESCRIBED IN LINES 1 - 23 ARE REPORTED ON LINE 24 UNDER THE EXPENSE CATEGORIES REQUIRED BY THE UNIFORM SYSTEM OF ACCOUNTS. |
| 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 $ 11,996,493 LESS DIRECTORS FEES REPORTED ON 1099-MISC (377,686) LESS EMPLOYEE OFFICER BENEFITS INCLUDED IN LINE 5 (695,469) PLUS SALARIES AND WAGES CAPITALIZED DIRECTLY TO PLANT 3,271,597 PLUS SALARIES AND WAGES CAPITALIZED/EXPENSED INDIRECTLY THROUGH CLEARING AND OTHER ACCOUNTS 2,317,754 TOTAL WAGES ACCRUED AND/OR PAID $ 16,512,689 |
| Form 990, Part IX, Line 24 | ADMINISTRATIVE AND GENERAL EXPENSE IS COMPRISED OF THE FOLLOWING: OFFICE SUPPLIES AND EXPENSE $ 516,168 OUTSIDE SERVICES EMPLOYED 146,705 OTHER INSURANCE 209,980 EMPLOYEE BENEFITS 403,198 ANNUAL MEETING EXPENSE 66,121 CAPITAL CREDITS EXPENSE 72,112 REGULATORY COMISSION EXPENSE 338,189 DIRECTOR EXPENSE 162,659 MAINTENANCE OF GENERAL PLANT 591,576 MISCELLANEOUS GENERAL EXPENSE 55,787 TOTAL ADMINISTRATIVE AND GENERAL EXPENSE PER 990 $ 2,562,495 |
| Form 990, Part IX, Line 24E | OTHER EXPENSES ARE COMPRISED OF THE FOLLOWING: CUSTOMER SERVICES & ACCOUNTS $ 2,801,957 TRANSMISSION EXPENSE 435,153 TAXES 7,405 TOTAL OTHER EXPENSES PER FORM 990, LINE 24E $ 3,244,515 |
| Form 990, Part IX, Line 4 | PURSUANT TO THE 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 COOPERATIVE'S 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 2015 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 XI, line 9: | OTHER COMPREHENSIVE INCOME PROVISION FOR POST-RETIREMENT BENEFIT OBLIGATION 2,280,818. NET CHANGE IN MEMBERSHIP 9,275. UNCLAIMED PATRONAGE RETIREMENTS RETAINED UNDER STATE LAW 1,265,377. PATRONAGE CAPITAL ASSIGNABLE 11,747,821. PATRONAGE CAPITAL RETIRED -6,260,253. OTHER EQUITY ASSIGNABLE 213,506. |
For Paperwork Reduction Act Notice, see the Instructions for Form 990 or 990-EZ.
Cat. No. 51056K
Schedule O (Form 990 or 990-EZ) 2015
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