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.
Go to www.irs.gov/Form990 for the latest information.
OMB No. 1545-0047
2018
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 DAVID LUEBKE (DIRECTOR) 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 (CHAIRMAN) 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 | BECAUSE THE BYLAWS GOVERN HOW THE ORGANIZATION OPERATES ON A COOPERATIVE BASIS WITH ITS MEMBERS, THE BOARD OF DIRECTORS PERIODICALLY INITIATES A REVIEW OF THE BYLAWS BY LEGAL COUNSEL IN ORDER TO CLARIFY THE RIGHTS AND RESPONSIBILITIES OF THE MEMBERS, THE BOARD OF DIRECTORS AND THE COOPERATIVE AS A WHOLE. DURING THE FALL OF 2018, THE BOARD OF DIRECTORS INITIATED SUCH A REVIEW OF THE COOPERATIVE'S BYLAWS. THE REVIEW RESULTED IN THE FOLLOWING SUMMARIZED CHANGES. TO ASSIST WITH THE INTERPRETATION AND IMPLEMENTATION OF THE BYLAWS, COMMON TERMS THAT WERE USED THROUGHOUT ARE NOW DEFINED AND CAPITALIZED IN ARTICLE I "DEFINITIONS", WHICH IS A NEW ARTICLE. THIS PROVIDES ONE CENTRAL LOCATION FOR THE DEFINITION OF THESE TERMS AND RESULTED IN OTHER ARTICLES AND SECTIONS BEING AMENDED AS THE DEFINITIONS FOR DEFINED TERMS WERE MOVED TO ARTICLE I. THE MEMBERSHIP ARTICLE WAS AMENDED TO INCLUDE LANGUAGE RECOGNIZING THE IMPORTANCE OF THE RELATIONSHIP BETWEEN THE MEMBERS AND THE COOPERATIVE AND THAT THE BYLAWS ARE A CONTRACT AMONG AND BETWEEN BOTH. THIS "CONTRACT LANGUAGE" WAS MOVED FROM THE NON-PROFIT OPERATION ARTICLE TO THE MEMBERSHIP ARTICLE SO THAT IT APPLIES TO ALL ACTIVITIES BETWEEN AND AMONG THE MEMBERS AND THE COOPERATIVE AND NOT JUST TO THE ACTIVITIES REQUIRED FOR NON-PROFIT OPERATION, SUCH AS THE ALLOCATION AND RETIREMENT OF PATRONAGE CAPITAL. ADDITIONALLY, THE REQUIREMENT FOR MEMBERS TO PURCHASE ELECTRICITY AND TO CONTRIBUTE CAPITAL TO THE COOPERATIVE WAS MOVED FROM THE MEMBERSHIP ARTICLE TO THE RIGHTS, LIABILITIES AND OBLIGATIONS ARTICLE. THE RIGHTS AND LIABILITIES OF MEMBERS ARTICLE WAS EXPANDED TO ALSO INCLUDE OBLIGATIONS, SUCH AS THE REQUIREMENT TO PURCHASE ELECTRIC ENERGY AND TO PROVIDE CAPITAL TO THE COOPERATIVE. IT IS NOW ENTITLED "RIGHTS, LIABILITIES AND OBLIGATIONS OF MEMBERS". IN ADDITION TO INCLUDING THE REQUIREMENT TO PURCHASE ELECTRIC ENERGY AND TO PROVIDE CAPITAL, IN THE FORM OF CAPITAL CREDITS AS PROVIDED FOR IN THE NON-PROFIT OPERATION ARTICLE, TO THE COOPERATIVE, THE EXPANDED ARTICLE NOW ADDRESSES AND CLARIFIES RIGHTS AND OBLIGATIONS RELATED TO INTERRUPTION OF SERVICE, SAFE OPERATION OF THE COOPERATIVE, PROTECTED OPERATION OF THE COOPERATIVE, MEMBER EQUIPMENT CONNECTED TO COOPERATIVE EQUIPMENT, SUSPENSION AND TERMINATION OF SERVICE, USE OF SERVICES PROVIDED BY THE COOPERATIVE, PAYMENT OF COOPERATIVE SERVICES, AND WHEN SUCH SERVICES ARE FOR SALE AND CAN BE REDUCED. SEE ARTICLE III, SECTION 4 AND SECTION 5 OF THE BYLAWS FOR THE SPECIFIC REQUIREMENTS. THE RIGHTS, LIABILITIES AND OBLIGATIONS PERTAIN TO THE REQUIREMENTS THE COOPERATIVE HAS TO PROVIDE ELECTRIC ENERGY AND OTHER SERVICES ON A PATRONAGE BASIS AND THE RELATIONSHIP BETWEEN THE RIGHT TO PROVIDE THESE SERVICES AND THE RIGHTS AND RESPONSIBILITIES THE MEMBERS HAVE IN PURCHASING THESE SERVICES. SECTION 7 OF THE BOARD OF DIRECTORS ARTICLE CLARIFIES THE RELATIONSHIP BETWEEN THE DIRECTORS AND THE COOPERATIVES. IT RECOGNIZES THAT A DIRECTOR IS NOT AN EMPLOYEE OF THE COOPERATIVE BUT THAT DIRECTORS MAY BE PROVIDED REASONABLE COMPENSATION FOR THE TIME, RESPONSIBILITIES UNDERTAKEN AND DUTIES PERFORMED AS A DIRECTOR. SUCH COMPENSATION MUST BE APPROVED, HOWEVER, BY THE BOARD OF DIRECTORS. DUE TO THE FACT THE BYLAWS ARE CONSIDERED A CONTRACT BETWEEN THE MEMBERS AND THE COOPERATIVE, NEW ARTICLES ON GOVERNING LAW, TITLES AND HEADINGS, PARTIAL INVALIDITY, CUMULATIVE REMEDIES, ENTIRE AGREEMENT, SUCCESSORS AND ASSIGNS, WAIVER AND LACK OF NOTICE WERE ADDED AS NEW SECTIONS UNDER THE MISCELLANEOUS ARTICLE. THE PURPOSE OF THESE NEW SECTIONS TO ALLOWS THE BYLAWS TO FUNCTION AS A CONTRACT. PURSUANT TO THESE NEW ARTICLES, THE LAWS OF THE STATE OF ARKANSAS AND APPLICABLE FEDERAL LAW ARE CONTROLLING. THE INVALIDATION OF ONE BYLAW PROVISION BY AN ENTITY POSSESSING PROPER JURISDICTION AND AUTHORITY DOES NOT INVALIDATE ALL PROVISIONS OF THE BYLAWS RIGHTS AND REMEDIES PROVIDED IN THE BYLAWS ARE CUMULATIVE AND DO NOT PRECLUDE A MEMBERS OR THE COOPERATIVE FROM ASSERTING OTHER RIGHTS AND REMEDIES. THE DUTIES, RESPONSIBILITIES, LIABILITIES AND OBLIGATIONS FOR THE MEMBERS AND THE COOPERATIVE ARE BINDING UPON SUCH MEMBERS AND COOPERATIVE'S SUCCESSORS AND ASSIGNS. THE GOVERNING DOCUMENTS, AS SUCH TERM IS DEFINED IN THE BYLAWS AND WHICH INCLUDES (BUT NOT LIMITED TO) SERVICE AGREEMENTS, PRICE SCHEDULES, RULES AND REGULATIONS PRESCRIBED BY THE BOARD OF DIRECTORS) REPRESENT THE FULL AGREEMENT BETWEEN THE COOPERATIVE AND ITS MEMBERS. THE FAILURE TO ASSERT A RIGHT DOES WAIVE A RIGHT OR REMEDY PROVIDED IN THE BYLAWS. ADDITIONALLY, THESE CHANGES PROVIDE THAT THE FAILURE OF A MEMBER OR A DIRECTOR TO RECEIVE A NOTICE OF A MEETING OF ACTION OR VOTE DOES NOT INVALIDATE THE ACTION APPROVED BY THE MEMBERS OR THE BOARD OF DIRECTORS. FOR A COMPLETE SET OF THE COOPERATIVE'S BYLAWS, PLEASE VISIT THE COOPERATIVE'S WEBSITE AT WWW.FIRSTELECTRIC.COOP/BYLAWS-NONDISCRIMINATION. |
| 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 5. INCREASE IN BONDED INDEBTEDNESS |
| 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, 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 USE THE EXPERTISE OF AN INDEPENDENT CONSULTANT AS WELL AS A RETENTION AND COMPENSATION PLAN COMMITTEE WHEN DETERMINING THE COMPENSATION OF THE PRESIDENT/CEO. THE CEO USES THE EXPERTISE OF AN INDEPENDENT CONSULTANT AS WELL AS A COMPENSATION SURVEY WHEN DETERMINING THE COMPENSATION OF THE COOPERATIVE'S OTHER EMPLOYEES MEETING THE DEFINITION OF OFFICER AND KEY EMPLOYEE. 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: | ALTHOUGHT THE COOPERATIVE IS NO LONGER AN 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 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 USOA. |
| 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 $14,982,533 LESS: DIRECTOR FEES & BENEFITS REPORTED ON FORM 1099-MISC (382,901) LESS: OFFICER & KEY EMPLOYEE BENEFITS INCLUDED IN LINE 5 (519,982) PLUS: SALARIES AND WAGES CAPITALIZED DIRECTLY TO PLANT 3,284,497 PLUS: SALARIES AND WAGES CAPITALIZED/EXPENSED INDIRECTLY THROUGH CLEARING AND OTHER ACCOUNTS 141,646 TOTAL WAGES ACCRUED AND/OR PAID $17,505,793 |
| FORM 990, PART IX, LINE 24E: | OTHER EXPENSES ARE COMPRISED OF THE FOLLOWING: TAXES $ 7,655 OTHER DEDUCTIONS 20,593 TRANSMISSION 361,014 TOTAL OTHER EXPENSES PER FORM 990, LINE 24E $ 389,262 |
| 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 2018 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, LINE 24: | ADMINISTRATIVE & GENERAL EXPENSE IS COMPRISED OF THE FOLLOWING: ADMINISTRATIVE & GENERAL $ 3,093,262 OFFICE SUPPLIES 699,590 OUTSIDE SERVICES 107,275 INSURANCES 173,172 EMPLOYEE BENEFITS 606,055 DIRECTORS 547,375 ANNUAL MEETING 70,150 CAPITAL CREDITS 52,287 MISCELLANEOUS GENERAL 384,619 FIBER NETWORK STUDY 18,135 REGULATORY COMMISSION 346,743 MAINTENANCE OF GENERAL PLANT 525,438 TOTAL ADMIN & GENERAL EXP PER FINANCIAL STATEMENTS $ 6,624,101 LESS: RECLASS OF DIRECTOR FEES TO PART IX, LINE 5 (382,901) LESS: RECLASS OF LABOR TO PART IX, LINES 5 & 7 (2,604,952) LESS: RECLASS OF BENEFITS TO PART IX, LINES 8-10 (1,437,248) TOTAL ADMIN & GENERAL EXPENSE PER FORM 990, PART IX $ 2,199,000 |
| FORM 990, PART XI, LINE 9: | PATRONAGE CAPITAL ALLOCATED OR TO BE ALLOCATED 21,622,494. PATRONAGE CAPITAL RETIRED -9,538,078. UNCLAIMED PATRONAGE RETIREMENTS RETAINED UNDER STATE LAW 1,720,162. OTHER COMPREHENSIVE INCOME PROVISION FOR POST-RETIREMENT BENEFIT OBLIGATION 903,138. NET CHANGE IN MEMBERSHIPS 8,405. OTHER CHANGE IN EQUITIES -416. |
For Paperwork Reduction Act Notice, see the Instructions for Form 990 or 990-EZ.
Cat. No. 51056K
Schedule O (Form 990 or 990-EZ) 2018
Additional Data
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