Farmers Electric Cooperative

“MEMBERS”

“YES”

“YES”

“Reviewed by board of directors prior to filing in a duly-organized meeting.”

“AVAILABLE UPON REQUEST”

“Form 990, part ix, line 4: pursuant to the form 990 instructions, the amount of patronage dividends paid to members (hereinafter referred to as "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 definies "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 calendar tax 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 by-laws. 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 current 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 acordance with generally accepted accounting principles, however.”

“Cost of power purchased 5,352,445 0 0 transmission maintenance 1,065,433 0 0 distribution maintenance 1,152,201 0 0 consumer accounts expense 571,368 0 0 customer service & info 65,865 0 0 administrative & general 915,859 0 0 misc other deductions 33,777 0 0 compensation shown elsewhere -516,574 0 0 director comp shown elsewhere -135,677 0 0 total 8,504,697 0 0”

“Temporary difference between allocated 418,611 capital credits and retired capital credits 0 memberships 180 total 418,791”