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Craig McBrain, director of finance and accounting, sat down with CEC newsletter staff in May to discuss the improvements in CEC's financial standing. CEC's audit is available at www.choctawelectric.coop.


Q&A on CEC's Finances


Can you give us some examples of measures that were taken in 2015 to improve the financial condition of the cooperative?


Following the leadership of the board, CEC made many improvements and 2015 was a busy year. One area we looked at was purchasing. We made adjustments to purchasing procedures to ensure competitive prices on goods purchased. We reviewed contracts and contractors. Another important move was to refinance some long-term debt in order to minimize interest expense. We also stressed the importance of utilizing technology to gain efficiency and reduce labor cost.


Describe the financial condition of the cooperative at the end of 2014 vs. 2015.


In 2014, the cooperative was reliant upon short- term borrowing to operate day to day and had underperformed in nearly every measure required by cooperative lenders. CEC closed 2014 with an operating loss of $3,409,168. By the close of 2015, our equity and key financial ratios were in line with peer groupings, and we minimized short-term borrowing. We closed out the year with an operating margin of $2,533,570. I think our operating margin is the best figure for this type of comparison; it excludes some items that aren’t always directly controlled by CEC such as non-cash patronage capital allocations from other cooperatives, investment income or losses, and extraordinary items. The net margin for 2015 was $6,034,920, up from $2,066,463 in 2014, is also a great improvement but does include a substantial capital credit allocation from Western Farmers Electric Cooperative along with some realized gains on investments that were sold early in 2015.


What steps are being taken to ensure financial stability for the cooperative in the future?


With the board's leadership, we will continually measure our results and seek to improve when possible. The board continues to review policies and adjust them when it's beneficial. They are really pushing efficiency in every area right now. CEC is truly accountable to the membership, and it's our obligation to ensure that we make the best use of our resources.


Have the financial results been verified by an independent source?


Yes. In 2015, the CEC board of trustees engaged the firm of Bolinger, Segars, Gilbert, & Moss, L.L.P. to conduct the audit. The audit report is available for viewing on our website, www.choctawelectric.coop.


4 | JUNE 2016 | CEC Inside Your Co-op


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