1. Beartooth Forecast Model Beartooth Board meeting July 31, 2018

2. Risk Management Committee Agenda
Determine if the Beartooth RUS forecast model could be transferred into the Compass model
If the model could be transferred – determine differences between the two models
Determine if the differences between the two models were explainable and understandable
Interest on long-term debt
Depreciation
Work Plan retirements
Update custom report cooperative is used to with results from Compass model
Meet with Risk Management Committee to discuss above items and next steps
Teri attend July board meeting present this agenda/forecast
Discuss with Beartooth engagement for future services

3. Can the Beartooth RUS forecast model be transferred into the Compass model?
Yes
Model Differences
RUS model was written programmed more than 20 years ago
No updates since original model was written
RUS model was determined by one employee at RUS
CFC Compass model was completely re-written in timeframe
Model has many options for flexibility
Base case Forecast - No automated features turned on
Member testing and validation process Improved long-term debt accuracy
Model can estimate future – based on weighted average past inputs
Model was enhanced with options, bells and whistles to allow for a more detailed setup of input data

4. RUS to Compass model differences for Beartooth to be aware of
Differences between the models are not material or significant differences
Compass model likely more accurate approach to debt and depreciation
Areas of differences
Long-term interest expenses
Compass model more accurate with new loan options built in
Model is pre-loaded with CFC debt and expected capital credits
Depreciation
Model assumptions are a bit different
Retirement of Plant Assets is something we need to revisit during engagement
Work Plan retirements

5. Reporting Considerations
RUS model and Compass model both have the same reports
Standard RUS 325 reports
Typically used in the RUS loan application process
Compass model has additional loan reports for the additional loan types – more detail, summary totals are the same between RUS and Compass
Beartooth has been using CUSTOMIZED Reports
Linked from the RUS model
Lines added to detail the Regulatory Asset
A few lines combined together in a summary format
Customized Reporting can continue from the Compass model
Want the committee to be aware they are specifically created reports for Beartooth for your decision making and member communication purposes.
Beartooth’s 3 reports can continue to be generated. They are not reports of the model. They are derived from the RUS 325 model output reports.

6. Work Completed to date Align the RUS model with the Compass model
Completed with differences identified
Rebuild Custom reports – mostly complete
Profit and Loss
Balance Sheet
Cash Flow
Review of the 3 financial statements with a subset of the Risk Management Committee
The conversion of the model is pro bono.
Rebuilding of the custom reports to Compass is pro bono
Attendance to the July board meeting is pro bono

7. Next Steps Risk Management Committee Meeting – Completed 7/17
July meeting with all committee members present to review the models and differences
July 31 Board meeting
Meet with coop staff the morning of the board meeting to discuss data in the current model regarding:
Debt
Depreciation
Plant retirement
Board meeting presentation and discussion

8. Engagement of services
Update forecast for years 2018 through 2023
Changes since last update
Push forecast out 10 years with assumptions
Dig deep into:
Debt
Depreciation
Plant investments and retirements
$300k difference in Other Assets reconciled
Graphs recreated
Assumptions continually updated with changes to model
Equity planning – equity is growing quickly
Revenue requirements as a result of Cost of Service Study work
Build template to consider options
What if scenario planning

9. Details… Comparison of Prior Forecast 8a to Compass
Income Statement
Prior version 8a
Compass
Balance Sheet
Cash Flow

10. Beartooth Scenario 8a - Assumptions

11. Beartooth Scenario 8a - Statement of Operations

12. Compass model – Statement of Operations

13. Beartooth Scenario 8a - Balance Sheet

14. Compass model – Balance Sheet

15. Beartooth Scenario 8a - Cash Flow Statement

16. Compass model – Cash Flow Statement

17. Dashboard data

18. Cash Flow – Dashboard Example

19. Cash Flow Example Can further detail by category

20. Ratio chart example

21. Balance Sheet – Plat and Depreciation

27. Thank you for spending your time talking about your financial future!