HollyFrontier 2013 Annual Report Download - page 47

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39
Interest Expense
Interest expense was $68.1 million for the year ended December 31, 2013 compared to $104.2 million for the year ended
December 31, 2012. This decrease was due to lower year-over-year debt levels principally as a result of the redemption of our
$286.8 million 9.875% senior notes in June 2013 and $200 million 8.5% senior notes in September 2012. For the years ended
December 31, 2013 and 2012, interest expense included $46.8 million and $57.2 million, respectively, in interest costs attributable
to HEP operations.
Loss on Early Extinguishment of Debt
In June 2013, we redeemed our $286.8 million aggregate principal amount of 9.875% senior notes maturing June 2017 at a
redemption cost of $301.0 million, at which time we recognized a $22.1 million early extinguishment loss consisting of a $14.2
million debt redemption premium and an unamortized discount of $7.9 million.
Income Taxes
For the year ended December 31, 2013, we recorded income tax expense of $391.6 million compared to $1,028.0 million for the
year ended December 31, 2012. This decrease was due principally to lower pre-tax earnings during the year ended December 31,
2013 compared to the same period of 2012. Our effective tax rates, before consideration of earnings attributable to the noncontrolling
interest, were 33.8% and 36.9% for the years ended December 31, 2013 and 2012, respectively. Our effective tax rate for GAAP
disclosure purposes reflects the inclusion of non-taxable earnings attributable to noncontrolling interest holders in the denominator
of our effective tax rate computation.
Results of Operations – Year Ended December 31, 2012 Compared to Year Ended December 31, 2011
Summary
Net income attributable to HollyFrontier stockholders for the year ended December 31, 2012 was $1,727.2 million ($8.41 per
basic and $8.38 per diluted share) a $703.8 million increase compared to $1,023.4 million ($6.46 per basic and $6.42 per diluted
share) for the year ended December 31, 2011. Net income increased due principally to greater operating scale following our July
1, 2011 merger and higher refining margins in 2012. Refinery gross margins for the year ended December 31, 2012 increased to
$24.89 per produced barrel compared to $20.64 for the year ended December 31, 2011.
Sales and Other Revenues
Sales and other revenues increased 30% from $15,439.5 million for the year ended December 31, 2011 to $20,090.7 million for
the year ended December 31, 2012, due principally to the inclusion of sales volumes and related revenues attributable to the El
Dorado and Cheyenne Refineries for a full year period and higher sales volumes of refined products produced from the legacy
Holly refineries. Additionally, the average sales price we received per produced barrel sold increased 1% from $118.82 for the
year ended December 31, 2011 to $119.48 for the year ended December 31, 2012. Sales and other revenues for the years ended
December 31, 2012 and 2011, include $47.6 million and $46.4 million, respectively, in HEP revenues attributable to pipeline and
transportation services provided to unaffiliated parties.
Cost of Products Sold
Cost of products sold increased 25% from $12,680.1 million for the year ended December 31, 2011 to $15,840.6 million for the
year ended December 31, 2012, due principally to the inclusion of sales volumes and related cost of products sold at the El Dorado
and Cheyenne Refineries, partially offset by lower crude oil costs for 2012. The average price we paid per barrel for crude oil and
feedstocks and the transportation costs of moving the finished products to the market place decreased 4% from $98.18 for the year
ended December 31, 2011 to $94.59 for the year ended December 31, 2012.
Gross Refinery Margins
Gross refining margin per produced barrel increased 21% from $20.64 for the year ended December 31, 2011 to $24.89 for the
year ended December 31, 2012. This is due to the effects of a current year decrease in crude oil and feedstock prices along with
slightly higher sales prices received on produced products sold. Gross refinery margin does not include the effects of depreciation
or amortization.
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