HollyFrontier 2013 Annual Report Download - page 50

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HEP Common Unit Issuance
In March 2013, HEP closed on a public offering of 1,875,000 of its common units. Additionally, our wholly-owned subsidiary,
HollyFrontier Holdings LLC, as a selling unitholder, closed on a public sale of 1,875,000 HEP common units held by it. HEP used
net proceeds of $73.4 million to repay indebtedness incurred under its credit facility and for general partnership purposes.
Liquidity
We believe our current cash and cash equivalents, along with future internally generated cash flow and funds available under our
credit facilities will provide sufficient resources to fund currently planned capital projects and our liquidity needs for the foreseeable
future. In addition, components of our growth strategy include construction of new refinery processing units and the expansion
of existing units at our facilities and selective acquisition of complementary assets for our refining operations intended to increase
earnings and cash flow.
As of December 31, 2013, our cash, cash equivalents and investments in marketable securities totaled $1.7 billion. We consider
all highly-liquid instruments with a maturity of three months or less at the time of purchase to be cash equivalents. Cash equivalents
are stated at cost, which approximates market value. These primarily consist of investments in conservative, highly-rated
instruments issued by financial institutions, government and corporate entities with strong credit standings and money market
funds.
We have a Board approved stock repurchase program that authorizes us to repurchase common stock in the open market or through
privately negotiated transactions. The timing and amount of stock repurchases will depend on market conditions, corporate,
regulatory and other relevant considerations. This program may be discontinued at any time by the Board of Directors. As of
December 31, 2013, we had remaining authorization to repurchase up to $311.6 million under this stock repurchase program.
Cash and cash equivalents decreased $817.6 million for the year ended December 31, 2013. Net cash used for investing and
financing activities of $526.7 million and $1,160.0 million, respectively, exceeded net cash provided by operating activities of
$869.2 million. Working capital decreased by $593.9 million during the year ended December 31, 2013.
Cash Flows – Operating Activities
Year Ended December 31, 2013 Compared to Year Ended December 31, 2012
Net cash flows provided by operating activities were $869.2 million for the year ended December 31, 2013 compared to $1,662.7
million for the year ended December 31, 2012, a decrease of $793.5 million. Net income for the year ended December 31, 2013
was $767.8 million, a decrease of $992.2 million compared to $1,760.0 million for the year ended December 31, 2012. Reconciling
adjustments to net income consisted of depreciation and amortization, earnings of equity method investments, net of distributions,
the write-off of an unamortized discount on the early extinguishment of debt, gain on sale of equity securities, deferred income
taxes, equity-based compensation expense, fair value changes to derivative instruments and loss on settlement of retirement benefit
obligations, net of contributions which totaled $430.4 million for the year ended December 31, 2013 compared to $410.7 million
for the same period in 2012. Changes in working capital items decreased cash flows by $157.0 million for the year ended
December 31, 2013 compared to $398.0 million for the year ended December 31, 2012. Additionally, for the year ended
December 31, 2013, refinery turnaround expenditures increased to $193.9 million from $159.7 million for the same period of
2012.
Year Ended December 31, 2012 Compared to Year Ended December 31, 2011
Net cash flows provided by operating activities were $1,662.7 million for the year ended December 31, 2012 compared to $1,338.4
million for the year ended December 31, 2011, an increase of $324.3 million. Net income for the year ended December 31, 2012
was $1,760.0 million, an increase of $700.3 million compared to $1,059.7 million for the year ended December 31, 2011.
Reconciling adjustments consisting of depreciation and amortization, earnings of equity method investments, net of distributions,
gain on sale of equity securities, deferred income taxes, equity-based compensation expense, fair value changes to derivative
instruments and loss on settlement of retirement benefit obligations, net of contributions resulted in an increase to operating cash
flows of $433.0 million for the year ended December 31, 2012 compared to $182.3 million for the same period in 2011. Changes
in working capital items decreased cash flows by $398.0 million for the year ended December 31, 2012 compared to an increase
of $147.3 million for the year ended December 31, 2011. The decrease in working capital items for the year ended December 31,
2012 was due principally to higher inventory levels and a decrease in income taxes payable and accrued liabilities due to timing
differences of payments during the fourth quarter of 2012 relative to 2011. Additionally, for the year ended December 31, 2012,
refinery turnaround expenditures increased to $159.7 million from $32.0 million for the same period of 2011.
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