HollyFrontier 2013 Annual Report Download - page 58

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At December 31, 2013, our marketable securities included investments in investment grade, highly-liquid investments with
maturities generally not greater than one year from the date of purchase and hence the interest rate market risk implicit in these
investments is low. Due to the short-term nature of our cash and cash equivalents, a hypothetical 10% increase in interest rates
would not have a material effect on the fair market value of our portfolio. Since we have the ability to liquidate this portfolio, we
do not expect our operating results or cash flows to be materially affected by the effect of a sudden change in market interest rates
on our investment portfolio.
Our operations are subject to hazards of petroleum processing operations, including fire, explosion and weather-related perils. We
maintain various insurance coverages, including business interruption insurance, subject to certain deductibles. We are not fully
insured against certain risks because such risks are not fully insurable, coverage is unavailable, or premium costs, in our judgment,
do not justify such expenditures.
Financial information is reviewed on the counterparties in order to review and monitor their financial stability and assess their
ongoing ability to honor their commitments under the derivative contracts. We have not experienced, nor do we expect to experience,
any difficulty in the counterparties honoring their commitments.
We have a risk management oversight committee consisting of members from our senior management. This committee oversees
our risk enterprise program, monitors our risk environment and provides direction for activities to mitigate identified risks that
may adversely affect the achievement of our goals.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
See “Risk Management” under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles
Reconciliations of earnings before interest, taxes, depreciation and amortization (“EBITDA”) to amounts reported under
generally accepted accounting principles in financial statements.
Earnings before interest, taxes, depreciation and amortization, which we refer to as EBITDA, is calculated as net income attributable
to HollyFrontier stockholders plus (i) interest expense, net of interest income, (ii) income tax provision, and (iii) depreciation and
amortization. EBITDA is not a calculation provided for under GAAP; however, the amounts included in the EBITDA calculation
are derived from amounts included in our consolidated financial statements. EBITDA should not be considered as an alternative
to net income or operating income as an indication of our operating performance or as an alternative to operating cash flow as a
measure of liquidity. EBITDA is not necessarily comparable to similarly titled measures of other companies. EBITDA is presented
here because it is a widely used financial indicator used by investors and analysts to measure performance. EBITDA is also used
by our management for internal analysis and as a basis for financial covenants.
Set forth below is our calculation of EBITDA.
Years Ended December 31,
2013 2012 2011
(In thousands)
Net income attributable to HollyFrontier stockholders $ 735,842 $ 1,727,172 $ 1,023,397
Add income tax provision 391,576 1,027,962 581,991
Add interest expense (1) 90,159 104,186 78,323
Subtract interest income (5,556) (4,786) (1,284)
Add depreciation and amortization 303,446 242,868 159,707
EBITDA $ 1,515,467 $ 3,097,402 $ 1,842,134
(1) Includes loss on early extinguishment of debt of $22.1 million for the year ended December 31, 2013.
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