HollyFrontier 2015 Annual Report Download - page 50

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Table of Content
42
LIQUIDITY AND CAPITAL RESOURCES
HollyFrontier Credit Agreement
We have a $1 billion senior unsecured revolving credit facility maturing in July 2019 (the “HollyFrontier Credit Agreement”),
which may be used for revolving credit loans and letters of credit from time to time and is available to fund general corporate
purposes. Indebtedness under the HollyFrontier Credit Agreement is recourse to HollyFrontier. At December 31, 2015, we were
in compliance with all covenants, had no outstanding borrowings and had outstanding letters of credit totaling $6.0 million under
the HollyFrontier Credit Agreement.
HEP Credit Agreement
HEP has an $850 million senior secured revolving credit facility that matures in November 2018 (the “HEP Credit Agreement”)
and is available to fund capital expenditures, investments, acquisitions, distribution payments and working capital and for general
partnership purposes. It is also available to fund letters of credit up to a $50 million sub-limit. At December 31, 2015, HEP was
in compliance with all of its covenants, had outstanding borrowings of $712.0 million and no outstanding letters of credit under
the HEP Credit Agreement.
See Note 11 "Debt" in the Notes to Consolidated Financial Statements for additional information on our debt instruments.
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, 2015, our cash, cash equivalents and investments in marketable securities totaled $210.6 million. 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.
In May 2015, our Board of Directors approved a $1 billion share repurchase program, which replaced all existing share repurchase
programs, authorizing 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 and corporate, regulatory and other relevant considerations.
This program may be discontinued at any time by our Board of Directors. As of December 31, 2015, we had remaining authorization
to repurchase up to $308.2 million under this stock repurchase program. In addition, we are authorized by our Board of Directors
to repurchase shares in an amount sufficient to offset shares issued under our compensation programs.
Cash and cash equivalents decreased $501.5 million for the year ended December 31, 2015. Net cash used for investing and
financing activities of $381.7 million and $1,099.3 million, respectively, exceeded net cash provided by operating activities of
$979.6 million. Working capital decreased by $961.6 million during the year ended December 31, 2015.
Cash Flows – Operating Activities
Year Ended December 31, 2015 Compared to Year Ended December 31, 2014
Net cash flows provided by operating activities were $979.6 million for the year ended December 31, 2015 compared to $758.6
million for the year ended December 31, 2014, an increase of $221.0 million. Net income for the year ended December 31, 2015
was $802.5 million, an increase of $476.2 million compared to $326.3 million for the year ended December 31, 2014. Non-cash
adjustments to net income consisting of lower of cost or market inventory valuation adjustment, depreciation and amortization,
net loss of equity method investments, inclusive of distributions, gain on sale of assets, unamortized premium / discount on early
extinguishment of debt, deferred income taxes, equity-based compensation expense and fair value changes to derivative instruments
totaled $492.0 million for the year ended December 31, 2015 compared to $580.0 million for the same period in 2014. Changes
in working capital items decreased cash flows by $195.1 million for the year ended December 31, 2015 compared to $64.1 million
for the year ended December 31, 2014. For the year ended December 31, 2015, turnaround expenditures decreased to $89.4 million
from $96.8 million for the same period of 2014.