HollyFrontier 2014 Annual Report Download - page 47

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Table of Content
39
General and Administrative Expenses
General and administrative expenses were $128.0 million and $128.1 million for the years ended December 31, 2013 and 2012,
respectively. For the years ended December 31, 2013 and 2012, general and administrative expenses include $9.4 million and $5.3
million, respectively, in costs attributable to HEP operations.
Depreciation and Amortization Expenses
Depreciation and amortization increased 25% from $242.9 million for the year ended December 31, 2012 to $303.4 million for
the year ended December 31, 2013. The increase was due principally to depreciation and amortization attributable to capitalized
improvement projects and capitalized refinery turnaround costs. For the years ended December 31, 2013 and 2012, depreciation
and amortization expenses include $64.7 million and $57.8 million, respectively, in costs attributable to HEP operations.
Interest Income
Interest income for the year ended December 31, 2013 was $5.6 million compared to $4.8 million for the year ended December 31,
2012. This increase was due to interest received on increased investments in marketable debt securities during 2013.
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 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.
LIQUIDITY AND CAPITAL RESOURCES
HollyFrontier Credit Agreement
On July 1, 2014, we entered into a new $1 billion senior unsecured revolving credit facility maturing in July 2019 (the “HollyFrontier
Credit Agreement”) and contemporaneously terminated our previous $1 billion senior secured revolving credit agreement. The
HollyFrontier Credit Agreement 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 and
guaranteed by certain of our wholly-owned subsidiaries. At December 31, 2014, we were in compliance with all covenants, had
no outstanding borrowings and had outstanding letters of credit totaling $4.7 million under the HollyFrontier Credit Agreement.
HEP Credit Agreement
HEP has a $650 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, 2014, HEP was
in compliance with all of its covenants, had outstanding borrowings of $571.0 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.