HollyFrontier 2014 Annual Report Download - page 75

Download and view the complete annual report

Please find page 75 of the 2014 HollyFrontier annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 122

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122

Table of Contents HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued
67
Level 3 Financial Instruments
We have commodity price swap contracts that relate to forecasted sales of diesel and forecasted purchases of WCS and WTS for
which quoted forward market prices were previously not readily available. The forward rate used to value these price swaps were
derived using a projected forward rate using quoted market rates for similar products, adjusted for regional pricing and grade
differentials, a Level 3 input. Effective December 31, 2014, we recategorized these swap contracts to Level 2 financial instruments
due to increased visibility of quoted forward pricing information. Our policy is to recognize transfers in and out of Level 3 based
on the fair value of the underlying financial instruments as of the end of the reporting period during which such transfers are made.
The following table presents the changes in fair value of our Level 3 assets and liabilities (all related to derivative instruments)
for the years ended December 31, 2014 and 2013:
Years Ended December 31,
Level 3 Financial Instruments 2014 2013
(In thousands)
Liability balance at beginning of period $ (35,318) $ (33,658)
Change in fair value:
Recognized in other comprehensive income 304,275 (71,751)
Recognized in cost of products sold 14,876 35,236
Settlement date fair value of contractual maturities:
Recognized in sales and other revenues (88,326) 20,060
Recognized in cost of products sold (21,848) 14,795
Transfer out of Level 3 (173,659) —
Liability balance at end of period $ — $ (35,318)
NOTE 4: Earnings Per Share
Basic earnings per share is calculated as net income attributable to HollyFrontier stockholders divided by the average number of
shares of common stock outstanding. Diluted earnings per share assumes, when dilutive, the issuance of the net incremental shares
from restricted shares and performance share units. The following is a reconciliation of the denominators of the basic and diluted
per share computations for net income attributable to HollyFrontier stockholders:
Years Ended December 31,
2014 2013 2012
(In thousands, except per share data)
Net income attributable to HollyFrontier stockholders $ 281,292 $ 735,842 $ 1,727,172
Participating securities' share in earnings 820 2,754 7,648
Net income attributable to common shares 280,472 733,088 1,719,524
Average number of shares of common stock outstanding 197,243 200,419 204,379
Effect of dilutive variable restricted shares and performance share units (1) 185 815 895
Average number of shares of common stock outstanding assuming
dilution 197,428 201,234 205,274
Basic earnings per share $ 1.42 $ 3.66 $ 8.41
Diluted earnings per share $ 1.42 $ 3.64 $ 8.38
(1) Excludes anti-dilutive restricted and performance share units of: 356 166 166