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Table of Contents HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued
72
NOTE 7: Inventories
Inventory consists of the following components:
December 31,
2015 2014
(In thousands)
Crude oil $ 518,922 $ 581,592
Other raw materials and unfinished products(1) 214,832 204,467
Finished products(2) 603,568 531,523
Lower of cost or market reserve (624,457)(397,478)
Process chemicals(3) 4,477 4,028
Repairs and maintenance supplies and other 124,527 110,999
Total inventory $ 841,869 $ 1,035,131
(1) Other raw materials and unfinished products include feedstocks and blendstocks, other than crude.
(2) Finished products include gasolines, jet fuels, diesels, lubricants, asphalts, LPG’s and residual fuels.
(3) Process chemicals include additives and other chemicals.
Crude oil, other raw materials, unfinished products and finished products are carried at the lower of cost or market. Cost is
determined principally under the LIFO valuation method to reflect a better matching of cost and revenue. Ending inventory costs
in excess of market values are written down to current replacement costs and charged to cost of products sold in the period recorded.
In subsequent periods a new lower of cost or market reserve determination is made based on current conditions. We determine the
need for a lower of cost or market inventory adjustment by evaluating inventories on an aggregate basis.
Inventories reflect lower of cost or market valuation reserves of $624.5 million and $397.5 million at December 31, 2015 and
2014, respectively. During 2015, the December 31, 2014 market valuation reserve of $397.5 million was reversed as inventory
quantities giving rise to the 2014 reserve were sold. A new reserve of $624.5 million was established at December 31, 2015 based
on market conditions at that time. The effect of the change in the lower of cost or market reserve was a $227.0 million and $397.5
million increase to cost of products sold for the years ended December 31, 2015 and 2014, respectively.
At December 31, 2015 and 2014, the LIFO value of inventory, net of the lower of cost or market reserve, was equal to current
costs. The excess of current cost over the LIFO value of inventory was $273.0 million at December 31, 2013.
NOTE 8: Properties, Plants and Equipment
The components of properties, plants and equipment are as follows:
December 31,
2015 2014
(In thousands)
Land, buildings and improvements $ 305,712 $ 255,260
Refining facilities 2,833,125 2,634,432
Pipelines and terminals 1,321,398 1,226,923
Transportation vehicles 21,289 35,178
Other fixed assets 158,401 136,545
Construction in progress 850,264 564,103
5,490,189 4,852,441
Accumulated depreciation (1,374,527)(1,181,902)
$ 4,115,662 $ 3,670,539