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Table of Contents HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued
70
NOTE 7: Inventories
Inventory consists of the following components:
December 31,
2014 2013
(In thousands)
Crude oil $ 581,592 $ 567,281
Other raw materials and unfinished products(1) 204,467 154,534
Finished products(2) 531,523 519,633
Lower of cost or market reserve (397,478) —
Process chemicals(3) 4,028 3,504
Repairs and maintenance supplies and other 110,999 109,295
Total inventory $ 1,035,131 $ 1,354,247
(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.
At December 31, 2014, market values had fallen below historical LIFO inventory costs and, as a result, we recognized a non-cash
pretax loss of $397.5 million. Such losses are subject to reversal in subsequent periods, not to exceed historical LIFO costs, if
prices recover.
At December 31, 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. For the year ended December 31,
2012, we recognized a reduction of $4.2 million to cost of products sold due to the liquidation of certain quantities of LIFO
inventory that were carried at historical acquisition costs below market value at the time of liquidation.
NOTE 8: Properties, Plants and Equipment
The components of properties, plants and equipment are as follows:
December 31,
2014 2013
(In thousands)
Land, buildings and improvements $ 255,260 $ 235,625
Refining facilities 2,634,432 2,510,750
Pipelines and terminals 1,226,923 1,158,288
Transportation vehicles 35,178 41,066
Other fixed assets 136,545 116,801
Construction in progress 564,103 281,327
4,852,441 4,343,857
Accumulated depreciation (1,181,902)(949,261)
$ 3,670,539 $ 3,394,596