<PAGE>   1
 
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                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
 
                                   FORM 10-K
 
/X/         ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
               SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
                  FOR THE FISCAL YEAR ENDED JULY 31, 1995
                                     OR
/ /         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
           THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
               FOR THE TRANSITION PERIOD FROM             TO
                       COMMISSION FILE NUMBER 1-3876
 
                               HOLLY CORPORATION
            (Exact name of registrant, as specified in its charter)
 

<TABLE>
<S>                                           <C>
                   DELAWARE                                     75-1056913
         (State or other jurisdiction              (I.R.S. Employer Identification No.)
      of incorporation or organization)

              100 CRESCENT COURT                                75201-6927
                  SUITE 1600                                    (Zip Code)
                DALLAS, TEXAS
   (Address of principal executive offices)
</TABLE>

 
       Registrant's telephone number, including area code: (214) 871-3555
 
                             ---------------------
 
          Securities registered pursuant to Section 12(b) of the Act:
 

<TABLE>
<CAPTION>
                                                          NAME OF EACH EXCHANGE
             TITLE OF EACH CLASS                           ON WHICH REGISTERED
             -------------------                          ---------------------
<S>                                           <C>
         Common Stock, $.01 Par Value                    American Stock Exchange
</TABLE>

 
          Securities registered pursuant to Section 12(g) of the Act:
 
                                      NONE
 
                             ---------------------
 
     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  / /
 
     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.  Yes /X/     No / /
 
     On October 13, 1995, the aggregate market value of the Common Stock, par
value $.01 per share, held by non-affiliates of the registrant was $98,000,000.
(This is not to be deemed an admission that any person whose shares were not
included in the computation of the amount set forth in the preceding sentence
necessarily is an "affiliate" of the registrant.)
 
     8,253,514 shares of Common Stock, par value $.01 per share, were
outstanding on October 13, 1995.
 
                      DOCUMENTS INCORPORATED BY REFERENCE
 
     (1) Portions of the registrant's proxy statement for its annual meeting of
stockholders in December 1995, which proxy statement will be filed with the
Securities and Exchange Commission within 120 days after July 31, 1995, are
incorporated by reference in Part III.
 
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<PAGE>   2


                           ANNUAL REPORT ON FORM 10-K
                              OF HOLLY CORPORATION
                        FISCAL YEAR ENDED JULY 31, 1995





                                     PART I



ITEMS 1 AND 2.  BUSINESS AND PROPERTY

       Holly Corporation, including its consolidated and wholly-owned
subsidiaries, herein referred to as the "Company" unless the context otherwise
indicates, is an independent refiner of petroleum and petroleum derivatives and
produces high value light products such as gasoline, diesel fuel and jet fuel
for sale primarily in the southwestern United States and northern Mexico.
Navajo Refining Company ("Navajo"), one of the wholly-owned subsidiaries, owns
a high-conversion petroleum refinery in Artesia, New Mexico, which it operates
in conjunction with crude, vacuum distillation and other facilities situated 65
miles away in Lovington, New Mexico (collectively, the "Navajo Refinery").  The
Navajo Refinery has a crude capacity of 60,000 barrels-per-day ("BPD") and can
process a variety of high sulphur sour crude oils.  The Company also owns
Montana Refining Company, a Partnership ("MRC"), which owns a 7,000 BPD
petroleum refinery near Great Falls, Montana ("Montana Refinery"), which can
process a range of crude oils and which serves primarily the State of Montana.

       In addition to its refining operations, the Company also conducts a
small-scale oil and gas exploration and production program.

       The Company was incorporated in Delaware in 1947.





                                      -2-

<PAGE>   3
       The following table sets forth certain information about the refinery
operations of the Company during the last five fiscal years:


<TABLE>
<CAPTION>
                                                                        Years ended July 31,   
                                                         ----------------------------------------------------------
                                                          1995          1994        1993       1992           1991
                                                         ------        ------      ------     ------         ------
    <S>                                                  <C>           <C>         <C>        <C>            <C>
    Refinery production (BPD)(1)  . . . . . . .          68,100        64,300(2)   65,300     55,200         44,800(2)
    Crude charge (BPD) (3)  . . . . . . . . . .          65,636        60,911(2)   62,115     51,723         43,838(2)
    Refinery utilization(4)   . . . . . . . . .           98.0%         90.9%(2)    92.7%      88.2%          93.3%(2)
    Average per barrel:
      Net sales   . . . . . . . . . . . . . . .          $24.02        $22.88      $25.43     $24.84         $29.79
      Raw material costs(5)   . . . . . . . . .           19.02         16.99       20.10      20.41          24.61
                                                         ------        ------      ------     ------         ------
      Gross margin  . . . . . . . . . . . . . .          $ 5.00        $ 5.89      $ 5.33     $ 4.43         $ 5.18
                                                         ======        ======      ======     ======         ======

    Product sales (percent of total sales volume)(6):
      Gasolines   . . . . . . . . . . . . . . .           55.5%         54.5%       52.0%      49.4%          46.6%
      Diesel fuels  . . . . . . . . . . . . . .            20.1          20.1        23.6       21.1           20.1
      Jet fuels   . . . . . . . . . . . . . . .            11.3          11.7        10.4       13.2           18.2
      Asphalt   . . . . . . . . . . . . . . . .             8.4           9.4         9.8       10.8            8.9
      LPG and other   . . . . . . . . . . . . .             4.7           4.3         4.2        5.5            6.2
                                                         ------        ------      ------     ------         ------

        Total   . . . . . . . . . . . . . . . .          100.0%        100.0%      100.0%     100.0%         100.0%
                                                         ======        ======      ======     ======         ======
</TABLE>


__________

 (1)    Barrels per calendar day of refined products produced from crude oil and
        other raw materials.
 (2)    Refinery production, crude charge and utilization rates were reduced as
        a result of a scheduled turnaround for major maintenance at the Navajo
        Refinery.
 (3)    Barrels per day of crude oil processed.
 (4)    Crude charge divided by crude capacity.
 (5)    Includes cost of refined products purchased for resale.
 (6)    Includes refined products purchased for resale representing 2.3%, 3.9%,
        3.2%, 0.7% and 0.7%, respectively, of total sales volume for the
        periods shown in the table above.


NAVAJO REFINING COMPANY

   FACILITIES

       With the completion of a major expansion in December 1991, Navajo's
refinery capacity increased from 40,000 to 60,000 BPD.  The Navajo Refinery has
the ability to process a variety of sour crude oils and, as a result of the
expansion, has increased the proportion of throughput that can be converted
into high value light products (such as gasoline, diesel fuel and jet fuel).
The expansion has also increased internal high octane capabilities and has
augmented overall operating flexibility.





                                      -3-

<PAGE>   4
       For the last three fiscal years, sour crude oils have represented
approximately 85% of the crude oils processed by the Navajo Refinery.  The
Navajo Refinery's processing capabilities enable management to vary its crude
supply mix to take advantage of changes in raw materials prices and to respond
to fluctuations in the availability of crude oil supplies.  The Navajo Refinery
converts approximately 86% of its raw materials throughput into high value
light products.  For fiscal 1995, gasoline, diesel fuel and jet fuel (including
volumes purchased for resale) represented 57.8%, 19.5%, and 11.0%,
respectively, of Navajo's sales volume.  For the last three fiscal years,
excluding downtime for scheduled maintenance and turnarounds, the Navajo
Refinery has operated at an average annual crude capacity utilization rate of
approximately 97%.

       The following table sets forth certain information concerning the
operations of Navajo during the last five fiscal years:


<TABLE>
<CAPTION>
                                                                            Years ended July 31,   
                                                         ----------------------------------------------------------
                                                          1995          1994        1993       1992           1991
                                                         ------        ------      ------     ------         ------
    <S>                                                  <C>           <C>         <C>        <C>            <C>

    Refinery production (BPD)(1)  . . . . . . .          61,900        57,400(2)   58,600     48,900         38,800(2)
    Crude charge (BPD) (3)  . . . . . . . . . .          59,614        54,089(2)   55,488     45,363         37,663(2)
    Refinery utilization(4)   . . . . . . . . .           99.4%         90.1%(2)    92.5%      87.8%          94.2%(2)
    Average per barrel:
      Net sales   . . . . . . . . . . . . . . .          $23.90        $22.63      $25.39     $24.69         $29.89
      Raw material costs(5)   . . . . . . . . .           19.13         17.20       20.26      20.53          24.67
                                                         ------        ------      ------     ------         ------
      Gross margins   . . . . . . . . . . . . .          $ 4.77        $ 5.43      $ 5.13     $ 4.16         $ 5.22
                                                         ======        ======      ======     ======         ======
</TABLE>


__________

 (1)    Barrels per calendar day of refined products produced from crude oil and
        other raw materials.
 (2)    Refinery production, crude charge and utilization rates were reduced as
        a result of a scheduled turnaround for major maintenance.
 (3)    Barrels per day of crude oil processed.
 (4)    Crude charge divided by crude capacity.
 (5)    Includes cost of refined products purchased for resale.

       Navajo's Artesia facility is located on a 300-acre site and has fully
integrated crude, FCC, vacuum distillation, alkylation, hydrodesulfurization
and reforming units, and approximately 1.5 million barrels of feedstock and
product tank storage, as well as other supporting units and office buildings at
the site.  The Artesia facilities are operated in conjunction with integrated
refining facilities located in Lovington, New Mexico, approximately 65 miles
east of Artesia.  The principal equipment at Lovington consists of a crude unit
and an associated vacuum unit.  The Lovington facility processes crude oil into
intermediate products, which are transported to Artesia through a Company-owned
eight-inch pipeline or by tanker truck.





                                      -4-

<PAGE>   5
       The Company's 500 miles of crude gathering pipelines lead to the Artesia
and Lovington facilities from various points in southeastern New Mexico.  The
Company distributes refined products from the Navajo Refinery to its principal
markets primarily through (i) a Company-owned pipeline which extends from
Artesia to El Paso and (ii) a Company-owned pipeline extending from Artesia to
Orla, Texas and from there west to El Paso.  The Company has product storage at
terminals in Tucson, Albuquerque, Artesia and El Paso in which the Company has
50% or greater interests.  The Company also owns a segment of products pipeline
running from Orla to Odessa, Texas, which is currently inactive.

   MARKETS AND COMPETITION

       The Navajo Refinery primarily serves the growing southwestern United
States market, including El Paso, Albuquerque, Phoenix and Tucson, and the
northern Mexico market.  The Company's products are shipped by pipeline from El
Paso to Albuquerque via a products pipeline system owned by Chevron Pipeline
Company and to Tucson and Phoenix via a products pipeline system owned by Santa
Fe Pacific Pipeline.  Access to the Company's markets by Gulf Coast refiners is
limited primarily by the lack of available product pipelines.

       The petroleum refining business is highly competitive.  Among the
Company's competitors are some of the world's largest integrated petroleum
companies, which have their own crude oil supplies, distribution and marketing
systems.  The Company competes with independent refiners as well.  Competition
in particular geographic markets is affected primarily by the amounts of
refined products produced by refineries located in such markets and by the
availability of refined products and the cost of transportation to such markets
from refineries located outside those markets.  Diamond Shamrock, Inc., an
independent refiner and marketer, is building a 420-mile, ten-inch refined
products pipeline from its McKee refinery near Dumas, Texas to El Paso, the
Company's largest market.  Diamond Shamrock has announced that it expects to
complete that pipeline, which will have an initial capacity of 25,000 BPD, in
the fourth quarter of calendar 1995, and that it intends to use its pipeline to
supply fuel to the El Paso, Arizona and northern Mexico markets.  The Diamond
Shamrock pipeline could substantially increase the supply of refined products
in the Company's principal markets.  In addition, there is excess pipeline
capacity from the West Coast into the Company's Arizona markets.  There can be
no assurance that West Coast refiners will not seek to increase shipments of
refined products into the Company's markets through existing pipelines, new
pipelines or otherwise.  In addition, in June 1995, an investor group announced
that it is negotiating to purchase an existing crude oil pipeline running from
West Texas to a refinery near Houston as part of the investor group's plan to
reverse the line and extend it for use in transporting refined products from
the Gulf Coast to El Paso.  An increased supply of products in the Company's
markets could adversely affect its sales volume and/or the prices it can obtain
for its products.





                                      -5-

<PAGE>   6
       At times in the past, the common carrier pipelines used by the Company
to serve the Arizona markets have been operated at or near their capacity and
have been subject to periods of proration.  In July 1993, the Company entered
into a settlement agreement regarding that pipeline system.  Under the
agreement, the occurrence of certain defined events will require increases in
the capacity of the pipeline.  It is anticipated that this settlement lessens,
at least in the foreseeable future, the likelihood of prolonged future
constraints on the movement of the Company's products into Arizona.  In
addition, the common carrier pipeline used by the Company to serve the
Albuquerque market currently is operating at or near capacity.  As a result,
the volume of refined products that the Company and other shippers have been
able to deliver to this market at times has been limited.  In general, no
assurances can be given that the Company will not experience future constraints
on its ability to deliver its products through common carrier pipelines or that
any existing constraints will not worsen.  In particular, the flow of
additional product into El Paso for shipment to Arizona, either as a result of
the new Diamond Shamrock pipeline or otherwise, could result in the
reoccurrence of such constraints.

   CRUDE OIL AND FEEDSTOCK SUPPLIES

       The Navajo Refinery is situated near the Permian Basin in an area with
historically abundant crude supplies.  The Company purchases crude oil from
producers in nearby southeastern New Mexico and west Texas, from major oil
companies and on the spot market.  Crude oil is gathered both through the
Company's pipelines and tank trucks and through third party crude oil pipeline
systems.  Crude oil acquired in locations distant from the refinery is
exchanged for crude oil that is transportable to the refinery.  In 1993, the
Company reactivated a subsidiary, Navajo Crude Oil Marketing Company, to
facilitate the purchase of crude oil from leases in west Texas and New Mexico.

   PRINCIPAL PRODUCTS AND MARKETS

       The Navajo Refinery converts approximately 86% of its raw materials
throughput into high value light products.  Set forth below is certain
information regarding the principal products of Navajo during the last five
fiscal years:


<TABLE>
<CAPTION>
                                                                      Years ended July 31,                   
                                  -------------------------------------------------------------------------------------
                                        1995              1994               1993              1992           1991
                                  --------------   ----------------    --------------    --------------  --------------
                                    BPD      %       BPD        %        BPD      %        BPD      %      BPD      %
                                  ------   -----   ------     -----    ------   -----    ------   -----  ------   -----
<S>                               <C>      <C>     <C>        <C>      <C>      <C>      <C>      <C>    <C>      <C>
Product sales (percent of
   total sales volumes)(1)
   Gasolines  . . . . . . . .     36,400    57.8%  33,200      56.5%   32,600    53.4%   24,800    50.3% 18,500    47.7%
   Diesel fuels . . . . . . .     12,300    19.5   11,600      19.7    14,500    23.7    10,300    20.9   7,600    19.6
   Jet fuels  . . . . . . . .      6,900    11.0    6,500      11.1     5,900     9.7     6,200    12.6   7,200    18.5
   Asphalt  . . . . . . . . .      4,500     7.1    4,900       8.3     5,500     9.0     5,000    10.1   2,900     7.5
   LPG and other  . . . . . .      2,900     4.6    2,600       4.4     2,600     4.2     3,000     6.1   2,600     6.7
                                  ------   -----   ------     -----    ------   -----    ------   -----  ------   -----
                                  63,000     100%  58,800       100%   61,100     100%   49,300     100% 38,800     100%
- -------------                     ======    ====   ======      ====    ======    ====    ======    ====  ======    ====
</TABLE>

       (1)    Includes refined products purchased for resale representing 1.9%,
              4.0%, 3.2%, 0.4%, and 0.5%, respectively, of total sales volume
              for the periods shown in the table above.





                                      -6-

<PAGE>   7
       Light products are shipped by product pipelines or are made available at
distant points by exchanges with others.  Light products are also available to
customers through truck loading facilities at the refineries and at terminals.
The demand for the Company's gasoline and asphalt products has historically
been stronger from March through October, which are the peak "driving" and road
construction months, than during the rest of the year.

       The Company's principal customers for gasoline include other refiners,
convenience store chains, independent marketers, an affiliate of PEMEX (the
government-owned energy company of Mexico) and retailers.  Navajo's gasoline is
marketed in the southwestern United States, including the metropolitan areas of
El Paso, Phoenix, Albuquerque, and Tucson, and in portions of northern Mexico.
Diesel fuel is sold to other refiners, wholesalers, independent dealers and
railroads.  Jet fuel is sold primarily for military use.  Military jet fuel is
sold to the Defense Fuel Supply Center (the "DFSC") of the Defense Logistics
Agency under a series of one-year contracts that can vary significantly from
year to year.  Navajo sold approximately 6,700 BPD of jet fuel to the DFSC in
its 1995 fiscal year and has a contract to supply 8,500 BPD to the DFSC for the
year ending September 30, 1996.  Asphalt is sold to contractors and government
authorities for highway construction and maintenance.  Carbon black oil is sold
for further processing, and LPGs are sold to petrochemical plants and are used
as fuel in refinery operations.

       Approximately 12% of the Company's revenues for fiscal 1995 resulted
from the sale of military jet fuel to the United States government.  Although
there can be no assurance that the Company will be awarded such contracts in
the future, the Company has had a supply contract with the United States
government for each of the last 26 years.  Approximately 7% of the Company's
revenues for fiscal 1995 resulted from the sale of gasoline to an affiliate of
PEMEX.  Those sales were made under a contract that expires in mid-1997.  The
loss of the Company's supply contract with the United States government or with
PEMEX could have a material adverse effect on the Company's results of
operations.

   CAPITAL IMPROVEMENT PROJECTS

       As part of its efforts to improve operating efficiencies, management
currently intends to enhance the Navajo Refinery by constructing an
isomerization unit and upgrading the fluid catalytic cracking unit (FCC).

       The first of these projects is the conversion of an idled reformer to a
UOP Isomerization unit.  This unit, which is expected to be on-line during the
fourth quarter of fiscal 1996, will increase the refinery's internal octane
generating capabilities, thereby improving light product yield and increasing
the refinery's ability to upgrade additional amounts of lower priced purchased
natural gasoline into finished gasoline.  The other significant project is a
revamp of the refinery's FCC.  This revamp, which will be implemented during
its next scheduled turnaround in the fall of 1996, will improve the yield of
high value products from the FCC by incorporating certain state-of-the-art
upgrades.  Engineering and equipment procurement will proceed during fiscal
1996, with completion of the revamp and realization of benefits occurring
during fiscal 1997.  The estimated costs of these two projects is $12.5
million.





                                      -7-

<PAGE>   8
       The Company is pursuing a joint venture with Mapco and Amoco Pipeline to
provide transportation of liquid petroleum gases from West Texas to Mexico.  In
connection with this project, a new 12-inch pipeline would be constructed from
the Navajo Refinery to El Paso, Texas which would allow realization of reduced
operating expenses at current throughputs and, position Navajo to transport
higher volumes in the event of future refinery expansion.  The new line would
replace the currently used 8-inch pipeline which in turn would be transferred
to the joint venture.  The Company is to have a 25% interest in the joint
venture.  The net cash investment of the Company in the project, including the
Company's interest in the joint venture, is estimated to be $22 million.

MONTANA REFINING COMPANY

       MRC owns a 7,000 BPD petroleum refinery near Great Falls, Montana, which
can process a range of crude oils and which serves primarily the State of
Montana.  For the last three fiscal years, excluding downtime for scheduled
maintenance and turnarounds, the Montana Refinery has operated at an average
annual crude capacity utilization rate of approximately 94%.

       The following table sets forth certain information regarding the
principal products of MRC during the last five years:


<TABLE>
<CAPTION>
                                                                 Years ended July 31,                   
                                    ---------------------------------------------------------------------------------
                                         1995            1994            1993             1992              1991
                                    -------------   -------------   --------------   ---------------   --------------
                                     BPD      %      BPD      %      BPD       %      BPD        %      BPD       %
                                    -----   -----   -----   -----   -----    -----   -----     -----   -----    -----
<S>                                 <C>     <C>     <C>     <C>     <C>      <C>     <C>       <C>     <C>      <C>
Product sales (percent of
   total sales volumes)(1)
   Gasolines  . . . . . . . . .     2,400   35.3%   2,700   38.6%   2,700    39.1%   2,800     42.4%   2,400    40.0%
   Diesel fuels . . . . . . . .     1,700    25.0   1,700    24.3   1,600     23.2   1,500      22.7   1,400     23.4
   Jet fuels  . . . . . . . . .     1,100    16.2   1,100    15.7   1,200     17.4   1,100      16.7     900     15.0
   Asphalt  . . . . . . . . . .     1,300    19.1   1,300    18.6   1,200     17.4   1,100      16.7   1,100     18.3
   LPG and other  . . . . . . .       300     4.4     200     2.8     200      2.9     100       1.5     200      3.3
                                    -----   -----   -----   -----   -----    -----   -----     -----   -----    -----
                                    6,800    100%   7,000    100%   6,900     100%   6,600      100%   6,000     100%
- -------------                       =====    ====   =====    ====   =====     ====   =====      ====   =====     ====
</TABLE>


       (1)    Includes refined products purchased for resale representing 6.5%,
              3.4%, 3.2%, 2.6%, and 2.1%, respectively, of total sales volume
              for the periods shown in the table above.

       The Montana Refinery obtains its supply of crude oils primarily from
suppliers in Canada via a 93-mile, Company-owned pipeline, which runs from
near the Canadian border.  The Montana Refinery's principal markets include
Great Falls, Helena, Bozeman and Billings, Montana.  MRC competes principally
with three other Montana refineries.





                                      -8-

<PAGE>   9
JET FUEL TERMINAL

       The Company owns and operates a 120,000 barrel capacity jet fuel
terminal near Mountain Home, Idaho, which serves as a terminalling facility for
jet fuel sold by unaffiliated producers to the Mountain Home United States Air
Force Base.

NAVAJO WESTERN ASPHALT COMPANY

       Navajo Western Asphalt Company, a wholly-owned subsidiary of the
Company, owns and operates an asphalt marketing facility near Phoenix.  The
Company has recently completed construction of asphalt processing and storage
facilities that should allow it to expand this operation.  In addition to
serving as a marketing outlet for asphalt produced by Navajo at the Lovington
facility, Navajo Western markets asphalt for third parties.

EXPLORATION AND PRODUCTION

       The Company contracts with two independent oil and gas consulting groups
that identify oil and gas exploration and production projects for the Company.
The scope of this activity is presently modest relative to the Company's
refining operations.  For fiscal 1996, the Company has budgeted approximately
$2 million for capital expenditures related to oil and gas exploration
activities.

EMPLOYEES AND LABOR RELATIONS

       The Company has approximately 543 employees.  Of its employees, 211 are
covered by collective bargaining agreement ("covered employees").  Contracts
relating to the covered employees at all facilities were negotiated during 1993
and will expire in 1996.  The Company considers its employee relations to be
good.

REGULATION

       Refinery operations are subject to federal, state and local laws
regulating the discharge of matter into the environment or otherwise relating
to the protection of the environment.  Over the years, there have been and
continue to be ongoing communications, including notices of violations, and
discussions about environmental matters between the Company and federal and
state authorities, some of which have resulted in changes of operating
procedures and in capital expenditures by the Company.  Compliance with
applicable environmental laws and regulations will continue to have an impact
on the Company's operations and capital requirements.





                                      -9-

<PAGE>   10
       Effective January 1, 1995, certain cities in the country were required
to use only reformulated gasoline ("RFG"), a cleaner burning fuel.  While none
of the Company's principal markets presently requires RFG, this requirement
could be implemented over time.  Further, other requirements of the Clean Air
Act could cause the Company to be required to expend substantial amounts for
compliance at its refineries.  Expenditures in connection with the Clean Air
Act at the Montana Refinery could be proportionally larger than similar
expenditures at the Navajo Refinery.  The specifics and extent of these
requirements and their attendant costs are not presently determinable.

       The Company is and has been the subject of various state, federal and
private proceedings relating to environmental regulations, conditions and
inquiries.  The most significant of these is the enforcement action which has
been brought by the United States Department of Justice ("DOJ"), on behalf of
the EPA, and which is discussed in the Management's Discussion and Analysis of
Financial Condition and Results of Operations and in Note 12 to the
Consolidated Financial Statements.  In addition to the expenditures that will
likely be incurred in connection with a resolution of this matter, current and
future environmental regulations inevitably will require other expenditures,
including remediation, at the New Mexico and Montana refineries.  The extent of
any such expenditures cannot be presently determined.

       The Company's operations are also subject to various laws and
regulations relating to occupational health and safety.  The Company maintains
safety, training and maintenance programs as part of its ongoing efforts to
ensure compliance with applicable laws and regulations.  Moreover, recently
enacted comprehensive health and safety legislation require substantial
expenditures and modifications of procedures.

       Notwithstanding the Company's efforts, following an eight-month series
of inspections at MRC, the Occupational Safety and Health Administration issued
numerous citations alleging a variety of matters of noncompliance.  MRC has
contested all citations and it cannot presently be determined the extent of any
fines for which it will ultimately be responsible.  While the parties have been
engaged in substantive settlement discussions, no assurance can be given that a
settlement will ultimately be reached.

INSURANCE

       The Company's operations (including its limited exploration and
production activities) are subject to normal hazards of operations, including
fire, explosion and weather-related perils.  The Company maintains various
insurance coverages, including business interruption insurance, subject to
certain deductibles.  The Company is not fully insured against certain risks
because such risks are not fully insurable, coverage is unavailable or premium
costs are prohibitive.





                                      -10-

<PAGE>   11

ITEM 3.  LEGAL PROCEEDINGS

       In July 1993, the DOJ, acting on behalf of the EPA, filed a complaint in
the United States District Court for the District of New Mexico alleging that
Navajo, beginning in September 1990 and continuing until the present, had
violated and continues to violate RCRA and implementing regulations of the EPA
by treating, storing and disposing of certain hazardous wastes without
necessary authorization and without compliance with regulatory requirements.
The complaint seeks a court order directing Navajo to comply with these
regulatory standards and civil penalties for the alleged non-compliance.  The
Company believes that the parties are in the final stages of negotiations that
should resolve the litigation.  Based on these negotiations, the Company would
close the existing evaporation ponds of its wastewater management system and
implement an alternative wastewater treatment system.  Any settlement with DOJ
and EPA also is expected to involve payment of a civil penalty.  See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Note 12 to the Consolidated Financial Statements.

       The Company is a party to various other litigation and proceedings which
it believes, based on advice of counsel, will not have a materially adverse
impact on its financial condition or operations.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

       No matter was submitted to a vote of security holders during the fourth
quarter of the Company's 1995 fiscal year.

Executive Officers of Registrant (per instruction 3 to Item 401(b) of
Regulation S-K)

       The executive officers of the Company as of October 20, 1995 are as
follows:


<TABLE>
<CAPTION>
                                                                                                   Executive
   Name                           Age                  Position                                  Officer Since
   ----                           ---                  --------                                  -------------
<S>                               <C>             <C>                                                <C>

Lamar Norsworthy                  49              Chairman of the Board,                             1971
                                                    President and Chief
                                                    Executive Officer

Jack P. Reid                      59              Executive Vice President,                          1976
                                                    Refining and Director

William J. Gray                   54              Senior Vice President,                             1976
                                                    Marketing and Supply

Matthew P. Clifton                44              Senior Vice President                              1988
                                                    and Director




</TABLE>


                                      -11-

<PAGE>   12

<TABLE>
<S>                               <C>             <C>                                                <C>
David G. Blair                    37              Vice President, Marketing                          1994
                                                    Asphalt and LPG

Christopher L. Cella              38              Vice President, General                            1990
                                                    Counsel and Secretary

Karl N. Knapp                     37              Vice President                                     1994

John A. Knorr                     45              Vice President, Crude Oil                          1988
                                                    Supply and Trading

Virgil R. Langford                50              Vice President, Refining                           1989

Mike Mirbagheri                   56              Vice President, International                      1982
                                                    Crude Oil and Refined
                                                    Products

Henry A. Teichholz                52              Vice President, Treasurer                          1984
                                                    and Controller

Gregory A. White                  38              Vice President, Marketing                          1994
                                                    Light Oils
</TABLE>


       In addition to the persons listed above, Kathryn Walker, age 45, was
appointed Controller of Navajo Refining Company in August 1993; prior thereto
she served from 1985 as Assistant Controller of Navajo.

       All officers of the Company are elected annually to serve until their
successors have been elected.  Mr. Cella has occupied the additional office of
Secretary since December 1994.  Mr. Clifton previously served as Vice
President, Economics, Engineering and Legal Affairs from 1988 to 1991.  Mr.
Knorr is also President of one of the partners of MRC and serves as the General
Manager of MRC.  Messrs. Blair, Knapp and White were elected to their
respective positions in September 1994.  Mr. Blair has served as Marketing
Manager of Asphalt and LPG of Navajo since 1989 and previously held various
marketing and supply positions.  Mr. Knapp joined the Company in 1992 and
served as Director of Corporate Development from 1992 to 1994.  Mr. Knapp was
Director of Corporate Planning for Northwest Airlines from 1991 to 1992, and
prior to that was associated with the management consulting firm of Monitor
Company from 1987 to 1991.  Mr. White has served as Marketing Manager of Light
Oils of Navajo since 1989 and previously held various marketing and supply
positions.





                                      -12-

<PAGE>   13

                                    PART II



ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDERS
         MATTERS

       The Company's common stock is traded on the American Stock Exchange
under the symbol "HOC".  The following table sets forth the range of the daily
high and low sales prices per share of common stock, dividends paid per share
and the trading volume of common stock for the periods indicated:


<TABLE>
<CAPTION>
                                                                               Total
Fiscal years ended July 31,                High        Low       Dividends     Volume
- ---------------------------                ----        ---       ---------     ------
<S>    <C>                                 <C>         <C>         <C>         <C>

1994
       First Quarter  . . . . . .          $30         $26 5/8     $.075         255,800
       Second Quarter   . . . . .           30          25 3/8      .075         269,400
       Third Quarter  . . . . . .           30 1/2      27 1/8      .10          165,200
       Fourth Quarter   . . . . .           33 3/8      28 1/4      .10          275,200

1995
       First Quarter  . . . . . .          $28 1/2     $23 3/4     $.10          230,200
       Second Quarter   . . . . .           26 1/2      24          .10          184,100
       Third Quarter  . . . . . .           26 3/4      23          .10          252,500
       Fourth Quarter   . . . . .           28 1/2      21 3/8      .10        1,218,600
</TABLE>



       As of July 31, 1995, the Company had approximately 2,000 stockholders of
record.

       On September 29, 1995, the Company's Board of Directors declared a
regular quarterly dividend in the amount of $.10 per share payable on October
27, 1995.  The Company intends to consider the declaration of a dividend on a
quarterly basis, although there is no assurance as to future dividends since
they are dependent upon future earnings, capital requirements and financial
condition of the Company as well as other factors.  The Senior Notes and Credit
Agreement limit the payment of dividends.  See Note 6 to the Consolidated
Financial Statements.





                                      -13-

<PAGE>   14

ITEM 6.  SELECTED FINANCIAL DATA


<TABLE>
<CAPTION>
($ in thousands, except per share amounts)
Years ended July 31,                                      1995         1994          1993           1992         1991
- -----------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>          <C>           <C>            <C>          <C>

FINANCIAL DATA
   For the year
      Revenues  . . . . . . . . . . . . . . . .         $614,830     $552,320      $630,621       $506,668     $489,333
      Income before income taxes and
        cumulative effect of
        accounting change . . . . . . . . . . .         $ 20,147     $ 35,002      $ 33,317       $    662     $ 18,416
      Income tax provision (benefit)  . . . . .            7,730       14,285        13,384         (2,097)       6,682
                                                        --------     --------      --------       --------     --------

      Income before cumulative effect
         of accounting change . . . . . . . . .           12,417       20,717        19,933          2,759       11,734
      Cumulative effect of
         accounting change  . . . . . . . . . .            5,703            -          (958)             -            -
                                                        --------     --------      --------       --------     --------

      Net income  . . . . . . . . . . . . . . .         $ 18,120     $ 20,717      $ 18,975       $  2,759     $ 11,734
                                                        ========     ========      ========       ========     ========

      Income per common share
         Income before cumulative
           effect of accounting
           change   . . . . . . . . . . . . . .         $   1.51     $   2.51      $   2.42       $    .33     $   1.42
         Cumulative effect of
           accounting change  . . . . . . . . .              .69            -          (.12)             -            -
                                                        --------     --------      --------       --------     --------

         Net income . . . . . . . . . . . . . .         $   2.20     $   2.51      $   2.30       $    .33     $   1.42
                                                        ========     ========      ========       ========     ========

      Cash dividends per common
         share  . . . . . . . . . . . . . . . .         $    .40     $    .35      $    .30       $    .45     $    .48
      Average number of shares of
         common stock outstanding . . . . . . .        8,254,000    8,254,000     8,254,000      8,254,000    8,254,000
      Net cash provided by
       operating activities . . . . . . . . . .         $ 34,241     $ 27,684      $ 38,737       $    961     $ 27,907
   At end of year . . . . . . . . . . . . . . .
      Working capital . . . . . . . . . . . . .         $ 17,740     $ 18,236      $ 12,145       $  5,031     $ 18,658
      Total assets  . . . . . . . . . . . . . .         $287,384     $281,814      $249,807       $245,462     $212,095
      Long-term debt (including
         current portion) . . . . . . . . . . .         $ 68,840     $ 74,448      $ 80,056       $ 80,164     $ 80,638
      Stockholders' equity  . . . . . . . . . .         $ 80,043     $ 64,772      $ 46,478       $ 29,505     $ 29,811




</TABLE>


                                      -14-

<PAGE>   15

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
         FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

1995 Versus 1994

       Net income for the 1995 fiscal year was $18.1 million, including a $5.7
million accounting change in the first quarter of fiscal 1995, compared to
$20.7 million in the prior year.

       Refining margins for the year were weak as crude oil costs increased at
a greater rate than product prices.  Margins at the Montana refinery were
particularly poor in the first nine-month period of fiscal 1995 as compared to
the prior year's period.  The 11% increase in the Company's revenues for the
year ended July 31, 1995 is attributable to a 6% increase in sales volume and
higher selling prices.  The prior year's sale volumes were reduced by a major
maintenance turnaround at Navajo Refining Company's New Mexico facilities.

       Effective August 1, 1994, the Company changed its method of accounting
for turnaround costs.  Turnarounds consist of preventive maintenance on major
processing units, as well as the shutdown and restart of units, and generally
are scheduled at two to three year intervals.  Previously, the Company
estimated the costs of the next scheduled turnaround and ratably accrued the
related expenses prior to the actual turnaround.  To provide for a better
matching of turnaround costs with revenues, the Company changed its accounting
method for turnaround costs to one that results in the amortization of costs
incurred over the period until the next scheduled turnaround.  The amortization
of turnaround costs is recorded in depreciation, depletion and amortization
expense, whereas previously the expenses accrued prior to the turnaround were
recorded in cost of sales as an operating expense.  The increase in the current
year in depreciation expense is primarily the result of this change in
accounting.  See Note 2 to the Consolidated Financial Statements for the effect
of the accounting change.

1994 Versus 1993

       Net income for the 1994 fiscal year ended July 31, 1994 was $20.7
million compared to $19.9 million before an accounting change in the prior
fiscal year.  A charge of $1.0 million relating to a change in the method to
account for income taxes reduced net income to $19.0 million in fiscal 1993.

       While refinery margins for the 1994 fiscal year as a whole improved over
the levels of the prior year, the margins were adversely impacted by poor
refined product margins experienced by Navajo Refining Company in the year's
fourth quarter, as product prices did not increase commensurately with a rise
in crude oil costs.  Montana Refining Company had a third consecutive record
year in fiscal 1994, as favorable margins were sustained for the entire year.
Most of the increase in profitability resulting from the Company's higher
refinery margins was offset by the effect of a 3% reduction in sales volumes
and the net effect of the other items described below.  Net sales for the 1994
fiscal year were down 13% as the result of lower prices on product sales and
the decrease in volumes.  The reduction in sales volume for the year was caused
primarily by a planned major maintenance turnaround of Navajo Refining
Company's New Mexico facilities which occurred in the first months of fiscal
1994.  A charge





                                      -15-

<PAGE>   16
of $2.9 million was recorded in the fourth quarter of fiscal 1993 to reflect an
increase in the estimate for the costs to be incurred in the turnaround, and an
additional $1.5 million in excess of the revised accrual at July 31, 1993 was
included as an expense in the second quarter of fiscal 1994.  Further reducing
income in fiscal 1994 were other operating expense increases and an increase in
exploration expenses, including dry holes.

       Income in fiscal 1993 was improved by $4 million relating to the
settlement of litigation with a common carrier pipeline and was reduced by a $2
million charge relating to an action by the United States Department of
Justice, acting on behalf of the Environmental Protection Agency (EPA).  Both
of these items are more fully discussed below.

1993 Versus 1992

       Net income for the year ended July 31, 1993 was $19.9 million before an
accounting change compared to $2.8 million in the prior year.  The cumulative
effect through the 1992 fiscal year of adopting Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes", which amends the
accounting for income taxes from the deferral method to the liability method,
was to decrease net income by $1.0 million, to $19.0 million for the year ended
July 31, 1993.  Other than the cumulative effect of the adjustment, the effect
of the change on income for the year ended July 31, 1993 was not significant.

       Net income for the year ended July 31, 1993 improved substantially over
the prior year due to improved refinery margins and higher sales volumes.
Increased sales volumes of 23% and revenues of 24% over the prior year were the
result of higher throughputs made possible by the refinery expansion completed
in December 1991 and the alleviation of product pipeline distribution
constraints in October 1992.  Refinery margins and sales volumes for the 1993
fiscal year also may have been favorably affected by a temporary suspension of
production during most of the year by a refinery in the Company's principal
market area.  Additionally contributing to 1993's performance was Montana
Refining Company's second consecutive record year.  Increases in fiscal 1993 in
operating expenses, principally an increase made in the fourth quarter of $2.9
million in the estimate for a planned major maintenance turnaround scheduled
for the fall of 1993, depreciation, depletion and amortization, primarily
attributable to the refinery expansion, and general and administrative expense
reduced profitability.  Net income in the fourth quarter of the 1993 fiscal
year was improved by pre-tax income of $4 million and reduced by a pre-tax
charge of $2 million, both of which are described below.

       The year ended July 31, 1993 included income of $4 million relating to a
settlement of litigation with a common carrier pipeline company.  As part of
the settlement, trigger events were established which would require increases
in the capacity of the pipeline the Company uses to access the Arizona markets.





                                      -16-

<PAGE>   17
       As discussed in detail under Financial Condition below, the $2 million
pre-tax charge relates to an enforcement action brought by the United States
Department of Justice, acting on behalf of the EPA, which alleges that the
Company's subsidiary, Navajo Refining Company, beginning in September 1990 and
continuing until the present, violated and continues to violate the Resource
Conservation and Recovery Act (RCRA) and implementing regulations of the EPA by
treating, storing and disposing of certain hazardous wastes without required
authorization and without compliance with regulatory requirements.  The
complaint seeks a court order directing Navajo to comply with these regulatory
standards and civil penalties for the alleged non-compliance.

       Net income in the fourth quarter of fiscal 1992 was improved by the
elimination, as a consequence of the Company's acquisition of the remaining
interest in Montana Refining Company, of a $2.6 million liability for deferred
taxes that had been reflected on the Company's financial statements.

FINANCIAL CONDITION

       Cash flows from operations during fiscal 1995 were greater than capital
expenditures, debt payments and dividends paid, resulting in a net increase of
cash and cash equivalents of $10.1 million.  Working capital decreased during
fiscal 1995 by $.5 million to $17.7 million at July 31, 1995.  At July 31,
1995, the Company had $25 million of borrowing capacity under the Credit
Agreement which can be used for short-term working capital needs.  The Company
believes that these sources of funds, together with future cash flows from
operations and a new private placement and extension of debt currently being
completed as described below, should provide sufficient resources, financial
strength and flexibility for the Company to satisfy its liquidity needs,
capital requirements, and debt service obligations and to permit the payment of
dividends for the foreseeable future.

       Net cash provided by operating activities amounted to $34.2 million in
fiscal 1995, compared to $27.7 million in fiscal 1994 and $38.7 million in
fiscal 1993.  The primary reason for the differences in cash provided from
operations during the three years ended July 31, 1995 was changes in working
capital accounts.  Significant amounts of funds were required in fiscal 1994 to
maintain working capital levels as compared to both the 1995 and 1993 fiscal
year.

       Cash flows used for investing activities totalled $57.8 million over the
last three years, $15.2 million in 1995, $22.5 million in 1994 and $20.1
million in 1993, all for capital expenditures.  In fiscal 1993 and 1994, most
of the funds expended were for refinery projects including diesel
desulfurization units at the Artesia, New Mexico facility and the Montana
refinery in order to meet the October 1993 requirements for lower sulphur
content in diesel fuel.  The New Mexico unit was completed in August 1993 and
the Montana unit was completed in December 1993.

       The Company has adopted capital budgets totalling $44 million for fiscal
1996.  The major components of this budget are projects at the Company's 60,000
barrel per day Navajo Refinery in Artesia, New Mexico.  The projects entail
both refinery upgrades to improve product yields and a joint venture to ship
liquid petroleum gas (LPGs) to Mexico.





                                      -17-

<PAGE>   18
       The Company believes its presently scheduled capital projects will
improve product yields and enhance refining profitability.  The first of these
projects, a UOP Isomerization unit, will increase the refinery's internal
octane generating capabilities and will result in improved light product
yields.  This unit is expected to be operational during the fourth quarter of
fiscal 1996.  In addition, the Company has determined to make certain
state-of-the-art upgrades to its fluid catalytic cracking unit (FCC), which
will improve FCC high value product yields.  Engineering and equipment
procurement for this project will proceed during fiscal 1996, with completion
and realization of benefits occurring during fiscal 1997.  The total estimated
cost of these two projects is $12.5 million.

       The Company's previously announced joint venture with Amoco and Mapco to
transport LPGs to Mexico is in the final stages of negotiation with Pemex.
Assuming successful completion of negotiations, a new 12" pipeline would be
constructed from the Navajo refinery in Artesia, New Mexico to El Paso, Texas,
thereby allowing Navajo to realize reduced operating expenses at current
throughput rates and position it, to expand capacity and ship greater volumes
to its El Paso-origin markets, if such steps later prove advantageous.  The new
line would replace an 8" pipeline currently used by Navajo which, in turn,
would be transferred to the joint venture.  The Company's total net cash
investment in the project, including a 25% interest in the joint venture, is
estimated to be $22 million.

       The remainder of the approved budget will be for various refinery
improvements, environmental and safety enhancements and approximately $2
million for exploration and production activities.

       Cash flows used for financing activities amounted to $8.9 million in
fiscal 1995, $8.5 million in fiscal 1994 and $13.4 million in fiscal 1993.
Financing activities over the last three years included the renewals of the
Company's Credit Agreement in July 1993 and July 1995 with a group of banks,
which provides for a total facility of $100 million, the full amount of which
may be used to support letters of credit and $25 million of which may be used
for direct borrowings for short-term working capital needs.  The Company had
$10.5 million of borrowings outstanding under its Credit Agreement as of July
31, 1992, the full amount of which was paid off during fiscal 1993.  The
Company made principal payments of $5.6 million on the Senior Notes in June
1994 and 1995.

       In October 1995, the Company negotiated with a group of insurance
companies a new private placement of senior notes in the amount of $39 million
and the extension of $21 million of existing Senior Notes for capital
expenditures and for general corporate purposes.  Closing of this transaction
is expected in November 1995.  The $39 million of new senior notes have a 10
year maturity, with equal annual principal payments of $5.6 million beginning
at the end of the fourth year and will have an interest rate of 7.62%.  The
extension of $21 million of Series B Notes extends the final maturity from June
2001 to December 2005, with the first principal payment due changed from June
1996 to December 1999 and with an interest rate subsequent to the original
maturity date of 7.82%.  Both the new notes and the extension have terms and
conditions similar to the existing Senior Notes.  Maturities of long-term debt
for the next five fiscal years upon closing of this transaction are as follows:
1996 -- $10,775,000; 1997 -- $10,775,000; 1998 -- $10,775,000; 1999 --
$5,175,000 and 2000 -- $13,746,000.





                                      -18-

<PAGE>   19
       See Note 6 to the Consolidated Financial Statements for a summary of the
Senior Notes and Credit Agreement.

       Diamond Shamrock, Inc., an independent refiner and marketer, is building
a 420-mile, ten-inch refined products pipeline from its McKee refinery near
Dumas, Texas to El Paso, the Company's largest market.  Diamond Shamrock has
announced that it expects to complete that pipeline, which will have an initial
capacity of 25,000 BPD, in the fourth quarter of calendar 1995, and that it
intends to use its pipeline to supply fuel to the El Paso, Arizona and northern
Mexico markets.  The Diamond Shamrock pipeline could substantially increase the
supply of products in the Company's principal markets.  In addition, in June
1995, an investor group announced that it is negotiating to purchase an
existing crude oil pipeline running from West Texas to a refinery near Houston
as part of the investor group's plan to reverse the line and extend it for use
in transporting refined products from the Gulf Coast to El Paso.

       At times in the past, the common carrier pipelines used by the Company
to serve the Tucson and Phoenix markets have been operated at or near their
capacity.  In addition, the common carrier pipeline used by the Company to
serve the Albuquerque market currently is operating at or near capacity.  As a
result, the volume of refined products that the Company and other shippers have
been able to deliver to these markets at times has been limited.  In general,
there is no assurance that the Company will not experience future constraints
on its ability to deliver its products through common carrier pipelines or that
any existing constraints will not worsen.  In particular, the flow of
additional product into El Paso for shipment to Arizona, either as a result of
the new Diamond Shamrock pipeline or otherwise, could result in the
reoccurrence of such constraints.

       In July 1993, the United States Department of Justice (DOJ), on behalf
of the United States Environmental Protection Agency (EPA), filed a suit
against the Company's subsidiary, Navajo Refining Company (Navajo) alleging
that, beginning in September 1990 and continuing through the present, Navajo
has violated and continues to violate the Resource Conservation and Recovery
Act (RCRA) and implementing regulations of the EPA by treating, storing and
disposing of certain hazardous wastes without compliance with regulatory
requirements.  The Company believes that the parties are in the final stages of
negotiating a resolution of the litigation.  If settled as anticipated, the
Company would close the existing evaporation ponds of its wastewater management
system at a cost believed to be substantially less than $1 million.  The
settlement also contemplates that the Company would implement one of several
alternatives to the existing wastewater treatment system.  Depending upon which
approach were utilized, the Company could incur total costs of approximately $3
million over the next several years.  The costs to implement an alternative
wastewater treatment system would be capitalized and amortized over the future
useful life of the resulting asset in accordance with generally accepted
accounting principles.  The settlement with the DOJ also is expected to involve
the payment of a civil penalty of less than $2 million.  In fiscal 1993, the
Company recorded a $2 million reserve for the litigation.





                                      -19-

<PAGE>   20

I
TEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


       Index to Consolidated Financial Statements


<TABLE>
<CAPTION>
                                                                                           Page
                                                                                         Reference
                                                                                         ---------
              <S>                                                                          <C>

              Report of Independent Auditors  . . . . . . . . . . . . . . .                 21

              Consolidated Balance Sheet at July 31,
                 1995 and 1994  . . . . . . . . . . . . . . . . . . . . . .                 22

              Consolidated Statement of Income for the
                 years ended July 31, 1995, 1994 and 1993 . . . . . . . . .                 23

              Consolidated Statement of Cash Flows for
                 the years ended July 31,
                 1995, 1994 and 1993  . . . . . . . . . . . . . . . . . . .                 24

              Consolidated Statement of Stockholders' Equity
                 for the years ended July 31, 1995, 1994
                 and 1993 . . . . . . . . . . . . . . . . . . . . . . . . .                 25

              Notes to Consolidated Financial

                 Statements . . . . . . . . . . . . . . . . . . . . . . . .                26-39
</TABLE>






                                     -20-

<PAGE>   21


REPORT OF ERNST & YOUNG LLP,

INDEPENDENT AUDITORS




The Board of Directors
and Stockholders of Holly Corporation

       We have audited the accompanying consolidated balance sheet of Holly
Corporation at July 31, 1995 and 1994, and the related consolidated statements
of income, cash flows and stockholders' equity for each of the three years in
the period ended July 31, 1995.  These financial statements are the
responsibility of the Company's management.  Our responsibility is to express
an opinion on these financial statements based on our audits.

       We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.  An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.  We believe that our audits provide a reasonable basis
for our opinion.

       In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Holly Corporation at July 31, 1995 and 1994, and the consolidated results of
its operations and its cash flows for each of the three years in the period
ended July 31, 1995, in conformity with generally accepted accounting
principles.




                                                          ERNST & YOUNG LLP


Dallas, Texas
September 26, 1995






                                     -21-

<PAGE>   22
                               HOLLY CORPORATION

                           CONSOLIDATED BALANCE SHEET


<TABLE>
<CAPTION>
($ in thousands, except per share amounts)                                                    July 31,    
                                                                                  --------------------------------
                                                                                    1995                    1994
                                                                                  --------                --------
<S>                                                                               <C>                     <C>
ASSETS
Current assets
   Cash and cash equivalents (Note 6) . . . . . . . . . . . . . . .               $ 13,432                $  3,297
   Accounts receivable (Notes 3 and 6)  . . . . . . . . . . . . . .                 85,825                  94,280
   Inventories (Notes 4 and 6)  . . . . . . . . . . . . . . . . . .                 42,181                  43,995
   Income taxes receivable  . . . . . . . . . . . . . . . . . . . .                  1,540                     697
   Prepayments and other  . . . . . . . . . . . . . . . . . . . . .                 10,032                   9,340
                                                                                  --------                --------

      Total current assets  . . . . . . . . . . . . . . . . . . . .                153,010                 151,609

Properties, plants and equipment, net (Note 5)  . . . . . . . . . .                131,185                 128,962

Other assets  . . . . . . . . . . . . . . . . . . . . . . . . . . .                  3,189                   1,243
                                                                                  --------                --------
                                                                                  $287,384                $281,814
                                                                                  ========                ========
LIABILITIES AND STOCKHOLDERS' EQUITY  . . . . . . . . . . . . . . .
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . .
   Accounts payable (Note 3)  . . . . . . . . . . . . . . . . . . .               $106,817                $112,084
   Accrued liabilities (Note 9) . . . . . . . . . . . . . . . . . .                 13,702                  14,945
   Income taxes payable . . . . . . . . . . . . . . . . . . . . . .                    476                     736
   Current maturities of long-term debt (Note 6). . . . . . . . . .                 14,275                   5,608
                                                                                  --------                --------

      Total current liabilities . . . . . . . . . . . . . . . . . .                135,270                 133,373

Deferred income taxes (Note 7)  . . . . . . . . . . . . . . . . . .                 17,506                  14,829

Long-term debt, less current maturities (Note 6). . . . . . . . . .                 54,565                  68,840

Contingencies (Notes 10 and 12)

Stockholders' equity (Notes 6, 8 and 9)
   Preferred stock, $1.00 par value - 1,000,000
     shares authorized; none issued . . . . . . . . . . . . . . . .                      -                       -
   Common stock, $.01 par value - 20,000,000 shares . . . . . . . .
     authorized; 8,650,282 shares issued  . . . . . . . . . . . . .                     87                      87
   Additional capital . . . . . . . . . . . . . . . . . . . . . . .                  6,132                   6,132
   Retained earnings  . . . . . . . . . . . . . . . . . . . . . . .                 74,803                  59,942
                                                                                  --------                --------
                                                                                    81,022                  66,161
   Common stock held in treasury, at cost -
     396,768 shares . . . . . . . . . . . . . . . . . . . . . . . .                   (569)                   (569)
   Deferred charge - amount due from ESOP . . . . . . . . . . . . .                   (410)                   (820)
                                                                                  --------                --------

         Total stockholders' equity . . . . . . . . . . . . . . . .                 80,043                  64,772
                                                                                  --------                --------
                                                                                  $287,384                $281,814
                                                                                  ========                ========
</TABLE>


See accompanying notes.





                                     -22-

<PAGE>   23
                               HOLLY CORPORATION

                        CONSOLIDATED STATEMENT OF INCOME


<TABLE>
<CAPTION>
($ in thousands, except per share amounts)                                                Years ended July 31,   
                                                                               -----------------------------------------
                                                                                  1995            1994            1993
                                                                               ---------       ---------       ---------
<S>                                                                             <C>             <C>             <C>

REVENUES
   Net sales  . . . . . . . . . . . . . . . . . . . . . . . . . .               $613,402        $550,903        $629,884
   Miscellaneous  . . . . . . . . . . . . . . . . . . . . . . . .                  1,428           1,417             737
                                                                               ---------       ---------       ---------
                                                                                 614,830         552,320         630,621
COSTS AND EXPENSES
   Cost of sales  . . . . . . . . . . . . . . . . . . . . . . . .                554,083         480,916         565,638
   General and administrative . . . . . . . . . . . . . . . . . .                 13,716          12,369          11,951
   Depreciation, depletion and amortization . . . . . . . . . . .                 15,796          10,871          11,344
   Exploration expenses, including dry holes  . . . . . . . . . .                  3,608           4,441           2,867
   Miscellaneous  . . . . . . . . . . . . . . . . . . . . . . . .                    148             183             150
                                                                               ---------       ---------       ---------
                                                                                 587,351         508,780         591,950
                                                                               ---------       ---------       ---------
Income from operations  . . . . . . . . . . . . . . . . . . . . .                 27,479          43,540          38,671

OTHER INCOME (EXPENSE)
   Interest income  . . . . . . . . . . . . . . . . . . . . . . .                  1,020             447             169
   Interest expense (Note 6)  . . . . . . . . . . . . . . . . . .                 (8,352)         (8,985)         (9,523)
   Other (Note 11)  . . . . . . . . . . . . . . . . . . . . . . .                      -               -           4,000
                                                                               ---------       ---------       ---------
                                                                                  (7,332)         (8,538)         (5,354)
                                                                               ---------       ---------       ---------
Income before income taxes and cumulative effect
 of accounting change . . . . . . . . . . . . . . . . . . . . . .                 20,147          35,002          33,317

Income tax provision (Notes 2, 7 and 10)
   Current  . . . . . . . . . . . . . . . . . . . . . . . . . . .                  6,042          11,785          12,647
   Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . .                  1,688           2,500             737
                                                                               ---------       ---------       ---------
                                                                                   7,730          14,285          13,384
                                                                               ---------       ---------       ---------
Income before cumulative effect of accounting
   change . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 12,417          20,717          19,933
Cumulative effect of accounting change
   (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . .                  5,703               -            (958)
                                                                               ---------       ---------       ---------

Net income  . . . . . . . . . . . . . . . . . . . . . . . . . . .              $  18,120       $  20,717       $  18,975
                                                                               =========       =========       =========

Income per common share
 Income before cumulative effect of accounting
   change . . . . . . . . . . . . . . . . . . . . . . . . . . . .              $    1.51       $    2.51       $    2.42
 Cumulative effect of accounting change . . . . . . . . . . . . .                    .69               -            (.12)
                                                                               ---------       ---------       ---------

 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . .              $    2.20       $    2.51       $    2.30
                                                                               =========       =========       =========

Cash dividends paid per common share  . . . . . . . . . . . . . .              $     .40       $     .35       $     .30
                                                                               =========       =========       =========

Average number of shares of common
   stock outstanding (in thousands) . . . . . . . . . . . . . . .                  8,254           8,254           8,254
                                                                               =========       =========       =========
</TABLE>


See accompanying notes.





                                     -23-

<PAGE>   24
                               HOLLY CORPORATION

                      CONSOLIDATED STATEMENT OF CASH FLOWS


<TABLE>
<CAPTION>
($ in thousands)                                                                     Years ended July 31,   
                                                                             -----------------------------------
                                                                               1995          1994          1993
                                                                             --------      --------     -------- 
<S>                                                                          <C>           <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . .        $ 18,120      $ 20,717     $ 18,975
   Adjustments to reconcile net income to net cash
     provided by operating activities
       Depreciation, depletion and amortization . . . . . . . . . . .          15,796        10,871       11,344
       Deferred income taxes  . . . . . . . . . . . . . . . . . . . .           1,688         2,500          737
       Dry hole costs and leasehold impairment  . . . . . . . . . . .             903         1,509        1,175
       Cumulative effect of accounting change . . . . . . . . . . . .          (5,703)            -          958
       (Increase) decrease in operating assets
         Accounts receivable  . . . . . . . . . . . . . . . . . . . .           8,455       (17,413)      12,222
         Inventories  . . . . . . . . . . . . . . . . . . . . . . . .           1,814        (6,023)      (2,365)
         Income taxes receivable. . . . . . . . . . . . . . . . . . .            (843)         (697)       2,115
         Prepayments and other  . . . . . . . . . . . . . . . . . . .             829        (2,403)        (197)
       Increase (decrease) in operating liabilities
         Accounts payable . . . . . . . . . . . . . . . . . . . . . .          (5,267)       25,297      (19,964)
         Accrued liabilities  . . . . . . . . . . . . . . . . . . . .           1,298        (1,703)       6,419
         Income taxes payable . . . . . . . . . . . . . . . . . . . .            (218)       (6,572)       7,427
       Other, net . . . . . . . . . . . . . . . . . . . . . . . . . .          (2,631)        1,601         (109)
                                                                             --------      --------     -------- 
         Net cash provided by operating activities  . . . . . . . . .          34,241        27,684       38,737

CASH FLOWS FROM FINANCING ACTIVITIES
   Decrease in notes payable  . . . . . . . . . . . . . . . . . . . .               -             -      (10,500)
   Payment of long-term debt  . . . . . . . . . . . . . . . . . . . .          (5,608)       (5,608)        (108)
   Issuance costs of debt . . . . . . . . . . . . . . . . . . . . . .               -             -         (291)
   Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . .          (3,301)       (2,889)      (2,476)
                                                                             --------      --------     -------- 
         Net cash used for financing activities . . . . . . . . . . .          (8,909)       (8,497)     (13,375)

CASH FLOWS FROM INVESTING ACTIVITIES
   Additions to properties, plants and equipment  . . . . . . . . . .         (15,197)      (22,521)     (20,120)
                                                                             --------      --------     -------- 

         Net cash used for investing activities . . . . . . . . . . .         (15,197)      (22,521)     (20,120)
                                                                             --------      --------     -------- 

CASH AND CASH EQUIVALENTS
   Increase (decrease) for the year . . . . . . . . . . . . . . . . .          10,135        (3,334)       5,242
   Beginning of year  . . . . . . . . . . . . . . . . . . . . . . . .           3,297         6,631        1,389
                                                                             --------      --------     -------- 
   End of year  . . . . . . . . . . . . . . . . . . . . . . . . . . .        $ 13,432      $  3,297     $  6,631
                                                                             ========      ========     ========
</TABLE>



See accompanying notes.





                                     -24-

<PAGE>   25
                               HOLLY CORPORATION

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

($ in thousands)


<TABLE>
<CAPTION>
                                                                                                      Amount      Total
                                                                                                       due        stock-
                                                        Common   Additional   Retained    Treasury     from      holders'
                                                         stock    capital     earnings     stock       ESOP       equity
                                                        ------    ------      -------     -------    -------     -------
<S>                                                     <C>       <C>         <C>         <C>        <C>         <C>
BALANCE AT JULY 31, 1992  . . . . . . . . . . .         $   87    $6,132      $25,496     $  (569)   $(1,641)    $29,505

Net income  . . . . . . . . . . . . . . . . . .              -         -       18,975           -          -      18,975
Dividends paid  . . . . . . . . . . . . . . . .              -         -       (2,476)          -          -      (2,476)
Reduction in amount due from ESOP . . . . . . .              -         -            -           -        411         411
Tax benefit of dividends paid to ESOP
  on unallocated shares . . . . . . . . . . . .              -         -           63           -          -          63
                                                        ------    ------      -------     -------    -------     -------

BALANCE AT JULY 31, 1993  . . . . . . . . . . .             87     6,132       42,058        (569)    (1,230)     46,478

Net income  . . . . . . . . . . . . . . . . . .              -         -       20,717           -          -      20,717
Dividends paid  . . . . . . . . . . . . . . . .              -         -       (2,889)          -          -      (2,889)
Reduction in amount due from ESOP . . . . . . .              -         -            -           -        410         410
Tax benefit of dividends paid to ESOP
  on unallocated shares . . . . . . . . . . . .              -         -           56           -          -          56
                                                        ------    ------      -------     -------    -------     -------

BALANCE AT JULY 31, 1994  . . . . . . . . . . .             87     6,132       59,942        (569)      (820)     64,772

Net income  . . . . . . . . . . . . . . . . . .              -         -       18,120           -          -      18,120
Dividends paid  . . . . . . . . . . . . . . . .              -         -       (3,301)          -          -      (3,301)
Reduction in amount due from ESOP . . . . . . .              -         -            -           -        410         410
Tax benefit of dividends paid to ESOP
   on unallocated shares  . . . . . . . . . . .              -         -           42           -          -          42
                                                        ------    ------      -------     -------    -------     -------

BALANCE AT JULY 31, 1995  . . . . . . . . . . .         $   87    $6,132      $74,803      $ (569)   $  (410)    $80,043
                                                        ======    ======      =======      ======    =======     =======
</TABLE>





See accompanying notes.





                                     -25-

<PAGE>   26
                               HOLLY CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          July 31, 1995, 1994 and 1993


1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

       The Company is principally engaged in the refining of petroleum
products.  Although the Company is also engaged in certain exploration and
production activities, such activities do not represent a significant segment
of the Company's assets or operations.

       The consolidated financial statements include the accounts of the
Company, its subsidiaries and Montana Refining Company, a Partnership (MRC).

CASH EQUIVALENTS

       For purposes of the statement of cash flows, the Company considers all
highly liquid investments with a maturity of three months or less at the time
of purchase to be cash equivalents.

INVENTORIES

       Inventories are stated at the lower of cost, using the last-in,
first-out (LIFO) method for crude oil and refined products and the average cost
method for materials and supplies, or market.

REVENUE RECOGNITION

       Sales and related cost of sales are recognized when products are shipped
to customers and title passes.  Sales are reported exclusive of excise taxes.

DEPRECIATION

        Depreciation is provided by the straight-line method over the estimated
useful lives of the assets, primarily 10 to 30 years for refining and pipeline
facilities and 3 to 10 years for corporate and other assets.





                                    -26-

<PAGE>   27
                               HOLLY CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          July 31, 1995, 1994 and 1993


OIL AND GAS EXPLORATION AND DEVELOPMENT

       The Company accounts for the acquisition, exploration, development and
production costs of its oil and gas activities using the successful efforts
method of accounting.  Lease acquisition costs are capitalized; undeveloped
leases are written down when determined to be impaired and written off upon
expiration or surrender.  Geological and geophysical costs and delay rentals
are expensed as incurred.  Exploratory well costs are initially capitalized,
but if the effort is unsuccessful, the costs are charged against earnings.
Development costs, whether or not successful, are capitalized.  Productive
properties are stated at the lower of amortized cost or estimated realizable
value of underlying proved oil and gas reserves.  Depreciation, depletion and
amortization of such properties is computed by the unit-of-production method.
At July 31, 1995, the Company had not discovered a material amount of proven
reserves.

EARNINGS PER SHARE

       Earnings per share amounts are based upon the weighted average number of
common shares outstanding during each period.

FUTURES CONTRACTS

       The Company enters into commodity futures contracts to hedge a portion
of the price risk associated with crude oil and refined products.  Gains or
losses on contracts are recognized when the related inventory is sold or the
hedged transaction is consummated.

2.     ACCOUNTING CHANGE

       Effective August 1, 1992, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes", which
amends the accounting for income taxes from the deferral method to the
liability method.  Under the liability method, deferred taxes are stated at the
income tax rates currently in effect or scheduled to be implemented rather than
at the tax rate in effect when the taxes were provided.  The cumulative effect
of this accounting change through the 1992 fiscal year was a $958,000 increase
in the Company's deferred tax liability at August 1, 1992.  This additional
income tax expense was reflected as a reduction of $958,000 in net income in
the first quarter of the 1993 fiscal year or $.12 per share.  Excluding the
provision for the cumulative effect upon adoption of the new standard, the
effect of the change on net income was not material.





                                    -27-

<PAGE>   28
                               HOLLY CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          July 31, 1995, 1994 and 1993


       Effective August 1, 1994, the Company changed its method of accounting
for turnaround costs.  Turnarounds consist of preventive maintenance on major
processing units as well as the shutdown and restart of all units, and
generally are scheduled at two to three year intervals.  Previously, the
Company estimated the costs of the next scheduled turnaround and ratably
accrued the related expenses prior to the actual turnaround.  To provide for a
better matching of turnaround costs with revenues, the Company changed its
accounting method for turnaround costs to one that results in the amortization
of costs incurred over the period until the next scheduled turnaround.  The
cumulative effect of this accounting change through the 1994 fiscal year was an
increase in net income in the first quarter of the 1995 fiscal year of
$5,703,000 (net of deferred taxes of $3,865,000), or $.69 per common share.
Excluding the cumulative effect, the change increased net income for fiscal
1995 by $886,000 or $.11 per common share.  If the accounting change for
turnaround costs had been retroactively applied, pro forma net income and net
income per common share would have been as follows:


<TABLE>
<CAPTION>
($ in thousands, except per share amounts)                       1994                1993
                                                               --------             ------
<S>                                                            <C>                  <C>

As reported
   Net income . . . . . . . . . . . . . .                      $ 20,717             $ 18,975
   Net income per share . . . . . . . . .                      $   2.51             $   2.30
Pro forma amounts
   Net income . . . . . . . . . . . . . .                      $ 21,983             $ 21,085
   Net income per share . . . . . . . . .                      $   2.66             $   2.55
</TABLE>




3.     ACCOUNTS RECEIVABLE


<TABLE>
<CAPTION>
($ in thousands)                                                 1995                 1994
                                                               --------             --------
<S>                                                            <C>                  <C>

Product . . . . . . . . . . . . . . . . .                      $ 37,733             $ 45,259
Crude oil resales . . . . . . . . . . . .                        48,092               49,021
                                                               --------             --------
                                                               $ 85,825             $ 94,280
                                                               ========             ========
</TABLE>


       Crude oil resales accounts receivable principally represent the sell
side of reciprocal crude oil buy/sell exchange arrangements involved in
supplying crude oil to the refineries, with an approximate like amount
reflected in accounts payable.  The net differential of these crude oil
buy/sell exchanges is reflected in cost of sales.  The exchange differentials
result principally from crude oil type and location differences.

       Credit losses are provided for in the financial statements and
consistently have been minimal.





                                    -28-

<PAGE>   29
                               HOLLY CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          July 31, 1995, 1994 and 1993


4.     INVENTORIES


<TABLE>
<CAPTION>
($ in thousands)                                              1995             1994
                                                            --------         --------
<S>                                                         <C>              <C>
Crude oil and refined products  . . . . . .                 $ 35,649         $ 37,949
Materials and supplies  . . . . . . . . . .                    6,532            6,046
                                                            --------         --------
                                                            $ 42,181         $ 43,995
                                                            ========         ========
</TABLE>


       The excess of current cost over the LIFO value of inventory was
$7,840,000 and  $12,228,000 at July 31, 1995 and 1994, respectively.

5.     PROPERTIES, PLANTS AND EQUIPMENT


<TABLE>
<CAPTION>
($ in thousands)                                               1995              1994
                                                             --------          --------
<S>                                                           <C>               <C>

Properties, plants and equipment, at cost
   Refining and pipeline facilities . . . . . . . .           $234,528          $224,540
   Oil and gas exploration
     and development  . . . . . . . . . . . . . . .             14,222            10,607
   Corporate and other  . . . . . . . . . . . . . .              1,064             1,038
                                                              --------          --------

                                                               249,814           236,185
Accumulated depreciation, depletion and . . . . . .
   amortization . . . . . . . . . . . . . . . . . .            118,629           107,223
                                                              --------          --------

                                                              $131,185          $128,962
                                                              ========          ========
</TABLE>



       Refining and pipeline facilities at July 31, 1995 and 1994 include
$1,578,000 and $4,452,000, respectively, of construction in progress which was
not being depreciated at those dates, pending completion of the construction
projects.

6.     DEBT


<TABLE>
<CAPTION>
($ in thousands)                                               1995           1994
                                                             --------       --------
<S>                                                          <C>            <C>
Senior Notes  . . . . . . . . . . . . . . . . . .            $ 68,800       $ 74,400
Other . . . . . . . . . . . . . . . . . . . . . .                  40             48
                                                               ------         ------
                                                               68,840         74,448
Less current maturities of long-
   term debt  . . . . . . . . . . . . . . . . . .              14,275          5,608
                                                             --------         ------
                                                             $ 54,565       $ 68,840
                                                             ========       ========

</TABLE>





                                    -29-

<PAGE>   30
                               HOLLY CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          July 31, 1995, 1994 and 1993



SENIOR NOTES

       In June 1991, the Company sold $80 million of Senior Notes to a group of
insurance companies.  The Senior Notes were issued in two Series and are
unsecured.  The Series A Notes are in the principal amount of $28 million, have
a 7- year life, require equal annual principal payments of $5,600,000 beginning
June 15, 1994 and bear interest at 9.72%.  The Series B Notes are in the
principal amount of $52 million, have a 10-year life, require equal annual
principal payments of $8,667,000 beginning June 15, 1996 and bear interest at
10.16%.  The note agreement imposes certain restrictive covenants, including
limitations on liens, additional indebtedness, sale of assets, investments,
business combinations and dividends, which collectively are less restrictive
than the terms of the bank Credit Agreement.

CREDIT AGREEMENT

       In June 1995, the Company and certain of its subsidiaries amended its
current bank Credit Agreement (Credit Agreement) extending the term for two
additional years.  The Credit Agreement provides a $100 million facility for
letters of credit, or for direct borrowings of up to $25 million, with such
borrowings being subject to an annual 20-day cleanup period.  Interest on
borrowings is based upon, at the Company's option, (i) the agent bank's prime
rate plus 1/2% per annum; (ii) various Eurodollar related rates; and (iii)
various certificate of deposit related rates.  A fee of 1% per annum is payable
quarterly on the outstanding balance of all letters of credit, and a commitment
fee of 3/8 of 1% per annum is payable on the unused portion of the facility.
The borrowing base for the facility consists of cash, cash equivalents,
accounts receivable and inventory, all of which secure the facility.  The
Credit Agreement imposes certain restrictions, including:  (i) a prohibition of
other indebtedness in excess of $3 million with exceptions for, among other
things, indebtedness under the Company's Senior Notes and certain nonrecourse
debt; (ii) maintenance of certain levels of net worth, working capital and
interest coverage; (iii) limitations on investments and dividends; and (iv) a
prohibition of incursions on controlling ownership, material changes in senior
management and business combinations with unaffiliated entities.

       At July 31, 1995, the Company had outstanding letters of credit
totalling $24,776,000 and no borrowings.  The unused commitment under the
Credit Agreement at July 31, 1995 was $75,224,000, of which up to $25,000,000
may be used for additional direct borrowings.

       The average and maximum amounts outstanding and the effective average
interest rate for borrowings under the Company's current and prior credit
agreements were as follows:


<TABLE>
<CAPTION>
($ in thousands)                                     1995        1994            1993
                                                     ----        ----            ----
<S>                                                 <C>         <C>             <C>
Average amount outstanding  . . . . . . . .         $   -       $    39         $ 3,565
Maximum balance . . . . . . . . . . . . . .         $   -       $ 1,900         $22,330
Effective average interest rate . . . . . .             -          6.6%            6.6%
</TABLE>






                                    -30-

<PAGE>   31
                               HOLLY CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          July 31, 1995, 1994 and 1993



      The Senior Notes and Credit Agreement restrict investments and
distributions, including dividends, to an amount in the aggregate not to exceed
75% of cumulative consolidated net income (as defined).  Under the most
restrictive of these covenants, at July 31, 1995 approximately $26.6 million
was available for the payment of dividends.

      Maturities of long-term debt for the next five fiscal years are as
follows:  1996 -- $14,275,000; 1997 -- $14,275,000; 1998 -- $14,275,000; 1999
- -- $8,675,000 and 2000 -- $8,675,000.

      The Company made interest payments of $8,183,000 in 1995, $8,744,000 in
1994 and $9,058,000 in 1993.

      Based on the borrowing rates that the Company believes would be available
for replacement loans with similar terms and maturities of the debt of the
Company now outstanding, the fair value of long-term debt including current
maturities would be $73.2 million at July 31, 1995.

7.    INCOME TAXES

      Effective August 1, 1992, the Company adopted SFAS No. 109 to account for
income taxes (see Note 2).

      The statutory federal income tax rate applied to pre-tax book income
reconciles to income tax expense as follows:


<TABLE>
<CAPTION>
($ in thousands)                                     1995           1994          1993
                                                     ----           ----          ----
<S>                                                 <C>            <C>           <C>

Tax computed at
  statutory rate  . . . . . . . . . .               $ 7,051        $12,251         $11,521(1)
State income taxes, net of federal
  tax benefit . . . . . . . . . . . .                   982          1,888           1,744
Other . . . . . . . . . . . . . . . .                  (303)           146             119
                                                    -------        -------         -------

                                                    $ 7,730        $14,285         $13,384
                                                    ========       =======         =======
</TABLE>


(1)  Blended rate, as federal income tax rate changed effective January 1,
     1993.





                                    -31-

<PAGE>   32
                               HOLLY CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          July 31, 1995, 1994 and 1993


     Operations of the corporation that was the sole limited partner of MRC
prior to the acquisition of such corporation by the Company (see Note 10)
resulted in unused net operating loss carryforwards of approximately
$7,000,000, which are expected to be available to the Company to a limited
extent each year through 2006 based on the income of such corporation.  As of
July 31, 1995, approximately $6,000,000 of these net operating loss
carryforwards remain available to offset future income.  For financial
reporting purposes, any benefit of these net operating loss carryforwards is
being offset against any contingent future payments relating to the acquisition
of such corporation.

     Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amount used for income tax purposes.  The Company's deferred
income tax assets and liabilities as of July 31, 1995 and 1994 are as follows:


<TABLE>
<CAPTION>
     ($ in thousands)
                                                                          1995
                                                                          ----
                                                     Assets            Liabilities            Total
                                                     ------            -----------           ------
     <S>                                             <C>               <C>                  <C>
     Deferred taxes
       Accrued employee benefits  . . . . . . .      $1,336            $   -                $  1,336
       Deferred turnaround costs  . . . . . . .           -               (1,532)             (1,532)
       Prepayments and other  . . . . . . . . .       1,425               (1,783)               (358)
                                                     ------             --------            --------
     Total current  . . . . . . . . . . . . . .       2,761               (3,315)               (554)

       Properties, plants and equipment
        (primarily tax in excess of
        book depreciation)  . . . . . . . . . .           -              (17,923)            (17,923)
       Intangible drilling costs  . . . . . . .           -               (1,020)             (1,020)
       Nondeductible oil and gas costs  . . . .       2,233                    -               2,233
       Deferred turnaround costs  . . . . . . .           -                 (887)               (887)
       Other  . . . . . . . . . . . . . . . . .         150                  (59)                 91
                                                     ------             --------            --------
     Total noncurrent   . . . . . . . . . . . .       2,383              (19,889)            (17,506)
                                                     ------             --------            --------
                                                      5,144              (23,204)            (18,060)

     Valuation allowance  . . . . . . . . . . .           -                    -                   -
                                                     ------             --------            --------
     Total  . . . . . . . . . . . . . . . . . .      $5,144             $(23,204)           $(18,060)
                                                     ======             ========            ======== 



</TABLE>



                                    -32-

<PAGE>   33
                               HOLLY CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          July 31, 1995, 1994 and 1993



<TABLE>
<CAPTION>
     ($ in thousands)
                                                                          1994
                                                                          ----
                                                     Assets            Liabilities            Total
                                                     ------            -----------           ------
     <S>                                             <C>               <C>                  <C>
     Deferred taxes
       Accrued employee benefits  . . . . . . .      $1,376            $       -            $  1,376
       Provision for future maintenance   . . .       1,353                    -               1,353
       Prepayments and other  . . . . . . . . .       1,339               (1,747)               (408)
                                                     ------            ---------            -------- 
     Total current  . . . . . . . . . . . . . .       4,068               (1,747)              2,321

       Properties, plants and equipment
        (primarily tax in excess of
        book depreciation)  . . . . . . . . . .           -              (16,038)            (16,038)
       Intangible drilling costs  . . . . . . .           -                 (704)               (704)
       Nondeductible oil and gas costs  . . . .       1,813                    -               1,813
       Other  . . . . . . . . . . . . . . . . .         152                  (52)                100
                                                     ------            ---------            -------- 
     Total noncurrent   . . . . . . . . . . . .       1,965              (16,794)            (14,829)
                                                     ------            ---------            -------- 
                                                      6,033              (18,541)            (12,508)

     Valuation allowance  . . . . . . . . . . .           -                    -                   -
                                                     ------            ---------            -------- 
     Total  . . . . . . . . . . . . . . . . . .      $6,033            $ (18,541)           $(12,508)
                                                     ======            =========            ======== 
</TABLE>


       The Company made income tax payments of $7,144,000 in 1995, $18,893,000
in 1994 and $5,138,000 in 1993.

       The Company's federal income tax returns have been examined by the
Internal Revenue Service through 1990.

8.     STOCKHOLDERS' EQUITY

       At July 31, 1995 and 1994, no stock options were outstanding and 751,500
shares of common stock were reserved for issuance under the Company's stock
option plan.

9.     EMPLOYEE BENEFIT PLANS

PENSION PLANS

       The Company has a non-contributory defined benefit retirement plan that
covers substantially all employees.  The Company's policy is to make
contributions annually of not less than the minimum funding requirements of the
Employee Retirement Income Security Act of 1974.  Benefits are based on the
employee's years of service and compensation.





                                    -33-

<PAGE>   34
                               HOLLY CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          July 31, 1995, 1994 and 1993


       Pension expense includes the following components:


<TABLE>
<CAPTION>
($ in thousands)                                     1995             1994              1993
                                                     ----             -----             ----
<S>                                                  <C>             <C>               <C>
Service cost - benefits earned
  during the year . . . . . . . . . . . .            $1,131          $ 1,014           $1,124
Interest cost on projected benefit
  obligations . . . . . . . . . . . . . .             1,830            1,603            1,711
Actual return on plan assets  . . . . . .            (3,421)            (841)          (1,802)
Net amortization and deferral . . . . . .             1,296           (1,252)            (379)
                                                     ------           ------           ------ 
Pension expense . . . . . . . . . . . . .            $  836           $  524           $  654
                                                     ======           ======           ======
</TABLE>


       The following table sets forth the funded status of the plan and amounts
recognized in the consolidated balance sheet:


<TABLE>
<CAPTION>
       ($ in thousands)                                    1995               1994
                                                           ----               ----
       <S>                                                <C>                <C>
       Plan assets at fair value  . . . . . .             $ 25,985           $ 23,256
       Actuarial present value of projected
         benefit obligations
          Accumulated benefit obligations
           Vested   . . . . . . . . . . . . .               19,717             17,733
           Unvested   . . . . . . . . . . . .                  259                222
          Provision for future salary
          increases   . . . . . . . . . . . .                7,189              6,171
                                                          --------           --------

       Projected benefit obligations  . . . .               27,165             24,126
                                                          --------           --------

       Plan assets less than projected
         benefit obligations  . . . . . . . .               (1,180)              (870)
       Unrecognized net (gain) loss   . . . .                 (197)               248
       Unrecognized prior service
           cost   . . . . . . . . . . . . . .                   72                108
       Unrecognized transition net
           asset  . . . . . . . . . . . . . .               (1,222)            (1,435)
                                                          --------           --------

       Accrued pension liability
         recognized in the consolidated
         balance sheet  . . . . . . . . . . .             $ (2,527)          $ (1,949)
                                                          ========           ======== 
</TABLE>






                                    -34-

<PAGE>   35
                               HOLLY CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          July 31, 1995, 1994 and 1993

       The principal actuarial assumptions were:


<TABLE>
<CAPTION>
                                                          1995        1994       1993
                                                          ----        ----       ----
         <S>                                               <C>        <C>        <C>
         Discount rate  . . . . . . . . . . .              7.5%       7.5%       7.5%
         Rate of future compensation
           increases  . . . . . . . . . . . .                5%         5%         5%
         Expected long-term rate of return
           on assets  . . . . . . . . . . . .              8.5%       8.5%       8.5%
</TABLE>


       Pension costs are determined using the assumptions as of the beginning
of the year.  The funded status is determined using the assumptions as of the
end of the year.

       Approximately 57% of plan assets is invested in equity securities and
43% is invested in fixed income securities and other instruments at July 31,
1995.

       The Company has adopted a retirement restoration plan that provides for
additional payments from the Company so that total retirement plan benefits for
executives will be maintained at the levels provided in the Retirement Plan
before the application of Internal Revenue Code limitations.  During 1995, the
Company accrued $237,000 in connection with this plan.

EMPLOYEE STOCK OWNERSHIP PLAN

       In December 1985, the Company established an Employee Stock Ownership
Plan (ESOP).  The ESOP is non-contributory and includes substantially all
employees of the Company and its subsidiaries who meet certain length of
service requirements and are not covered by a collective bargaining agreement.

       In 1985, the ESOP borrowed from the Company the $4,102,000 needed to
purchase 1,500,000 shares of the Company's common stock.  The loan is repayable
in ten annual installments of $410,000 (subject to certain adjustments)
commencing August 1, 1986 and bears interest at 12% per annum.  The Company is
obligated to make annual contributions sufficient to enable the ESOP to repay
the loan with interest.  The unearned compensation of $4,102,000 was recorded
as a reduction of stockholders' equity and is being reduced as payments are
made.  Interest income earned on the note due from the ESOP is offset against
an equal amount contributed to the ESOP by the Company.





                                    -35-

<PAGE>   36
                               HOLLY CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          July 31, 1995, 1994 and 1993


10.    MONTANA REFINING COMPANY, A PARTNERSHIP

       The Company acquired on July 31, 1992, the corporation that was the
limited partner in MRC in connection with a settlement of litigation.  The
acquisition involved among other items contingent future payments of up to
$189,000 per year over the period 1993 through 2005.

11.    OTHER INCOME

       The 1993 fiscal year included income of $4,000,000 relating to a
settlement with a common carrier pipeline concerning product pipeline
distribution constraints.

12.    CONTINGENCIES

       In July 1993, the United States Department of Justice (DOJ), on behalf
of the United States Environmental Protection Agency (EPA), filed a suit
against the Company's subsidiary, Navajo Refining Company (Navajo) alleging
that, beginning in September 1990 and continuing through the present, Navajo
has violated and continues to violate the Resource Conservation and Recovery
Act (RCRA) and implementing regulations of the EPA by treating, storing and
disposing of certain hazardous wastes without compliance with regulatory
requirements.  The Company believes that the parties are in the final stage of
negotiating a resolution of the litigation.  If settled as anticipated, the
Company would close the existing evaporation ponds of its wastewater management
system at a cost believed to be substantially less than $1 million.  The
settlement also contemplates that the Company would implement one of several
alternatives to the existing wastewater treatment system.  Depending upon which
approach is utilized, the Company could incur total costs of approximately $3
million over the next several years.  The costs to implement an alternative
wastewater treatment system would be capitalized and amortized over the future
useful life of the resulting asset in accordance with generally accepted
accounting principles.  The settlement with the DOJ also is expected to involve
the payment of civil penalty of less than $2 million.  In fiscal 1993, the
Company recorded a $2 million reserve for the litigation.

       The Company is a party to various other litigation and proceedings which
it believes, based on advice of counsel, will not have a materially adverse
impact on its financial condition or operations.





                                    -36-

<PAGE>   37
                               HOLLY CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          July 31, 1995, 1994 and 1993


13.    SIGNIFICANT CUSTOMERS

       Virtually all revenues were domestic revenues (including domestic sales
for export to Mexico).  Approximately $74,000,000 (12%) of the Company's
revenues for fiscal 1995, $67,000,000 (12%) of revenues for fiscal 1994 and
$65,000,000 (10%) for fiscal 1993 were from the sale of military jet fuel to
the United States Government.  Approximately $41,000,000 (7%) of the Company's
revenues for fiscal 1995 and $58,000,000 (11%) of revenues for fiscal 1994 were
from the sale of gasoline to an affiliate of PEMEX (the government-owned energy
company of Mexico).  In addition to the United States Government and PEMEX,
another refiner, which is a purchaser of gasoline and diesel for resale to
retail customers, accounted for approximately $75,000,000 (12%) of the
Company's revenues in fiscal 1993.  While a loss of, or reduction in amounts
purchased by, major purchasers that resell to retail customers could have an
adverse effect on the Company, the Company believes that the impact of such a
loss on the Company's results of operations should be limited because the
Company's sales volume with respect to products whose end-users are retail
customers is more dependent on the general retail demand in the Company's
primary markets than on sales to any specific customer.






                                    -37-

<PAGE>   38
                               HOLLY CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                          July 31, 1995, 1994 and 1993


14.    QUARTERLY INFORMATION (UNAUDITED)


<TABLE>
<CAPTION>
                                                    First        Second         Third        Fourth
Financial Data                                     Quarter       Quarter       Quarter       Quarter          Year
                                                   -------       -------       -------       -------        --------
                                                            ($ in thousands, except per share amounts)
<S>                                               <C>            <C>          <C>            <C>           <C>

1995
   Revenues . . . . . . . . . . . . . . .         $ 160,724      $146,962     $ 147,047      $160,097      $ 614,830
   Operating margin (net sales less                                             
       cost of sales) . . . . . . . . . .         $  21,353      $ 10,860     $   9,251      $ 17,855      $  59,319
   Income (loss) before income taxes and                                        
      cumulative effect of accounting                                           
      change  . . . . . . . . . . . . . .         $  12,166      $  1,649     $    (931)     $  7,263      $  20,147
   Income (loss) before cumulative effect                                       
      of accounting change  . . . . . . .         $   7,252      $    983     $    (376)     $  4,558      $  12,417
   Cumulative effect of accounting                  
      change  . . . . . . . . . . . . . .             5,703            -              -             -          5,703
                                                  ---------      --------     ---------      --------      ---------

   Net income (loss)  . . . . . . . . . .         $  12,955      $    983      $   (376)     $  4,558      $  18,120
                                                  =========      ========     =========      ========      =========

   Income per common share
      Income (loss) before cumulative
        effect of accounting change . . .         $     .88      $    .12      $   (.05)     $    .56      $    1.51
      Cumulative effect of
        accounting change . . . . . . . .               .69             -             -             -            .69
                                                  ---------      --------     ---------      --------      ---------

      Net income (loss) . . . . . . . . .         $    1.57      $    .12      $   (.05)     $    .56      $    2.20
                                                  =========      ========     =========      ========      =========


   Dividends per common share . . . . . .         $     .10      $    .10      $    .10      $    .10      $     .40
   Average number of shares of
      common stock outstanding
      (in thousands)  . . . . . . . . . .             8,254         8,254         8,254         8,254          8,254




</TABLE>


                                     -38-

<PAGE>   39
                               HOLLY CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                          July 31, 1995, 1994 and 1993






<TABLE>
<CAPTION>
                                                    First        Second         Third        Fourth
Financial Data                                     Quarter       Quarter       Quarter       Quarter          Year
                                                   -------       -------       -------       -------        --------
(continued)                                                  ($ in thousands, except per share amounts)
<S>                                              <C>            <C>             <C>            <C>             <C>
1994
   Revenues . . . . . . . . . . . . . . .        $135,518       $120,689        $143,934       $152,179        $552,320
   Operating margin (net sales less
      cost of sales)  . . . . . . . . . .        $ 22,570       $ 15,790        $ 23,420       $  8,207        $ 69,987
   Income (loss) before
      income taxes  . . . . . . . . . . .        $ 13,835       $  7,134        $ 14,635       $   (602)       $ 35,002
   Net income (loss)  . . . . . . . . . .        $  8,273       $  4,266        $  8,730       $   (552)       $ 20,717
   Income (loss) per
      common share  . . . . . . . . . . .        $   1.00       $    .52        $   1.06       $   (.07)       $   2.51
   Dividends per common share . . . . . .        $   .075       $   .075        $    .10       $    .10        $    .35
   Average number of shares of
      common stock outstanding
      (in thousands)  . . . . . . . . . .           8,254          8,254           8,254          8,254           8,254


</TABLE>




<TABLE>
<CAPTION>
                                                    First        Second         Third        Fourth
Operating Data                                     Quarter       Quarter       Quarter       Quarter          Year
                                                   -------       -------       -------       -------        --------
                                                                           (barrels-per-day)
<S>                                                <C>            <C>             <C>            <C>             <C>
1995
   Sales of
     refined products . . . . . . . . . .          71,200         67,900          69,500         70,700          69,800
   Refinery production  . . . . . . . . .          67,000         68,200          68,600         68,400          68,100

1994
   Sales of
     refined products . . . . . . . . . .          58,500         62,300          73,100         69,600          65,800
   Refinery production  . . . . . . . . .          54,100         66,000          69,900         67,500          64,300


</TABLE>




                                    -39-

<PAGE>   40

I
TEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
         ON ACCOUNTING AND FINANCIAL DISCLOSURE   

       None.



                                    PART III



ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

       The required information regarding the directors of the Company is
incorporated herein by this reference to information set forth under the
caption "Election of Directors" in the Company's Proxy Statement for its Annual
Meeting of Stockholders to be held in December 1995 which will be filed within
120 days of July 31, 1995 (the "Proxy Statement").

       The required information regarding the executive officers of the Company
is included herein in Part I, Item 4.

       Required information regarding compliance with Section 16(a) of the
Securities Exchange Act of 1934 is incorporated herein by this reference to
information set forth under the caption "Compliance with Section 16(a) of the
Securities Exchange Act of 1934" in the Proxy Statement.


ITEM 11.  EXECUTIVE COMPENSATION

       Information regarding executive compensation is incorporated herein by
this reference to information set forth under the captions "Executive
Compensation and Other Information" and "Compensation Committee Report on
Executive Compensation" in the Proxy Statement.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

       Information regarding security ownership of certain beneficial owners
and management is incorporated herein by this reference to information set
forth under the captions "Principal Stockholders" and "Election of Directors"
in the Proxy Statement.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

       Information regarding certain relationships and related transactions is
incorporated herein by this reference to information set forth under the
caption "Election of Directors" in the Proxy Statement.





                                    -40-

<PAGE>   41

                                    PART IV


ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES
          AND REPORTS ON FORM 8-K          

  (a)  Documents filed as part of this report

         (1)    Index to Consolidated Financial Statements

<TABLE>
<CAPTION>
                                                                                        Page in
                                                                                        Form 10-K
                                                                                        ---------
              <S>                                                                          <C>

              Report of Independent Auditors  . . . . . . . . . . .                          21
              Consolidated Balance Sheet at
                 July 31, 1995 and 1994 . . . . . . . . . . . . . .                          22
              Consolidated Statement of Income for
                the years ended July 31, 1995,
                1994, and 1993  . . . . . . . . . . . . . . . . . .                          23
              Consolidated Statement of Cash Flows
                 for the years ended July 31, 1995,
                 1994, and 1993 . . . . . . . . . . . . . . . . . .                          24
              Consolidated Statement of Stockholders'
                 Equity for the years ended July 31,
                 1995, 1994 and 1993  . . . . . . . . . . . . . . .                          25
              Notes to Consolidated Financial
                 Statements . . . . . . . . . . . . . . . . . . . .                        26-39
</TABLE>



       (2) Index to Consolidated Financial Statement Schedules

       All schedules are omitted since the required information is not present
       or is not present in amounts sufficient to require submission of the
       schedule, or because the information required is included in the
       consolidated financial statements or notes thereto.

         (3) Exhibits

              See Index to Exhibits on pages 44 to 48.


   (b)  Reports on Form 8-K

              No reports on Form 8-K were filed during the Company's fourth
              quarter that ended July 31, 1995.





                                    -41-

<PAGE>   42

                                   SIGNATURES


       Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.


                                               HOLLY CORPORATION
                                               (Registrant)



                                               /s/ Lamar Norsworthy 
                                               ---------------------
                                               Lamar Norsworthy
                                               Chairman of the Board,
                                               President and Chief
                                               Executive Officer


Date:  October 26, 1995


       Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.



<TABLE>
<CAPTION>
     Signature                                   Capacity                                    Date
     ---------                                   --------                                    ----
<S>                                        <C>                                           <C>

/s/ Lamar Norsworthy                       Chairman of Board of Directors,               October 26, 1995
- ---------------------------                President and Chief Executive                                        
Lamar Norsworthy                           Officer of the Company       
                                                                        
/s/ Jack P. Reid                           Executive Vice President,                     October 26, 1995
- ---------------------------                Refining and Director                                                
Jack P. Reid                                                    

/s/ Matthew P. Clifton                     Senior Vice President                         October 26, 1995
- ---------------------------                and Director                                                         
Matthew P. Clifton                                     

/s/ Henry A. Teichholz                     Vice President, Treasurer and                 October 26, 1995
- ---------------------------                Controller (Principal Financial                                      
Henry A. Teichholz                         and Accounting Officer)        
                                                                          
</TABLE>





                                    -42-

<PAGE>   43

<TABLE>
<CAPTION>
     Signature                                   Capacity                                    Date
     ---------                                   --------                                    ----
<S>                                        <C>                                           <C>

/s/ W. John Glancy                         Director                                      October 26, 1995
- ---------------------------                                                                                     
W. John Glancy

/s/ Marcus R. Hickerson                    Director                                      October 26, 1995
- ---------------------------                                                                                     
Marcus R. Hickerson

/s/ A. J. Losee                            Director                                      October 26, 1995
- ---------------------------                                                                                     
A. J. Losee

/s/ Robert G. McKenzie                     Director                                      October 26, 1995
- ---------------------------                                                                                     
Robert G. McKenzie

/s/ Thomas K. Matthews, II                 Director                                      October 26, 1995
- ---------------------------                                                                                     
Thomas K. Matthews, II
</TABLE>





                                    -43-

<PAGE>   44
                               HOLLY CORPORATION


                               INDEX TO EXHIBITS


              (Exhibits are numbered to correspond to the exhibit table in
             Item 601 of Regulation S-K)


<TABLE>
<CAPTION>
              Exhibit
              Number        Description
              ------        -----------
                 <S>        <C>

                 3(a)       -  Restated Certificate of Incorporation of the Registrant, as amended (incorporated by
                               reference to Exhibit 3(a), of Amendment No. 1 dated December 13, 1988 to Registrant's
                               Annual Report on Form 10-K for its fiscal year ended July 31, 1988, File No. 1-3876).

                 3(b)       -  Bylaws of the Registrant, as amended (incorporated by reference to Exhibit 3(b) of
                               Registrant's Annual Report on Form 10-K for its fiscal year ended July 31, 1993, File No.
                               1-3876).

                 4(a)       -  9.72% Series A Senior Note of Holly Corporation, dated as of June 26, 1991, to Hartnat &
                               Co. with schedule attached thereto of four other substantially identical Notes which
                               differ only in the respects set forth in such schedule (incorporated by reference to
                               Exhibit 4.1 of Registrant's Form 8-K dated June 26, 1991, File No. 1-3876).

                 4(b)       -  10.16% Series B Senior Note of Holly Corporation, dated as of June 26, 1991, to New York
                               Life Insurance Company with schedule attached thereto of seven other substantially
                               identical Notes which differ only in the respects set forth in such schedule
                               (incorporated by reference to Exhibit 4.2 of Registrant's Form 8-K dated June 26, 1991,
                               File No. 1-3876).

                 4(c)       -  Guaranty, dated as of June 15, 1991, of Navajo Refining Company, Navajo Pipeline Co.,
                               Midland-Lea, Inc., and Lea Refining Company in favor of Kentucky Central Life Insurance
                               Company, Pan-American Life Insurance Company, American International Life Assurance
                               Company of New York, Safeco Life Insurance Company, The Manhattan Life Insurance Company,
                               The Union Central Life Insurance Company, The Penn Insurance and Annuity Company, The
                               Penn Mutual Life Insurance Company, Confederation Life Insurance Company, John Hancock
                               Mutual Life Insurance Company, John Hancock Variable Life Insurance Company, and New York
                               Life Insurance Company (incorporated by reference to Exhibit 4.3 of Registrant's Form 8-K
                               dated June 26, 1991, File No. 1-3876).


</TABLE>




                                    -44-

<PAGE>   45

<TABLE>
<CAPTION>
              Exhibit
              Number        Description
              ------        -----------
                 <S>        <C>

                 4(d)       -  Note Agreement of Holly Corporation, dated as of June 15, 1991, to John Hancock Mutual
                               Life Insurance Company, with schedule attached thereto of eleven other substantially
                               identical Note Agreements which differ only in the respects set forth in such schedule
                               (incorporated by reference to Exhibit 4.8 of Registrant's Form 8-K dated June 26, 1991,
                               File No. 1-3876).

                 4(e)       -  First Amended and Restated Credit Agreement, dated as of July 23, 1993, among Holly
                               Corporation, Navajo Refining Company, Navajo Holdings, Inc., Holly Petroleum, Inc.,
                               Navajo Pipeline Co., Lea Refining Company, Navajo Western Asphalt Company, Montana
                               Refining Company, A Partnership and NationsBank of Texas, N.A., Banque Paribas, The First
                               National Bank of Boston, The Bank of Nova Scotia and NationsBank of Texas, N.A. as the
                               agent (incorporated by reference to Exhibit 4(e) of Registrant's Annual Report on Form
                               10-K for its fiscal year ended July 31, 1993, File No. 1-3876).

                 4(f)       -  First Amendment to First Amended and Restated Credit Agreement, dated as of April 7,
                               1994, among Holly Corporation, Navajo Refining Company, Holly Petroleum, Inc., Navajo
                               Pipeline Co., Navajo Holdings, Inc., Lea Refining Company, Navajo Western Asphalt
                               Company, Montana Refining Company, A Partnership and Navajo Crude Oil Marketing Company,
                               and NationsBank of Texas, N.A., as Agent, and NationsBank of Texas, N.A., Banque Paribas,
                               The First National Bank of Boston, and The Bank of Nova Scotia (incorporated by reference
                               to Exhibit 4(f) of Registrant's Annual Report on Form 10-K for its fiscal year ended July
                               31, 1994, File No. 1-3876).

                 4(g)       -  Second Amendment to First Amended and Restated Credit Agreement, dated as of June 13,
                               1995, among Holly Corporation, Navajo Refining Company, Holly Petroleum, Inc., Navajo
                               Pipeline Co., Navajo Holdings, Inc., Lea Refining Company, Navajo Western Asphalt
                               Company, Montana Refining Company, A Partnership and Navajo Crude Oil Marketing Company,
                               and NationsBank of Texas, N.A., as Agent, and NationsBank of Texas, N.A., Banque Paribas,
                               The First National Bank of Boston, and The Bank of Nova Scotia.

                 4(h)       -  Promissory Note of Holly Corporation, dated as of July 23, 1993, to NationsBank of Texas,
                               N.A. with schedule attached thereto of three other substantially identical Notes which
                               differ only in the respects set forth in such schedule (incorporated by reference to
                               Exhibit 4(f) of Registrant's Annual Report on Form 10-K for its fiscal year ended July
                               31, 1993, File No. 1-3876).




</TABLE>


                                    -45-

<PAGE>   46

<TABLE>
<CAPTION>
                Exhibit
                Number         Description
                ------         -----------
                 <S>        <C>

                 4(i)       -  Guaranty, dated as of July 30, 1991, of Navajo Refining Company, Holly Petroleum, Inc.,
                               Navajo Pipeline Co., and Midland-Lea, Inc. in favor of NCNB Texas National Bank, Banque
                               Paribas, The First National Bank of Boston, The Bank of Nova Scotia and NCNB Texas
                               National Bank as agent for itself and the other banks (incorporated by reference to
                               Exhibit 4.2 of Registrant's Form 8-K dated July 30, 1991, File No. 1-3876).

                 4(j)       -  First Supplement, executed as of February 20, 1992, to Guaranty, dated as of July 30,
                               1991, among Navajo Refining Company, Holly Petroleum, Inc., Navajo Holdings, Inc., Navajo
                               Pipeline Co., Lea Refining Company and Navajo Western Asphalt Company in favor of NCNB
                               Texas National Bank, Banque Paribas, The First National Bank of Boston, and The Bank of
                               Nova Scotia and NCNB Texas National Bank as agent for the banks (incorporated by
                               reference to Exhibit 4.4 of Registrant's Quarterly Report on Form 10-Q for the quarterly
                               period ending January 31, 1992, File No. 1-3876).

                 4(k)       -  Confirmation of Guaranty, executed as of July 23, 1993 by Navajo Refining Company, Holly
                               Petroleum, Inc., Navajo Pipeline Co., Navajo Holdings, Inc., Navajo Western Asphalt
                               Company and Lea Refining Company which confirms the Guaranty (Exhibit 4(i) of this Form
                               10-K) and First Supplement to the Guaranty (Exhibit 4(j) of this Form 10-K) (incorporated
                               by reference to Exhibit 4(i) of Registrant's Annual Report on Form 10-K for its fiscal
                               year ended July 31, 1993, File No. 1-3876).

                 4(l)       -  Second Supplement to Guaranty, executed as of April 7, 1994, by Navajo Refining Company,
                               Holly Petroleum, Inc., Navajo Holdings, Inc., Navajo Pipeline Co., Lea Refining Company,
                               Navajo Western Asphalt Company and Navajo Crude Oil Marketing Company, in favor of
                               NationsBank of Texas, N.A., Banque Paribas, The First National Bank of Boston, The Bank
                               of Nova Scotia, and NationsBank of Texas, N.A., as agent for the banks (incorporated by
                               reference to Exhibit 4(k) of Registrant's Annual Report on Form 10-K for its fiscal year
                               ended July 31, 1994, File No. 1-3876).

                 4(m)       -  Security Agreement, dated as of July 30, 1991, among Holly Corporation, Navajo Refining
                               Company, Holly Petroleum, Inc., Navajo Pipeline Co., Midland-Lea, Inc., Lea Refining
                               Company, Navajo Western Asphalt Company and NCNB Texas National Bank as agent for itself,
                               Banque Paribas, The First National Bank of Boston and The Bank of Nova Scotia
                               (incorporated by reference to Exhibit 4.3 of Registrant's Form 8-K dated July 30, 1991,
                               File No. 1-3876).




</TABLE>


                                    -46-

<PAGE>   47

<TABLE>
<CAPTION>
                Exhibit
                Number         Description
                ------         -----------
                 <S>        <C>

                 4(n)       -  First Supplement, executed as of February 20, 1992, to the Security Agreement, dated as
                               of July 30, 1991, among Holly Corporation, Navajo Refining Company, Holly Petroleum,
                               Inc., Navajo Holdings, Inc., Navajo Pipeline Co., Lea Refining Company, Navajo Western
                               Asphalt Company and NCNB Texas National Bank as agent for itself, Banque Paribas, The
                               First National Bank of Boston and The Bank of Nova Scotia (incorporated by reference to
                               Exhibit 4.3 of Registrant's Quarterly Report on Form 10-Q for the quarterly period ending
                               January 31, 1992, File No. 1-3876).

                 4(o)       -  Confirmation of Security Agreement, executed as of July 23, 1993 by Holly Corporation,
                               Navajo Pipeline Co., Navajo Refining Company, Holly Petroleum, Inc., Navajo Holdings,
                               Inc.,  Lea Refining Company and Navajo Western Asphalt Company which confirms the
                               Security Agreement (Exhibit 4(m) of this Form 10-K) and First Supplement to the Security
                               Agreement (Exhibit 4(n) of this Form 10-K) (incorporated by reference to Exhibit 4(l) of
                               Registrant's Annual Report on Form 10-K for its fiscal year ended July 31, 1993, File No.
                               1-3876).

                 4(p)       -  Security Agreement, dated as of July 23, 1993, between Montana Refining Company, A
                               Partnership, and NationsBank of Texas, N.A. as agent for itself, Banque Paribas, The
                               First National Bank of Boston and The Bank of Nova Scotia (incorporated by reference to
                               Exhibit 4(m) of Registrant's Annual Report on Form 10-K for its fiscal year ended July
                               31, 1993, File No. 1-3876).

                 4(q)       -  Second Supplement to Security Agreement, executed as of April 7, 1994, by and among Holly
                               Corporation, Navajo Refining Company, Holly Petroleum, Inc., Navajo Holdings, Inc.,
                               Navajo Pipeline Co., Lea Refining Company, Navajo Western Asphalt Company and Navajo
                               Crude Oil Marketing Company, and NationsBank of Texas, N.A., as agent, Banque Paribas,
                               The First National Bank of Boston and The Bank of Nova Scotia (incorporated by reference
                               to Exhibit 4(p) of Registrant's Annual Report on Form 10-K for its fiscal year ended July
                               31, 1994, File No. 1-3876).

                 4(r)       -  Holly Corporation Stock Option Plan - As adopted at the Annual Meeting of Stockholders of
                               Holly Corporation on December 13, 1990 (incorporated by reference to Exhibit 4(i) of
                               Registrant's Annual Report on Form 10-K for its fiscal year ended July 31, 1991, File No.
                               1-3876).





</TABLE>

                                    -47-

<PAGE>   48

<TABLE>
<CAPTION>
                Exhibit
                Number         Description
                ------         -----------
                 <S>        <C>

                 10(a)      -  Supplemental Payment Agreement, dated as of July 8, 1993, between Lamar Norsworthy and
                               Holly Corporation (incorporated by reference to Exhibit 10(a) of Registrant's Annual
                               Report on Form 10-K for its fiscal year ended July 31, 1993, File No. 1-3876).

                 10(b)      -  Supplemental Payment Agreement, dated as of July 8, 1993, between Jack P. Reid and Holly
                               Corporation (incorporated by reference to Exhibit 10(b) of Registrant's Annual Report on
                               Form 10-K for its fiscal year ended July 31, 1993, File No. 1-3876).

                 (21)       -  Subsidiaries of Registrant

                 (23)       -  Consent of Independent Auditors

                 (27)       -  Financial Data Schedule

                 (99)       -  Copy of civil action against the Company's subsidiary, Navajo Refining Company, filed on
                               July 16, 1993 by the United States, in the United States District Court for the District
                               of New Mexico, seeking civil penalties and other compliance measures under the Resource
                               Conservation and Recovery Act and implementing regulations of the Environmental
                               Protection Agency (incorporated by reference to Exhibit 28 of Registrant's Form 8-K dated
                               July 16, 1993, File No. 1-3876).
</TABLE>






                                    -48-





<PAGE>   1
                                                                    EXHIBIT 4(g)

                              SECOND AMENDMENT TO
                  FIRST AMENDED AND RESTATED CREDIT AGREEMENT

         THIS SECOND AMENDMENT TO FIRST AMENDED AND RESTATED CREDIT AGREEMENT
(herein called the "Amendment") made as of the 13th day of June, 1995, by and
among Holly Corporation ("Borrower"), Navajo Refining Company ("Navajo"), Holly
Petroleum, Inc. ("Holly Petroleum"), Navajo Pipeline Co. ("Navajo Pipeline"),
Navajo Holdings, Inc. ("Navajo Holdings"), Lea Refining Company ("Lea"), Navajo
Western Asphalt Company ("Navajo Western"), Montana Refining Company, A
Partnership ("Montana") and Navajo Crude Oil Marketing Company ("Navajo
Crude"), (Navajo, Holly Petroleum, Navajo Pipeline, Navajo Holdings, Lea,
Navajo Western and Navajo Crude collectively referred to herein as
"Guarantors"), NationsBank of Texas, N.A., as Agent ("Agent"), and NationsBank
of Texas, N.A., Banque Paribas, The First National Bank of Boston, and The Bank
of Nova Scotia (collectively, "Lenders"),

                              W I T N E S S E T H:

         WHEREAS, Borrower, Guarantors, Montana, Agent and Lenders have entered
into that certain First Amended and Restated Credit Agreement dated as of July
23, 1993, as amended by that certain First Amendment to First Amended and
Restated Credit Agreement dated as of April 7, 1994 (as so amended, the
"Original Agreement")
 for the purpose and consideration therein expressed,
whereby Lenders became obligated to make loans to Borrower as therein provided;
and

         WHEREAS, Borrower, Guarantors, Montana, Navajo Crude, Agent and
Lenders desire to amend the Original Agreement for the purposes expressed
herein;

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and in the Original Agreement and in
consideration of the loans which may hereafter be made by Lenders to Borrower
and of the letters of credit which may hereafter be issued, extended and
renewed by Lenders for the account of Borrower and for the account of Montana,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto do hereby agree as follows:

                                   ARTICLE I.

                           DEFINITIONS AND REFERENCES

         Section 1.1. Terms Defined in the Original Agreement. Unless the
context otherwise requires or unless otherwise expressly defined herein, the
terms defined in the original





                                      -1-

<PAGE>   2
Agreement shall have the same meanings whenever used in this Amendment.

         Section 1.2. Other Defined Terms. Unless the context otherwise
requires, the following terms when used in this Amendment shall have the
meanings assigned to them in this Section 1.2.

                 "Amendment" shall mean this Second Amendment to First Amended
         and Restated Credit Agreement.

                 "Credit Agreement" shall mean the Original Agreement as
         amended hereby.

                                  ARTICLE II.

                        AMENDMENTS TO ORIGINAL AGREEMENT

         Section 2.1. Defined Terms. The definition of "Maturity Date" in
Section 1.1 of the Original Agreement is hereby amended in its entirety to read
as follows:

                 "Maturity Date. August 1, 1997."

         The definition of "Guaranty" in Section 1.1. of the original Agreement
is hereby amended in its entirety to read as follows:

                 "Guaranty. The Guaranty dated as of July 30, 1991, made by the
         Guarantors for the benefit of the Lenders and Agent, as supplemented
         by the First Supplement to Guaranty dated as of February 20, 1992, and
         the Second Supplement to Guaranty dated as of April 7, 1994, and as
         may be further amended, renewed, confirmed, ratified or supplemented
         from time to time."

         The following definition of "LIFO Ratio" is hereby added to Section
1.1 of the Original Agreement immediately following the definition of "LIFO."

                 "LIFO Ratio. As of the last day of any Fiscal Quarter, the
         ratio of Consolidated LIFO Earnings before Interest and Taxes for the
         four complete Fiscal Quarters then ending to Interest Charges for such
         period."

         The following definition of "Minimum Working Capital Requirements" is
hereby added to Section 1.1 of the Original Agreement immediately following the
definition of "Maximum Rate."

                 "Minimum Working Capital Requirements. The Minimum Working
         Capital Requirements shall be satisfied at any time when Consolidated
         Current Assets, minus Consolidated Current Liabilities equals or
         exceeds Fifteen Million Dollars ($15,000,000), except that (i) the
         minimum working capital Requirements shall be satisfied in each of
         year 1994 and year 1995, during the period from and including April 30





                                      -2-

<PAGE>   3
         until but excluding the Private Placement Date, only if Consolidated
         Current Assets minus Consolidated Current Liabilities equals or exceed
         Twenty-One Million Dollars ($21,000,000) and (ii) the Minimum Working
         Capital Requirements shall be satisfied in each year commencing 1996,
         during that period from and including April 30 until but excluding the
         Private Placement Date, only if Consolidated Current Assets minus
         Consolidated Current Liabilities equals or exceeds Thirty Million
         Dollars ($30,000,000). For purposes of this paragraph, Consolidated
         Current Liabilities will be calculated without including any payments
         of principal on the notes issued under the Private Placement Agreement
         which are required to be repaid within one year from the time of
         calculation."

         Section 2.2. Investments. Section 7.3(j) of the original
Agreement is hereby amended in its entirety to read as follows:

                 "(j) Investments other than Investments described in
         subsections 7.3(a)-(i) at any time outstanding in an amount not to
         exceed in the aggregate at any time the sum of Five Million Dollars
         ($5,000,000) plus the amount of Distributions which could then be made
         pursuant to Section 7.4(b)(iii), without giving effect to clauses
         (b)(i) and (ii) of Section 7.4; provided that no such Investment shall
         be made unless at the time such Investment is made the Continuing
         Performance Level for the immediately preceding Fiscal Quarter has
         been achieved."

         Section 2.3. Distributions. Section 7.4 of the Original
Agreement is hereby amended in its entirety to read as follows:

                 "Section 7.4. Distributions. Borrower shall make no
         Distribution unless (i) at the time such Distribution is made, the
         LIFO Ratio (calculated as of the last day of the Fiscal Quarter
         immediately preceding the Fiscal Quarter in which such Distribution is
         made) is equal to or greater than 2.0 to 1.0 and (ii) immediately
         after giving effect to any such Distribution, each of the Related
         Persons and Montana shall be in compliance with all of its covenants
         hereunder and no Default or Event of Default shall have occurred and
         be continuing (collectively, the "Distribution Conditions"). If all of
         the Distribution Conditions are satisfied, Borrower may make
         Distributions as follows:

                 (a)      Borrower may make Distributions in an amount not to
         exceed $5,000,000 in the aggregate during any Fiscal Year; and

                 (b)      Borrower may make Distributions in excess of
         $5,000,000 during any Fiscal Year so long as (i) the LIFO Ratio
         (calculated as of the last day of the Fiscal Quarter immediately
         preceding the Fiscal Quarter in which such Distribution is made) is
         equal to or greater than 3.5 to 1.0, and (ii) the Minimum Working
         Capital Requirements are





                                      -3-

<PAGE>   4
         satisfied, and (iii) during any period in which Consolidated FIFO Net
         Worth does not equal or exceed Fifty Million Dollars ($50,000,000),
         the amount of all Distributions made prior to and on the date of
         distribution, when added to the aggregate amount of Investments made
         prior to the date of distribution under Section 7.3(j) in excess of
         $5,000,000, shall not exceed the sum of 60% of Cumulative Consolidated
         Net Income; and during any period in which Consolidated FIFO Net Worth
         equals or exceeds Fifty Million Dollars ($50,000,000), the amount of
         all Distributions made prior to and on the date of distribution when
         added to the aggregate amount of Investments made prior to the date of
         distribution under Section 7.3(j) in excess of $5,000,000, shall not
         exceed the sum of 75% of Cumulative Consolidated Net Income; provided
         that in calculating the amount of Investments under Section 7.3(j) in
         excess of $5,000,000 and Distributions for purposes of this subsection
         (b) only, the Quarterly Dividend shall be excluded and Distributions
         made prior to February 1, 1992 shall be excluded. Nothing herein
         contained shall be deemed in any way to restrict or prohibit
         Borrower's (x) retirement of any shares of its capital stock in
         exchange for, or upon conversion of, or out of the proceeds of the
         substantially concurrent sale (other than to a Subsidiary) of, other
         shares of its capital stock, or (y) purchase of its common stock where
         (1) the aggregate number of shares purchased from any one Person at
         any one time is less than 100 shares, (2) after giving effect to such
         purchase, such Person does not own any common stock of Borrower, and
         (3) the aggregate payment for all such common stock does not exceed
         $300,000 in any fiscal year."

         Section 2.4. Working Capital. Section 7.8 of the Original
Agreement is hereby amended in its entirety to read as follows:

                 "Section 7.8. Working capital. The Related Persons shall not
         permit Consolidated Current Assets, minus Consolidated Current
         Liabilities to be less than Ten Million Dollars ($10,000,000) at any
         time except that (i) in each of year 1994 and year 1995, during the
         period from and including April 30 until but excluding the Private
         Placement Date, Consolidated Current Assets minus Consolidated Current
         Liabilities shall not be less than Sixteen Million Dollars
         ($16,000,000) and (ii) in each year commencing 1996, during that
         period from and including April 30 until but excluding the Private
         Placement Date, Consolidated Current Assets minus Consolidated Current
         Liabilities shall not be less than Twenty Five Million Dollars
         ($25,000,000). For purposes of this Section 7.8, Consolidated Current
         Liabilities will be calculated without including any payments of
         principal on the notes issued under the Private Placement Agreement
         which are required to be repaid within one year from the time of
         calculation."





                                      -4-

<PAGE>   5
         Section 2.5. Borrower's Working Capital. Section 7.9 of the Original
Agreement is hereby amended in its entirety to read as follows:

                 "Section 7.9. Borrower's Working Capital. The Related Persons
         shall not, at any time, permit Consolidated Current Assets, minus
         Consolidated Current Liabilities to be less than Five Million Six
         Hundred Thousand Dollars ($5,600,000) except that (i) in each year
         commencing 1994, during the period from and including April 30 until
         but excluding the Private Placement Date, Consolidated Current Assets
         minus Consolidated Current Liabilities shall not be less than Eleven
         Million Six Hundred Thousand Dollars ($11,600,000) and (ii) in each
         year commencing 1996, during the period from and including April 30
         until but excluding the Private Placement Date, Consolidated Current
         Assets minus Consolidated Current Liabilities shall not be less than
         Twenty Million Six Hundred Thousand Dollars ($20,600,000). For
         purposes of this section only, the current assets and current
         liabilities of Montana and the Montana General Partners shall be
         excluded from the calculation of Consolidated Current Liabilities and
         Consolidated Current Assets. For purposes of this Section 7.9,
         Consolidated Current Liabilities will be calculated without including
         any payments of principal on the notes issued under the Private
         Placement Agreement which are required to be repaid within one year
         from the time of calculation."

                                  ARTICLE III.

                          CONDITIONS OF EFFECTIVENESS

         Section 3.1. Effective Date. This Amendment shall become effective as
of the date first above written when, and only when, (i) Agent shall have
received, at Agent's office, a counterpart of this Amendment executed and
delivered by Borrower, each Guarantor, and each Lender, and (ii) Agent shall
have additionally received all of the following documents, each document
(unless otherwise indicated) being dated the date of receipt thereof by Agent,
duly authorized, executed and delivered, and in form and substance satisfactory
to Agent:

                 (a)      Secretary's Certificates. Agent shall have received,
         in form and substance satisfactory to Agent, certificates of the
         Secretary of Borrower and each Guarantor dated the date of this
         Amendment certifying that (i) the persons named as authorized
         signatories in prior Secretary's Certificates delivered to Agent (the
         "Prior Certificates") are authorized to sign this Amendment, (ii) the
         resolutions authorizing the execution of the Loan Documents that were
         attached to the Prior Certificates have not been amended, modified or
         revoked in any respect and are in full force and effect on the date
         hereof and (iii) that the charter documents of Borrower or such
         Guarantor attached to the





                                      -5-

<PAGE>   6
         Prior Certificates have not been amended, modified or revoked in any
         respect and are in full force and effect on the date hereof.

                                  ARTICLE IV.

                         REPRESENTATIONS AND WARRANTIES

         Section 4.1. Representations and Warranties of Related Persons. In
order to induce each Lender to enter into this Amendment, Borrower represents
and warrants as to itself and each other Related Person, and each other Related
Person represents and warrants as to itself, to each Lender that:

                 (a)      The representations and warranties contained in
         Section 5.1 of the Original Agreement are true and correct at and as
         of the time of the effectiveness hereof.

                 (b)      Each of Borrower, each Guarantor and Montana is duly
         authorized to execute and deliver this Amendment, and Borrower is and
         will continue to be duly authorized to borrow monies and to perform
         its obligations under the Credit Agreement. Each of Borrower, each
         Guarantor and Montana has duly taken all corporate or partnership
         action necessary to authorize the execution and delivery of this
         Amendment and to authorize the performance of its obligations
         hereunder.

                 (c)      The execution and delivery by each of Borrower, each
         Guarantor and Montana of this Amendment, the performance by such
         Person of its obligations hereunder and the consummation of the
         transactions contemplated hereby do not and will not conflict with any
         provision of law, statute, rule or regulation or of any of its
         organizational documents, or of any material agreement, judgment,
         license, order or permit applicable to or binding upon it, or result
         in the creation of any lien, charge or encumbrance upon any assets or
         properties or any of its assets. Except for those which have been
         obtained, no consent, approval, authorization or order of any court or
         governmental authority or third party is required in connection with
         the execution and delivery by any of Borrower, any Guarantor or
         Montana of this Amendment or to consummate the transactions
         contemplated hereby.

                 (d)      When duly executed and delivered, this Amendment will
         be a legal and binding obligation of Borrower, Guarantors and Montana
         enforceable in accordance with its terms, except as limited by
         bankruptcy, insolvency or similar laws of general application relating
         to the enforcement of creditors' rights and by equitable principles of
         general application.





                                      -6-

<PAGE>   7
                                   ARTICLE V.

                                 MISCELLANEOUS

         Section 5.1. Ratification of Agreements. The Original Agreement as
hereby amended is hereby ratified and confirmed in all respects. Any reference
to the Credit Agreement in any Loan Document shall be deemed to be a reference
to the Original Agreement as hereby amended. The execution, delivery and
effectiveness of this Amendment shall not, except as expressly provided herein,
operate as a waiver of any right, power or remedy of Lenders under the Credit
Agreement, the Notes, or any other Loan Document nor constitute a waiver of any
provision of the Credit Agreement, the Notes or any other Loan Document. Each
Guarantor hereby consents to the provisions of this Amendment and the
transactions contemplated herein, and hereby ratifies and confirms the
Guaranty, and agrees that its obligations and covenants thereunder are
unimpaired hereby and shall remain in full force and effect.

         Section 5.2. Survival of Agreements. All representations, warranties,
covenants and agreements of each of Borrower, Guarantors and Montana herein
shall survive the execution and delivery of this Amendment and the performance
hereof, including without limitation the making or granting of the Loans, and
shall further survive until all of the obligations are paid in full. All
statements and agreements contained in any certificate or instrument delivered
by Borrower, any Guarantor or Montana hereunder or under the Credit Agreement
to any Lender shall be deemed to constitute representations and warranties by,
and/or agreements and covenants of, such Person under this Amendment and under
the Credit Agreement.

         Section 5.3. Loan Documents. This Amendment is a Loan Document, and
all provisions in the Credit Agreement pertaining to Loan Documents apply
hereto.

         Section 5.4. Governing Law. This Amendment shall be governed by and
construed in accordance the laws of the State of Texas and any applicable laws
of the United States of America in all respects, including construction,
validity and performance.

         Section 5.5. Counterparts. This Amendment may be separately executed
in counterparts and by the different parties hereto in separate counterparts,
each of which when so executed shall be deemed to constitute one and the same
Amendment.

         THIS WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OR
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

          THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.





                                      -7-

<PAGE>   8
         IN WITNESS WHEREOF, this Amendment is executed as of the
date first above written.


                                        HOLLY CORPORATION, a Delaware
                                          corporation
                                        
                                        
                                        By: /s/ HENRY A. TEICHHOLZ
                                            -----------------------------------
                                            Henry A. Teichholz
                                            Vice President, Treasurer and
                                            Controller
                                        
                                        
                                        NAVAJO REFINING COMPANY, a Delaware
                                          corporation
                                        
                                        
                                        By: /s/ HENRY A. TEICHHOLZ
                                            -----------------------------------
                                            Henry A. Teichholz
                                            Vice President and Treasurer
                                            
                                        
                                        NAVAJO PIPELINE CO., a New Mexico
                                          corporation
                                        
                                        
                                        By: /s/ HENRY A. TEICHHOLZ
                                            -----------------------------------
                                            Henry A. Teichholz
                                            Vice President and Treasurer
                                            
                                        
                                        NAVAJO HOLDINGS, INC., a New Mexico
                                          corporation
                                        
                                        
                                        By: /s/ HENRY A. TEICHHOLZ
                                            -----------------------------------
                                            Henry A. Teichholz
                                            Vice President and Treasurer
    




                                      -8-

<PAGE>   9
                                        HOLLY PETROLEUM, INC., a Delaware
                                          corporation
                                        
                                        
                                        By: /s/ HENRY A. TEICHHOLZ
                                            -----------------------------------
                                            Henry A. Teichholz
                                            Vice President and Treasurer
                                            
                                        
                                        LEA REFINING COMPANY, a Delaware
                                          corporation
                                        
                                        
                                        By: /s/ HENRY A. TEICHHOLZ
                                            -----------------------------------
                                            Henry A. Teichholz
                                            Vice President and Treasurer
                                            
                                        
                                        NAVAJO WESTERN ASPHALT COMPANY, a
                                          New Mexico corporation
                                        
                                        
                                        By: /s/ HENRY A. TEICHHOLZ
                                            -----------------------------------
                                            Henry A. Teichholz
                                            Vice President and Treasurer
                                            
                                        
                                        MONTANA REFINING COMPANY, A
                                          PARTNERSHIP, a Montana general
                                          partnership
                                        
                                        
                                        By: Navajo Northern, Inc., its
                                            General Partner and a Nevada
                                            corporation
                                            
                                        
                                        By: /s/ HENRY A. TEICHHOLZ
                                            -----------------------------------
                                            Henry A. Teichholz
                                            Vice President and Treasurer
    




                                      -9-

<PAGE>   10
                                        NAVAJO CRUDE OIL MARKETING COMPANY
                                        
                                        By: /s/ HENRY A. TEICHHOLZ
                                            -----------------------------------
                                            Henry A. Teichholz
                                            Vice President and Treasurer
                                            
                                        
                                        NATIONSBANK OF TEXAS, N.A.,
                                          as Agent
                                        
                                        
                                        By: /s/ E. MURPHY MARKHAM, IV
                                            -----------------------------------
                                            E. Murphy Markham, IV
                                            Senior Vice President
                                            
                                        
                                        NATIONSBANK OF TEXAS, N.A.
                                        
                                        By: /s/ E. MURPHY MARKHAM, IV
                                            -----------------------------------
                                            E. Murphy Markham, IV
                                            Senior Vice President
                                            
                                        BANQUE PARIBAS
                                        
                                        By: /s/ BARTON D. SCHOUEST
                                            -----------------------------------
                                            Barton D. Schouest
                                            Group Vice President
                                            
                                        By: /s/ MARK GREEN
                                            -----------------------------------
                                            Mark Green
                                            Vice President
                                            
                                        
                                        THE FIRST NATIONAL BANK OF BOSTON
                                        
                                        
                                        By: /s/ H. LOUIS BAILEY
                                            -----------------------------------
                                            H. Louis Bailey
                                            Director
    




                                      -10-

<PAGE>   11
                                        THE BANK OF NOVA SCOTIA
                                        
                                        By: /s/ A.S. NORSWORTHY
                                            -----------------------------------
                                            A.S. Norsworthy
                                            Assistant Agent
                                            




                                      -11-



<PAGE>   1
                                                                      EXHIBIT 21



                               HOLLY CORPORATION

                           SUBSIDIARIES OF REGISTRANT




       Holly Corporation owns 100% of the capital stock of the following
subsidiaries (state of respective incorporation shown in parentheses):


<TABLE>
                     <S>                                    <C>
                     Navajo Corp.  (Del.)
                     Navajo Holdings, Inc.                  (N.M.)
                     Holly Petroleum, Inc.                  (Del.)
                     Black Eagle, Inc.                      (Del.)
                     Navajo Crude Oil
                       Marketing Company                    (Texas)
</TABLE>



       Holly Corporation owns 57.5% and Navajo Corp. owns 42.5% of the capital
stock of Navajo Refining Company (Del.).

       Navajo Refining Company owns 100% of the stock of Navajo Northern, Inc.
(Nev.), Lorefco, Inc. (Del.), and Navajo Western Asphalt Company (N.M.).

       Navajo Holdings, Inc. owns 100% of the stock of Navajo Pipeline Co.
(Del.).

       Lorefco, Inc. owns 100% of the stock of Lea Refining Company (Del.).

       Black Eagle, Inc. and Navajo Northern, Inc. are the general partners of
Montana Refining Company, a Partnership.





                                    -49-





<PAGE>   1
                                 EXHIBIT 23



                        CONSENT OF INDEPENDENT AUDITORS


       We consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 2-74856) pertaining to the Holly Corporation Incentive
Stock Option Plan, Holly Corporation Stock Option Plan, and Holly Corporation
Stock Appreciation Rights Plan and in the related Prospectus of our report
dated September 26, 1995 with respect to the consolidated financial statements
of Holly Corporation included in the Annual Report (Form 10-K) for the year
ended July 31, 1995.





                                                            ERNST & YOUNG LLP


Dallas, Texas
October 26, 1995





                                     -50-





<TABLE> <S> <C>

<ARTICLE> 5
<MULTIPLIER> 1,000
       
<S>                             <C>
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          JUL-31-1995
<PERIOD-END>                               JUL-31-1995
<CASH>                                          13,432
<SECURITIES>                                         0
<RECEIVABLES>                                   85,825
<ALLOWANCES>                                         0
<INVENTORY>                                     42,181
<CURRENT-ASSETS>                               153,010
<PP&E>                                         249,814
<DEPRECIATION>                                 118,629
<TOTAL-ASSETS>                                 287,384
<CURRENT-LIABILITIES>                          135,270
<BONDS>                                         54,565
<COMMON>                                            87
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<OTHER-SE>                                      79,956
<TOTAL-LIABILITY-AND-EQUITY>                   287,384
<SALES>                                        613,402
<TOTAL-REVENUES>                               614,830
<CGS>                                          554,083
<TOTAL-COSTS>                                  587,351
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                               8,352
<INCOME-PRETAX>                                 20,147
<INCOME-TAX>                                     7,730
<INCOME-CONTINUING>                             12,417
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                        5,703
<NET-INCOME>                                    18,120
<EPS-PRIMARY>                                     2.20
<EPS-DILUTED>                                     2.20
        

</TABLE>