F.Inventories

Our major classes of inventories were as follows as of September 30, 2015 and December 31, 2014 (in thousands):


	September 30, 2015		December 31, 2014
Raw materials	$	18,556	$	14,188
Work in process		1,506		5,965
Finished goods		17,155		20,457
Inventories included in current assets		37,217		40,610
Included in other long-term assets:
Raw materials		2,654		7,798
Total inventories	$	39,871	$	48,408

The decrease in inventories as of September 30, 2015 as compared to December 31, 2014, was primarily due to inventory sold to customers, partially offset by the inclusion of CBR inventory acquired in connection with the August 2015 acquisition of CBR, which consists of cord blood and cord tissue collection kits and processing bags.

In the fourth quarter of 2014, we recorded the acquired Makena inventory at a fair value of $30.3 million, which required a $26.1 million step-up adjustment to recognize the inventory at its expected net realizable value. We are amortizing and recognizing the step-up adjustment primarily as cost of product sales in our condensed consolidated statements of operations as the related inventories are sold. During the three and nine months ended September 30, 2015, we recognized $1.6 million and $7.5 million of the fair value adjustment as cost of product sales, respectively. In connection with the fair value step-up adjustment of the Makena inventory, we have recorded a portion of the associated raw material inventory and associated step-up adjustment in other long-term assets as we believe that the amount of inventory purchased in the acquisition exceeds our normal inventory cycle.

During the nine months ended September 30, 2015, we expensed $3.6 million of Makena inventory and $0.6 million of Feraheme inventory, which may not be saleable, and was recorded in cost of product sales in our condensed consolidated statements of operations. This amount included a fair value adjustment of $3.3 million.