Change in Accounting Principle: Inventories

Effective January 1, 2014, the Company elected to change its method of accounting for certain inventories from lower of cost, as determined by the LIFO method, or market, to lower of cost, as determined by the average cost method, or market. Had the Company not made this change in accounting method, "Net income" for the three and nine months ended September 30, 2014, would have been $1.7 million and $1.5 million, respectively, higher than reported in the Consolidated Statements of Income and "Inventories" at September 30, 2014, would have been $69.3 million lower than reported in the Consolidated Balance Sheets.

We applied this change in method of inventory costing retrospectively to all prior periods presented in accordance with U.S. generally accepted accounting principles relating to accounting changes. As a result of the retrospective change in accounting principle, opening retained earnings as of January 1, 2013, increased $38.8 million. Certain components of our financial statements affected by the change in valuation methodology as originally reported under the LIFO method and as adjusted for the change to the average cost method were as follows (in thousands, except per share data):



	Three Months Ended September 30, 2013									Nine Months Ended September 30, 2013
Consolidated Statements of Income and Comprehensive Income	As Previously Reported (a)			Effect of Change			As Adjusted			As Previously Reported (a)			Effect of Change			As Adjusted
Cost of sales	$	(618,663	)	$	822		$	(617,841	)	$	(1,799,285	)	$	6,503		$	(1,792,782	)
Gross profit	226,777			822			227,599			601,592			6,503			608,095
Income from operations	141,960			822			142,782			352,476			6,503			358,979
Income before taxes	130,110			822			130,932			322,143			6,503			328,646
Provision for income taxes	(45,930		)	(320		)	(46,250		)	(112,885		)	(2,533		)	(115,418		)
Net income	84,180			502			84,682			209,258			3,970			213,228
Comprehensive income	93,400			502			93,902			237,206			3,970			241,176
Net income per common share:
Basic	0.87			0.01			0.88			2.17			0.04			2.21
Diluted	0.86			0.01			0.87			2.15			0.04			2.19

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(a)	Certain amounts in prior periods' consolidated financial statements have been reclassified to conform with the current period presentation.



	December 31, 2013
Consolidated Balance Sheet	As Previously Reported		Effect of Change			As Adjusted
Inventories	$	522,523	$	71,768		$	594,291
Deferred income tax assets	75,579		(27,963		)	47,616
Retained earnings	975,296		43,805			1,019,101



	Nine Months Ended September 30, 2013
Consolidated Statement of Cash Flows	As Previously Reported		Effect of Change			As Adjusted
Net income	$	209,258	$	3,970		$	213,228
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income tax provision	3,604		2,533			6,137
Change in inventories	1,875		(6,503		)	(4,628		)

The components of inventories were as follows (dollars in thousands):



	September 30, 2014		December 31, 2013
Raw materials	$	239,673	$	212,027
Work in process	12,739		13,898
Finished goods	195,538		209,972
Supplies and materials	169,012		158,394
Inventories	$	616,962	$	594,291