On January 1, 2019, the Company elected to change its method of accounting for U.S. inventories from the LIFO basis to the FIFO basis. Total U.S. inventories accounted for using the LIFO cost flow assumption, prior to the accounting method change, comprised 68 percent of the Company’s total inventories as of December 31, 2018. Non-U.S. inventories have historically been maintained on the FIFO basis. The Company believes that this change to the FIFO method of inventory valuation is preferable as it provides a better matching of costs with the physical flow of goods, more accurately reflects the current market value of inventory presented on the Company’s consolidated balance sheets, standardizes the Company’s inventory valuation methodology and improves comparability with the Company’s industry peers.

In accordance with ASC 250, Accounting Changes and Error Corrections, this change in method of accounting for U.S. inventories has been retrospectively applied to all prior periods presented herein. Prior period financial statements and financial comparables have been adjusted to reflect what results would have been had the Company always used the FIFO method of inventory valuation for U.S. inventories. The cumulative effect on retained earnings for these changes was $23.7 million at December 31, 2018.

The following tables present the prior year financial statement line items that have been affected by the retrospective change in accounting principle:

(In thousands, except per share amounts)	Three Months Ended June 30, 2018
	As originally reported under LIFO		Effect of change			As adjusted under FIFO
Cost of Sales	$	430,586	$	(701	)	$	429,885
Gross Profit		89,280		701			89,981
Operating Income		44,685		701			45,386
Income Before Provision for Income Taxes		42,497		701			43,198
Provision for Income Taxes		9,574		172			9,746
Net Income		32,923		529			33,452
Net Income Attributable to Stepan Company		32,925		529			33,454
Net Income Per Diluted Common Share Attributable to Stepan Company	$	1.41	$	0.03		$	1.44

(In thousands, except per share amounts)	Six Months Ended June 30, 2018
	As originally reported under LIFO		Effect of change			As adjusted under FIFO
Cost of Sales	$	840,351	$	(2,329	)	$	838,022
Gross Profit		178,850		2,329			181,179
Operating Income		84,340		2,329			86,669
Income Before Provision for Income Taxes		80,161		2,329			82,490
Provision for Income Taxes		16,522		571			17,093
Net Income		63,639		1,758			65,397
Net Income Attributable to Stepan Company		63,648		1,758			65,406
Net Income Per Diluted Common Share Attributable to Stepan Company	$	2.73	$	0.07		$	2.80

(In thousands)	December 31, 2018
	As originally reported under LIFO		Effect of change			As adjusted under FIFO
Inventories	$	200,165	$	31,363		$	231,528
Other Non-Current Assets		10,964		(1,415	)		9,549
Total Assets		1,484,666		29,948			1,514,614
Deferred Income Taxes	$	18,672	$	6,289		$	24,961
Retained Earnings		813,448		23,659			837,107
Total Liabilities and Equity		1,484,666		29,948			1,514,614

(In thousands)	Six Months Ended June 30, 2018
	As originally reported under LIFO			Effect of change			As adjusted under FIFO
Net Income	$	63,639		$	1,758		$	65,397
Deferred Income Taxes		2,463			571			3,034
Change in Assets and Liabilities:
Inventories		(14,409	)		(2,329	)		(16,738	)

The following tables present what current year financial statement line items would have been had the Company not changed its method of accounting for U.S. inventories from the LIFO to FIFO basis:

(In thousands, except per share amounts)	Three Months Ended June 30, 2019
	As reported under FIFO		Effect of change			As computed under LIFO
Cost of Sales	$	380,044	$	(3,500	)	$	376,544
Gross Profit		92,959		3,500			96,459
Operating Income		41,065		3,500			44,565
Income Before Provision for Income Taxes		39,534		3,500			43,034
Provision for Income Taxes		9,324		860			10,184
Net Income		30,210		2,640			32,850
Net Income Attributable to Stepan Company		30,218		2,640			32,858
Net Income Per Diluted Common Share Attributable to Stepan Company	$	1.30	$	0.11		$	1.41

(In thousands, except per share amounts)	Six Months Ended June 30, 2019
	As reported under FIFO		Effect of change			As computed under LIFO
Cost of Sales	$	784,605	$	(2,000	)	$	782,605
Gross Profit		177,568		2,000			179,568
Operating Income		70,803		2,000			72,803
Income Before Provision for Income Taxes		70,564		2,000			72,564
Provision for Income Taxes		15,376		492			15,868
Net Income		55,188		1,508			56,696
Net Income Attributable to Stepan Company		55,202		1,508			56,710
Net Income Per Diluted Common Share Attributable to Stepan Company	$	2.37	$	0.06		$	2.43

(In thousands)	June 30, 2019
	As reported under FIFO		Effect of change			As computed under LIFO
Inventories	$	216,278	$	(29,363	)	$	186,915
Other Non-Current Assets		12,098		1,415			13,513
Total Assets		1,528,968		(27,948	)		1,501,020
Deferred Income Taxes	$	28,271	$	(5,797	)	$	22,474
Retained Earnings		886,349		(22,151	)		864,198
Total Liabilities and Equity		1,528,968		(27,948	)		1,501,020

(In thousands)	Six Months Ended June 30, 2019
	As reported under FIFO		Effect of change			As computed under LIFO
Net Income	$	55,188	$	1,508		$	56,696
Deferred Income Taxes		223		492			715
Change in Assets and Liabilities:
Inventories		15,515		(2,000	)		13,515