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 September 30, 2018
	As originally reported under LIFO		Effect of change			As adjusted under FIFO
Cost of Sales	$	423,872	$	549		$	424,421
Gross Profit		84,125		(549	)		83,576
Operating Income		27,694		(549	)		27,145
Income Before Provision for Income Taxes		25,243		(549	)		24,694
Provision for Income Taxes		3,075		(135	)		2,940
Net Income		22,168		(414	)		21,754
Net Income Attributable to Stepan Company		22,168		(414	)		21,754
Net Income Per Diluted Common Share Attributable to Stepan Company	$	0.95	$	(0.02	)	$	0.93

(In thousands, except per share amounts)	Nine Months Ended September 30, 2018
	As originally reported under LIFO		Effect of change			As adjusted under FIFO
Cost of Sales	$	1,264,223	$	(1,780	)	$	1,262,443
Gross Profit		262,975		1,780			264,755
Operating Income		112,034		1,780			113,814
Income Before Provision for Income Taxes		105,404		1,780			107,184
Provision for Income Taxes		19,597		436			20,033
Net Income		85,807		1,344			87,151
Net Income Attributable to Stepan Company		85,816		1,344			87,160
Net Income Per Diluted Common Share Attributable to Stepan Company	$	3.68	$	0.06		$	3.74

(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)	Nine Months Ended September 30, 2018
	As originally reported under LIFO			Effect of change			As adjusted under FIFO
Net Income	$	85,807		$	1,344		$	87,151
Deferred Income Taxes		6,410			436			6,846
Change in Assets and Liabilities:
Inventories		(21,586	)		(1,780	)		(23,366	)

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 September 30, 2019
	As reported under FIFO		Effect of change			As computed under LIFO
Cost of Sales	$	374,180	$	(1,000	)	$	373,180
Gross Profit		77,402		1,000			78,402
Operating Income		27,966		1,000			28,966
Income Before Provision for Income Taxes		27,449		1,000			28,449
Provision for Income Taxes		1,569		246			1,815
Net Income		25,880		754			26,634
Net Income Attributable to Stepan Company		25,889		754			26,643
Net Income Per Diluted Common Share Attributable to Stepan Company	$	1.11	$	0.03		$	1.14

(In thousands, except per share amounts)	Nine Months Ended September 30, 2019
	As reported under FIFO		Effect of change			As computed under LIFO
Cost of Sales	$	1,158,785	$	(3,000	)	$	1,155,785
Gross Profit		254,970		3,000			257,970
Operating Income		98,769		3,000			101,769
Income Before Provision for Income Taxes		98,013		3,000			101,013
Provision for Income Taxes		16,945		738			17,683
Net Income		81,068		2,262			83,330
Net Income Attributable to Stepan Company		81,091		2,262			83,353
Net Income Per Diluted Common Share Attributable to Stepan Company	$	3.48	$	0.10		$	3.58

(In thousands)	September 30, 2019
	As reported under FIFO		Effect of change			As computed under LIFO
Inventories	$	203,303	$	(28,363	)	$	174,940
Other Non-Current Assets		10,985		1,415			12,400
Total Assets		1,518,370		(26,948	)		1,491,422
Deferred Income Taxes	$	25,218	$	(5,551	)	$	19,667
Retained Earnings		906,612		(21,397	)		885,215
Total Liabilities and Equity		1,518,370		(26,948	)		1,491,422

(In thousands)	Nine Months Ended September 30, 2019
	As reported under FIFO			Effect of change			As computed under LIFO
Net Income	$	81,068		$	2,262		$	83,330
Deferred Income Taxes		(2,291	)		738			(1,553	)
Change in Assets and Liabilities:
Inventories		25,879			(3,000	)		22,879