The current year's net earnings were $$8,019,000$ or $$0\mathrm{.}65$ per diluted share, compared with $$32,067,000$ or $$2\mathrm{.}63$ per diluted share, last year. These results reflect the Company's decision to implement the LIFO $($last$-$in$,$ first$-$out$)$ inventory valuation method effective December $30,2007($fourth quarter$).$ The effect of this change was to reduce annual pretax earnings by $$28,165,000$ and net earnings by $$18,307,000$ or $$1\mathrm{.}50$ per share $($$$1\mathrm{.}49$ diluted$)$ below that which would have been reported using the Company's previous inventory method. The Company believes that in this period of significant inflation, the use of the LIFO method better matches current costs with current revenues. This change also results in cash savings of $$9,858,000$ by reducing the Company's income taxes, based on statutory rates. If the Company had remained on the FIFO $($first$-$in$,$ first$-$out$)$ inventory valuation method, the pretax results, less non$-$operating gains and losses, would have been an all$-$time record of $$42,644,000,$ up from $$40,009,000$ in the prior year.

As a new financial analyst at a leading Wall Street investment banking firm, you are assigned to outline the effects of the accounting change on Seneca's financial statements.

Required:

Why did management adopt LIFO?

By how much did the change affect pretax earnings and ending inventory? At the time, the corporate tax rate was $35\%.$