network. At December 31, 2004, this Segment included consolidated operations in 11 foreign countries and real- ized income from licensing agreements in 13 foreign countries. A map on page 18 of this report shows the number of automotive branches and their geographical location. 

The International Coatings Segment develops, licens- es, manufactures and distributes a variety of paint, coat- ings and related products worldwide. The majority of the sales from licensees and subsidiaries occurred in South America, the Segment’s most important interna- tional market. This Segment sold its products through 29 company-operated specialty paint stores in Chile, 36 in Brazil, 5 in Uruguay and 1 in Argentina and by out- side selling functions to dealers and other distributors. At December 31, 2004, this Segment included consoli- dated operations in 8 foreign countries, 4 foreign joint ventures and income from licensing agreements in 12 foreign countries. 

The Administrative Segment included the administra- tive expenses of the Company’s corporate headquarters site. This Segment also included interest expense which was unrelated to retail real estate leasing activities, investment income, certain foreign currency transaction losses related to dollar-denominated debt and foreign currency option and forward contracts, certain expenses related to closed facilities and environmental-related matters, and other expenses which were not directly associated with any Operating Segment. Administrative expenses did not include any significant foreign opera- tions. Also included in the Administrative Segment was a real estate management unit that is responsible for the ownership, management, leasing of non-retail properties held primarily for use by the Company, including the Company’s headquarters site, and disposal of idle facili- ties. Sales of the Administrative Segment represented external leasing revenue of excess headquarters space or leasing of facilities no longer used by the Company in its operations. Gains and losses from the sale of property were not a significant operating factor in determining the performance of this Segment. 

Net external sales of all consolidated foreign sub- sidiaries were $637,137, $546,472 and $488,280 for 

2004, 2003 and 2002, respectively. Operating profits of all consolidated foreign subsidiaries were $46,516, $14,340 and $17,953 for 2004, 2003 and 2002, respec- tively. Domestic operations account for the remaining net sales and operating profits. Long-lived assets consist of net property, plant and equipment, goodwill, intangi- bles, deferred pension assets and other long-term assets. Long-lived assets of consolidated foreign subsidiaries totaled $149,037, $130,188 and $108,077 at December 31, 2004, 2003 and 2002, respectively. The consolidat- ed total of long-lived assets for the Company was $2,492,223, $1,967,464 and $1,926,319 at December 31, 2004, 2003 and 2002, respectively. During 2002, the reduction in the carrying value of long-lived assets of consolidated foreign subsidiaries resulted primarily from an impairment of long-lived assets of the Argentina sub- sidiary due to a devaluation of the Argentine peso and other foreign currency translation rate declines. Total assets of consolidated foreign subsidiaries at December 31, 2004 were $458,705, which represented 10.7 per- cent of the Company’s total assets. No single geographic area outside the United States was significant relative to consolidated net sales or operating profits. Export sales and sales to any individual customer were each less than 10 percent of consolidated sales to unaffiliated cus- tomers during all years presented. 

In the reportable segment financial information that follows, operating profit was total revenue, including inter-segment transfers, less operating costs and expens- es. Identifiable assets were those directly identified with each reportable segment. Administrative Segment assets consisted primarily of cash and cash equivalents, invest- ments, deferred pension assets, and headquarters prop- erty, plant and equipment. The operating margin for each Operating Segment was based upon total net sales and inter-segment transfers. Domestic inter-segment transfers were accounted for at the approximate fully absorbed manufactured cost plus distribution costs. International inter-segment transfers were accounted for at values comparable to normal unaffiliated customer sales. The reportable segment financial information has been restated for 2001 and 2000 to reflect certain reor- ganizations between segments effective January 1, 2002. 

