involved, management is unable to predict the outcome of the lead pigment and lead-based paint litigation, the number or nature of possible future claims and proceed- ings, or the affect that any legislation and/or administra- tive regulations may have on the litigation or against the Company. In addition, management cannot reasonably determine the scope or amount of the potential costs and liabilities related to such litigation, or any such legisla- tion and regulations. The Company has not accrued any amounts for such litigation. Any potential liability that may result from such litigation or such legislation and regulations cannot reasonably be estimated. However, based upon, among other things, the outcome of such lit- igation to date, management does not currently believe that the costs or potential liability ultimately determined to be attributable to the Company arising out of such lit- igation will have a material adverse effect on the Compa- ny’s results of operations, liquidity or financial condition. 

The operations of the Company, like those of other companies in the same industry, are subject to various federal, state and local environmental laws and regula- tions. These laws and regulations not only govern cur- rent operations and products, but also impose potential liability on the Company for past operations. Manage- ment expects environmental laws and regulations to impose increasingly stringent requirements upon the Company and the industry in the future. Management believes that the Company conducts its operations in compliance with applicable environmental laws and regulations and has implemented various programs designed to protect the environment and promote continued compliance. 

Depreciation of capital expenditures and other expenses related to ongoing environmental compliance measures were included in the normal operating expens- es of conducting business. The Company’s capital expenditures, depreciation and other expenses related to ongoing environmental compliance measures were not material to the Company’s financial condition, liquidity, cash flow or results of operations during 2004. Manage- ment does not expect that such capital expenditures, depreciation and other expenses will be material to the Company’s financial condition, liquidity, cash flow or results of operations in 2005. 

The Company is involved with environmental inves- tigation and remediation activities at some of its current and former sites (including sites which were previously owned and/or operated by businesses acquired by the Company). In addition, the Company, together with 

other parties, has been designated a potentially responsi- ble party under federal and state environmental protec- tion laws for the investigation and remediation of environmental contamination and hazardous waste at a number of third-party sites, primarily Superfund sites. The Company may be similarly designated with respect to additional third-party sites in the future. 

The Company accrues for estimated costs of investi- gation and remediation activities at its current, former and third party sites for which commitments or clean-up plans have been developed and when such costs can be reasonably estimated based on industry standards and professional judgment. These estimated costs are based on currently available facts regarding each site. The Company accrues a specific estimated amount when such an amount and a time frame in which the costs will be incurred can be reasonably determined. If the best estimate of costs can only be identified as a range and no specific amount within that range can be determined more likely than any other amount within the range, the minimum of the range is accrued by the Company in accordance with applicable accounting rules and inter- pretations. The Company continuously assesses its potential liability for investigation and remediation activities and adjusts its environmental-related accruals as information becomes available upon which more accurate costs can be reasonably estimated. At Decem- ber 31, 2004, 2003 and 2002, the Company had accru- als for environmental-related activities of $141.5 million, $133.4 million and $128.7 million, respectively. 

Due to the uncertainties surrounding environmental investigation and remediation activities, the Company’s liability may result in costs that are significantly higher than currently accrued. If the Company’s future loss contingency is ultimately determined to be at the maxi- mum of the range of possible outcomes for every site for which costs can be reasonably estimated, the Company’s aggregate accruals for environmental-related activities would be $117.1 million higher than the accruals at December 31, 2004. 

Four of the Company’s current and former manufac- turing sites, described below, accounted for the majority of the accruals for environmental-related activities and the unaccrued maximum of the estimated range of pos- sible outcomes at December 31, 2004. Included in the accruals of $141.5 million at December 31, 2004 was $92.4 million related directly to these four sites. Of the aggregate unaccrued exposure of $117.1 million at December 31, 2004, $64.4 million related to the four 

