MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS primarily to charges incurred relating to the Company’s foreign operations. See Note 13 on page 65 of this report, for more information concerning the Other expense – net caption. in 2003. The operating profit improvement for the Con- sumer Segment in 2003 resulted primarily from higher sales levels, tight expense control and manufacturing efficiencies relating to the sales volume increase despite  a reduction of $5.9 million in the net pension credit. Operating profit reduction in the Automotive Finishes Segment in 2003 resulted primarily from low sales vol- ume, related unfavorable manufacturing absorption and a reduction of $1.8 million in the net pension credit compared to 2002. There was no significant impact on operating profit in this Segment during 2003 from the fiscal year change or foreign currency fluctuations. The International Segment’s 2003 operating profit increased due primarily to a reduction of $11.9 million in impair- ment charges, the beginning stabilization of the South American economies and improving currency exchange rates relating to dollar-denominated raw materials. Effective January 1, 2002, the Company adopted SFAS No. 142. In accordance with the requirements of that pronouncement, indefinite-lived intangible assets and goodwill were reviewed for possible impairment. Due to the reduction in fair value of certain acquired trademarks and businesses, related principally to inter- national acquisitions and the acquisition of Thompson Minwax Holding Corp., the Company recorded an after-tax transitional impairment charge of $183.1 million, or $1.21 per share, in the first quarter of 2002. The transitional impairment charge was recorded as a cumulative effect of change in accounting principle in accordance with SFAS No. 142. Income before income taxes, minority interest and cumulative effect of change in accounting principle increased $25.8 million in 2003 primarily as a result of increased gross profit exceeding SG&A by $19.6 mil- lion. Net income increased $204.5 million in 2003 due primarily to the cumulative effect of change in account- ing principle recorded in 2002 and to the reduction in the effective tax rate to 36.5 percent in 2003 from 37.5 percent in 2002. For the full year 2003, diluted income per common share before cumulative effect of change in accounting principle increased to $2.26 per share from $2.04 per share in 2002. Diluted net income per com- mon share in 2003 was $2.26 per share compared to $.84 per share for 2002 due primarily to the cumulative effect of change in accounting principle net of income taxes of $1.20 per share for the full year of 2002. Interest expense decreased $1.7 million in 2003 ver- sus 2002 due to average short-term borrowing rates that were 50 average basis points lower in 2003 and lower average outstanding short-term and long-term debt. Other expense – net decreased $2.8 million in 2003 compared to 2002 due primarily to foreign currency related losses that decreased $7.0 million partially offset by net expenses of financing and investing activities that increased $1.8 million, provisions for environmental- related matters that increased $1.6 million and a reduc- tion in dividend and royalty income of $.5 million. Decreases in foreign currency exchange losses during 2003 were due primarily to the favorable exchange rates experienced in most South American currencies, particu- larly during the last half of 2003. Increases in expenses of financing and investing activities in 2003 were due 36