MANAGEMENT’S DISCUSSION AND ANALYSIS OF  FINANCIAL CONDITION AND RESULTS OF OPERATIONS can economies showed signs of improving although market demand for architectural and product finishes products in the region continue to be somewhat con- strained. Sales in the U.K. subsidiary during 2003 con- tinued to be strong compared to 2002. Selective price increases throughout the Segment and some reversal of the shift to lower priced products during 2002 also helped improve sales in 2003. Shown below are operating profit and the percent change for the current period by reportable segment: Consolidated gross profit in 2003 increased $116.7 over 2002 last year and increased as a percent of sales to 45.4 percent from 45.1 percent in 2002. Higher con- solidated sales volume levels accounted for approxi- mately $98.6 million of the gross profit improvement.  A reduction in the net pension credit of $5.9 million reduced consolidated gross profit for 2003. Higher- margin product sales mix and lower product costs in the Paint Stores Segment combined with moderating raw material costs, improved overhead absorption related to architectural paint volume gains and manufacturing expense reductions in the Consumer Segment enhanced consolidated gross profit margins approximately $16.5 million. The Automotive Finishes Segment’s margins improved slightly over 2002 due to moderating raw material costs, favorable customer/product sales mix and improved manufacturing absorption due to cost reductions. The International Coatings Segment’s margins in 2003 were lower than 2002 due to economic and competitive pressures and the higher cost of dollar- denominated raw materials. Consolidated SG&A for 2003 increased $97.1 million, or 5.4 percent, to $1.88 billion versus $1.78 bil- lion in 2002. As a percent of sales, SG&A increased to 34.8 percent from 34.4 percent in 2002. Higher SG&A in 2003 was due primarily to expenses associated with additional investment in our businesses, a decrease in the net pension credit of $15.0 million and an increase in intangible asset impairment charges of $9.7 million. In the Paint Stores Segment, SG&A increased $88.3 mil- lion in 2003 due primarily to continued investments in Paint Stores Segment operating profit for 2003 increased due to higher sales volumes and improved gross margins as a result of a favorable product sales mix partially offset by continued margin pressure of product finishes products. This Segment’s operating profit was adversely affected in 2003 by a reduction of $11.3 million in the net pension credit, the investment by the Segment in the Asia/Pacific market, incremental expenses associated with new stores, continuing increas- es in health care costs and increased utility costs earlier During the first quarter of 2002, a reduction of $8,997 was charged to Cost of Goods Sold ($6,502) and SG&A ($2,495) for the impairment of fair values of long-lived assets of the Argentine subsidiary in accor- dance with SFAS No. 144. In accordance with SFAS No. 142, an annual impairment review was conducted as of October 1, 2002 resulting in an impairment of goodwill and indefinite-lived intangible assets of $3,607 that was recorded and charged to Cost of Goods Sold ($801) and SG&A ($2,806). In 2003, an impairment was charged to SG&A for $1,013 due to the reduction in fair values of indefinite-lived intangible assets. An impairment of capitalized software costs was also recorded in 2003 and charged to SG&A for $11,441. See Notes 3 and 4, on pages 51 through 53 of this report, for more infor- mation concerning the impairment of goodwill, intangi- ble assets and long-lived assets in accordance with SFAS No. 142 and SFAS No. 144. new stores and in the Asia/Pacific market and a reduc- tion in the net pension credit of $10.5 million. The Con- sumer Segment’s SG&A decreased $11.8 million in 2003 and the percentage of sales ratio was favorable to 2002 due primarily to continued cost control, higher sales levels and a $3.6 million reduction in intangible asset impairment charges that were partially offset by a $1.6 million reduction in the net pension credit. In the Automotive Segment, SG&A as a percent of sales increased in 2003 over 2002 due primarily to the sales short fall and a reduction of $1.3 million in the net pen- sion credit that were partially offset by tight expense control. In the International Coatings Segment, SG&A increased $7.2 million in U.S. dollar spending during 2003 but declined as a percentage of sales due primarily to increased sales levels and tight expense control. The Administrative Segment’s SG&A increased $7.5 million in 2003 due primarily to an intangible asset impairment charge of $8.7 million and increased fees for outside professional and consulting services, partially offset by reduced spending for software licenses. 35 (thousands of dollars) 2003 Change 2002 Paint Stores.................. $ 403,379  1.2% $ 398,546  Consumer .................... 198,984  3.3% 192,549 Automotive Finishes .... 52,375  (3.8%) 54,458  International Coatings. 8,370 248.8% (5,624)  Administrative ............. (140,182) 1.8% (142,765) $ 522,926  5.2% $ 497,164