developed using both industry and company historical results and forecasts. Such models required management to make certain assumptions based upon information available at the time the valuation was performed, which could differ from actual results. See Note 4, pages 52 and 53 of this report, for a discussion of the reductions in carrying value of long-lived assets in accordance with SFAS No. 144. To determine the Company’s ultimate obligation under its defined benefit pension plans and other postre- tirement benefit plans, management must estimate the future cost of benefits and attribute that cost to the time period during which each covered employee works. To record the related net assets and obligations of such benefit plans, management used assumptions related  to inflation, investment returns, mortality, employee turnover, rate of compensation increases, medical costs and discount rates. Management, along with third-party actuaries, reviews all of these assumptions on an ongo- ing basis to ensure that the most reasonable information available is being considered. An increase or decrease in the assumptions or economic events outside manage- ment’s control could have a direct impact on reported results of operations. In determining the expected long- term rate of return on defined benefit pension plan assets, management considered the historical rates of return, the nature of investments and an expectation for future investment strategies. For 2005 expense recogni- tion, the Company will use a discount rate of 5.75 percent, an expected rate of return on defined benefit pension plan assets of 7.5 percent and a rate of compen- sation increase of 4.0 percent. Use of these assumptions will result in a net pension credit in 2005 that is expect- ed to remain approximately the same as 2004. See Note 7, pages 55 through 59 of this report, for information concerning the Company’s defined benefit pension plans and postretirement benefits. The Company is self-insured for certain liabilities, primarily worker’s compensation claims, employee medical and disability benefits, and automobile, property and general liability claims. Claims filed but unsettled and estimated claims incurred but not reported were accrued based upon management’s estimated aggregate liability for claims incurred using historical experience and actuarial assumptions followed in the insurance industry. The Company is involved with environmental inves- tigation and remediation activities at some of its current and former sites and at a number of third-party sites. Management is continually re-evaluating the Compa- ny’s operating facilities against its long-term strategic goals and may adopt an exit or disposal plan for facilities that no longer meet those strategic goals. Effective Janu- ary 1, 2003, the Company recognizes liabilities associated with exit or disposal activities as incurred in accordance with SFAS No. 146, “Accounting for Costs from Exit or Disposal Activities.” Qualified exit costs primarily include post-closure rent expenses, incremental post-clo- sure costs and costs of employee terminations. Adjust- ments may be made to liabilities accrued for qualified exit costs if information becomes available upon which more accurate amounts can be reasonably estimated. Concur- rently, long-lived assets are tested for impairment in accordance with SFAS No. 144 and, if impairment is determined to exist, the carrying value of the long-lived assets is reduced to fair value estimated by management using a cash flow valuation model, incorporating dis- count rates commensurate with the risks involved for each group of assets. Additional impairment may be recorded for subsequent revisions in estimated fair value. During 2004, a leased distribution facility in the Automo- tive Finishes Segment was exited. During 2003, a formal plan was approved to close and dispose of a manufactur- ing facility in the Consumer Segment. The useful lives of the long-lived assets were reduced at that time in accor- dance with SFAS No. 144. Manufacturing ceased at the facility during 2004. In accordance with SFAS No. 146, non-cancelable rent, post-closure severance and other qualified exit costs were accrued at the time of ceasing The Company accrued for environmental remediation- related activities for which commitments or clean-up plans have been developed and for which costs could be reasonably estimated based on industry standards and historical experience. All accrued amounts were record- ed on an undiscounted basis. Accrued environmental remediation-related expenses included direct costs of investigation and remediation and indirect costs such  as compensation and benefits for employees directly involved in the investigation and remediation activities and fees paid to outside engineering, consulting and law firms. See Note 9, on pages 60 and 61 of this report, for information concerning the accrual for extended envi- ronmental-related activities. Due to uncertainties sur- rounding environmental investigations and remediation activities, the Company’s ultimate liability may result in costs that are significantly higher than currently accrued. See pages 29 and 30 of this report for a discussion concerning unaccrued future loss contingencies. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 24