Management’s Discussion and Analysis action antitrust legal settlement.
Net income for 2005 and 2004 included an aftertax charge of $13 million, or 8 cents a share, and $19 million, or 11 cents a share, respectively, to reflect the net increase in the current value of the Company’s obligation under the PPG Settlement Arrangement relating to asbestos claims.
## Table 0 ##
Coatings sales increased $291 million or 5% in 2005.
Sales increased 3% due to higher selling prices across all businesses except automotive; 1% due to improved volumes as increases in our aerospace, architectural and original equipment automotive businesses offset volume declines in automotive refinish and industrial coatings; and 1% due to the positive effects of foreign currency translation.
Operating income decreased $168 million in 2005.
The adverse impact of inflation totaled $315 million, of which $245 million was attributable to higher raw material costs.
Higher year-over-year selling prices increased operating earnings by $169 million.
Coatings operating earnings were reduced by the $132 million charge for the cost of the Marvin legal settlement net of insurance recoveries.
Other factors increasing coatings operating income in 2005 were the increased sales volumes described above, manufacturing efficiencies, formula cost reductions and higher other income.
Glass sales increased $33 million or 1% in 2005.
Sales increased 1% due to improved volumes as increases in our automotive replacement glass, insurance and services and performance glazings (flat glass) businesses offset volume declines in our fiber glass and automotive original equipment glass businesses.
The positive effects of foreign currency translation were largely offset by lower selling prices primarily in our automotive replacement glass and automotive original equipment businesses.
Operating income decreased $113 million in 2005.
The federal glass class action antitrust legal settlement of $61 million, the $49 million impact of rising natural gas costs and the absence of the $19 million gain in 2004 from the sale/ leaseback of precious metal combined to account for a reduction in operating earnings of $129 million.
The remaining year-over-year increase in glass operating earnings of $16 million resulted primarily from improved manufacturing efficiencies and lower overhead costs exceeding the adverse impact of other inflation.
Our continuing efforts in 2005 to position the fiber glass business for future growth in profitability were adversely impacted by the rise in fourth quarter natural gas prices, slightly lower year-over-year sales, lower equity earnings due to weaker pricing in the Asian electronics market, and the absence of the $19 million gain which occurred in 2004 stemming from the sale/ leaseback of precious metals.
Despite high energy costs, we expect fiber glass earnings to improve in 2006 because of price strengthening in the Asian electronics market, which began to occur in the fourth quarter of 2005, increased cost reduction initiatives and the positive impact resulting from the start up of our new joint venture in China.
This joint venture will produce high labor content fiber glass reinforcement products and take advantage of lower labor costs, allowing us to refocus our U. S.  production capacity on higher margin direct process products.
The 2005 operating earnings of our North American automotive OEM glass business declined by $30 million compared with 2004.
Significant structural changes continue to occur in the North American automotive industry, including the loss of U. S.  market share by General Motors and Ford.
This has created a very challenging and competitive environment for all suppliers to the domestic OEMs, including our business.
About half of the decline in earnings resulted from the impact of rising natural gas costs, particularly in the fourth quarter, combined with the traditional adverse impact of year-over-year sales price reductions producing a decline in earnings that exceeded our successful efforts to reduce manufacturing costs.
The other half of the 2005 decline was due to lower sales volumes and mix and higher new program launch costs.
The challenging competitive environment and high energy prices will continue in 2006.
Our business is working in 2006 to improve its performance through increased manufacturing efficiencies, structural cost reduction initiatives, focusing on profitable growth opportunities and improving our sales mix.
Chemicals sales increased $364 million or 18% in 2005.
Sales increased 21% due to higher selling prices, primarily for chlor-alkali products, and 1% due to the combination of an acquisition in our optical products business and the positive effects of foreign currency translation.
Total volumes declined 4% as volume increases in optical products were more than offset by volume declines in chlor-alkali and fine chemicals.
Volume in chlor-alkali products and silicas were adversely impacted in the third and fourth quarters by the hurricanes.
Operating income increased $160 million in 2005.
The primary factor increasing operating income was the record high selling prices in chlor-alkali.
Factors decreasing operating income were higher inflation, including $136 million due to increased energy and ethylene costs; $34 million of direct costs related to the impact of the hurricanes; $27 million due to the asset impairment charge related to our fine chemicals business; lower sales volumes; higher manufacturing costs and increased environmental expenses.
The increase in chemicals operating earnings occurred primarily through the first eight months of 2005.
The hurricanes hit in September impacting volumes and costs in September through November and contributing to the rise in natural gas prices which lowered fourth quarter chemicals earnings by $58 million, almost 57% of the full year impact of higher natural gas prices.
The damage caused by Hurricane Rita resulted in the shutdown of our Lake Charles, LA chemical plant for a total of eight days in September and an additional five
Management’s Discussion and Analysis Interest expense was $17 million less in 2004 than in 2003 reflecting the year over year reduction in debt of $316 million.
Other charges declined $30 million in 2004 due to a combination of lower environmental remediation, legal and workers compensation expenses and the absence of certain 2003 charges.
Other earnings were $28 million higher in 2004 due primarily to higher earnings from our equity affiliates.
The effective tax rate for 2004 was 30.29% compared to 34.76% for the full year 2003.
The reduction in the rate for 2004 reflects the benefit of the subsidy offered pursuant to the Medicare Act not being subject to tax, the continued improvement in the geographical mix of nonU.
S.  earnings and the favorable resolution during 2004 of matters related to two open U. S.  federal income tax years.
Net income in 2004 totaled $683 million, an increase of $189 million over 2003, and earnings per share – diluted increased $1.06 to $3.95 per share.
Results of Business Segments
## Table 1 ##
(1) Operating income by segment for 2003 has been revised to reflect a change in the allocation method for certain pension and other postretirement benefit costs in 2004 (See Note 22, “Business Segment Information”, under Item 8 of this Form 10-K).
Coatings sales increased $440 million or 9% in 2004.
Sales increased 6% from improved volumes across all our coatings businesses and 4% due to the positive effects of foreign currency translation, primarily from our European operations.
Sales declined 1% due to lower selling prices, principally in our automotive business.
Operating income increased $58 million in 2004.
Factors increasing operating income were the higher sales volume ($135 million) and the favorable effects of currency translation described above and improved manufacturing efficiencies of $20 million.
Factors decreasing operating income were inflationary cost increases of $82 million and lower selling prices.
Glass sales increased $54 million or 3% in 2004.
Sales increased 6% from improved volumes primarily from our performance glazings (flat glass), fiber glass, and automotive original equipment businesses net of lower volumes in our automotive replacement glass business.
Sales also increased 2% due to the positive effects of foreign currency translation, primarily from our European fiber glass operations.
Sales declined 5% due to lower selling prices across all our glass businesses.
Operating income in 2004 increased $98 million.
Factors increasing operating income were improved manufacturing efficiencies of $110 million, higher sales volume ($53 million) described above, higher equity earnings and the gains on the sale/leaseback of precious metals of $19 million.
The principal factor decreasing operating income was lower selling prices.
Fiber glass volumes were up 15% for the year, although pricing declined.
With the shift of electronic printed wiring board production to Asia and the volume and pricing gains there, equity earnings from our joint venture serving that region grew in 2004.
These factors combined with focused cost reductions and manufacturing efficiencies to improve the operating performance of this business, as we continue to position it for future growth in profitability.
Chemicals sales increased $263 million or 15% in 2004.
Sales increased 10% from improved volumes in our commodity and specialty businesses and 4% due to higher selling prices for our commodity products.
Sales also increased 1% due to the positive effects of foreign currency translation, primarily from our European operations.
Operating income increased $63 million in 2004.
Factors increasing operating income were the higher selling prices for our commodity products and the higher sales volume ($73 million) described above, improved manufacturing efficiencies of $25 million and lower environmental expenses.
Factors decreasing 2004 operating income were inflationary cost increases of $40 million and higher energy costs of $79 million.
Other Significant Factors The Company’s pension and other postretirement benefit costs for 2004 were $45 million lower than in 2003.
This decrease reflects the market driven growth in pension plan assets that occurred in 2003, the impact of the $140 million in cash contributed to the pension plans by the Company in 2004 and the benefit of the subsidy offered pursuant to the Medicare Act, as discussed in Note 12, “Pension and Other Postretirement Benefits,” under Item 8 of this Form 10-K.  Commitments and Contingent Liabilities, including Environmental Matters PPG is involved in a number of lawsuits and claims, both actual and potential, including some that it has asserted against others, in which substantial monetary damages are sought.
See Item 3, “Legal Proceedings” of this Form 10-K and Note 13, “Commitments and Contingent Liabilities,” under Item 8 of this Form 10-K for a description of certain of these lawsuits, including a description of the proposed PPG Settlement Arrangement for asbestos claims announced on May 14, 2002.
As discussed in Item 3 and Note 13, although the result of any future litigation of such lawsuits and claims is inherently unpredictable, management believes that, in the aggregate, the outcome of all lawsuits and claims involving PPG, including asbestos-related claims in the event the PPG Settlement Arrangement described in Note 13 does not become effective, will not have a material effect on PPG’s consolidated financial position or liquidity; however, any such outcome may be material to the results of operations of any particular period in which costs, if any, are recognized.
The Company has been named as a defendant, along with various other co-defendants, in a number of antitrust lawsuits filed in federal and state courts.
These suits allege that PPG acted with competitors to fix prices and allocate markets in the flat glass and automotive refinish industries.
Notes to the Financial Statements auction rate securities are highly liquid investments, and view them as being similar to cash and cash equivalents.
We invest in auction rate securities that reset the interest rate every one to three weeks even though the underlying securities have stated maturities in excess of 90 days.
Each time the interest rate is reset, we can choose to sell our investment.2.
Acquisitions, Asset Impairment and Business Restructuring During 2005, 2004 and 2003, the Company made acquisitions at a cost totaling $91 million, $67 million and $3 million, respectively.
The amount in 2005 relates primarily to four acquisitions.
In the second quarter, the Company acquired the business of International Polarizer Holdings Trust, a privately held polarized film manufacturer for sun lens applications based in Marlborough, Massachusetts.
In the third quarter, the Company acquired the business of Crown Coatings Industries, a privately held manufacturer of specialty wood coatings based in Singapore.
In the fourth quarter, the Company acquired a network of 42 architectural coatings service centers from Iowa Paint Manufacturing.
Also in the fourth quarter, the Company purchased the 30% minority interest in PPG Coatings (Hong Kong), which wholly owns a Chinese automotive and industrial coatings producer.
The preliminary purchase price allocation of these acquisitions resulted in an excess of purchase price over the fair value of net assets acquired, which has been reflected as an addition to goodwill.
The amount in 2004 related primarily to the acquisition in the first quarter of the remaining one-third interest in PPG Iberica, S. A. , a Spanish automotive and industrial coatings producer, for $61 million.
The purchase price allocation resulted in an excess of purchase price over the fair value of net assets acquired, which has been reflected as an addition to goodwill.
Market conditions, such as fewer new drug approvals, product withdrawals, excess production capacity and an increasing share of generic drugs, have continued to put pressure on the pharmaceutical industry, and have created a challenging environment for our fine chemicals business, which is included in our chemicals segment.
These conditions have produced an operating performance in our fine chemicals business in 2005 that has been disappointing.
As a result, in the fourth quarter, the Company evaluated our fine chemicals business for impairment in accordance with SFAS No.144, “Accounting for the Impairment of Long-Lived Assets”, and determined that indicators of impairment were present for certain long-lived assets at our manufacturing plant in the United States.
In measuring the fair value of these assets, the Company utilized an expected cash flow methodology to determine that the carrying value of these assets exceeded their fair value by $24 million.
We have also decided to sell a small fine chemical facility in France and have written the related assets down to their estimated net realizable value.
Due to these developments, the Company has recorded an asset impairment charge related to these fine chemicals assets of $27 million pretax, which is included in “Other charges” in the accompanying statement of income.
In 2003, the Company recorded a charge of $6 million for restructuring actions related to our coatings and glass segments.
This charge was for severance benefits for 93 employees.
These actions were completed in 2004.
Also in 2003, $2 million of the initial $81 million restructuring charge from 2002 described below, primarily related to the coatings segment, was reversed to income.
In 2002, the Company recorded a charge of $81 million for restructuring and other related activities.
The workforce reductions covered by this charge are complete; however, as of Dec.  31, 2005, $5 million of this reserve remained to be spent.
This reserve relates to a group of approximately 75 employees in Europe, whose terminations have been concluded under a different social plan than was assumed when the reserve was recorded.
Under the terms of this social plan, severance payments will be paid to these 75 individuals through 2008.
Additionally, during 2003, we paid $3 million related to remaining lease and other exit costs reserved in 2000 and 1999.3.
Working Capital Detail
## Table 2 ##
(1) Inventories valued using the LIFO method comprised 57% and 55% of total gross inventory values as of Dec.  31, 2005 and 2004, respectively.
If the first-in, first-out method of inventory valuation had been used, inventories would have been $203 million and $167 million higher as of Dec.  31, 2005 and 2004, respectively.
During the years ended Dec.  31, 2005 and 2004, certain inventories accounted for on the LIFO method of accounting were reduced, which resulted in the liquidation of certain quantities carried at costs prevailing in prior years.
The net effect on earnings of these liquidations was not material.
Notes to the Financial Statements levels in the Calcasieu River estuary and issued a Final Remedial Investigation Report in Sept.  2003, which incorporates the Human Health and Ecological Risk Assessments, indicating that elevated levels of risk exist in the estuary.
PPG and other potentially responsible parties are performing a feasibility study under the authority of the Louisiana Department of Environmental Quality (“LDEQ”).
A report describing the process by which preliminary remedial action goals will be determined was submitted on March 1, 2005 and approved by LDEQ on Aug.  10, 2005.
These goals will more fully define the nature and extent of any potentially required remedial actions.
When the results of the feasibility study are known, an evaluation will be made to determine what role PPG would have with respect to future remedial actions.
It is expected that submittal of a draft feasibility study to the LDEQ will occur in the second half of 2006.
With respect to certain waste sites, the financial condition of any other potentially responsible parties also contributes to the uncertainty of estimating PPG’s final costs.
Although contributors of waste to sites involving other potentially responsible parties may face governmental agency assertions of joint and several liability, in general, final allocations of costs are made based on the relative contributions of wastes to such sites.
PPG is generally not a major contributor to such sites.
The impact of evolving programs, such as natural resource damage claims, industrial site reuse initiatives and state remediation programs, also adds to the present uncertainties with regard to the ultimate resolution of this unreserved exposure to future loss.
The Company’s assessment of the potential impact of these environmental contingencies is subject to considerable uncertainty due to the complex, ongoing and evolving process of investigation and remediation, if necessary, of such environmental contingencies, and the potential for technological and regulatory developments including the formal review by the NJDEP of its chromium cleanup guidelines.
In May 2005, a report on this review was issued expressing NJDEP’s conclusion that the existing chromium cleanup guidelines are adequate for current remediation activities, but they could change as new information becomes available.
In June 2003, our partner in a fiber glass joint venture in South America filed for bankruptcy.
Upon resolution of the bankruptcy proceedings, the partner’s ownership interest may transfer to one of its senior secured creditors or be sold.
While PPG expects operations at the joint venture to continue, the Company continues to evaluate its options with respect to this venture, which may include the sale or liquidation of the venture.
Should liquidation occur, PPG’s exposure to loss would be limited to $10 million, which includes a combination of the Company’s investment, outstanding receivables and a loan guarantee related to this venture.14.
Shareholders’ Equity A class of 10 million shares of preferred stock, without par value, is authorized but unissued.
Common stock has a par value of $1.662?3 per share; 600 million shares are authorized.
The following table summarizes the shares outstanding for the three years ended Dec.  31, 2005:
## Table 3 ##
ESOP shares represent the unreleased new shares held by the ESOP that are not considered outstanding under SOP 93-6 (see Notes 1 and 16).
The number of ESOP shares changes as a result of the purchases of new shares and releases of shares to participant accounts by the ESOP.
PPG has a Shareholders’ Rights Plan, under which each share of the Company’s outstanding common stock has an associated preferred share purchase right.
The rights are exercisable only under certain circumstances and allow holders of such rights to purchase common stock of PPG or an acquiring company at a discounted price, which would generally be 50% of the respective stocks’ current fair market value.
Per share cash dividends paid were $1.86 in 2005, $1.79 in 2004 and $1.73 in 2003.15.
Accumulated Other Comprehensive Loss
## Table 4 ##
Unrealized currency translation adjustments exclude income tax expense (benefit) given that the earnings of non-U.
S.  subsidiaries are deemed to be reinvested for an indefinite period of time.
The tax benefit (cost) related to changes in the minimum pension liability for the years ended Dec.  31, 2005, 2004 and 2003 was $107 million, $(21) million and $(69) million, respectively.
The

<table><tr><td></td><td><i>Net sales</i></td><td><i>Operating income</i></td></tr><tr><td><i>(Millions)</i></td><td>2005</td><td>2004</td><td>2005</td><td>2004</td></tr><tr><td>Coatings</td><td>$5,566</td><td>$5,275</td><td>$609</td><td>$777</td></tr><tr><td>Glass</td><td>2,237</td><td>2,204</td><td>56</td><td>169</td></tr><tr><td>Chemicals</td><td>2,398</td><td>2,034</td><td>451</td><td>291</td></tr></table>
<table><tr><td></td><td><i>Net sales</i></td><td><i>Operating income</i></td></tr><tr><td><i>(Millions)</i></td><td>2004</td><td>2003</td><td>2004</td><td>2003<sup>-1</sup></td></tr><tr><td>Coatings<sup></sup></td><td>$5,275</td><td>$4,835</td><td>$777</td><td>$719</td></tr><tr><td>Glass</td><td>2,204</td><td>2,150</td><td>169</td><td>71</td></tr><tr><td>Chemicals<sup></sup></td><td>2,034</td><td>1,771</td><td>291</td><td>228</td></tr></table>
<table><tr><td><i>(Millions)</i></td><td>2005</td><td>2004</td></tr><tr><td><i></i> <i>Receivables</i></td><td></td><td></td></tr><tr><td>Customers</td><td>$1,728</td><td>$1,675</td></tr><tr><td>Equity affiliates</td><td>54</td><td>34</td></tr><tr><td>Other</td><td>128</td><td>127</td></tr><tr><td>Allowance for doubtful accounts</td><td>-39</td><td>-39</td></tr><tr><td><i></i> <i>Total</i></td><td>$1,871</td><td>$1,797</td></tr><tr><td><i></i> <i>Inventories<sup>-1</sup></i></td><td></td><td></td></tr><tr><td>Finished products</td><td>$667</td><td>$635</td></tr><tr><td>Work in process</td><td>111</td><td>118</td></tr><tr><td>Raw materials</td><td>213</td><td>192</td></tr><tr><td>Supplies</td><td>128</td><td>131</td></tr><tr><td><i></i> <i>Total</i></td><td>$1,119</td><td>$1,076</td></tr><tr><td><i></i> <i>Accounts payable and accrued liabilities</i></td><td></td><td></td></tr><tr><td>Trade creditors</td><td>$927</td><td>$874</td></tr><tr><td>Accrued payroll</td><td>273</td><td>300</td></tr><tr><td>Other postretirement and pension benefits</td><td>91</td><td>97</td></tr><tr><td>Income taxes</td><td>36</td><td>36</td></tr><tr><td>Other</td><td>449</td><td>344</td></tr><tr><td><i></i> <i>Total</i></td><td>$1,776</td><td>$1,651</td></tr></table>
<table><tr><td></td><td><i>Common</i><i>Stock</i></td><td>Treasury Stock</td><td>ESOP Shares</td><td>Shares Outstanding</td></tr><tr><td>Balance, Jan. 1, 2003</td><td>290,573,068</td><td>-120,988,129</td><td>-142,746</td><td>169,442,193</td></tr><tr><td>Issuances/releases</td><td>—</td><td>1,479,576</td><td>4,870</td><td>1,484,446</td></tr><tr><td>Balance, Dec. 31, 2003</td><td>290,573,068</td><td>-119,508,553</td><td>-137,876</td><td>170,926,639</td></tr><tr><td>Purchases</td><td>—</td><td>-1,507,400</td><td>—</td><td>-1,507,400</td></tr><tr><td>Issuances/releases</td><td>—</td><td>2,577,392</td><td>5,164</td><td>2,582,556</td></tr><tr><td>Balance, Dec. 31, 2004</td><td>290,573,068</td><td>-118,438,561</td><td>-132,712</td><td>172,001,795</td></tr><tr><td>Purchases</td><td>—</td><td>-9,401,300</td><td>—</td><td>-9,401,300</td></tr><tr><td>Issuances/releases</td><td>—</td><td>2,669,955</td><td>6,840</td><td>2,676,795</td></tr><tr><td><i></i> <i>Balance, Dec. 31, 2005</i></td><td>290,573,068</td><td>-125,169,906</td><td>-125,872</td><td>165,277,290</td></tr></table>
<table><tr><td><i>(Millions)</i></td><td>Unrealized Currency Translation Adjustment</td><td>Minimum Pension Liability Adjustment</td><td>Unrealized Gain (Loss) on Marketable Securities</td><td>Unrealized Gain (Loss) on Derivatives</td><td>Accumulated Other Comprehensive Loss</td></tr><tr><td>Balance,</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Jan. 1, 2003</td><td>$-340</td><td>$-775</td><td>$5</td><td>$9</td><td>$-1,101</td></tr><tr><td>Net change</td><td>328</td><td>147</td><td>-3</td><td>-13</td><td>459</td></tr><tr><td>Balance,</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Dec. 31, 2003</td><td>-12</td><td>-628</td><td>2</td><td>-4</td><td>-642</td></tr><tr><td>Net change</td><td>180</td><td>33</td><td>-3</td><td>-3</td><td>207</td></tr><tr><td>Balance,</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Dec. 31, 2004</td><td>168</td><td>-595</td><td>-1</td><td>-7</td><td>-435</td></tr><tr><td>Net change</td><td>-215</td><td>-173</td><td>1</td><td>3</td><td>-384</td></tr><tr><td><i></i> <i>Balance,</i></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td><i></i> <i>Dec. 31, 2005</i></td><td>$-47</td><td>$-768</td><td>$—</td><td>$-4</td><td>$-819</td></tr></table>

Question: In which year is Unrealized Gain (Loss) on Marketable Securities greater than 4?
Answer: 2003