Health Imaging  Sales in the Health Imaging segment increased 3% from the prior year, or 6% excluding the adverse effect of currency movements. Sales inside the U.S. increased 9%, while sales outside the U.S. decreased 2%, despite an increase of 7% in emerging market sales. Excluding negative exchange movements, sales outside the U.S. increased 4%

Sales of digital products (including laser printers, digital media, digital capture equipment and Picture Archiving and Communication Systems (PACS)) increased 11% over fiscal 1999. Placements of DryView laser imagers increased 67% in 2000. DryView media sales increased 48% on higher volumes, while digital capture products and PACS increased 51%. The growth in these digital product lines was partially mitigated by an expected decline in wet laser imaging sales.

Sales of traditional medical products, including analog film, equipment, chemistry and services, declined 3% for the year but were flat when adjusted for exchange. For traditional analog film (excluding specialty films), year-over-year sales declined 6% reflecting flat volumes, unfavorable exchange and anticipated price declines. Mammography and Oncology specialty products grew by 12% primarily on higher volumes, while sales of dental products increased 5% on slightly higher volumes and favorable pricing.

SG&A expenses for the segment decreased 6%, from 20.0% of sales in 1999 to 18.2% in 2000. Excluding advertising expenses, SG&A expenses decreased 8%, from 19.1% of sales to 17.1%, reflecting the benefits of cost control initiatives and the continued successful integration of the Imation business acquired in December 1998. R&D expenses increased 5%, from 6.0% of sales in 1999 to 6.2% in 2000.

Earnings from operations increased 7%, as higher sales and lower SG&A costs more than offset increased R&D spending. Segment net earnings increased 10%, from $315 million to $346 million.

Other Imaging  Sales in the Other Imaging segment increased 2% from the prior year, or 5% excluding exchange. Adjusting for the impact of portfolio changes, segment sales were up 10%. Sales growth in 2000 was led by strong digital camera sales and increased sales performance in the Commercial & Government Systems unit. Sales of motion picture film and services also increased, reflecting the motion picture film industry’s recovery from the softness of a year ago. U.S. sales increased 1%, while sales outside the U.S. were up 3%, but up 9% excluding exchange.

Consumer digital camera sales increased 26% with over 70% higher unit volumes partially offset by lower prices that reflect the competitiveness of this business. U.S. digital camera sales grew by 17% while camera sales outside the U.S. increased 38%, both reflecting higher unit volumes and lower prices.

SG&A expenses for the segment decreased 12%, from 20.6% of sales in 1999 to 17.7% in 2000. Adjusting for special charges taken in 1999, SG&A expenses declined 8%. Excluding advertising expenses, SG&A expenses decreased 17%, from 17.4% of sales to 14.2%. Current-year SG&A expenses included charges of approximately $23 million primarily related to the Company’s PictureVision acquisition and write-downs at the Company’s divested Eastman Software business, while prior year included SG&A from divested businesses. R&D expenses increased 1% in dollar terms, but were level on a percentage of sales basis at 7.7%. R&D expenses in 2000 include approximately $10 million of charges for the write-off of in-process R&D related to the PictureVision acquisition.