07.29.15
$11.2 Billion
KEY EXECUTIVES:
Frans van Houten, President & CEO, Philips
Ron Wirahadiraksa, Exec. VP & Chief Financial Officer, Philips
Jim Andrew, Exec. VP & Chief Strategy and Innovation Officer, Philips
Ronald de Jong, Exec. VP & Chief Market Leader, Philips
Brent Shafer, CEO, Philips North America
Derek Smith, CEO, Hospital to Home, Philips Healthcare
Jeroen Tas, CEO, Philips Healthcare Informatics
Gene Saragnese, CEO, Imaging Systems, Philips Healthcare
Bert van Meurs, Sr. VP, Philips Healthcare
Paul Smilde, Sr. VP, President and Head, Global Commercial Operations, Philips Healthcare
Jeff Barnes, Sr. VP, Philips Home Healthcare Solutions
Ralph Asencio, Head, Quality and Regulatory Affairs, Philips Healthcare
NO. OF EMPLOYEES: 37,065
GLOBAL HEADQUARTERS: Amsterdam, the Netherlands
Difficult. That’s the word Frans van Houten, CEO of Royal Philips Electronics N.V, used to describe fiscal 2014. The Dutch multinational is the picture of a firm in transition—an evolution that’s been taking place for nearly four years. The company’s multi-year change and performance program is called “Accelerate!” and was launched in the second half of 2011 in an effort to “realize the value potential” of Philips and to speed growth.
In the latter half of FY14, Accelerate! kicked into serious overdrive with a plan to completely reshape the structure of the Philips organization. In September, company leadership unveiled plans to split the diverse multinational into two parts. Following a series of consecutive profit warnings, Philips officials said they would merge the company’s healthcare and consumer electronics divisions into a single company. The company’s leadership also planned to spin off the firm’s 123-year-old lighting business—either in an initial public offering as early as 2016 or possibly sold to investors, the company’s CEO said. Van Houten announced the plans on the same day the company issued its second profit warning in less than three months. Operating profit for the second half of 2014 fell below the level of 2013, according to the company.
“Philips is uniquely positioned to help reshape and optimize population health management by leveraging big data and delivering care across the health continuum, from healthy living and prevention to diagnosis, minimally invasive treatment, recovery and home care,” van Houten said in a statement. “The combination of our Healthcare and Consumer Lifestyle portfolios and the integration of the data from the connected products on Philips’ cloud-based digital health platform illustrate our opportunity to capture growth in an increasingly connected world, where societies are looking for more effective and lower cost health solutions.”
Philips claims that its HealthTech businesses already have leading positions in oral healthcare, healthcare informatics, ultrasound diagnostics, cardiac care and home healthcare. Officials have blamed problems at a medical imaging facility in Cleveland, Ohio, which was shut down following an inspection by the U.S. Food and Drug Administration (FDA). China’s sluggish economy also was blamed for sluggish performance.
Philips was founded in 1891 with a focus on lighting. Over the past decade, however, it has refocused on more profitable activities such as healthcare, while selling its chip-making and TV businesses. (Company trivia: Philips invented the audio cassette and compact disc.)
Van Houten said Philips has been facing the same challenges as other corporate giants that have been slow to adapt to a new world. The split means Philips will focus on its healthcare division, which leadership clearly has identified as the company’s best growth opportunity for the near future. He said the split would create two “market-leading businesses” in healthcare and lighting. Both businesses will continue to operate under the Philips brand and will be based in the Netherlands, he added. The split would generate a total of 300 million euros in cost-savings in 2015 and 2016, but it could result in job losses, officials said.
Deals to Reshape
In a high-profile deal designed to add value to the company’s healthcare business, Philips announced plans in December last year to acquire Volcano Corp. for $1.2 billion. Volcano made catheter-based imaging and measurement solutions for cardiovascular uses. The acquisition—for $18 per share—was a move to boost Philips’ image-guided therapy business. The purchase price was a 57 percent premium compared to Volcano’s closing price the day before the deal was announced. Within the last few years, Philips has created an image-guided therapy business through strategic investments in R&D, partnerships and technology licenses.
Philips officials claim that one out of every three interventional X-ray systems sold globally is one of its systems, which provide visual maps that allow the clinician to guide thin catheters through the body and perform the minimally invasive treatment. In image-guided treatments of the heart and blood vessels, there is an increasing trend to use advanced catheters that are capable of producing ultrasound images of the interior of blood vessels (intravascular ultrasound or IVUS) or perform blood flow measurements (fractional flow reserve or FFR), with which Volcano had a strong market position. There is a growing body of clinical evidence that the use of such technologies in conjunction with interventional X-ray helps improve procedural outcomes.
According to executives from Philips, the combination of the companies would create new sources of recurring revenue streams and increase sales growth for Philips in the approximately $5 billion image-guided therapy market. Sales growth will be accelerated through Volcano’s close customer relationships associated with its disposable products and channel synergies that will create cross-selling opportunities between both companies’ existing customer bases, officials said. In addition, the combination of Volcano’s proven clinical development and commercialization capabilities with Philips’ next generation of imaging and measurement technologies will allow Philips to introduce new solutions in higher-growth segments such as the minimally invasive treatment of heart rhythm disorders and structural heart diseases.
“The agreement to acquire Volcano significantly advances our strategy to become the leading systems integrator in image-guided therapies,” said van Houten. “Volcano’s impressive and unique product portfolio is highly complementary to our strong offering in live image-guidance solutions, creating an opportunity to accelerate the revenue growth for our image-guided therapy business to a high single-digit rate by 2017. Our combined sales forces will be able to capture immediate cross selling opportunities, while our joint R&D teams will be able to develop new solutions to address significant unmet needs in the minimally invasive treatment of cardiovascular diseases.”
Van Houten added: “Image-guided therapies provide significant benefits for healthcare systems and patients, including reduced patient trauma, shorter recovery times and hospital stays, and lower costs. As a result, our clinical partners and customers are asking for a tighter integration of imaging and measurement technologies to enable such therapies. This transaction allows us to provide our customers with an integrated solution to improve procedural outcomes at a decisive stage in the health continuum.”
Once the transaction was completed in February, the Volcano business and its 1,800 employees became part of the new image-guided therapy business group within Philips, which is led by Philips executive Bert van Meurs. Volcano generated sales of $400 million in 2014.
In November, Zoll Medical Corp., bought the InnerCool temperature management business from Philips Healthcare. The purchase included catheter-based endovascular and surface temperature management technologies designed to improve outcomes for patients with a variety of temperature management-related needs. Terms of the deal were not disclosed.
InnerCool was integrated into Zoll’s Temperature Management business in San Jose, Calif. Philips and Zoll haven’t always played so well together. In fact, the companies have battled in court in recent years over patents involving automated external defibrillator technology. Chelmsford, Mass.-based Zoll Medical makes products for defibrillation and monitoring, circulation and CPR feedback, data management, fluid resuscitation, and therapeutic temperature management.
Leadership Shakeup
During the summer of 2014, Deborah DiSanzo, the head of Philips Healthcare, stepped down and van Houten took control of Healthcare. A spokesman for Philips said the company changed horses because its operations weren’t adapting quickly enough to changing market demands. In a statement at the time, Van Houten said the move was an example of how the company took “decisive action to improve our performance and competitiveness, and demonstrates our relentless commitment to quality and meaningful innovation that meet the needs of our customers.”
Earlier in the year, in February, Philips appointed a new North American leader. The company named Brent Shafer as CEO of Philips North America, the company’s single largest market. He succeeded Greg Sebasky, who retired from Philips. Shafer is no stranger to the company, having served as chief executive of Philips’ Home Healthcare Solutions business group. Shafer became CEO of Home Healthcare Solutions, Philips Healthcare, in May 2010. He previously served as CEO of the North America region for Royal Philips Electronics, and as president/CEO of the Healthcare Sales and Service business for Philips North America. Prior to joining Philips, Shafer was vice president and general manager of the Patient Care Environment Division for Hill-Rom Company Inc. He also has worked at GE Medical Systems, where he held key positions in sales, marketing and general management. In addition, Shafer has worked for Hewlett-Packard’s Medical Products Group, Johnson & Johnson, and Intermountain Healthcare Primary Children’s Hospital. Shafer earned a bachelor’s degree in communications and completed additional graduate studies in business and marketing communications at the University of Utah.
Lingering Litigation
In October, Philips suffered a significant legal setback. The company was fined $466 million for infringing upon rival Masimo Corp.’s pulse oximeter technology. At the time of the verdict, it was the third-largest 2014 legal judgment in the United States. In the field of patent law, a key requirement is that the invention be non-obvious before a patent can be awarded. Basically, this means the invention must be an unexpected advance or innovation. Historically, patents have been awarded by mistake when, in fact, they were obvious and should not have been awarded in the first place. These inappropriately awarded patents can be challenged in court and, if the challenge is successful, they can be eliminated. This was the argument made unsuccessfully by Philips in U.S. District Court, District of Delaware (Wilmington), according to a Bloomberg article. “Philips agrees that it infringed,” U.S. District Judge Leonard P. Stark said in court papers cited in the Bloomberg article. “The company claimed the patents are invalid because they weren’t properly written and the technology is obvious.” Masimo filed suit against Philips in 2009 contending Philips was importing pulse oximeters that infringed on its patent. Originally, Masimo asked for $650 million in damages, a number the jury amended to $466 million, according to Bloomberg. Philips appealed the verdict.
Sluggish Numbers
“Healthcare was down overall, mainly caused by operational issues and soft markets,” said van Houten. “We were encouraged by market share gains in image-guided therapy and recorded strong orders in Europe and the Middle East, where we signed four multi-year solution deals. Our Cleveland factory resumed shipments to customers in January [of 2015], marking an important milestone.”
In January 2014, the company voluntarily suspended production at its Cleveland facility, primarily to fix and strengthen manufacturing process controls following areas identified during an ongoing FDA inspection. The agency had targeted areas for improvement following months of inspection.
“The updated quality management system at our Cleveland facility recently passed the third-party audit and we have now resumed shipments of our Brilliance iCT systems,” van Houten said. “Due to the slower than anticipated ramp-up of production and shipments, the impact on 2014 EBITA (earnings before interest, taxes and amortization) was larger than previously anticipated.
Passing the third-party audit for the production of the Brilliance iCT systems is an important milestone that enables us to focus on building further momentum as we deliver imaging innovations to our customers. We are also ramping up the production of computed tomography (CT) systems in our facilities in Haifa (Israel) and Suzhou (China), initially for customers outside of the United States. Our remediation work will continue to weigh on 2015 and we expect our global CT system production and shipment volume to only gradually return to 2013 levels by the end of the year.”
Sales for Philips Healthcare in fiscal 2014 (ended Dec. 31) were 9.19 billion euros ($11.17 billion), down 2 percent compared to fiscal 2013. EBITA of 616 million euros (6.7 percent of sales, $748 million) was down compared to 1.51 billion euros (15.8 percent of sales) in fiscal 2013. Restructuring and acquisition-related charges amounted to 70 million euros, compared with close to zero in 2013. EBITA included charges of 366 million euros related to the jury verdict in the Masimo litigation, 49 million euros of inventory write-downs mainly related to the Cleveland facility, and a 16 million euro past-service pension cost gain in the Netherlands. For the company overall, sales dropped from 21.4 billion euros ($26 billion) from 21.9 billion euros in fiscal 2013. Net income was 411 million euros ($499 million) in 2014 compared to 1.17 billion euros in 2013.
The United States is Philips Healthcare’s largest market at 40 percent of the unit’s sales, followed by China, Japan and Germany. Emerging markets accounted for 25 percent of healthcare sales.
In 2014, the business was organized around four strategic business groups: Healthcare Informatics, Solutions and Services (imaging informatics, healthcare IT, electronic medical records); Imaging Systems (computed tomography, magnetic resonance imaging, molecular imaging, diagnostic X-ray, and mammography); Patient Care and Monitoring Systems (patient monitoring and analytics, mother and child care, temperature management, anesthesia care, hospital repository care systems and ventilation, sleep management, respiratory care and noninvasive ventilation); and Customer Services (clinical support and performance services, proactive monitoring, product support). Imaging systems accounted for 35 percent of Healthcare division sales. Patient Care & Monitoring Solutions were 32 percent of sales. Healthcare Informatics, Solutions & Services made up 6 percent of sales, while Customer Services accounted for 27 percent of sales.
So far for 2015, Philips Healthcare has made modest sales gains. The company posted 2.26 billion euros ($2.45 billion) in sales for the first quarter (ended March 31), up 1 percent from 2014. The company credited mid-single-digit gains in Imaging Systems and Customer Services for the improvement.
KEY EXECUTIVES:
Frans van Houten, President & CEO, Philips
Ron Wirahadiraksa, Exec. VP & Chief Financial Officer, Philips
Jim Andrew, Exec. VP & Chief Strategy and Innovation Officer, Philips
Ronald de Jong, Exec. VP & Chief Market Leader, Philips
Brent Shafer, CEO, Philips North America
Derek Smith, CEO, Hospital to Home, Philips Healthcare
Jeroen Tas, CEO, Philips Healthcare Informatics
Gene Saragnese, CEO, Imaging Systems, Philips Healthcare
Bert van Meurs, Sr. VP, Philips Healthcare
Paul Smilde, Sr. VP, President and Head, Global Commercial Operations, Philips Healthcare
Jeff Barnes, Sr. VP, Philips Home Healthcare Solutions
Ralph Asencio, Head, Quality and Regulatory Affairs, Philips Healthcare
NO. OF EMPLOYEES: 37,065
GLOBAL HEADQUARTERS: Amsterdam, the Netherlands
Difficult. That’s the word Frans van Houten, CEO of Royal Philips Electronics N.V, used to describe fiscal 2014. The Dutch multinational is the picture of a firm in transition—an evolution that’s been taking place for nearly four years. The company’s multi-year change and performance program is called “Accelerate!” and was launched in the second half of 2011 in an effort to “realize the value potential” of Philips and to speed growth.
In the latter half of FY14, Accelerate! kicked into serious overdrive with a plan to completely reshape the structure of the Philips organization. In September, company leadership unveiled plans to split the diverse multinational into two parts. Following a series of consecutive profit warnings, Philips officials said they would merge the company’s healthcare and consumer electronics divisions into a single company. The company’s leadership also planned to spin off the firm’s 123-year-old lighting business—either in an initial public offering as early as 2016 or possibly sold to investors, the company’s CEO said. Van Houten announced the plans on the same day the company issued its second profit warning in less than three months. Operating profit for the second half of 2014 fell below the level of 2013, according to the company.
“Philips is uniquely positioned to help reshape and optimize population health management by leveraging big data and delivering care across the health continuum, from healthy living and prevention to diagnosis, minimally invasive treatment, recovery and home care,” van Houten said in a statement. “The combination of our Healthcare and Consumer Lifestyle portfolios and the integration of the data from the connected products on Philips’ cloud-based digital health platform illustrate our opportunity to capture growth in an increasingly connected world, where societies are looking for more effective and lower cost health solutions.”
Philips claims that its HealthTech businesses already have leading positions in oral healthcare, healthcare informatics, ultrasound diagnostics, cardiac care and home healthcare. Officials have blamed problems at a medical imaging facility in Cleveland, Ohio, which was shut down following an inspection by the U.S. Food and Drug Administration (FDA). China’s sluggish economy also was blamed for sluggish performance.
Philips was founded in 1891 with a focus on lighting. Over the past decade, however, it has refocused on more profitable activities such as healthcare, while selling its chip-making and TV businesses. (Company trivia: Philips invented the audio cassette and compact disc.)
Van Houten said Philips has been facing the same challenges as other corporate giants that have been slow to adapt to a new world. The split means Philips will focus on its healthcare division, which leadership clearly has identified as the company’s best growth opportunity for the near future. He said the split would create two “market-leading businesses” in healthcare and lighting. Both businesses will continue to operate under the Philips brand and will be based in the Netherlands, he added. The split would generate a total of 300 million euros in cost-savings in 2015 and 2016, but it could result in job losses, officials said.
Deals to Reshape
In a high-profile deal designed to add value to the company’s healthcare business, Philips announced plans in December last year to acquire Volcano Corp. for $1.2 billion. Volcano made catheter-based imaging and measurement solutions for cardiovascular uses. The acquisition—for $18 per share—was a move to boost Philips’ image-guided therapy business. The purchase price was a 57 percent premium compared to Volcano’s closing price the day before the deal was announced. Within the last few years, Philips has created an image-guided therapy business through strategic investments in R&D, partnerships and technology licenses.
Philips officials claim that one out of every three interventional X-ray systems sold globally is one of its systems, which provide visual maps that allow the clinician to guide thin catheters through the body and perform the minimally invasive treatment. In image-guided treatments of the heart and blood vessels, there is an increasing trend to use advanced catheters that are capable of producing ultrasound images of the interior of blood vessels (intravascular ultrasound or IVUS) or perform blood flow measurements (fractional flow reserve or FFR), with which Volcano had a strong market position. There is a growing body of clinical evidence that the use of such technologies in conjunction with interventional X-ray helps improve procedural outcomes.
According to executives from Philips, the combination of the companies would create new sources of recurring revenue streams and increase sales growth for Philips in the approximately $5 billion image-guided therapy market. Sales growth will be accelerated through Volcano’s close customer relationships associated with its disposable products and channel synergies that will create cross-selling opportunities between both companies’ existing customer bases, officials said. In addition, the combination of Volcano’s proven clinical development and commercialization capabilities with Philips’ next generation of imaging and measurement technologies will allow Philips to introduce new solutions in higher-growth segments such as the minimally invasive treatment of heart rhythm disorders and structural heart diseases.
“The agreement to acquire Volcano significantly advances our strategy to become the leading systems integrator in image-guided therapies,” said van Houten. “Volcano’s impressive and unique product portfolio is highly complementary to our strong offering in live image-guidance solutions, creating an opportunity to accelerate the revenue growth for our image-guided therapy business to a high single-digit rate by 2017. Our combined sales forces will be able to capture immediate cross selling opportunities, while our joint R&D teams will be able to develop new solutions to address significant unmet needs in the minimally invasive treatment of cardiovascular diseases.”
Van Houten added: “Image-guided therapies provide significant benefits for healthcare systems and patients, including reduced patient trauma, shorter recovery times and hospital stays, and lower costs. As a result, our clinical partners and customers are asking for a tighter integration of imaging and measurement technologies to enable such therapies. This transaction allows us to provide our customers with an integrated solution to improve procedural outcomes at a decisive stage in the health continuum.”
Once the transaction was completed in February, the Volcano business and its 1,800 employees became part of the new image-guided therapy business group within Philips, which is led by Philips executive Bert van Meurs. Volcano generated sales of $400 million in 2014.
In November, Zoll Medical Corp., bought the InnerCool temperature management business from Philips Healthcare. The purchase included catheter-based endovascular and surface temperature management technologies designed to improve outcomes for patients with a variety of temperature management-related needs. Terms of the deal were not disclosed.
InnerCool was integrated into Zoll’s Temperature Management business in San Jose, Calif. Philips and Zoll haven’t always played so well together. In fact, the companies have battled in court in recent years over patents involving automated external defibrillator technology. Chelmsford, Mass.-based Zoll Medical makes products for defibrillation and monitoring, circulation and CPR feedback, data management, fluid resuscitation, and therapeutic temperature management.
Leadership Shakeup
During the summer of 2014, Deborah DiSanzo, the head of Philips Healthcare, stepped down and van Houten took control of Healthcare. A spokesman for Philips said the company changed horses because its operations weren’t adapting quickly enough to changing market demands. In a statement at the time, Van Houten said the move was an example of how the company took “decisive action to improve our performance and competitiveness, and demonstrates our relentless commitment to quality and meaningful innovation that meet the needs of our customers.”
Earlier in the year, in February, Philips appointed a new North American leader. The company named Brent Shafer as CEO of Philips North America, the company’s single largest market. He succeeded Greg Sebasky, who retired from Philips. Shafer is no stranger to the company, having served as chief executive of Philips’ Home Healthcare Solutions business group. Shafer became CEO of Home Healthcare Solutions, Philips Healthcare, in May 2010. He previously served as CEO of the North America region for Royal Philips Electronics, and as president/CEO of the Healthcare Sales and Service business for Philips North America. Prior to joining Philips, Shafer was vice president and general manager of the Patient Care Environment Division for Hill-Rom Company Inc. He also has worked at GE Medical Systems, where he held key positions in sales, marketing and general management. In addition, Shafer has worked for Hewlett-Packard’s Medical Products Group, Johnson & Johnson, and Intermountain Healthcare Primary Children’s Hospital. Shafer earned a bachelor’s degree in communications and completed additional graduate studies in business and marketing communications at the University of Utah.
Lingering Litigation
In October, Philips suffered a significant legal setback. The company was fined $466 million for infringing upon rival Masimo Corp.’s pulse oximeter technology. At the time of the verdict, it was the third-largest 2014 legal judgment in the United States. In the field of patent law, a key requirement is that the invention be non-obvious before a patent can be awarded. Basically, this means the invention must be an unexpected advance or innovation. Historically, patents have been awarded by mistake when, in fact, they were obvious and should not have been awarded in the first place. These inappropriately awarded patents can be challenged in court and, if the challenge is successful, they can be eliminated. This was the argument made unsuccessfully by Philips in U.S. District Court, District of Delaware (Wilmington), according to a Bloomberg article. “Philips agrees that it infringed,” U.S. District Judge Leonard P. Stark said in court papers cited in the Bloomberg article. “The company claimed the patents are invalid because they weren’t properly written and the technology is obvious.” Masimo filed suit against Philips in 2009 contending Philips was importing pulse oximeters that infringed on its patent. Originally, Masimo asked for $650 million in damages, a number the jury amended to $466 million, according to Bloomberg. Philips appealed the verdict.
Sluggish Numbers
“Healthcare was down overall, mainly caused by operational issues and soft markets,” said van Houten. “We were encouraged by market share gains in image-guided therapy and recorded strong orders in Europe and the Middle East, where we signed four multi-year solution deals. Our Cleveland factory resumed shipments to customers in January [of 2015], marking an important milestone.”
In January 2014, the company voluntarily suspended production at its Cleveland facility, primarily to fix and strengthen manufacturing process controls following areas identified during an ongoing FDA inspection. The agency had targeted areas for improvement following months of inspection.
“The updated quality management system at our Cleveland facility recently passed the third-party audit and we have now resumed shipments of our Brilliance iCT systems,” van Houten said. “Due to the slower than anticipated ramp-up of production and shipments, the impact on 2014 EBITA (earnings before interest, taxes and amortization) was larger than previously anticipated.
Passing the third-party audit for the production of the Brilliance iCT systems is an important milestone that enables us to focus on building further momentum as we deliver imaging innovations to our customers. We are also ramping up the production of computed tomography (CT) systems in our facilities in Haifa (Israel) and Suzhou (China), initially for customers outside of the United States. Our remediation work will continue to weigh on 2015 and we expect our global CT system production and shipment volume to only gradually return to 2013 levels by the end of the year.”
Sales for Philips Healthcare in fiscal 2014 (ended Dec. 31) were 9.19 billion euros ($11.17 billion), down 2 percent compared to fiscal 2013. EBITA of 616 million euros (6.7 percent of sales, $748 million) was down compared to 1.51 billion euros (15.8 percent of sales) in fiscal 2013. Restructuring and acquisition-related charges amounted to 70 million euros, compared with close to zero in 2013. EBITA included charges of 366 million euros related to the jury verdict in the Masimo litigation, 49 million euros of inventory write-downs mainly related to the Cleveland facility, and a 16 million euro past-service pension cost gain in the Netherlands. For the company overall, sales dropped from 21.4 billion euros ($26 billion) from 21.9 billion euros in fiscal 2013. Net income was 411 million euros ($499 million) in 2014 compared to 1.17 billion euros in 2013.
The United States is Philips Healthcare’s largest market at 40 percent of the unit’s sales, followed by China, Japan and Germany. Emerging markets accounted for 25 percent of healthcare sales.
In 2014, the business was organized around four strategic business groups: Healthcare Informatics, Solutions and Services (imaging informatics, healthcare IT, electronic medical records); Imaging Systems (computed tomography, magnetic resonance imaging, molecular imaging, diagnostic X-ray, and mammography); Patient Care and Monitoring Systems (patient monitoring and analytics, mother and child care, temperature management, anesthesia care, hospital repository care systems and ventilation, sleep management, respiratory care and noninvasive ventilation); and Customer Services (clinical support and performance services, proactive monitoring, product support). Imaging systems accounted for 35 percent of Healthcare division sales. Patient Care & Monitoring Solutions were 32 percent of sales. Healthcare Informatics, Solutions & Services made up 6 percent of sales, while Customer Services accounted for 27 percent of sales.
So far for 2015, Philips Healthcare has made modest sales gains. The company posted 2.26 billion euros ($2.45 billion) in sales for the first quarter (ended March 31), up 1 percent from 2014. The company credited mid-single-digit gains in Imaging Systems and Customer Services for the improvement.