The ratings on Rochester, N.Y.-based Carestream Health Inc. (Carestream) reflect Standard&Poor's Ratings Services' expectation that, although its operating margin is likely to fall below 20% due to rising commodity costs, we believe the company's capital expenditures of 3% to 4% of revenues should enable the company to continue to generate good free cash flow of more than $100 million and maintain leverage of 4x to 5x--a level we consider appropriate for the rating. The ratings on Carestream also reflect the firm's weak business risk profile and aggressive financial risk profile. Carestream manufactures and sells traditional film and digital imaging products in the rapidly changing and challenging diagnostic-imaging industry. Their products include analog film, laser imagers, digital print film,
