All in all, both our geographic and product diversity continue to provide our company with a solid foundation for sales and earnings growth, in line with our expectations. The continued strength in the U.S. commercial businesses, both Applied Systems and Unitary Products, was augmented by increased revenues from the growing sales and service operations. The U.S. residential business, as expected, was essentially flat relative to last year as dealers, cautioned by the persistent cooler than normal weather of last year, were reluctant to carry large inventories in advance of the season. Continued strong performance in the U.S. commercial and residential businesses was more than offset by the effects of the four week strike, the effect of economic weakness in the Far East and continued competitive pricing pressures in Europe. Development costs of new diagnostic products were offset by the operating results of the diagnostic business acquired in June 1997.
Progress continues on U.S. and European regulatory approvals of new diagnostic products and tests.
The lower 1997 rate resulted from the utilization of certain previously unrecognized tax benefits. No similar benefits are available in 1998. Comments in this earnings release contain certain forward-looking statements which are based on management s good faith expectations and belief concerning future developments.