also declined compared to the prior year, due in part to a mix shift to the lower-priced Windows 98 operating system reflecting the softness in demand for business PCs and lower prices on operating systems licensed through certain OEM channel sectors.  In both fiscal 1999 and 1998, PC shipment growth coupled with an increased penetration of higher value 32-bit operating systems drove the OEM revenue increases. 

South Pacific and Americas Region revenue was $5.57 billion, $7.25 billion, and $8.33 billion in 1998, 1999, and 2000.  In fiscal 2000, Office 2000 integrated suites, Windows 2000 Server, online revenue, and SQL Server sales were the primary drivers of the revenue growth.  Strong retail sales of hardware devices and consumer software also contributed to the growth over the prior year.  Revenue growth was particularly strong in Latin America and Australia, moderate in Canada, and modest in the United States.  In fiscal 1999, server applications, Windows NT Server, Windows NT Workstation, and Microsoft Office all exhibited solid year-over-year growth rates.  Organizational licensing activity was strong.  Revenue growth was solid in the United States and moderate in Latin America and the South Pacific.  In fiscal 1998, revenue growth reflected strong licensing of Microsoft Office.

Europe, Middle East, and Africa Region revenue was $3.50 billion, $4.33 billion, and $5.02 billion in 1998, 1999, and 2000.  In fiscal 2000, retail sales of Windows operating systems and Office licensing produced moderate growth in the region.  Growth from SQL Server licensing, new hardware device offerings, and entertainment software was exceptionally strong.  Revenue growth, measured in constant dollars, was very healthy in Germany and Italy, robust in the Middle East, and low in the United Kingdom.  In fiscal 1999, all major products grew strongly over the prior year.  Revenue growth was solid in the United Kingdom, Germany, and France, and was particularly high in Sweden, the Netherlands, and Spain.  In fiscal 1998, organizational licensing of desktop applications and business systems grew strongly.  Revenue growth was particularly high in the United Kingdom.

Asia Region revenue was $1.48 billion in 1998, $1.78 billion in 1999, and $2.60 billion in 2000.  In fiscal 2000, the region’s growth rate reflected strong performance resulting from improved local economic conditions.  Revenue growth was also influenced by robust growth of localized versions of Microsoft Office 2000, especially the Office Personal Edition sold in Japan; Windows platform and server licensing; and strong adoption of SQL Server.  Revenue grew strongly in nearly all countries in the Asia region.  In fiscal 1999, Japan, Taiwan, China, Hong Kong, and Southeast Asia had moderate revenue growth, while revenue grew very strongly in Korea.  In fiscal 1998, revenue was relatively flat in Japan and Southeast Asia due to economic issues and weak currencies.

The Company’s operating results are affected by foreign exchange rates.  Approximately 32%, 29%, and 30% of the Company’s revenue was collected in foreign currencies during 1998, 1999, and 2000.  Since a portion of local currency revenue is