Heavy duty sales increases of $3.1 million, or 8.7%, reflect the full year impact of gaining exclusivity at a major mass mer- chandiser. Sales of hearing aid batteries decreased $3.3 mil- lion, or 7.6%, primarily as the result of planned inventory reduction at several professional and retail distribution accounts, a reduction in promotional programs, and softness in the hearing aid device market. Our profitability increased $17.5 million, or 22.5%, to $95.3 million in fiscal 2000 from $77.8 million the previous year. This increase was primarily attributed to sales volume increases, improved gross profit margins and operating expenses that decreased as a percentage of sales. The improvement in gross profit margins was primarily the result of previously announced cost rationalization initiatives and a shift in product mix. Operating expenses decreased as a percentage of sales primarily reflecting a gain recognized on the sale of certain camcorder battery assets and corresponding license to utilize the “Rayovac” trade name offset by higher promotional and distribution expenses. Latin America (Dollars in millions) 1999 2000 Revenue from external customers $19.3 $112.2 Profitability 3.5 20.3 Profitability as a % of net sales 18.1% 18.1% In August 1999, we acquired the consumer battery business of ROV Limited in Latin America. ROV Limited was our cus- tomer before the acquisition. Total revenue for the region for fiscal 1999 includes two months of sales for the Latin American business and ten months of sales to ROV Limited as an external customer. The fiscal 1999 and fiscal 2000 sales in the region are predominantly heavy duty batteries. The sales growth in Latin America primarily reflects the full year impact of the Latin America business, new distribution in Mexico, Central America, and the southern region of South America, price increases in certain countries implemented in the second quarter, and distribution of alkaline batteries and lighting products in mass merchandiser chains. Our profitability was $20.3 million, which was 18.1% of net sales for fiscal 2000. Our operating expense in Latin America was lower, as a percent of sales, than in North America. This difference is attributed primarily to spending less in marketing and advertising as a result of selling less alkaline and more heavy duty batteries. Europe/ROW (Dollars in millions) 1999 2000 Revenue from external customers $64.2 $52.8 Profitability 9.9 6.1 Profitability as a % of net sales 15.4% 11.6% Our revenue from external customers decreased $11.4 mil- lion, or 17.8%, to $52.8 million in fiscal 2000 from $64.2 million the previous year due primarily to the impacts of currency devaluation, the exit of certain private label alkaline battery business in Europe, the termination of certain non- performing foreign distributors, and sales volume softness in Europe negatively impacting our hearing aid and watch bat- tery business. Our profitability decreased $3.8 million, or 38.4%, to $6.1 million reflecting the impact of currency devaluation and higher operating expenses as a percentage of sales partially offset by a favorable shift in product mix away from our lower margin private label alkaline battery business. Corporate Expense.Our corporate expense increased $4.2 million, or 14.9%, to $32.4 million in fiscal 2000 from $28.2 million the prior year. These increases were primarily due to increased travel expense, higher legal fees primarily attributa- ble to our patent infringement lawsuit, higher professional expenses, and increased research and development expenses. As a percentage of total sales, our corporate expense was 4.7% compared to 5.1% in the previous year. Special Charges.In fiscal 2000, we recorded no special charges. In fiscal 1999, we recorded special charges of $8.1 million in addition to the $1.3 million recorded in cost of sales. The $8.1 million includes (1) $2.5 million associated with restructuring the organization to streamline and better serve global markets and operating efficiencies, (2) $2.1 million associated with the termination of non-performing foreign distributors and exiting the respective territory, (3) $1.9 million of cost associated with the previously announced closing of our Appleton, Wisconsin plant and its consolidation into our Portage, Wisconsin facility, (4) $0.8 million of cost associated with the closing of our Newton Aycliffe, United Kingdom, facility, and (5) $0.8 million of one-time expenses associated with the Latin American acquisition. Management’s Discussion and Analysis of Financial Condition and Results of Operations Rayovac Corporation and Subsidiaries