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## Cost of sales and gross profit 

The following table presents EMCOR’s cost of sales, gross profit, and gross profit as a percentage of revenues, for the years ended December 2000, 1999 and 1998: 

<img src='content_image/122655.jpg'>

Gross profit increased $61.9 million, or 20.9%, for 2000 compared to 1999. Gross profit as a percentage of revenues was 10.3% for 2000 compared to 10.2% for 1999. The increase in gross profit was due to the increase in revenues of EMCOR’s operations excluding acquisitions, as well as incremental gross profit from companies acquired in 1999. The increase in gross profit as a percentage of revenues was primarily a result of an increase in gross profits on projects due to overall favorable market conditions, partially offset by losses on jobs in the South and North Carolina markets undertaken by EMCOR’s Poole & Kent subsidiary prior to their acquisition by EMCOR. Gross profit increased $72.6 million, or 32.5%, for 1999 compared to 1998, and gross profit as a percentage of revenues increased 0.1% for the 1999 period compared with 1998. The increase in gross profit and gross profit as a percentage of revenues was primarily due to the mix of projects completed and in progress during 1999. 

## Selling, general and administrative expenses 

The following table presents EMCOR’s selling, general and administrative expenses, and selling, general and administrative expenses as a percentage of revenues for the years ended December 31, 2000, 1999 and 1998: 

<img src='content_image/122654.jpg'>

Selling, general and administrative expenses increased $41.1 million, or 17.3%, between 2000 and 1999. As a percentage of revenues, total selling, general and administrative expenses decreased by 0.1% to 8.1% in 2000 as compared to 8.2% in 1999. Selling, general and administrative expenses increased $51.7 million, or 27.8%, between 1999 and 1998. As a percentage of revenues, total selling, general and administrative expenses decreased by 0.2% to 8.2% in 1999 as compared to 8.4% in 1998. The dollar increase during 2000 compared to 1999 was attributable to the increase in revenues and corresponding increases in variable selling, general and administrative expenses required to support the increased revenue base, incremental fixed costs to support the current growth in operations, plus selling, general and administrative expenses associated with BTENA and 1999 acquisitions. The decrease in selling, general and administrative expenses as a percentage of revenues was primarily due to the leveraging of fixed costs over increased revenues. The increase in selling, general and administrative expenses for 1999 as compared to 1998 was primarily attributable to incremental selling, general and administrative expenses from companies acquired during 1999 and 1998, as well as the effect of the overall increase in revenues on variable indirect overhead costs. The decrease of 0.2% in total selling, general and administrative expenses as a percentage of revenues was primarily due to the leveraging of fixed costs over increased revenues and the generally lower total selling, general and administrative expenses as a percentage of revenues for companies acquired during 1999 and 1998. 

