Cost of Services and Fulfillment. Costs of services and fulfillment decreased as a percentage of total revenues to 29% in the year ended December 31, 2000 from 32% in the year ended December 31, 1999. These expenses increased 64% to $45.5 million in the year ended December 31, 2000 from $27.7 million in the year ended December 31, 1999. The decrease in expenses as a percentage of revenues reflects a larger revenue base in 2000, proportionally lower production costs resulting from the leverage of our eResearch platform, and increased analyst productivity. The expense increase in 2000 reflects an increase in research analyst staffing and related compensation expenses, increased survey costs related to our Technographics ® and TechRankings ™ offerings, and increased expenditures related to the increase in the number of events hosted during the year. 

Selling and Marketing. Selling and marketing expenses increased as a percentage of total revenues to 37% in the year ended December 31, 2000 from 36% in the year ended December 31, 1999. These expenses increased 86% to $58.0 million in the year ended December 31, 2000 from $31.1 million in the year ended December 31, 1999. The increase in expenses and expenses as a percentage of revenues were principally due to the increase in the number of direct sales personnel and related commission and travel expenses. 

General and Administrative. General and administrative expenses increased as a percentage of total revenues to 12% in the year ended December 31, 2000 from 11% in the year ended December 31, 1999. These expenses increased 89% to $18.6 million in the year ended December 31, 2000 from $9.9 million in the year ended December 31, 1999. The increase in expenses and expenses as a percentage of revenues were principally due to increased staffing in our technology, operations, finance, and strategy groups and related compensation and recruiting expenses, as well as travel costs to integrate operations. 

Depreciation and Amortization. Depreciation and amortization expenses increased 98% to $7.9 million in the year ended December 31, 2000, including $261,000 related to the amortization of goodwill, from $4.0 million in the year ended December 31, 1999. The increase in these expenses was principally due to purchases of computer equipment, software, and leasehold improvements to support business growth. 

Other Income, Net. Other income, consisting primarily of interest income, increased to $6.9 million in the year ended December 31, 2000 from $3.7 million in the year ended December 31, 1999. The increase was principally due to additional interest income from higher cash and marketable securities balances resulting from positive cash flows from operations of $70.4 million, proceeds of $22.7 million from our public offering in February 2000, and $21.8 million from proceeds of stock option exercises and our employee stock purchase plan during the year ended December 31, 2000. Other income also includes a one-time $950,000 write-down of a non-marketable investment during the fourth quarter. 

Income Tax Provision. During the year ended December 31, 2000, we recorded a tax provision of $12.4 million, reflecting an effective tax rate of 36.5%. During the year ended December 31, 1999, we recorded a tax provision of $6.6 million reflecting an effective tax rate of 37.5%. The decrease in our effective tax rate resulted primarily from an increase in our investments in tax-exempt marketable securities and a reduction in our effective state tax rate. 

## Years Ended December 31, 1999 and December 31, 1998 

Revenues. Total revenues increased 42% to $87.3 million in the year ended December 31, 1999 from $61.6 million in the year ended December 31, 1998. Revenues from core research increased 38% to $64.7 million in the year ended December 31, 1999 from $46.8 million in the year ended December 31, 1998. 

