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in operating income as a percentage of revenues for 2000 of 2.2% compared to 2.0% in 1999 was primarily due to the jobs performed in 2000 having higher gross profit margins. 

United Kingdom construction and facilities services operating income increased by $1.2 million for 2001 compared to 2000. The improvement was primarily attributable to growth in construction and facilities markets in the United Kingdom during the first half of 2001. For 2000, operating income increased by $2.8 million as compared to 1999. This increase was primarily attributable to the commencement of new projects that resulted in higher gross profits in 2000 than in previous years due to improved market conditions. 

Other international construction and facilities services operating losses were $1.2 million for 2001 compared to operating income of $0.5 million in 2000 and operating losses of $0.3 million in 1999. These operating losses in 2001 were attributable to project losses related to a Middle East joint venture, partially offset by operating income for projects in the new technology division in Europe. EMCOR continues to pursue new business selectively in the Middle Eastern, South African and European markets; however, the availability of opportunities has been significantly reduced as a result of local economic factors, particularly in the Middle East. Therefore, the business activities in this segment were not significant for 2000 and 1999. 

General corporate expenses for 2001 increased by $7.3 million from 2000 levels, and increased by $1.1 million between 2000 and 1999. The increases are attributable to increased variable overhead costs associated with marketing and business development efforts, including transfer from subsidiary operations to corporate administration of certain individuals, some of whom were previously involved in subsidiary operations, to monitor EMCOR’s overall operations, provide strategic direction and support future business activity. Additionally, operations support activities such as information technology infrastructure support have been expanded to meet the level of service expected by our clients. 

Interest expense decreased by $4.9 million for 2001 compared to 2000 principally due to the conversion of EMCOR’s $115.0 million of 5.75% Convertible Subordinated Notes into approximately 4.2 million shares of common stock in the second quarter of 2001. Interest expense decreased by $0.8 million in 2000 compared to 1999 primarily due to reduced borrowings under EMCOR’s working capital credit facility. 

Interest income increased by $3.2 million for 2001 compared with 2000. Interest income increased by $0.3 million for 2000 compared to 1999. The increase in interest income for 2001 compared to 2000 was due to increased cash on hand in 2001, partially offset by lower interest rates. 

## Liquidity and Capital Resources 

On March 18, 1998, EMCOR sold, pursuant to an underwritten public offering, $115.0 million principal amount of 5.75% Convertible Subordinated Notes. During the second quarter of 2001, EMCOR called the 5.75% Convertible Subordinated Notes for redemption. As a consequence, all of the Convertible Subordinated Notes were converted into approximately 4.2 million shares of EMCOR common stock. 

The following table presents EMCOR’s net cash provided by (used in) operating activities, investing activities and financing activities for the years ended December 31, 2001 and 2000 (in millions): 

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The Company’s consolidated cash balance increased by $52.1 million from $137.7 million at December 31, 2000 to $189.8 million at December 31, 2001. Net cash provided by operating activities for 2001 was $81.1 million, a decrease of $10.3 million from $91.4 million for 2000. The cash provided by operating activities for 2001 was primarily due to increased net income, increased accrued expenses and decreased accounts receivable, partially offset by increased contracts in progress, net and decreased accounts payable. The cash provided by the Provision in lieu of income taxes of $21.4 million for 2001, will not recur beginning in 2002 as EMCOR has substantially used the net operating loss carryforwards attributable to this item. Net cash used in investing activities for 2001 of $31.2 million consisted primarily of $8.8 million for earn-out payments pertaining to historical acquisitions, net disbursement for other investments of $6.5 million and $17.9 million for the purchase of property, plant and equipment. This activity compares to net cash used in investing activities for 2000 of $16.7 million for the purchase of property plant and equipment, $4.2 million for payments for acquisitions and 

