Business Overview Mechanical and electrical construction services generally fall into one of two categories: (1) large installation projects with contracts often in the multi-million dollar range that involve construction of industrial and commercial buildings and institutional and public works facilities or the fit-out of large blocks of space within commercial buildings and (2) smaller installation projects typically involving fit-out, renovation and retrofit work. EMCOR’s mechanical and electrical construction services operations accounted for about 84% of its 2000 revenues, of which approximately 52% was related to new construction and approximately 48% was related to renovation and retrofit projects. EMCOR provides mechanical and electrical construction  services for both large and small installation and renovation projects. Its largest projects include those (1) for institutional use (such as water and wastewater treatment facilities, hospitals, correctional facilities, schools and research laboratories); (2) for industrial use (such as pharmaceutical factories, steel, pulp and paper mills, chemical, automotive and semiconductor plants, and oil refineries); (3) for transportation systems (such as airports and transit systems) and (4) for commercial use (such as office buildings, data centers, hotels, casinos, convention centers, sports stadiums, shopping malls and resorts). EMCOR’s largest projects, typically in excess of $10.0 million, are usually  multi-year projects and range in size up to, and occasionally  in excess of, $50.0 million. These projects represented about 25% of EMCOR’s construction services revenues in 2000. EMCOR’s projects of less than $10.0 million accounted for approximately 75% of 2000 construction services revenues. These projects are typically completed in less than a year. They usually involve mechanical and electrical construction services when an end-user or owner undertakes construction or modification of a facility to accommodate a specific use. These projects frequently require mechanical and electrical systems to meet special needs such as redundant power supply systems, special environmental controls and high-purity air systems, sophisticated electrical and mechanical systems for data centers, including those associated with internet service providers and electronic commerce, trading floors in financial services businesses, new production lines in manufacturing plants and office arrangements in  existing office buildings. These types of projects are not usually dependent upon the new construction market. Demand for them is often prompted by the expiration of leases, changes in technology or changes in the customer’s plant or office layout in the normal course of a customer’s business. EMCOR performs its services pursuant to contracts  with owners, such as corporations, municipalities and other governmental entities, general contractors, systems suppliers, construction managers, developers, other subcontractors and tenants of commercial properties. Institutional and public  works projects are frequently long-term, complex projects that require significant technical and management skills and the financial strength to, among other things, obtain bid and  performance bonds, which are often a condition to bidding for, and award of these projects. EMCOR also installs and maintains street, highway, bridge and tunnel lighting, traffic signals, computerized traffic control systems and signal and communication systems for mass In the early 1990’s, the market for facilities services grew rapidly in the United Kingdom as a result of government  initiatives. EMCOR’s United Kingdom subsidiary expanded its traditional technical service business in response to these  opportunities and established a dedicated unit to focus on the facilities services business. This unit currently provides a full range of facilities services to public and private sector customers under multi-year agreements, including maintaining British Airways’ facilities at Heathrow and Gatwick Airports, the new British Library, the Department of Trade and Industry offices in London, and the new Jubilee Line Extension of the London Underground. In the United Kingdom, EMCOR also provides facilities services at several manufacturing plants for various British Aerospace and Rolls Royce facilities. In addition, the United Kingdom operations provide on-call and mobile service support on a task-order or contract basis, small renovation  project work, data communications, security system installation, and maintenance services. EMCOR has experienced an expansion in the demand  for its facilities services which it believes is driven by customers’ downsizing programs and their focus on their own core  competencies, the increasing technical complexity of their  facilities and their mechanical, electrical, voice and data and other systems, and the need for increased reliability, especially  in mechanical and electrical systems. These trends have led to outsourcing and privatization programs whereby customers in both the private and public sectors seek to contract out those activities that support but are not directly involved in the  customer’s business. Facilities services include customer-based operations and maintenance, mobile maintenance service, small modification and retrofit projects, consulting, program development and management for energy systems and maintenance activities. These services are provided to a wide range of commercial, industrial and institutional facilities, including both those for which EMCOR provided construction services and those  for which construction services were provided by others. The services are frequently bundled to provide integrated service packages and may include services in addition to EMCOR’s core mechanical and electrical services. EMCOR also provides customers with facility support services which are not related to construction projects. These services, frequently referred to as facilities services, generated approximately 16% of 2000 revenues. Following completion  of construction projects, EMCOR has historically provided  technical support services to many of its customers, involving maintenance and service of mechanical and electrical systems and small modification and retrofit projects that support their day-to-day needs. In addition, EMCOR provides other services to owners, operators, tenants and managers of all types of facilities both on a contract basis for a specified period of time and on an individual task order basis. transit systems in several metropolitan areas. In addition, in the United States, EMCOR manufactures and installs sheet metal air handling systems for both its own mechanical construction operations and for unrelated mechanical contractors. EMCOR also maintains welding and pipe fabrication shops for some of its own mechanical operations. EMCOR, 2000 Annual Report 13