2003 Best Practices Study

Analysis of Agencies with Revenues Greater Than $10,000,000

PROFITABILITY (as % of Net Revenues)

A. Profitability Ratios

Average

+25% Profit

+25% Growth

Pre-Tax Profit

11.6% 17.2%

20.5% 24.7% 12.8%

11.3% 19.4%

Pro Forma Pre-Tax Profit (1) Operating Pre-Tax Profit (2)

4.0%

4.4%

(1) The agency's pre-tax profit when discretionary expenses (bonuses, compensation, and perks) made for the benefit of the owners, based solely on ownership, are removed (i.e., removing

expenses that would not be incurred if a third party owned the agency. (2) Pre-tax profit minus contingents, bonus and investment income.

Profitability

25.0%

20.0%

15.0%

10.0%

5.0%

% Net Revenue

0.0%

Pre-Tax Profit

Pro Forma Pre-Tax Profit (1)

Operating Pre-Tax Profit (2)

Average +25% Profit

+25% Growth

B. Growth in Profitability (% change from prior year)

Average

+25% Profit

+25% Growth

Net Revenues (Total) Compensation Expense

18.2% 14.4% 11.1% 15.7%

22.8% 12.5% 23.2% 19.4% -6.0% 24.4% 68.9%

24.8% 26.0% 19.7% 20.7%

Selling Expense Operating Expense

Administrative Expense

1.7%

7.4%

Pre-Tax Profit

14.9% 19.2%

37.0% -0.2%

Operating Pre-tax Profit

Growth in Net Revenues

Growth in Pre-Tax Profit

25.0%

10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0%

20.0%

15.0%

10.0%

5.0%

0.0% 5.0%

0.0%

Average

+25% Profit

+25% Growth

Average

+25% Profit

+25% Growth

Page 86 2003 Best Practices Study