Attrition Measurement Update Year End 2011 Developing Meaningful Trends Prepared By: TRG Associates, Inc

Defining Attrition Gross Attrition The loss of existing customers and their associated recurring monthly revenue (RMR) for contracted services during a particular customer / calendar cycle Net Attrition Gross Attrition plus the add back of “ like customer ” gains thru resigns of the existing locations – - The Home/Business location is your ultimate customer - Price increases for inflation - Price increases for additional services or technology

Defining Attrition The Short Version The measurement of customer dissatisfaction with or need for the system Why Measure? Attrition measures customer dissatisfaction which, for the most part, is company caused. The Attrition Tracking Process should be managed to identify, focus on, and rectify those causes within each organization.

Attrition Measurement Methodology Weighted Ending RMR Attrition Method Step 1: Cancelled RMR for the Reporting Period = Monthly Attrition Sum of Ending RMR for Each Month Step 2: Monthly Attrition (from Step 1)* 12 = Annualized Attrition

Benefits of Weighted Ending RMR Method Accounts for and weights RMR acquisitions Accounts for timing of acquired RMR Accounts for rapid internal growth and the timing thereof Similar to many lending/equity institution’s preferred calculation.

The Geography of Attrition NE/Mid Atlantic Southeast Midwest Southwest West International

Annual Trend Dollars of RMR* Region Northeast $29,312,561$ 34,255,218 $ 38,123,162 Southeast $30,717,788$ 34,551,487 $ 42,678,957 Midwest $22,194,576$ 25,343,869 $ 32,755,145 Southwest $11,666,058$ 14,451,746 $ 20,315,471 West $33,418,789$ 33,359,003 $ 39,705,534 International $ 12,601,570$ 14,982,984 $ 5,035,296 $139,911,342$ 156,944,307 $ 178,613,564 *Recurring Monthly Revenue

Annual Trend Dollars of RMR Size * 3-50$ 248,301$ 237,446 $ 291, $ 684,232$ 728,794 $ 659, $ 3,187,759$ 2,637,789 $ 2,578, $ 14,846,631$ 16,257,476 $ 17,103, $120,944,419$ 137,082,802 $ 157,980,482 Total $139,911,342$ 156,944,307 $ 178,613,564 *Includes branches of companies reflected by RMR size/Attrition if provided

Annual Trend Dollars of RMR Customer Source Dealer$37,684,131$ 49,061,372 $ 49,127,653 Traditional$79,688,494$ 80,388,844 $ 85,279,682 Mass Market$ 22,538,717$ 27,494,091 $ 44,206,230 Total$139,911,942$ 156,944,307 $ 178,613,564

Annual Trend Dollars of RMR Customer Type Residential$69,568,717$ 74,839,754 $ 101,339,459 Commercial$ 70,342,625$ 82,104,553 $ 77,274,105 Total $139,911,342$ 156,944,307 $ 178,613,564

Attrition Update through Year End RegionGrossNetGrossNetGrossNet Northeast10.06%7.96%10.02%7.66%10.34%7.94% Southeast11.92%9.81%11.46%9.15%11.63%9.47% Midwest11.29%8.18%10.92%7.89%10.92%9.23% Southwest13.70%11.12%12.35%9.75%11.98%10.06% West12.34%9.26%11.58%8.73%11.43%9.16% International11.64%9.00%11.74%8.83%10.76%9.42%

Attrition Update through Year End Co. SizeGrossNetGrossNetGrossNet %7.58%7.57%5.04%7.26%4.80% %8.73%9.26%6.55%9.69%6.68% %8.73%8.67%6.00%9.30%7.10% %9.03%9.92%8.02%9.46%7.83% %9.09%11.41%8.68%11.43%9.02%

Attrition Update through Year End SourceGrossNetGrossNetGrossNet Dealer13.19%11.07%12.55%10.10% 12.36%9.91% Traditional11.16%8.31%10.66%7.85% 10.70%8.60% Mass Market10.85%8.40%10.33%7.87% 10.84%9.14%

Attrition Update through Year End Customer TypeGrossNetGrossNetGrossNet Residential12.04%9.72%11.37%8.92% 11.26%9.17% Commercial11.27%8.43%11.03%8.23% 11.10%9.00%

Impact on Attrition Measurement with Publicly Held Company Results Excluding PHCIncluding PHC RMR Companies$137.5M$158.0M$427.8M$448.7M Net Attrition Company Size8.68%9.02%11.42%11.73% Residential8.92%9.17%11.06%11.44% Commercial8.23%9.00%11.41%11.83% Sources: SDM May 2012 – SDM 100 SEC Filings 10K Public Quarterly Company Reviews

Top Reasons for Attrition

Reason Code Analysis Cancellation Reason Collection/Non Payment14.7%20.9%21.6% 19.1% Moved29.9%38.4%31.3% 33.9% Poor Service2.6%1.9%7.7% 2.0% Lost to Competition16.6%9.1%7.9% 13.5% No Longer Using System11.1%14.1%9.4% 7.6% Sold/Out of Business12.8%7.3%6.3% 6.8% Financial Difficulties4.9%5.8%9.3% 6.2% Property Abandoned/Vacant0.3%0.0%0.2% 0.3% End of Contract Term2.2%0.3%0.4% 0.8% Deceased/Rest home1.3%0.4%1.2% 0.7% PI Rescinded/RMR Reduction3.4%0.6%4.7% 9.1% Natural Disaster/Military0.2%1.2%0.0%

TRG Maintains Full Confidentiality of Participant’s Figures Summary results as presented will be available on CSAA Web-Site ( TRG Web-Site ( Next update for 2012 – May 2013 Posted in June