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— These initiatives could provide three key regional platforms for further development and consolidation.

In the medium term, numerous opportunities for KUE should be generated by the increasing demand for quality for-profit educational offerings by governments and citizens around the world
— Competitive pressures for development of human capital, deficiencies of national education systems, growth of a middle-class in China, India and the Middle East, demand for English language offerings and changing demographics are some of the primary drivers of increased demand internationally.
— In China alone, 274 million children are under the age of 15, and 100 million are single-children under the age of 25, as a result of the one-child policy. These demographics result in large demand for education and increased spending capacity per child.

■ Favorable demographic trends and customer behavior in the U.S.

Growing number of working mothers
— According to the Bureau of Labor Statistics (BLS) estimates, women are expected to represent nearly 48% of the total U.S. workforce by 2012, up from 46.6% in 2002.⁹
— In the U.S., approximately 60% of mothers with children under the age of six are employed.

Increasing birth rate
— There are approximately 24 million children under the age of five in the U.S. today. According to the U.S. Census Bureau, absolute birth rates are going to continue to increase, and the population of children in the U.S. five and under is expected to increase to approximately 27 million by 2015.¹⁰

Essential nature of the service to the consumer
— As with healthcare, parents are primarily focused on the quality of the service that their child receives and the proximity of the center to their home or work; price is typically a secondary consideration. By relieving parents of the requirement to stay at home with their children, ECE allows both men and women to participate in the workforce and generate income for the household.

1.2.2 Compelling Business Profile

■ KUE presents an attractive financial profile

For the fiscal year ended December 31, 2005, KLC OpCo had operations in 39 states and Washington D.C. and generated pro forma revenue of $1.48 billion
— With organic growth projected to be in excess of 5% per annum through 2011, geographic diversity and double-digit Adjusted EBITDA margins, KLC OpCo can generate attractive returns.
— KLC OpCo generates strong operating cash flow (48% of 2005 pro forma Adjusted EBITDA) which provides significant resources to fund investment and support equity return-enhancing leverage, a

⁹ Source: Harris Nesbitt, Education and Training, September 2005.
¹⁰ Source: Population Projections Branch, U.S. Census Bureau, "U.S. Interim Projections by Age, Sex, Race and Hispanic Origin," May 2004.

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