8.2. The Education Market Education is one of the largest sectors in the world, representing approximately 5% of global gross national income of $48 trillion.'” In 2005 in the U.S. alone, education was a $1.0 trillion market with for- profit education accounting for $81 billion or 7.8% of this amount."® The for-profit component of this industry (pre-K-12, post secondary and corporate training) is projected to grow faster than the overall historical industry growth rate, at a 7.4% annual rate, reflecting the increasing importance of for-profit operations in the sector, to reach a market size of $116 billion by 2010.'® Education is still predominantly provided by public / governmental entities in most countries including the U.S. KUE believes that the industry will converge towards a more balanced public / private system, similar to the evolution observed in the 20th century in other major industries such as healthcare, infrastructure and telecommunications. US Education Industry: Revenues Generated by For-Profit Companies (1999—2010E) $150 10.0% x» = $120 9.0% & S $90 8.0% 3 = $60 7.0% = o ~ $30 6.0% 2 $0 5.0% & 1999 2000 2001 2002 2003 2004 2005E 2006E 2007E 2008E 2009E 2010E mmm For-Profit Spending —ilFor-Profit % Source: Harris Nesbitt estimates, U.S. Department of Education National Center for Education Statistics, Training Magazine and Eduventures. 8.3. The U.S. Early Childcare or “pre-K” Market The highly fragmented early childcare or “pre-K” market includes care based in homes and housed by community organizations (e.g., churches, synagogues, YMCAs) and center based facilities. Center- based childcare includes preschools (nurseries), workplace centers (located on-site at the company), lease-model centers (located in a real estate developer's office building), back-up centers (a variety of on- site and off-site back-up care programs) and family day-care facilities (located in someone’s home or center). Although childcare may evoke thoughts of a babysitting ser