KLC Consolidated 2004PF 2005PF EBITDA $194.6 $174.7 Adjustments to EBITDA Restructuring Charge Addback’ 5.1 29.4 (Gains) / Losses on Sales* 2.1 (1.3) (Gain) / Loss on Minority Investment (2:1) 0.0 Dividend Income® (1.8) (0.5) SAR Plan* 0.0 9.9 IDS Expenses® 27 (0.0) Estimated Parallel Organization Costs® 28.1 23.3 Management Fee’ 2.5 2.5 Adjusted EBITDA $231.4 $238.0 ‘ Represents one-time, non-recurring costs of integrating the AER and KinderCare acquisitions in 2004 and 2005, respectively. ? Represents the non-cash impact of (gains) / losses on the sales of centers. 3 Income earned as a result of ownership in a minority investment. * Non-cash expenses related fo KSI’s Stock Appreciation Rights Plan attributed to KLC’s employees and payable by KSI in cash upon settlement. $7.8 million has been paid pursuant to SARs in connection with the departure of KLC’s chief executive officer in 2006. 5 In 2004, KinderCare contemplated an offering of income deposit securities. Costs here reflect the costs incurred as a result of the contemplated offering. ® Result of the costs of operating duplicative infrastructure at KLC and KinderCare following the KinderCare acquisition. 7 Management fee paid to affiliate entities. Restructuring charges. Restructuring charges during the 52 weeks ended December 31, 2005, were $29.4 million. Included in the $29.4 million of non-recurring integration costs were $11.0 million of severance costs that resulted primarily from the closure of KLC’s former corporate offices at Golden, CO. Additional restructuring costs in 2005 were the result of consulting, temporary contract-based labor and other charges. Restructuring charges in 2004 were $5.1 million and were related to KLC’s acquisition of AER in May 2003. Parallel_Organization Costs. For much of 2005 KLC was burdened with the central operations and infrastructure of both KinderCare and KLC. KLC has defined parallel organization costs as the cost of maintaining these duplicative corporate function