KLC OpCo corporate overview highlights curriculum, accreditation, and real estate assets

KLC OpCo has leveraged its scale and operational expertise to roll out a proprietary curriculum and to provide enhanced corporate level services —- Curriculum has been developed, rolled out and refined over many years and provides a significant competitive advantage in an industry where smail independent players do not have the resources to develop comparable programs. — Operational leverage allows for enhanced marketing, back-office, legal and compliance functions, keeping KLC OpCo at the forefront of education standards. Controls that meet or exceed requirements established by licensing authorities, state and federal government and accrediting bodies — Controls include rigorous and stringent hiring procedures and uniform rules for conduct. -~» 43% of KLC OpCo's centers, over four times the indusiry average of 10%, are accredited by the National Association for the Education of Young Children (referred fo herein as "NAEYC"), the nation's leading accreditation body. Management believes that ali the Company’s centers’ operations and policies meet or are substantially compliant with NAEYC accreditation requirements. B# A compelling business model at 412 As the state of education across the U.S. is generating increasing concerns, k12 provides a compelling value proposition -- Children continue to perform poorly on assessment tests geared to measure reading, writing and math skills. The passing of legislation such as the "No Child Left Behind Act of 2001" which, among other things, provides for increased funding for education and implementation of achievement level standards, demonstrates the commitment of government to address the issue. Technology and content platform easily leverageable to provide results-driven curriculum and service —-- With $70 million invested in the development of the platform for kindergarten to 9th grade classes, extension of the offering into new states and schools is expected te be achieved at relatively low costs. — k12 benefits from stable demand for its curriculum and services which is reflected by current reenrollment rates of 65% to 70%. -. Many of the direct costs are semi-fixed in nature (e.g., school administration) creating strong economies of scale as this business continues to grow. H Valuable reai estate portfolio of centers providing solid asset base 845 owned centers recently appraised at approximately $1.25 billion” ~~ New organization separating management of real estate assets allows KLC OpCo education teams to focus on the core education business. ~- Long term partnership with Greenstreet Real Estate Partners ensuring state-of-the-art management of the real estate assets by a leader in this field. * Actual appraisal was for 713 out of 845 centers and the appraised value was $1.1 billion. The $1.25 billion is achieved by taking the independent appraisal valuation methodology and extrapolaiing it fo the remaining 132 centers. 24 HOUSE_OVERSIGHT_024457