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Capital Expenditures The following table shows the breakdown in KLC OpCo's projected capital expenditures: KLC OpCo ($ in millions) 2006P 2007P 2008P 2009P 2010P 2011P Maintenance $41.1 $408 $41.0 $41.8 $426 $43.5 New Centers (Furniture, Fixtures &Equipment) 1021 7.2 15.6 22.5 23.4 24.0 IT Spending and Other Capex 18.6 12.2 8.4 8.6 8.8 9.0 Total Capital Expenditures $69.9 $60.2 $65.0 $72.8 $74.8 $76.4 Between 2006 and 2011, KLC OpCo projects to spend between $41 million and $44 million annually on maintenance capital expenditures (approximately $22,000 on a per center basis), which includes refurbishment of its existing centers and equipment and supplies replacement costs. In addition, KLC OpCo expects to spend approximately $19 million in 2006 on corporate infrastructure improvements, primarily IT spending. The remainder of KLC’s OpCo capital expenditures is projected to be used to expand KLC OpCo'’s center base. Beginning in 2007 KLC projects that it will only open leased centers; KLC OpCo believes that its cost of furnishing each center will be approximately $300,000 per center. 11.17. Debt Summary The table below shows KLC OpCo's outstanding debt as of December 31, 2005. KLC OpCo Debt Capitalization ($ in millions) 12/31/05 Cash $118.8 Revolver’ $0.0 Capital Leases 16.4 Senior Subordinated Notes 260.0 Total KLC OpCo Debt $276.4 Net Debt? $157.6 1 KLC OpCo has a $100 million revolver, primarily used to support outstanding letters of credit. ? Represents total debt less cash. 11.18. Terms of Revolving Credit Facility In November 2005, KLC entered into a revolving credit facility (the “Revolver’) with a syndicate of financial institutions consisting of a $100.0 million five-year revolving credit facility under which revolving and swingline loans may be made, and letters of credit may be issued in amounts up to $75.0 million. The Revolver is used for KLC’s working capital and general corporate requirements. At December 31, 2005, KLC had no revolving loans outstanding and approximately $46.6 million in letters of credit outstanding under the Revolver. KLC pays a commitment fee equal to 0.50% per annum on the undrawn portion available under the Revolver and a fee of 1.25% per annum of the daily amount available to be drawn under outstanding letters of credit. 97 HOUSE_OVERSIGHT_024530