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11.9. Employees

As of December 31, 2005, KLC OpCo employed approximately 40,000 non-unionized personnel. Of the total amount, 39,639 are employed at the field level (including teachers and center staff, center directors, facilities and field and regional staff) and 592 are employed at the corporate level. Given the seasonality of the child care business and the regulated teacher-student ratio that varies by age with each state, approximately 16.5% of the total field personnel are employed on a part-time basis. Teachers and teaching assistants, which account for 93% of the total employee pool, are paid on an hourly basis. Most of KLC OpCo's remaining employees, including District Managers as well as most corporate staff, are salaried. KLC believes that its relations with its employees are good.

KLC OpCo's management believes that its below-industry average turnover rates are a result of its hiring practices and closer involvement in center operations, a focus on treating teachers as educators and not just employees, and comprehensive training programs that are designed to ensure that teachers are successful. KLC OpCo believes that it has the opportunity to reduce employee turnover further through improved recruiting, training and management.

The following table presents a breakdown of employees as of December 31, 2005:

KLC Employee Breakdown
Employee Type Number
Teachers and Center Staff 37,440
Center Directors 1,874
Corporate 592
Facilities 218
Field / Regional Staff 107
Total 40,231

11.10. Accreditation

KLC OpCo pursues accreditation of its centers by accrediting bodies, primarily the National Association for the Education of Young Children (referred to herein as "NAEYC"), the nation's leading child care accreditation body. NAEYC accreditation criteria cover a wide range of quantitative and qualitative factors, including, among others, faculty qualifications and development, staffing ratios, health and safety and physical environment. NAEYC criteria generally are more stringent than state regulatory requirements. As of December 31, 2005, KLC OpCo had 831 or approximately 43% of its total ECE centers that were accredited by NAEYC. Of the approximately 117,000 licensed centers in the U.S., approximately 10% are accredited by NAEYC.

Management believes that substantially all of its centers' operations and policies adhere to or are substantially compliant with NAEYC accreditation requirements. Since the accreditation process is expensive, KLC OpCo intends to seek accreditation only where it believes accreditation will provide meaningful local marketing benefits or competitive advantages.

11.11. Licensing and Government Regulation

Each early childhood care and education center and most school programs must be licensed under applicable state or local licensing laws. Responsibility for licensing and compliance with government regulations is at the regional and local level. Licenses are held at the center level or by the school program and are typically good for a minimum of one year. Generally, the center or school program will

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