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Forward Looking Statements

Certain statements in this presentation constitute “forward- looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current expectations and involve certain risks and uncertainties. Actual results might differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in the preliminary prospectus.

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Educate, Inc.

• $700 million enterprise value• Estimated 2005 revenues of $350 to $365 million, 17% to

22% growth over 2004• Estimated 2005 adjusted EPS(1) of $.58 to $.60 per share,

18% to 22% growth over 2004• Portfolio of highly acclaimed brands including Sylvan

Learning Center and Hooked on Phonics• Strong Cash flow generation

The Leading Pre-K through 12 Education Services Company

(1) Excludes refinancing costs

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$68.2

$154.9

$242.3

$300.3

$11.0$33.6

Educate Revenue ($ mm)

Company History

2003

Sylvan TutoringCompanyFounded

Chris Hoehn-SaricJoins as Chairman& Co-CEO of Laureate (Sylvan Learning Systems)

CatapultBusinessFounded

500th CenterOpens

750th CenterOpens

1,000th Center Opens

IPO completed 9/2004

1979 1991 1995 1999 20041994

Apollo/Management Buyout of Pre-K-12Business (6/30/03)

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Segment Contribution

NCLB

School Service

European

Franchise

Company - Owned

CatapultLearning

Sylvan Learning

10%

23%

7%

14%

46%

14%

86%

Revenue Operating Profit

33%

Catapult Learning

67%

Sylvan Learning

Schools

Consumer

Schools

Consumer

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Strategic Focus

• Leverage Educate’s competitive advantages as largest services provider in Pre-K – 12 education industry.

• Consumer Operations– Expand Sylvan Learning Center network– Improve average territory revenue through implementation of best

practices– Increased focus on convenience (densification / Sylvan Online)– Expand fun, affordable programs targeted to younger students

• School-Based Operations– Focus public / non-public services on strong margin contributors– Balanced approach to No Child Left Behind services, growth and

profitability (site based and Catapult Online)

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Pre-K-12 Education - $600 Billion Industry

GROWINGCONSUMERISM

GOVERNMENTPOLICY

ECONOMICDRIVERS

- Highly fragmented- No company with a 1% overall share- Educate, Inc – largest services company in Pre-K-12 education

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Economic Drivers

High School Diploma:103% of Average SalaryPrimary Economic Force:Manufacturing

73% of Average Salary

Knowledge Based

1970 Today

$28,704

$46,800

$70,148

0

10000

20000

30000

40000

50000

60000

70000

80000

$ Doll

ars

Annual Salary

High School AA Degree BA/BS MA/MS PHD

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Federal Government Policy• No Child Left Behind – Standards, Accountability, Penalties• 1980’s Medicare drove deregulation and reform - 11.5% of

total healthcare spending• The “Special Edification” of classroom instruction – tailored

solutions for each student

10

Education Consumerism• Consumers spending to supplement free public education

• Consumers begin demanding changes at the school level

$12 Billion is spent on supplemental education products and services

1 out 6 children has left the traditional public schools - Charters, Private, Virtual Charter, Home Schooling

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Brand Market Presence

Consumer Marketplace School Marketplace

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Long-Term Sustainable Advantages

• Control of the two leading consumer brands in education• Unique direct-to-consumer distribution system• Dominant share (5x next competitor)• Scale

- Broadest and deepest distribution system- Marketing - $63M in annual spend

• Deep management bench w/ competencies in consumer marketing, multi-unit operating expertise, education

• Proven learning center franchise model• Long-standing school relationships • Unique integrated online service offering• Outstanding track record of growth and financial performance

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Consumer Business Overview

Premium Tutors

Mass Market Programs

Online

European

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Sylvan Learning Center Segment

• Strong Sylvan Network Territories Centers

Franchise 736 898Company-Owned 128 185Total System 864 1,083

• $565,000 average franchise territory revenue– Average 8% royalty ($45,000)

• $1,000,000 average company territory revenue– 19% operating margin ($190,000)

• Low capital investment ~ $140-200K• Low service distribution cost - 3 yr, strip center leases in 3rd

party locations• Leading tutoring center business in Germany - Schuelerhilfe

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Source: RoperASW Awareness & Attitude Study 2004

Leader in Brand Awareness & Market Share

Brand Awareness Estimated Revenue Share

Best Known Brand – Approximately $63mm Total Ad Spend in 2004

50%

25%

12%

13%

Sylvan

Local Centers

Branded National Competitors Combined 400,000+

Private Tutors

99% 97%

47% 45% 43%

20%17%

0%

20%

40%

60%

80%

100%

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Proprietary Instruction and Programs

• Generate parent inquiry

• 1 of every 3 inquiries enrolls

• Average program price of approximately $3,250

• Learning program matched to specific student

• Proprietary instructional program

• Guaranteed results

Inquiry Assessment InstructionEnrollmentOngoing

Conferences Teacher/Parent

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Strong Territory Based System

Franchises (736 Territories)

• ~4,000 inquiries per year, screened for 35 - 45 new territories

• Typical franchisees are family teams committed to improving children’s lives

• New franchisees invest $140k - $200k, typically first year cash flow positive

• Owner operators – no franchisee owns more than 15 centers

• Educate has right of first refusal to match any purchase offers

• Top performing territories are 3-4 times average territory revenue

Company-Owned (128 Territories)

• Higher revenue per territory and greater operating income contribution

• Best practices developed

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Improving Performance

Learning Center Best Practices• Complete assessment of student needs• Greater emphasis on convenience (expanded hours; more locations; Sylvan Online integration)• Greater use of third party financing• Co-op marketing efficiency• Expansion of fun, affordable servicesFuture Growth• Expansion of territories to meet growing population needs • Drive existing territory revenue growth throughout Learning Center network

– Work with existing franchisees to implement proven best practices– Match energetic new franchisees with available territories– Opportunistic acquisition of franchise territories in strategic company-owned

DMA’s

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Our Unique Sylvan Online Approach

• Proprietary system based on Sylvan Learning Center concepts

• Online, live, two-way teacher-led vocal, written and graphic instruction delivered via dial-up connection

• Same guaranteed academic achievement and similar pricing to in-center services

• Meeting family convenience needs

• Currently, 25% of the Learning Centers offer Sylvan Online. Expectation is over 50% by year-end.

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Hooked on Phonics

• 99% Brand Awareness w/ a 15+ year old company• Over 2,000,000 Satisfied Customers• Learn to Read, Math, Master Reader, School Success Programs• Successful services business with 600 small store within a store

daycare locations• Multiple potential service locations –

– Leveraged with a program through Sylvan franchise network• Addressing consumer demand for low-stakes, fun, afterschool

educational programs

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School Business

Traditional

NCLB

Online

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School Market Overview

Features:

• Providing outsourced services

• Programs focused on specific student needs

• Measurement of academic success

Growth Drivers:

• Leveraging long-term school partnerships

• Serving growing idea marketplace

• Integration of consumer / school services (NCLB)

• Catapult Online (urban and rural markets)

• Movement toward school accountability

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School Business Overview• Core service offerings remain strong with high contract retention rates

• New offerings being launched to meet emerging opportunities

- Tutoring for eligible students funded by federal government

- Catapult Online services to meet needs of underserved rural market

• Partnering with schools to address accountability requirements

1993 Small Group Instruction Paid for by School Districts

1997 Address Other School Outsourcing Service Need

2002 Government Sponsored Tutoring (NCLB)

2004 Catapult On-Line Pilot

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Financial Overview

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Outstanding Track Record of GrowthR

even

ue ($

in m

illio

ns)

$0

$50

$100

$150

$200

$250

$300

$350

$400

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Learning Center Catapult Learning

25% CAGR

1999-2003 12%

MBO

(1) Reflects the Company’s current estimate of 2005 revenues, at the mid-point of projected range.

(1)

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2005 Full Year Financial Expectations

(In Millions) 2004 Low High Growth

Revenue $300.3 $350.0 $365.0 17-22%

Operating Profit $40.1 $47.0 $49.0 17-22%

Adjusted EPS $0.49 $0.58 $0.60 18-22%

2005 Guidance

(1) Margin shift in revenue growth for franchise / co-owned (2) Excludes other financing costs, and in 2004, certain non-cash stock compensation expense associated with grants that vested immediately

(2)

(1)

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Seasonality of Educate Profits

• Peak royalties (Q1, Q2)

• School break (Q3)

• Marketing and start-up expenses for government-funded tutoring (Q4)

% o

f Ann

ual O

pera

ting

Prof

it

Q1 Q2 Q3 Q4

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Strong Free Cash Flow Generation

• Strong EBITDA Margins• Low Debt Service Requirements• Low Maintenance Capital Expenditures• Favorable Tax Structure with Low Cash Tax Requirements

(Approximately 20%)• Cash Flow Available for Investment and Growth

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Growth Strategies in ActionPre-MBO1999 - 2003 Post - MBO

Overall Revenue Growth 12% CAGR 20-25%

Learning Centers New Territories 40 / yr 40 / yr Convenience/Densification 5-10 / yr Potential for add'l 1,000 centers

Franchise Buybacks 14 / yr 25-30 / yr Company Greenfields 1 / yr 5-10+ / yr Fun, Affordable Offering None Hooked on Phonics At Home Offering Development Online Rollout, Hooked on Phonics Brand Extension None Researching

School Partnerships Traditional 0% 5% NCLB $2 million $35 + million Online Convenience Development Phase Catapult Online Rollout

~ ~

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Growth Initiative Pipeline

Low Cost Service

Catapult Online

Sylvan Online

Center Convenience Expansion

Territory Best Practices Revenue Focus

NCLB Market Expansion

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2005 2006 2007

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Educate – Market Vision

• Control best brands in education

• Own and grow a propriety distribution system direct to consumer

• Lead the integration of consumer involvement and school partnership solutions

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