LifeCare Holdings, Inc. Announces Year-e...(e taxes 3707 77...),Health

Net loss $(40,826) $(60,782) 48.9%

Reconciliation to Credit Agreement

EBITDA:

Operating loss - per above $(37,119) $(60,010)

Adjusted for:

Gain on early extinguishment

of debt (1,329) -

Loss of disposition of assets 945 -

Interest expense, net 32,819 35,911

Depreciation and amortization 11,856 11,254

Goodwill impairment charge 43,600 38,834

Stock compensation expense 632 695

Severance - 2,918

Cost report adjustment 3,871 -

Cost saving initiatives - 3,648

Hospital closure/relocation/

start-up losses 3,198 5,967

Sarbanes Oxley implementation - 1,477

New Orleans operations, net of

proceeds (3,573) 86

Other credit agreement add-back

items 2,850 713

Credit Agreement EBITDA 57,750 41,493

Exercise of cure right for quarter

ended September 30, 2007 - 5,999

Pro Forma Credit Agreement EBITDA $57,750 $47,492

Schedule 3

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

December 31, December 31,

Assets 2006 2007

Current assets:

Cash and cash equivalents $33,250 $17,816

Accounts receivable, net
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