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to become a publicly traded partnership within two years of this offering or the acquisition of KLC and k12. As a result, KUE does not believe the anti-inversion legislation or any regulations promulgated within the scope of the legislation’s regulatory authority should apply to KUE although no assurance can be given in this regard or with respect to any new acquisitions of or investments in U.S. corporations. In addition, KUE does not believe that any other Code provision subjecting non-U.S. corporations to U.S. federal income tax should apply to KUE or its subsidiaries, although no assurance can be in this regards. The promuigation of contrary regulations or a successful challenge of either of these positions by the Internal Revenue Service could materially reduce a holder's after-tax return and, thus, could result in a substantial reduction of the value of the Units. 6.2.6 Currency Fluctuations An investment in KUE is a U.S. dollar denominated investment. Coniributions to and distributions from KUE will be made in U.S. dollars. Fluctuations in value between the U.S. dollar and the Investor's functional currency (if other than the U.S. dollar) may result in taxable income to the Investor. 6.2.7 Reporting Requirements Investors who are U.S. Persons will be required to file an IRS Form 8865 with the Investor's U.S. federal income tax return for the taxable year in which the Investor purchases the Common LP Units. Investors who are U.S. Persons may, depending upon the size of their investment in the General Partner, be required to file an IRS Form 5471 with the Investor’s U.S. federal income tax return for the taxable year in which the Investor purchases Class A ordinary shares in the General Partner. Additionally, depending on the type of non-U.S. investments KUE makes, Investors who are U.S. Persons may be required to file additional IRS Forms such as a Form 5471 in subsequent years. 6.3. Risks Related to Projections 6.3.1. The projections included in this Memorandum and otherwise provided to potential Investors are subject to a number of assumptions and uncertainties; potential Investors are cautioned not to place undue reliance on such projections The projections included in this Memorandum and other models and forecasts that may be presented to or discussed with Investors represent management's best estimates as of the date of this Memorandum of KLC’s, KLC OpCo's and KLC PropCoc’s projected results of operations for the years ended December 31, 2006 to 2011 (the “Projections"}. The Projections were not prepared with a view toward compliance with published guidelines of the SEC, the American Institute of Certified Public Accountants, or any regulatory or professional agency or body or generally accepted accounting principles of the U.S. or any other country. In addition, neither the Agents, Deloitte & Touche LLP, the Company’s independent auditors, nor any other independent expert, accountant or counsel has examined, reviewed or compiled the Projections and, consequently, assume no responsibility for them. The Projections should be read together with, and are qualified in their entirety by, the information contained in the rest of this “Risk Factors" section, “Management's Discussion and Analysis of KLC’s Pro Forma Results of Operations,” “Business” and the financial statements and the related notes thereto included in this Memorandum. The Projections do not include any expenses of any entity within the Company above the KLC level, including KUE expenses ($17.5 million of the $20.0 million payable pursuant to the Fixed Overhead Payment Agreement) that will be payable by KUE for administrative and other services. See “Related Party Transactions.” The Projections also do not include any projected expenses relating to grants of Profits Participation Units or other equity-related grants, including for the Stock Appreciation Rights Plan at Knowledge Schools, Inc. ("KSI’), pursuant to which payments may be made based on different valuations of KSI stock and are based on the same multiples of Adjusted EBITDA used in 2005; actual valuations are conducted annually and may be higher or lower. Finally, the Projections do not reflect projected interest expenses on KUE debt. 55 HOUSE_OVERSIGHT_024488