2008 Annual Report - The Carlyle Group

Continued from page 18• Manor Care, an owner and operator of skilled nursingand assisted living facilities across the UnitedStates, was named the most admired health careprovider in the country by Fortune magazine for thesecond consecutive year.• The Nielsen Company, a global marketing informationand media company, acquired two companiesto bolster its digital media assets.• Wesco Holdings, the leading provider of integratedjust-in-time inventory management services anddistributor of hardware and electrical componentsto the global aerospace industry, strengthened itscore business with one acquisition.In 2008, Carlyle successfully exited its investmentin AxleTech International when the company wasacquired by General Dynamics. AxleTech is a globalsupplier of planetary axles, advanced suspension systemsand other drivetrain components and aftermarketparts for off-highway and specialty vehicles for thecommercial and military end markets. Since Carlyleacquired the company in 2005, AxleTech successfullyrepositioned itself and achieved significant profitablegrowth by enhancing processes and systems and bymaking operational and management improvements.Also during 2008, Carlyle exited its investmentin Kuhlman Electric, a designer, manufacturer andmarketer of a broad range of transformers for electricutility distribution systems. Kuhlman was acquired byABB, a global power and automation technology companybased in Switzerland. Over the last five years ofCarlyle’s ownership, Kuhlman Electric demonstrateda track record of profitable growth with double-digitincreases in annual sales.In 2005, CP III acquired Hawaiian Telcom, afull-service telecommunications provider in Hawaii,and sought to grow the company by upgrading andexpanding its networks to deliver new products andservices. However, these initiatives were hamperedby significant operational setbacks, stiff competitionand an increasingly difficult economic environment.To stabilize the company, Carlyle brought in a newmanagement team and replaced certain key vendors.In late 2008, Hawaiian Telcom’s operational difficultieswere exacerbated by the economic downturn and thecompany filed for Chapter 11 bankruptcy protection.Hawaiian Telcom continues to operate without interruptionto both customers and employees.Carlyle Europe PartnersThree European-focused buyout funds make upCarlyle Europe Partners. Carlyle Europe Partners, L.P.(CEP) was launched in 1998 at €1 billion. In 2003, CarlyleEurope Partners II, L.P. (CEP II) was launched and has€1.8 billion in commitments. The most recent fund,Carlyle Europe Partners III, L.P. (CEP III), completedfundraising in 2007 with €5.3 billion in commitments.Carlyle Europe Partners seeks opportunities to createvalue through partnerships with management teams,corporate partners or proprietor-owned businesses.Applying Carlyle’s conservative and disciplined investmentapproach, the team helps these organizations repositionand expand their businesses to attain leadershippositions in European and other global markets. Withaccess to the resources provided by Carlyle’s network ofinvestment professionals, Carlyle Europe Partners believesit is in an excellent position to assist European companiesseeking ways to expand globally into other markets.The investment advisory team, which operatesfrom offices in Barcelona, London, Milan, Munich andParis, offers expertise in management consultancy,banking and auditing, along with experience in a widerange of industries. Because team members have beenrecruited locally, they have an intimate understandingof the local business and cultural environments.During 2008, CEP III acquired De La Rue CashSystems, which was subsequently renamed Talaris. Basedin the United Kingdom, Talaris is a global provider of cashhandlingtechnology solutions focused primarily on theniche teller automation market. More than 5,000 banks inover 60 countries rely on Talaris’ cash-handling solutions.CEP III also acquired a 48% stake in MonclerS.p.A., an Italian manufacturer of high-end sportswearproducts under the brands Moncler, Henry Cotton,Marina Yachting, and Coast, Weber & Ahaus. Moncleris also the licensee of the second-line brand Cerruti.In addition, CEP II and CEP III acquired a 37.85% stakein French telecommunications companies Numericableand Completel. Numericable provides high-definitiontelevision, video on demand, high-speed Internet and telephonyservices over its network in France, covering close22 The Carlyle Group 2008