KKR Annual Review 2007

2007 Annual Review
Contents
About KKR 2
To Our Limited Partners 5
The Year in Review: Private Equity Investments 9
People 26
KKR and Its Principles 36
Investments of the KKR Funds 38
KKR’s consistent record of value
creation is based both on its
willingness to evolve as the
investment environment changes
and its steadfast commitment to
principles that have guided the
Firm for more than 32 years.
About KKR
Established in 1976, KKR & Co. L.P. is a leading global alternative asset manager
with $53.2 billion of assets under management, as of December 31, 2007. KKR is
organized into two primary business segments: private equity and credit. Our
intellectual capital, our integrated global investment platform, and our experience
in adapting investment strategies to market conditions allow us to invest successfully
at every level of a company’s capital structure. KKR has more than 400 employees
and offices in New York, Menlo Park, San Francisco, London, Paris, Hong Kong,
Beijing, Tokyo, and Sydney. The Firm is led by founding partners Henry R. Kravis
and George R. Roberts.
KKR is a world leader in private equity, sponsoring and managing funds that make
investments in attractive franchises for long-term appreciation, either through
controlling ownership of a company or strategic minority positions. KKR’s private
equity professionals and KKR Capstone operating executives work with the
management of industry-leading businesses to create value for our investors, primarily
through improvements in company operations. KKR’s Investment Committee, which
consists of several of the Firm’s most experienced investment professionals, reviews
all private equity proposals globally and brings discipline to decision-making about
new investments. The Firm’s Portfolio Management Committee, which includes
KKR executives and senior advisors with significant operating experience, monitors
the performance of investments and oversees value-creation activities in portfolio
companies. Our current private equity portfolio consists of 46 companies, with
combined annual revenues of more than $185 billion and over 825,000 employees.
In addition to sponsoring and managing traditional private equity funds, which

have a finite life and investment period, KKR established in 2006 KKR Private
Equity Investors, L.P. (Euronext Amsterdam: KPE), a permanent capital fund that
provides selected public market investors, including institutions and individuals,
the opportunity to access KKR’s private equity investment strategies in a liquid
manner. KPE’s private equity investments include limited partner interests in KKR
private equity funds, co-investments in certain KKR portfolio companies, and
negotiated equity investments. KPE may also invest up to 25% of its adjusted assets
in public securities that KKR investment professionals identify in the course of their
work. As a listed fund, KPE produces its own annual report, which is available at
www.kkrprivateequityinvestors.com.

1992 1993 1994 1995 1996 1997 1998
KKR 2007 Annual Review
Private Equity
Credit
By acquiring and monitoring leveraged businesses in its private equity portfolio,

KKR has acquired significant credit experience. In 2004 KKR actively began to pursue
debt investments as a separate asset class with the establishment of KKR Financial
LLC (KFL), whose credit professionals have significant experience in managing and
evaluating fixed-income investments. Leveraging KKR’s deal flow and industry Assets Under Management by Asset Class,
expertise, KFL is the manager for KKR Financial Holdings LLC (NYSE: KFN), a December 31, 2007
Billions of Dollars
publicly traded fund that invests in corporate credit transactions, and the KKR
Strategic Capital Fund, a private vehicle for investing in debt transactions. As of
December 31, 2007, KFL has $11.0 billion of credit investments in approximately
170 companies. KFN’s annual report is available at www.kkrfinancial.com. 11.0
Over its 32-year history, KKR has grown from a relatively small pioneer in the buyout
industry to an integrated alternative asset manager with global capabilities and reach. 42.2
Although the Firm has nine offices across four continents, it still operates as a single
firm that encourages teamwork among investment executives and the sharing of
expertise, resources, and networks. We are proud of our strong relationships with
investors, many of whom have invested with KKR for decades across multiple funds,
and we are confident that we have built a sustainable model for delivering Private Equity
attractive returns. Credit
Assets Under Management, 1992-2007

Billions of Dollars
60.0
53.2
50.0 11.0
43.9
5.2
40.0
30.0
23.9 23.4
20.0 21.0
19.7 3.7
17.5 18.3 17.5
20.0 16.8 16.0
15.4 14.5 15.1
12.6 0.8
10.0
12.6 15.4 16.8 16.0 17.5 23.9 20.0 21.0 19.7 14.5 18.3 17.5 14.4 19.7 38.7 42.2
0.0
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Private Equity
Credit

KKR co-founders Henry R. Kravis, right,
and George R. Roberts lead a team of
investment professionals who are among
the most experienced and successful
private equity investors in the world.

To Our Limited Partners
Two thousand seven was a year of transition for the private equity industry,
with the healthy economic environment for buyouts in the first half of the year
deteriorating in the second. Concerns about the sub-prime mortgage sector, a
supply-and-demand imbalance for LBO debt, and other factors led to a sudden
re-pricing of risk in the summer. The severe challenges in the leveraged loan and
high-yield markets sharply curtailed deal activity in the second half of the year.
As we enter 2008, uncertainty about the economy, particularly in the United States,
but also in Europe, poses challenges for many industries and businesses,
including those financed by private equity.
Despite this difficult environment, 2007 was a very good year for KKR and its
limited partners, and we see many more reasons for optimism than pessimism in
the years ahead. In 2007 KKR invested $15.2 billion of equity in 14 companies
that have an aggregate enterprise value of $144.5 billion. In total, the KKR Funds
distributed $4.3 billion in 2007, and more than $23.6 billion in the past five years.
Our fundraising initiatives included closing the $17.6 billion KKR 2006 Fund L.P.
and the $4.0 billion KKR Asian Fund L.P.
We took advantage of the abundant liquidity in the leveraged loan and high-yield
markets in early 2007 to acquire several large national and global brands, including
First Data Corporation, Energy Future Holdings (formerly TXU Corp.), Alliance
Boots, Dollar General, Biomet, and U.S. Foodservice. We were able to lock in flexible,
low-cost, long-term financing terms that are unlikely to be replicated in the near
future. Such financing will enable these companies to pay down debt while investing
in future growth and competitiveness. We believe that when we have executed our
value-creation strategies in the coming years, the companies KKR acquired in 2007
will produce overall returns that are significantly above those of public markets and
compare favorably with private equity industry benchmarks.
As with all our investments, KKR’s acquisitions in 2007 were made with an eye
toward the inevitable turn in the business cycle. The Firm’s general approach to
private equity has several characteristics that are designed to ameliorate the impact
of an economic slowdown. Our focus on the large end of the buyout market is driven,
in part, by the relative lack of volatility in global franchises. These companies tend
to attract the best senior managers, whose experience generally includes successfully
managing through downturns. Although the macroeconomic environment and
markets impact all forms of investing, our portfolio comprises discrete investments
in diverse industries and geographies. Our control positions allow us to exert more
influence on the performance of our businesses than other asset classes. We decide not
only what companies to buy, but also how to improve them and when to exit them.

KKR’s careful approach to capitalizing portfolio companies was documented in a

January 2008 Moody’s research report, which singled us out as more conservative in
acquisition financing than other large private equity firms. The report noted that
only one KKR portfolio company had a debt-rating downgrade between 2002 and
2007 and that “KKR was the only firm to have more upgrades than downgrades.” *
FridsonVision, a publisher of independent research on credit topics, built on the
Moody’s study, quantifying the incidence of distressed debt in buyouts and
concluding that KKR “can make a fairly strong claim to superior performance.” **
Over the past two years, KKR’s industry teams have sought out companies that not
only are great franchises, but also would likely perform well in a more challenging
economic environment. Examples of such investments include First Data Corporation,
a global provider of electronic commerce and payment solutions for merchants,
financial institutions, and card issuers. The continuing shift from cash and checks to
electronic payment transactions is a secular change in commerce unlikely to be
reversed. We expect that Biomet, a leading international manufacturer of orthopedic
devices, will benefit from both an aging U.S. population and improvements in implant
devices that can benefit younger patients. Alliance Boots has the largest portfolio of
pharmacies in the U.K., where sales of prescription medicines and over-the-counter
pharmaceuticals have been very stable and largely immune to the economic cycle.
Economic headwinds will adversely impact some portfolio companies more

than others. We have no more important priority, particularly in a tough economy,
than monitoring closely our portfolio companies and taking action to address major
challenges. Our Portfolio Management Committee, which includes investment
professionals and senior advisors with extensive operating experience, instills
discipline into the process of reviewing the financial and operating performance of
our portfolio companies. This committee ensures that value-creation strategies are
executed, and it focuses particular attention on investments that are underperforming.
The professional capabilities we make available to our portfolio companies include
the industry expertise of our investment professionals, the operational skills of
KKR Capstone executives, the experience of our senior advisors, and other
specialized resources.
Our business has never been risk free. Yet we believe that our portfolio of private
equity investments will continue to perform well relative to other asset classes.
Over the past 32 years, we have invested successfully in high- and low-interest rate
environments, liquid and illiquid credit markets, and periods of economic expansion
and recession. Such consistent performance is not an accident. It is a consequence of
experience and a disciplined approach to long-term value creation. We buy great
franchises for reasonable prices, we partner with quality management teams, we
develop appropriate capital structures for our portfolio companies, we create value
largely through improvements in business operations and EBITDA growth, and
we determine the optimum timing and method for exiting an investment.
* “Private Equity: Tracking the Largest Sponsors,” Moody’s Investors Service, January 2008.
** “LBOs Are Disproportionately Distressed,” Distressed Debt Investor, January 24, 2008, Vol. 4, No. 2, p. 5.
It is our belief that difficult markets play to KKR’s fundamental strength – the
ability to finance, acquire, and improve portfolio companies. The U.N Ro-Ro and
Northgate Information Solutions acquisitions, which closed in December 2007 and Over the past 32 years, we have
March 2008, respectively, demonstrate our ability to execute transactions in tough invested successfully in high- and
markets. Our investment in Legg Mason, which closed in January 2008, shows how low-interest rate environments,
proactive deal sourcing and industry expertise lead to proprietary opportunities. liquid and illiquid credit markets,
With a portfolio of companies that are diverse in geography and industry sectors,
and periods of economic
and with KKR Capstone’s ability to drive operational improvement initiatives,
we believe that our portfolio companies are well positioned to weather
expansion and recession.
difficult economic times.
� ver the years, KKR has grown from a handful of partners, associates, and support
staff to more than 400 employees worldwide. We have also adapted our business to
changes in the private equity market. In 1998, for example, we recognized that a global
footprint was a requirement for continued industry leadership. Since then, the Firm
has opened offices in London, Paris, Hong Kong, and Tokyo. In early 2008, we
established new offices in Sydney and Beijing.
What has not changed at KKR are the Firm’s values and culture, which we believe
have been central to our long-term success. The fundamental value, upon which all
others rest, is integrity. In practice, this means honesty with our investors, portfolio
companies, financial and other service providers, and all internal and external
constituencies with whom we interact. We invest in companies and work with people
with whom we are proud to associate ourselves. We strive to be the best at what we do,
and we are not afraid to assume prudent risks to achieve an appropriate return. We hire
and promote high-intensity self-starters who are analytical, disciplined, and results-
oriented team players.
We are pleased to report that in 2007 Ken Freeman, Craig Farr, and David Sorkin
were appointed Members of the Firm. Ken, the former chairman and CEO of Quest
Diagnostics Incorporated, joined KKR as a managing director in 2005 and has taken
an active role in managing our investments in Masonite and Accellent. Craig, a former
managing director at Citigroup Global Markets and co-head of North American
Equity Capital Markets, joined KKR in 2006 and is co-head of the Firm’s Capital
Raising team. David, a former partner at Simpson Thacher & Bartlett LLP and a
longtime advisor to KKR, joined the Firm in late 2007 as general counsel.
Heinz-Joachim Neubürger, the former chief financial officer of Siemens AG,

joined the London office of KKR in 2007 as a managing director. Shusaku Minoda,
the former managing executive officer of the Global Investment Banking Group of
Mizuho Corporate Bank, was appointed a managing director in Tokyo and the
chief executive officer of KKR Japan.

To support the Firm’s ongoing global growth, KKR made three other senior executive
appointments in late 2007 and early 2008: Bob Gottlieb, who spent nearly 20 years at
KKR’s track record from its founding in 1976 Goldman Sachs in senior human resource management and administrative functions,
to December 31, 2007
Billions of Dollars was named chief human resources officer; Peter Fasolo, former vice president of
Global Talent Management at Johnson & Johnson, joined KKR as chief talent officer,
90.0
North America, to help assess, recruit, train, and coach management teams at the
$87.9
Firm’s North American portfolio companies; and Ed Brandman, a highly experienced
80.0
technology executive, joined KKR as chief information officer, responsible for global
technology and information strategy.
70.0
We also strengthened our team of senior advisors, all of whom have held leading
60.0
positions either in major corporations or in public agencies in the United States,
Europe, or Asia. Senior advisors contribute to the Firm’s success by serving on
50.0
the boards of portfolio companies, helping us evaluate individual investment
40.0
opportunities, and assisting our companies with operational matters. Senior advisor
$42.2
appointments in 2007 include: Sanjiv Ahuja, former chief executive officer of Orange
30.0 SA; Thierry Breton, former French Minister of Economy, Finance, and Industry;
Richard L. Clemmer, former CEO of Agere Systems; and David M. Cote, chairman
20.0 and chief executive officer of Honeywell. In early 2008, KKR made the following
appointments to its team of senior advisors: John F. Bookout III, former director
10.0 of McKinsey & Company; Lee R. Raymond, former chairman and CEO of
ExxonMobil; and Wolfgang Reitzle, president and CEO of the Executive Board
0.0 of The Linde Group.
A s this publication goes to press in early 2008, we believe that we will continue to
Amount Invested
Total Value
see good investment opportunities and that financing will be available for transactions
by leading private equity firms. Some of the best investments in KKR’s history
were made in periods of economic uncertainty. Valuations for potential portfolio
$61.4 companies are becoming increasingly attractive, and interest rates remain low when
compared to historical standards. We believe that in a less robust environment for
mergers and acquisitions, KKR’s strength in deal sourcing, its industry expertise
and operational skill set, and its outstanding reputation with market participants
will provide opportunities for the Firm to distinguish itself from competitors.
$26.5
We are grateful for your support, and we look forward to remaining worthy of
your confidence in the years ahead.
Realized Value
Unrealized Value
Henry R. Kravis George R. Roberts
March 2008

The Year in Review Private Equity Investments
Though KKR’s investments are far from formulaic, we generally seek to acquire
controlling interests in large, diversified, high-quality franchises. Such companies
attract world-class managers who can drive returns; provide more opportunities
than smaller companies for making fundamental operational improvements; and
command greater attention from capital markets and corporate buyers when
exiting an investment.
We believe that our experience, networks of relationships, and industry expertise

provide KKR with a sourcing advantage in the large end of the buyout market.
We have been investing in this segment longer than anybody else, and our
executives have global networks of relationships that include CEOs of the largest
companies, government officials, co-investors, advisory institutions, and financial
intermediaries. The industry expertise of KKR investment professionals enables
them to reach out proactively to the most attractive potential portfolio companies,
demonstrate their credibility as a value-added partner to management teams, and
assess quickly and thoroughly possible transactions in complex industries.
KKR’s sourcing advantage means that we are less reliant on auctions and secondary
buyouts than many other buyout firms. In 2007 our proprietary transactions
included Energy Future Holdings, First Data Corporation, Laureate Education,
Northgate Information Solutions, Tianrui, and Yageo. KKR investments that closed
in 2007 or early 2008 are listed in the pages that follow.

Summary of Private Equity Investments
January 1, 2007 – March 31, 2008
U.S. Foodservice Laureate Education, Inc.

Chicago, Illinois Baltimore, Maryland
Biomet, Inc. Legg Mason, Inc.
Warsaw, Indiana Baltimore, Maryland
(Q1 2008)
First Data Corporation Harman International

Greenwood Village, Industries, Inc.
Colorado Washington, D.C.
Energy Future Holdings Dollar General
(formerly TXU Corp.) Goodlettsville, Tennessee
Dallas, Texas
$15.2 billion
$144.5 billion
of equity invested in 2007
$4.3 billion
aggregate enterprise value in 2007
distributed in 2007
10
Northgate Information Solutions plc

Hemel Hempstead, England
(Q1 2008) Tianrui Group
Alliance Boots Cement Co., Ltd.
London, England Henan, China
U.N Ro-Ro Yageo

Istanbul, Turkey Taipei, Taiwan
Tarkett
Nanterre, France MMI Holdings Ltd.
Singapore
ProSiebenSat.1
Munich, Germany Bharti Infratel Ltd.
New Delhi, India
(Q1 2008)
11
Retail
Alliance Boots (£12.4 billion) * is an international pharmacy-led health care

and beauty group acquired by KKR and its partner, Executive Chairman Stefano
Pessina. Headquartered in London, the company has a European retail pharmacy
business with approximately 3,100 stores and a leading pharmaceutical wholesaler
with a network of some 380 depots serving more than 125,000 outlets
across Europe.
Alliance Boots is the market leader in the U.K. pharmacy and health and beauty
market, and it is a leading player in the European pharmaceutical wholesale
market. We believe that the company has opportunities for further international
expansion across its primary business areas. Our investment professionals and KKR
Capstone executives have been working with management on a broad range of
operational improvement initiatives, which include accelerating the conversion
Alliance Boots of Alliance pharmacies into Boots-branded pharmacies and optimizing the U.K.
supply chain infrastructure.
Alliance Boots had strong Christmas-season retail sales in the U.K. and Republic
of Ireland. Contributing to growth in the Health and Beauty segment was the
company’s own No 7 brand, particularly the Protect & Perfect skin cream.
Dollar General ($7.6 billion) is the largest “small box” discount retailer in the
United States. With over 8,000 neighborhood stores, Dollar General stores are
a convenient alternative to “big box” discounters, offering basic items that are
frequently used and replenished, such as food, snacks, health and beauty aids and
cleaning supplies, as well as a selection of basic apparel, housewares and seasonal
items. In addition to convenience, everyday low prices are central to the company’s
mission of serving its customers. KKR led a consortium of investors, including
affiliates of Goldman Sachs and Citigroup, in acquiring Dollar General.
The company is the market leader in a unique niche of retail that has experienced
high rates of growth. We believe there is ample opportunity to continue growing
the format. To take advantage of Dollar General’s local brand awareness and
maximize operating efficiency, the company expects that in the near term a majority
of its new stores will be opened within existing markets. In addition to the goal of
opening hundreds of new stores each year, Dollar General expects to make
substantial investments to remodel its existing stores.
In January 2008, Richard W. Dreiling was appointed CEO of Dollar General.

A retail industry veteran, he most recently served as chairman and chief executive
officer of the drug store chain Duane Reade.
* Figures in parentheses are the total enterprise value of an acquisition.

12
U.S. Foodservice ($7.3 billion) is the second largest food distributor in the United
States. The company’s 250,000 customers include restaurants, hospitals, schools, and
government agencies. The combination of customer focus, commitment to service,
and a portfolio of national and private label brands has enabled the company to
deliver exceptional value to its customers. KKR and Clayton, Dubilier & Rice are
equal partners in the transaction.
Operating in an industry that has a 30-year record of uninterrupted growth through

a variety of economic cycles, U.S. Foodservice has an experienced management team,
a proven business model, and opportunities for profitable growth – for example, by
expanding USF’s private label product offering and enhancing USF’s presence in
geographies with high growth potential. The Firm’s investment professionals and
KKR Capstone executives have been working with management on a range of
initiatives to generate new sales, improve gross margins, and enhance operations
productivity. Notable initiatives that contributed to USF’s success in 2007 included
increasing private label penetration and improving procurement, enhancing delivery
and warehouse productivity, and strengthening inbound freight and logistics.
Energy and Natural Resources
Energy Future Holdings ($49.0 billion), formerly TXU Corp., is a Dallas-based U.S. Foodservice
energy holding company operating in one of the nation’s largest and fastest
growing power markets. EFH has three principal operating subsidiaries: Luminant,
a competitive power generation business with more than 18,300 MW of capacity
in Texas; TXU Energy, a competitive retailer that provides electricity and related
services to more than two million customers in Texas; and Oncor, a regulated
electric distribution and transmission business that provides power to three million
electric delivery points over more than 100,000 miles of distribution lines and
14,000 miles of transmission lines.
The investment by KKR and our partners, TPG and Goldman Sachs, will enable
the company to meet the growing energy needs of customers in Texas by building
three new generation units that are currently under construction, by investing in
new transmission and distribution facilities, and by growing its customer base
with a suite of competitive retail electric plans. A flexible capital structure provides
ample liquidity to fund ongoing operating activities and anticipated capital
investment, as well as cope with fluctuations in underlying commodity prices.
Consistent with the investor group’s philosophy, the company has hedged more
than 80% of its underlying commodity exposure over the next five years through
Energy Future Holdings
natural gas sales. The acquisition involved intensive consultation with local
legislators, regulators, consumer groups, environmental organizations, organized
13
labor, and government officials about the company’s strategy and operations.
Our investment gained the support of a diverse set of constituencies, including
Texans for Affordable & Reliable Power, the Texas Economic Development
Council, the International Brotherhood of Electrical Workers, elected officials
in state and local government, as well as Environmental Defense and the
Natural Resources Defense Council.
In January 2008, EFH appointed John F. Young as chief executive officer. Prior to
joining the company, he served as chief financial officer and executive vice president
of Finance and Markets at Exelon, the largest U.S. utility, where he held a range of
leadership responsibilities. Mr. Young brings significant operating experience to
EFH, having worked for 25 years at some of the utility sector’s top companies.
Financial Services
First Data Corporation ($29.5 billion) is a leading provider of electronic

commerce and payment solutions for merchants, financial institutions, and card
issuers globally. The company has operations in 38 countries, serving more than
five million merchant locations and 1,900 card issuers. First Data operates in three
primary segments: Commercial Services, Financial Institution Services, and
First Data International.
The payments processing industry expects to benefit from the continuing

global shift from cash and checks to electronic payment transactions. First Data,
a market leader in each of its core segments, is a predictable and stable business
with multi-year contracts, high renewal rates, and a diversified mix of customers,
products, geographies, and distribution channels. We see many opportunities
to improve operational efficiency – for example, by optimizing technology
infrastructure – and to grow the core business, develop new product offerings,
and expand internationally.
KKR recruited Michael D. Capellas to become chairman and chief executive

officer of First Data. A 30-year veteran of the IT industry, he has served as CEO
of MCI, president of Hewlett-Packard Company, and chairman and CEO of
Compaq Computer Corporation.
Legg Mason, Inc. is a global asset management firm with approximately $1 trillion
in assets. It serves the institutional, mutual fund, and wealth management markets
through 14 different affiliates, providing a broad array of investment management
First Data Corporation services across equity, fixed-income, and liquidity products, both in the U.S. and
around the world.
14
As global capital markets expand and wealth is accumulated, the asset management
industry has experienced strong growth. Asset managers such as Legg Mason that
have leading franchises, broad product offerings, and scale are well positioned to
capitalize on continued growth in the sector. In January 2008, KKR agreed to invest
$1.25 billion into a convertible debt security issued by the company. The structure
of the investment minimizes the risk from a downturn in Legg Mason’s stock price,
while offering significant upside from improved performance. KKR Member
Scott Nuttall has joined the company’s board of directors.
Media and Communications
ProSiebenSat.1 (€3.2 billion) is a leading European media conglomerate

based in Germany. In February 2007, KKR partnered with Permira to acquire
German Media Partners’ 88% of voting shares and 13% of non-voting shares
(50.5% economic stake) in publicly listed ProSiebenSat.1 Media AG. The following
June, ProSiebenSat.1 acquired KKR portfolio company SBS Broadcasting for
€3.3 billion, creating the second largest European free TV group with pan-
European operations. ProSiebenSat.1 owns and operates four of Germany’s
leading commercial TV stations, 22 additional commercial stations in markets
across Europe, and 24 pay-TV channels branded “CMore,” the leading Nordic
ProSiebenSat.1
premium pay-TV provider. The company also owns 22 radio networks, two
Dutch television and radio guides, and a range of German Internet media
interests, such as MyVideo.de and lokalisten.de.
In January 2008, KKR and Permira purchased the 12% stake in ProSiebenSat.1
of German publisher Axel Springer AG. With this incremental investment of
€509 million, KKR and Permira increased their voting rights in the company to
100% and their economic interest to 62.7%.
Bharti Infratel Ltd. is a leading Indian wireless infrastructure company

providing telecom tower space to mobile operators. It is a newly formed company
recently demerged from Bharti Airtel Ltd. (“Airtel”). Airtel is India’s leading mobile
service provider and the core holding of Bharti Enterprises, one of India’s leading
business groups. Airtel will continue to be the majority shareholder in Infratel.
Infratel has the most extensive nationwide telecom infrastructure in India, owning
and operating approximately 22,000 telecom towers. In addition, the company
owns a 42% stake in a recently announced joint venture with Vodafone Group plc
and Idea Cellular Ltd., which operates more than 70,000 cell phone towers across
India. KKR Member Oliver Haarmann was elected to Bharti’s board of directors.
15
In February 2008, KKR agreed to invest $250 million in common equity and
convertible debentures issued by Infratel. We believe that the company is an
investment opportunity with an attractive risk-return profile combining
emerging market growth potential with a stable, cash-generative business
that has long-term contracts.
Health Care
Biomet, Inc. ($11.6 billion) is a leading international manufacturer of orthopedic

devices and other products used primarily by musculoskeletal medical specialists in
both surgical and non-surgical therapy. The company’s products are distributed in
over 70 countries, and they include orthopedic joint replacement products, dental
reconstructive implants, fixation devices, spinal products, and other applications.
KKR was a lead investor in this transaction, and our partners include Blackstone,
TPG, and Goldman Sachs.
We expect that Biomet will benefit from favorable demographics and higher
procedure penetration. For example, the market for knee and hip implants is
expected to grow because of the aging U.S. population and improvements in
implant devices that can benefit younger patients. Biomet is an R&D-focused
company with a history of innovation and a robust new product pipeline. The
company has a favorable competitive position in all of its key business units.
The company appointed Jeffrey R. Binder president and chief executive officer.
A 15-year veteran of the orthopedic medical device industry, most recently with
Abbott Laboratories, Mr. Binder has broad management and operational experience
and a record of helping companies take advantage of growth opportunities.
Industrial
Tarkett (€1.6 billion) is one of the world’s largest manufacturers and marketers
of hard floor products. Headquartered in Nanterre, France, the company produces
and sells resilient (vinyl, linoleum, and rubber), wood, and laminate flooring as
well as sports flooring and flooring accessories. KKR owns a 50% stake in Tarkett,
alongside the Deconinck family, who were looking for an experienced, hands-on
partner to drive value creation in the business.
Tarkett is the leading manufacturer of resilient flooring in Eastern Europe, with

Tarkett significant growth prospects from geographic and product expansion. Eastern
Europe is the company’s largest regional profit contributor. In Western Europe,
16
Tarkett is the market leader in residential flooring and commercial flooring,

with a particularly strong presence in the healthcare and education sectors.
In sports flooring, particularly artificial turf, the company’s Fieldturf brand is the
global industry leader in its segments. In North America, the company operates in
selected segments in residential and commercial flooring. In addition to initiatives
to drive further growth in Eastern Europe and in sports flooring, management
has been leading, with support from KKR Capstone, a series of operational
improvement initiatives in such areas as product assortment and customer service,
supply chain management, overhead costs, and sales force effectiveness.
Tianrui Group Cement Co., Ltd.
In September, Tarkett appointed Michel Giannuzzi chief executive officer. He joins
the company from his previous position as divisional CEO at the global automotive
components supplier Valeo S.A.
Tianrui Group Cement Co., Ltd. ($448 million) is one of China’s leading
cement producers, with the capacity to produce 14.4 million tons of cement
per year. The company focuses on Henan and Liaoning provinces, the two
major cement markets in the emerging economic belt in central China and
northeastern China, respectively. In July 2007, KKR acquired a 43% stake
in this rapidly growing company.
China is the largest cement producing country in the world, accounting for
more than 40% of global production. Henan, Tianrui’s home market, is the sixth
largest cement producing province in the country. Expanding into Liaoning
province, Tianrui is establishing a cement facility in the city of Dalian. The
company has acquired strategically located reserves of limestone (one of the
key raw materials in cement production) near its target markets, which
cannot be replicated by competitors.
Tianrui, which has attracted an impressive team of executives, is one of 12 cement

companies in China that the central government expressly supports as part of its
initiative to drive national consolidation of the cement market.
Technology
MMI Holdings Ltd. ($757 million) is a precision engineering company that

designs, manufactures, and assembles cutting edge electro-mechanical components
for global technology leaders. With headquarters in Singapore, the company
operates in four key segments: the hard disk drive (HDD) data storage industry, the
commercial laser industry, industrials, and the semiconductor equipment industry.
In July 2007, KKR acquired approximately 71% of the company.
17
MMI is one of the largest manufacturers of HDD components globally.

The company has strong relationships with its blue chip customer base, which
includes Seagate, JDS Uniphase, Sun Microsystems, and KLA-Tencor. Under the
leadership of its senior management, MMI has a track record of continuous
revenue growth since its inception in 1989. The outlook for the HDD industry,
which has experienced significant consolidation over the past two decades,
is robust, with strong anticipated growth in consumer electronics.
Northgate Information Solutions plc (£1.1 billion) is a U.K.-based provider of

specialist software, outsourcing, and information technology services to the human
resources, local government, education, and public safety markets. Operating in 46
countries across five continents, Northgate has thousands of commercial customers
and works with approximately 100 of the Fortune 500 companies, 90% of U.K. local
authorities, and all of the U.K.’s regional police forces.
The market for outsourced services will likely grow as organizations seek
efficient, high-quality alternatives to in-house offerings. Northgate is No.1 in the
U.K. market for human resources software and No. 2 for U.K. payroll outsourcing.
The company’s recent acquisition of Arinso, a global human resources services and
payroll processing business, represents a significant opportunity for value creation.
KKR’s acquisition of Northgate was announced in December 2007 and closed
Northgate Information Solutions plc in March 2008.
Yageo Corporation is one of the world’s leading manufacturers of capacitors,

resistors, and other passive components that mainly regulate, store, or alter
electrical voltages or currents in a wide range of electronic devices. Passive
components are found, for example, in computers, mobile phones, and consumer
electronics. Yageo has its headquarters in Taipei and production facilities in
Taiwan, Mainland China, and Europe. By volume, the company’s current global
rank is No.1 in chip-resistors, No. 3 in MLCCs, and No. 3 in ferrite products.
The market for passive components is large, and continued volume growth will
likely be sustained by the proliferation of electronic devices and other factors.
Yageo has a strong management team, extensive manufacturing know-how, global
scale, a competitive cost structure, and a diversified customer base. Yageo shares
are publically traded on the Taiwan Stock Exchange. In June 2007, KKR invested
Yageo $228 million in Yageo in the form of a convertible instrument.
18
Consumer
Harman International Industries, Inc. manufactures a wide range of audio and

entertainment products for the automotive, consumer, and professional markets.
The company is the leading supplier of premium audio and infotainment systems
for automotive OEMs, including Mercedes, BMW, Audi, Lexus, and other high-
end manufacturers. Harman also operates strong professional and consumer
multimedia businesses, with products marketed under the JBL, harman/kardon,
Crown, Infinity, Studer, and Mark Levinson brands, among others.
In addition to its strength in developing innovative new technologies, Harman

is highly regarded for its commercialization capabilities, integration expertise,
and marketing appeal. Based on contracts signed with leading automotive OEMs,
Harman has a high level of visibility on future revenues. In October 2007, KKR
and Goldman Sachs agreed to invest $400 million in Harman through the
purchase of convertible notes that provide substantial downside protection
and continued equity upside. KKR Member Brian Carroll has joined the
company’s board of directors.
Education
Laureate Education, Inc. ($4.0 billion) is the world’s leading international

provider of higher education. With a presence in 16 countries, Laureate serves more
than 300,000 students, meeting the growing demand for post-secondary education
in developing countries through its network of campuses around the world.
In addition, the company has an online education business in the United States
that specializes in post-graduate degree programs.
In developing countries, prestigious post-secondary schools tend to be

government-funded public institutions that cannot accommodate the demand
from a growing number of eligible students with high school educations. Focused
on providing their people with an education from kindergarten through twelfth
grade, governments in developing countries often do not have sufficient resources
available to finance additional post-secondary educational institutions. In addition,
a growing middle class in many developing countries can afford to pay for post- Laureate Education, Inc.
secondary education. This creates a significant opportunity for private, for-profit
19
education alternatives. One of Laureate’s greatest assets is its global network

of higher education institutions, which provides benefits such as leveraging
curriculum development across the schools. A proven and replicable model
of enrollment growth and campus expansion allows the company to acquire
more institutions and integrate them into the Laureate network.
Laureate was acquired by a consortium of investors that included Douglas L.

Becker, Laureate’s chairman and chief executive officer. KKR was the
consortium’s largest investor and holds two of nine board seats.
Transportation
U.N Ro-Ro (€933.0 million) is a Mediterranean short-sea roll-on/roll-off

(“ro-ro”) ferry operator and a market leader for trucked cargo between Turkey and
Western Europe. With a fleet of eight state-of-the-art vessels, the company operates
a round-the-clock “highway of the sea” service, delivering efficient transport services
between Istanbul and Trieste that combine maritime, air, and rail transport.
KKR’s acquisition of U.N Ro-Ro is the largest buyout to date in Turkey.
We believe that the company is positioned well to profit from anticipated trade
growth between Turkey and Western Europe. U.N Ro-Ro’s service is less costly
than overland routes and has environmental and regulatory advantages as well.
To meet growing demand, the company plans to add four new ships over the next
three years. Operational improvement initiatives include reducing turnaround
time in ports to enable slower sailing and reduced fuel consumption. The
U.N Ro-Ro company has an experienced management team and strong relationships with
customers and key stakeholders such as port authorities and operators.
20
The Year in Review Creating and Realizing Value
Creating value for our investors begins in earnest the day a transaction to
acquire a company closes. This is when the Firm’s investment professionals
and KKR Capstone operating executives work with management to execute a
company’s unique 100-day plan. Prior to closing, we identify and prioritize
high-impact operational initiatives that will be launched and tracked in the
first 100 days. The plans assign specific responsibilities to managers, the Firm’s
investment professionals, and KKR Capstone executives, and we have found
them to be an effective way to hold people accountable for results.
Leverage provides some level of returns, but the principal driver of the value
we create is improving portfolio company operations in such areas as:
• S
ales growth through market share expansion or moving into new
geographies or business areas;
• C
ost improvements in purchasing, manufacturing, and
discretionary spending;
• D
evelopment of efficient central-headquarters functions, such as finance,
human resources, information technology, and legal, particularly when
acquisitions are carve-outs from large corporations;
• B
etter cash management through increased attention to working capital
and more focused capital expenditures and investments;
• A
sset optimization through the sale of non-core businesses and the
acquisition of complementary businesses; and
• E
nhanced performance metrics to monitor key value drivers, identify
trends, and respond promptly to problems.
The Portfolio Management Committee, which oversees value-creation

activities in our portfolio companies, works with each deal team to
determine the optimum timing and method for exiting an investment.
KKR’s longstanding relationships with the investment banking community
and corporate buyers enhance our ability to complete IPOs, secondary
offerings, and sales to strategic buyers.
Notable exits and portfolio company highlights from 2007 and early
2008 include:
21
Argillon Group, headquartered in Redwitz, Germany, is an international

developer and manufacturer of advanced ceramic materials. It is the last of seven
separate businesses that KKR acquired from Siemens in 2002, renamed Demag
Holding, to be exited by the Firm. In December 2007, Demag announced the sale
of Argillon to Johnson Matthey, a U.K. specialty chemical company. The transaction
closed in February 2008, following regulatory approval by German antitrust
authorities. Including the approximately $167.1 million KKR received for Argillon,
the gross multiple for the Demag investment is 3.4x our original equity
investment of $409 million.
AVR is the leading waste management company in the Netherlands and active
in every stage of the waste management chain: collection, recycling, treatment,
processing, and disposal and incineration. KKR and our partner, CVC, acquired the
company in March 2006. In April 2007, AVR acquired van Gansewinkel, a leading
waste service provider in the Benelux. Van Gansewinkel has an outstanding
management team led by Ruud Sondag, who was appointed CEO of the combined
AVR/van Gansewinkel. The integration has been successfully completed and
positions the combination as the leading player in European waste management
with strong market positions across the entire waste management value chain.
BIS is a leading Australian provider of on-site and off-site materials handling

and logistics services, primarily to customers in the coal, metals and minerals, and
steel industries. In July 2007, BIS sold its Cleanaway waste management division to
AVR Transpacific Industries for A$1.25 billion. The sale was a significant financial and
strategic divestiture for BIS, enabling the company to realize an attractive price for
Cleanaway and to focus on high-growth opportunities in the industrial logistics
business. The new contract pipeline for BIS remains robust, and we expect that the
business will continue to grow both organically and through regional acquisitions.
Bristol West is a provider of private passenger automobile insurance, specializing

in coverage for drivers who, for a variety of reasons, find it difficult to purchase
policies from standard carriers. Investing in a long-term growth opportunity, KKR
acquired the company in 1998 and, with the active leadership of CEO Jim Fisher,
helped expand the business from two states at the time of purchase to the current
21 states and the District of Columbia. From 1999 to 2006, the company’s total
revenues more than tripled from $208.4 million to $661.1 million. In March 2007,
Bristol West agreed to be acquired by Farmer’s Group, Inc., a subsidiary of Zurich
BIS
Financial Services Group. Including dividends received and proceeds from the
secondary sale completed at the initial offering, KKR’s original $81.1 million
investment has netted $450.3 million, or 5.6x invested capital.
22
FL Selenia, headquartered in Turin, Italy, is Europe’s largest independent

producer of lubricants and functional oils used in commercial and agricultural
vehicles. Acquired by KKR in 2005, FL Selenia markets a wide range of products,
including lubricants, anti-freeze, and transmission and engine fluids for
automobiles, trucks, tractors, and earth-moving equipment, as well as marine
and industrial applications. In November 2007, KKR completed the sale of FL
Selenia to PETRONAS, the Malaysian National Oil Company, for approximately
€1.1 billion. The gross multiple of the Firm’s investment in FL Selenia is 2.1x
our original equity investment of $243.5 million.
HCA is the largest, most diversified investor-owned health care services provider
in the United States, operating 169 hospitals and 108 freestanding surgery centers
in 20 states and the United Kingdom. A consortium led by KKR, Bain Capital,
Merrill Lynch, and the family of Dr. Thomas Frist, Jr. acquired the company in
November 2006 for $33 billion. HCA continues its focus on providing “best-in-
class” health care services, which include high-quality health outcomes and a highly
trained, efficient nursing staff. On all major quality composites, HCA currently
operates above the average U.S. government benchmark scores, and the company
continues to trend toward its goal of the 90th percentile. Other HCA performance-
tracking initiatives include improved credentialing and case management.
ITC Holdings Corp. is an independent electricity transmission company that HCA

serves the lower peninsula of Michigan, which includes the metropolitan areas
of Detroit and Ann Arbor. Under KKR’s ownership between 2002 and 2007, ITC
invested more than $400 million to rebuild and upgrade the transmission grid in
southeast Michigan, created new, high-quality jobs, and provided residents of
Michigan with more reliable service, less congestion, and access to competitively
priced power. KKR sold its remaining stake in the company in February 2007 for
$316.7 million. The Firm’s initial investment of $128.7 million in ITC has
generated gross proceeds of approximately $664.4 million, or 5.0x invested capital.
La Costa Resort and Spa, located in Carlsbad, California, was an innovator in

1965, when it was the first resort to offer a full-service spa. The resort, however,
had suffered years of neglect until KKR portfolio company KSL Recreation
Corporation acquired the property in 2001. A $140 million investment to transform
the resort included upgrades of all guest rooms, construction of a new spa and
fitness facility, the addition of a new ballroom, and improvement of common areas.
In May 2007, La Costa was sold to a real estate affiliate of Goldman Sachs. Including
previous distributions, this investment generated a gross multiple of 3.3x KKR’s
original $90.3 million investment.
23
Legrand is a global manufacturer of more than 130,000 items for electrical

installations and data networks in residential, commercial, and industrial buildings.
Headquartered in Limoges, France, the company was acquired in 2002 by a
consortium of investors led by KKR and the French conglomerate Wendel
Investissement. Legrand continues to invest in developing innovative new products,
which have been well received by the market. The company is accelerating its
expansion into emerging markets and growing its business through targeted add-
on acquisitions. Seeking to strengthen ties with customers, identify their emerging
requirements, and provide them with support, Legrand continues to invest in its
sales and marketing teams.
Maxeda is the leading non-food retailer in the Benelux, operating “do-it-yourself,”

department, and specialty stores in the Netherlands, Belgium, Luxembourg,
Legrand Germany, France, Denmark, and Spain. Acquired in 2004 by a KKR-led consortium
of investors, Maxeda sold its HEMA variety retailer in 2007 to Lion Capital, a
London-based buyout firm, for approximately €1.1 billion. Together with additional
proceeds from a simultaneous refinancing, KKR received €498 million, bringing the
total cash returned to date to 2.3x the original equity invested. The new financing
structure provides Maxeda with a competitive and flexible capital structure for its
future development. In 2007, Maxeda continued to make significant progress in
growing revenues, improving margins, and increasing earnings.
Rockwood Holdings, headquartered in Princeton, New Jersey, is a global producer

of specialty chemicals and advanced materials and serves a wide range of end-use
markets, including construction, life sciences, electronics, telecommunications,
and metal treatment. KKR acquired Rockwood in 2000 from the U.K. chemical
conglomerate Laporte plc and made a subsequent investment in 2004, when the
company acquired Dynamit Nobel specialty chemicals. Rockwood went public
in 2005, and in a 2007 secondary offering KKR sold approximately 20% of its
position, resulting in a gross multiple of invested capital of 2.2x.
24
SBS Broadcasting is one of Europe’s leading broadcasting groups, operating

commercial television, premium pay channels, radio stations, and related print
businesses in Western, Central, and Eastern Europe. SBS currently has broadcasting
operations in Belgium (Flanders), Bulgaria, Denmark, Finland, Greece, Hungary,
the Netherlands, Norway, Romania, and Sweden. Acquired by KKR and Permira in
October 2005, SBS was acquired by the German media company ProSiebenSat.1
in July 2007 for €3.3 billion. The gross multiple of the Firm’s investment in SBS
was approximately 2.2x our original equity investment of €351.0 million.
Toys “R” Us is one of the leading specialty toy and children’s products retailers in
the world, selling merchandise through a worldwide network of stores, including
Babies “R” Us, the world’s largest baby product specialty store chain. Acquired by
KKR and its partners Bain Capital and Vornado Realty Trust in 2005, Toys “R” Us
posted solid increases in same-store sales during the holiday selling season for the
second year in a row. In a challenging year for the toy industry, the company
repeatedly demonstrated leadership in toy safety. Toys “R” Us
25
People
The global Media and Communications team includes (seated, left to right) Florian Waldmann,
Simon E. Brown, Alexander Navab, and Kevin Galligan, (standing, left to right) Clive R. Hollick,
Marcelo Hallack, Adam Levyn, Max Alper, Thomas C. Uger, Webster Chua, Matthew Pascale,
Josselin de Roquemaurel, and Philipp Freise.
KKR has more than 100 private equity professionals, who are led by Henry Kravis and
George Roberts, founders of KKR. As members of the Investment Committee and the
Portfolio Management Committee, they work with other senior members of KKR to
select and build our portfolio of investments and to guide the strategic direction of
the Firm.
KKR’s investment executives come from a broad range of backgrounds in private

equity, operations, strategic consulting, and corporate finance. Because of the
importance of making fundamental improvements in the businesses we own, KKR’s
senior-level recruiting has focused on executives with significant operating experience,
including former CEOs and CFOs of companies in a wide range of industries.
The Firm’s private equity executives are organized globally into nine
primary industry groups:
• Chemicals
• Consumer Products
• Energy and Natural Resources
• Financial Services
• Health Care
• Industrial
• Media and Communications
• Retail
• Technology
26
Our executives have developed networks of industry experts and an in-depth

understanding of their industry’s economic drivers, inherent risks, and opportunities
for value creation. The knowledge and insights of our industry teams allow them
to reach out proactively to the most attractive potential portfolio companies, to
demonstrate their credibility as a value-added partner to management teams, and
to assess quickly and thoroughly possible transactions in complex industries.
Teamwork among our executives has been essential to KKR’s success, as most of the
investments we consider are multinational in scope, requiring coordinated diligence
efforts across different markets. Our growing global presence has been rooted in the
conviction that successful private equity investors have investment teams that are
multilingual and multicultural. In every geography where KKR operates, strong teams
of experienced, local private equity professionals have seamless access to the Firm’s
global resources and network of relationships. Globally, our investment professionals
represent 23 nationalities, speak 21 languages, and have a deep familiarity with local
customs, business practices, and market participants.
To share the risks and rewards of ownership with our limited partners, each executive
personally invests in all KKR transactions. To date, our investment professionals,
senior advisors, and other executives have committed approximately $1.5 billion
in or alongside KKR’s private equity funds.
The Retail industry team includes (seated, left to right) Raj K. Agrawal, Michael M. Calbert,
and Joseph Bubel, (standing, left to right) Ryan Miller, Denny Hou, Adam Waglay,
Kenan Basha, Pavel Chernyshov, and Sanjay K. Morey.
27
People
Senior Executives
New York Menlo Park
Henry R. Kravis, co-founding member and co-CEO George R. Roberts, co-founding member and co-CEO
Paul E. Raether, member Michael W. Michelson, member

Perry Golkin, member James H. Greene, Jr., member
Alexander Navab, member Michael M. Calbert, member
Marc S. Lipschultz, member Adam H. Clammer, member
Scott C. Nuttall, member Frederick M. Goltz, member
John K. Saer, Jr., member
Brian F. Carroll, member Raj K. Agrawal, director
Kenneth W. Freeman, member Herald Y. Chen, director
David J. Sorkin, member Dominique Y. Hansen, director
Craig Farr, member David M. Kerko, director
James C. Momtazee, director
Sir Deryck Maughan, managing director Sanjay K. Morey, director
Simon E. Brown, director

Annette Guarnaccio, director
Anthony C. Hass, director
Stephen Ko, director
Janice Cook Roberts, director
Jonathan D. Smidt, director
Peter M. Stavros, director
Thomas C. Uger, director
William J. Janetschek, chief financial officer

Edward Brandman, chief information officer
Peter M. Fasolo, chief talent officer, North America
Robert D. Gottlieb, chief human resources officer
London Paris
Johannes P. Huth, member Jacques Garaïalde, member

Todd A. Fisher, member
Reinhard Gorenflos, member
Oliver Haarmann, member
John L. Pfeffer, member
Dominic P. Murphy, member
Lord (Clive) Hollick, member
Heinz-Joachim Neubürger, managing director
Nicolas Cattelain, director

Mattia Caprioli, director
Henrik Kraft, director
Christina A. Pamberg, director
Silke C. Scheiber, director
28
(Top) Executives in Europe include (seated, left to right) Reinhard Gorenflos, John L. Pfeffer, Clive R. Hollick,
Oliver Haarmann, Johannes P. Huth, Todd A. Fisher, Dominic P. Murphy, and Jacques Garaïalde, (standing, left to right)
Roger M. Carr, Nicolas Gheysens, Christina A. Pamberg, Ahmet Faralyali, Torbjørn Midsem, Pontus Pettersson,
Philipp Freise, Henrik Kraft, Sergio D’Angelo, Mattia Caprioli, Silke C. Scheiber, Jakob Kjellberg, Josselin de Roquemaurel,
Nicolas Martin, Enrico Grasso, Nicolas Cattelain, Heinz-Joachim Neubürger, Florian Waldmann, Lucian Schoenefelder,
Timotheus Osnabrug, and Edouard Muûls.
(Bottom) Investment professionals in Hong Kong include (seated, left to right) David H. Liu, Joseph Y. Bae, and Ming Lu,
(standing, left to right) Clifford K. Chiu, Aaron Y. Du, Weiyu Tan, Chris Z. Sun, Charlie F. Gao, Lane F. Zhao,
Julian J. Wolhardt, Robert H. Lewin, and Ying Deng.
29
People
(Top) Tokyo-based executives include (seated, left to right)

Naohiko Kitsuta, and Shusaku Minoda, (standing, left to right)
Daisuke Nozaki, Ryo Fujii, Osamu Ogura, Eiji Yatagawa, and
Andrew J. Bellas.
(Middle) The Capital Raising team includes (seated, left to
right) Dominique Y. Hansen, Craig Farr, Perry Golkin, and
Anthony C. Hass, (standing, left to right) Greg Guest,
Richard J. Kreider, Janice Cook Roberts, Clifford K. Chiu,
Christina A. Pamberg, Alisa Amarosa Wood, Ryan J. Marshall,
Irene Mavroyannis, and Amy C. Stuart.
(Bottom) The executives of KKR Private Equity Investors
include (seated, left to right) Kendra L. Decious, Katherine
T. Becher, (standing, left to right) Brian W. Bull, John J. Knox,
and Christopher B. Lee.
30
Senior Executives
Hong Kong Tokyo
Joseph Y. Bae, member Shusaku Minoda, managing director

Ming Lu, member Naohiko Kitsuta, managing director
Clifford K. Chiu, director

Julian J. Wolhardt, director
Beijing Sydney
David H. Liu, member Justin Reizes, managing director
KKR Private Equity Investors LLC KKR Financial LLC
Kendra L. Decious, chief financial officer Saturnino S. Fanlo, founding member and CEO
David A. Netjes, founding member and COO
Katherine T. Becher, investor relations manager Mark D. Lerdal, member
Brian W. Bull, tax director Ryan J. Marshall, member
John J. Knox, controller
Christopher B. Lee, general counsel Derek M. Larson, managing director
Christopher A. Sheldon, managing director
Jamie M. Weinstein, managing director
Donald D. Destino, director

Jeremiah S. Lane, director
Stefanie L. Rosenberg, director
Nathaniel L. Yap, director
Saturnino S. Fanlo, left, is the chief executive officer of KKR

Financial LLC and David A. Netjes is its chief operating officer.
31
People
We believe that KKR Capstone

differentiates our Firm from
competitors and underscores our
emphasis on creating value by KKR Capstone
improving operations.
KKR Capstone is a proprietary global resource for helping the Firm’s portfolio
companies define strategic priorities and implement operational changes.
With a team of 32 executives based in New York, Menlo Park, and London,
KKR Capstone specializes in multiple industries, including chemicals, consumer
products, industrial, health care, media, retail, and technology. We believe that
KKR Capstone differentiates our Firm from competitors and underscores our
emphasis on creating value by improving operations.
During the initial stages of an investment, KKR Capstone’s work with portfolio
companies reflects our initial thesis for value creation. Its executives work with
management teams to implement best-in-class operating and financial metrics,
and assist them in reviewing operational improvement opportunities and in
developing detailed plans to realize those opportunities. KKR Capstone executives
typically address issues such as pricing and go-to-market strategies, sales force
management and customer service, sourcing and purchasing, indirect costs, and
capital efficiency.
In 2007 the North America team worked with 14 KKR companies – approximately
one-third of the Firm’s global portfolio. At Toys “R” Us, for example, KKR Capstone
executives worked with company management on initiatives to reduce clutter in
stores, to manage inventory more effectively, to increase the efficiency of
promotional and advertising spending, and to improve the company’s forecasting
capabilities. In Europe, the KKR Capstone team worked with nine portfolio
companies in 2007, including Alliance Boots, AVR, KION, Maxeda, and NXP. Given
the increased size, complexity, and geographic reach of our European portfolio, KKR
Capstone plans to expand its team there in 2008.
32
(Top) The U.S. KKR Capstone team includes (front row, left to right) Nicholas Zeitlin,
Michael Linford, Anand Nathan, Chris Hsu, Chad Fargason, Dean Nelson, Matt King, Karr Narula,
and Andrew Low Ah Kee, (back row, left to right) Dhruv Parekh, Ernesto Perez-Carrillo,
Vincent Letteri, Sam Allen, Rebecca McKillican, Derick Prelle, Bill Cornog, Scott Bookmyer,
Eric Daliere, Scott Wagner, Kermit Cook, Vikas Parekh, and Rushi Patel.
(Bottom) The European KKR Capstone team includes (seated, left to right) Paul Douek,
Roger M. Carr, and Andreas Krinninger, (standing, left to right) Paolo Notarnicola,
Steffen Pauls, Johan van de Steen, Jerome Losson, Henrik Poulsen, and Alain Vourch.
33
People
Senior Advisors
Complementing the expertise of the Firm’s investment professionals and KKR

Capstone’s operating executives is our team of senior advisors, each of whom has
held leading positions in major corporations or public agencies in the United
States, Europe, or Asia. The responsibilities of senior advisors include serving on
the boards of portfolio companies, helping us evaluate individual investment
opportunities, and assisting our portfolio companies with operational matters.
Our senior advisors include:
• Sanjiv Ahuja, former chief executive officer of Orange SA
• Sir John Bond, former group chairman of HSBC Holdings plc
• John F. Bookout III, former director of McKinsey & Company
• Thierry Breton, former French Minister of Economy, Finance, and Industry
• Richard L. Clemmer, former CEO of Agere Systems
• David M. Cote, chairman and CEO of Honeywell
• George M.C. Fisher, former chairman and CEO of Eastman Kodak Company
and Motorola Corporation
• Joe W. Forehand, former chairman and CEO of Accenture
• Paul M. Hazen, former chairman and CEO of Wells Fargo
• Hisashi Hosokawa, former vice minister for International Economic Affairs

at Japan’s Ministry of International Trade & Industry
34
• R. Clint Johnstone, former director and CFO of the Bechtel Group
• Gen. John M. Keane, former vice chief of staff of the U.S. Army
• Liu Chuanzhi, founder of the Lenovo Group and president of Legend Holdings
• Paul J. Norris, non-executive chairman and former CEO of W.R. Grace & Co.
• Lee R. Raymond, former chairman and CEO of ExxonMobil
• Wolfgang Reitzle, president and CEO of the Executive Board of The Linde Group
• Edward Tian Suning, founder and chairman of China Broadband Capital

Partners, L.P., and vice chairman and former CEO of China Netcom Group
Specialized Resources
Two industries requiring specialized resources are insurance and energy and natural
resources. To assist our investment teams in these industries, KKR has established
exclusive relationships with Fisher Capital and KD Capital.
Fisher Capital is an insurance advisory firm formed by Jim Fisher after the
successful sale of American Re-Insurance, a former KKR portfolio company where
he was CFO.
KD Capital is an advisory firm formed by Foster Duncan to support our efforts

in the energy and natural resources industries. He was formerly executive vice
president and CFO of Cinergy Corp., a large integrated electric and gas company.
35
KKR and Its Principles
KKR, a leading global alternative asset manager, is one of the world’s oldest and
most experienced private equity firms. The core of our franchise is making equity
investments in management buyouts on behalf of our firm and our investors,
which include state and corporate pension funds, government agencies, banks,
insurance companies, fund of funds, and university endowments. We have offices
in New York, Menlo Park, San Francisco, London, Paris, Hong Kong, Beijing,
Tokyo, and Sydney.
Track Record of Value Creation
KKR’s private equity professionals seek to invest in attractive businesses for long-
term appreciation, either through controlling ownership of a company or strategic
minority positions.
Since the Firm’s founding in 1976, KKR has invested more than $46 billion of
equity in more than 165 transactions involving more than $422 billion of total
financing. We have a well-established record of investing large pools of capital and
consistently generating attractive rates of return and returning large multiples
of capital to our investors.
KKR operates as an investment firm, not as a conglomerate or a holding

company. Each company in our portfolio is independently managed and financed.
Each has its own board of directors, which generally includes KKR representatives.
There are no cross-holdings. Cash flow from one company cannot be used in
another company.
Commitment to Investors
As the general partner of the KKR Funds, we make our money just as our
investors do, by the increased value over time of our stake in the Funds’
investments. We have a significant portion of our personal assets committed
to our Funds’ investments, and we share the risks of ownership.
36
Partnering With Management
Management is our partner in creating value. Our portfolio company managers

have a significant amount of their personal net worth invested in their companies.
We strongly believe that the best managers think like – and are – owners.
We work closely with our portfolio companies to develop and implement

operational strategies. In doing this, KKR brings substantial resources to bear
to ensure that our companies are positioned to drive value creation.
We want our portfolio companies to invest for future competitiveness.

We encourage them to take a long-term perspective; to maintain their business
focus; to manage the balance sheet as well as the income statement; to make
strategic acquisitions; to motivate a wide range of employees by giving them
a stake in the business; and to build for the future through prudent capital
investment, research and development spending, and new product marketing.
Long-Term Appreciation
We are involved, patient investors. We take a long-term view of a company’s

performance. We are not concerned with quarter-to-quarter results, but rather
focus on cash flow and measure results over a number of years. It is our objective
to achieve attractive rates of return for our investors, balanced with an attractive
multiple of capital returned for each dollar invested. It is not unusual for us to
own companies for five years or more, and we have held some investments
for more than ten years.
37
Investments of the KKR Funds

Investment Headquarters 2007 Revenue Employees
Accellent Wilmington, $472 million 3,667

Massachusetts

Alliance Boots London, England £14.6 billion 100,000

Aricent Palo Alto, $297.5 million * 7,500

California

* Represents FY07 Revenue for the period ending March 31, 2007.
A.T.U. – Weiden, €1.4 billion 15,143

Auto-Teile-Unger Germany

Avago Technologies San Jose, $1.55 billion * 3,610

California
and Singapore

* Represents FY07 Revenue for the period ending October 31, 2007.
AVR/van Gansewinkel Rotterdam, €1.2 billion 6,000

the Netherlands

38
Year of
Leadership Investment Business Website
Kenneth W. Freeman, 2005 The largest provider of fully integrated outsourced www.accellent.com
chairman manufacturing and engineering services to the
Robert E. Kirby, medical device industry.
chief executive officer
Stefano Pessina, 2007 An international pharmacy-led health and beauty www.allianceboots.com

chairman and CEO group operating in more than 15 countries
(including associates) across the world.
Ash Bhardwaj, 2006 The leading provider of high-impact, innovative www.aricent.com

chief executive officer software solutions to the global communications
industry.
Johannes P. Huth, 2004 Germany’s leading operator of automotive www.atu.de

chairman retail stores and repair shops, with an expanding
Michael Kern, international footprint.
Dick Chang, 2005 A leading supplier of innovative semiconductor www.avagotech.com

chairman solutions for advanced communications and
Hock E. Tan, industrial and commercial applications.

Reinhard Gorenflos, 2006 The largest waste management company in www.avr.nl

chairman the Netherlands.
Ruud Sondag,
39

Biomet, Inc. arsaw,

W $2.1 billion * 6,772
Indiana

* Represents FY07 Revenue for the period ending May 31, 2007.
BIS North Sydney, $A432 million * 1,275

Australia

* Represents FY07 Revenue for the period ending June 30, 2007.
Capmark San Mateo, $1.39 billion 2,134

California

“Der Grüne Punkt” Cologne, €947 million 274

Duales System Germany
Deutschland GmbH

Dollar General Goodlettsville, $9.5 billion 69,000

Tennessee

Energy Future Holdings Dallas, Texas $8.1 billion 7,262

(formerly TXU Corp.)

First Data Corporation Greenwood Village, $8.8 billion 29,000

Colorado

40
Year of
Jeffrey R. Binder, 2007 Designs and manufactures orthopedic medical www.biomet.com

chairman and CEO devices and other products used primarily by
surgeons and medical specialists, with distribution
in over 70 countries.
Mark Luby, 2006 A leading outsourced supplier of on-site and off-site www.bislimited.com.au
chairman materials handling and logistics services to the
Chris Berkefeld, minerals, metals, and coal mining sectors.
Dennis D. Dammerman, 2006 A leader in real estate finance, investments, www.capmark.com

chairman and services.
William F. Aldinger, III,
Reinhard Gorenflos, 2005 Organizes the collection, sorting, and recycling of www.gruener-punkt.de
chairman packaging waste in Germany with the support of
Stefan Schreiter, a network of local waste management partners.
Michael M. Calbert, 2007 A customer-driven distributor of everyday items, www.dollargeneral.com

chairman including basic consumable merchandise and other
Richard W. Dreiling, home, apparel and seasonal products, with more than
chief executive officer 8,000 stores in 35 states.
Donald L. Evans, 2007 Manages a portfolio of competitive and regulated www.energyfutureholdings.com

chairman energy subsidiaries consisting of TXU Energy,
John F. Young, a competitive electricity retailer; Luminant, a
chief executive officer competitive power generation business, including
mining, wholesale marketing and trading, and
construction; and Oncor, a regulated electric
distribution and transmission business.
Michael D. Capellas, 2007 A leading provider of electronic commerce and www.firstdata.com

chairman and CEO payment solutions for merchants, financial
institutions, and card issuers globally.
41

Harman International Washington, D.C. $3.8 billion 11,688

Industries, Inc.

HCA Inc. Nashville, $26.9 billion 186,000

Tennessee

Jazz Pharmaceuticals, Inc. Palo Alto, $65 million 405

California

KION Group Wiesbaden, €4.3 billion 21,000

Germany

KSL Holdings San Diego, $141 million 1,200

(Hotel del Coronado) California
Laureate Education, Inc. Baltimore, $1.4 billion 29,900

Maryland

Legg Mason, Inc. Baltimore, $4.3 billion * 4,030 *

Maryland

*Represents FY07 figure for the period ending March 31, 2007.
42
Year of
Dr. Sidney Harman, 2007 Designs, manufactures, and markets a wide range of www.harman.com
chairman audio and infotainment products for the automotive,
Dinesh Paliwal, consumer and professional markets.
Jack O. Bovender, Jr., 2006 The largest, most diversified investor-owned health www.hcahealthcare.com
chairman and CEO care services provider in the United States, operating
169 hospitals and 108 freestanding surgery centers in
20 states and the United Kingdom.
Bruce C. Cozadd, 2004 A specialty pharmaceutical company focused on www.jazzpharmaceuticals.com

chairman identifying, developing, and commercializing
Samuel Saks, M.D., innovative products to meet unmet medical needs
chief executive officer in neurology and psychiatry.
Johannes P. Huth, 2006 Leading European manufacturer of forklift trucks www.kiongroup.com

chairman and related services.
Gordon Riske,
Michael S. Shannon, 2003 Owner/operator of luxury resort hotels, spas, and www.kslrec.com
chairman and CEO membership clubs, including the Hotel del Coronado.
Douglas L. Becker, 2007 Leading provider of for-profit post-secondary www.laureate-inc.com

chairman and CEO education in 16 countries worldwide, serving more
than 300,000 students through campus-based
universities located in Latin America, Europe, and Asia,
and through online universities based in the U.S.
Raymond A. 2008 A global asset management firm with nearly www.leggmason.com

“Chip” Mason, $1 trillion in assets under management. Through
chairman its domestic and international subsidiaries, the firm
Mark R. Fetting, serves the institutional, mutual fund, and wealth
chief executive officer management markets.
43

Legrand Limoges, €4.1 billion 33,656

France

Masonite Tampa, Florida $2.2 billion 10,863

and Toronto, Canada

Maxeda Amsterdam, €3.1 billion 18,000

the Netherlands
MedCath Corporation Charlotte, $706 million 3,805

North Carolina

MMI Holdings Ltd. Singapore $545 million 12,000

The Nielsen Company Haarlem, the $4.7 billion 34,577

(fka VNU) Netherlands and
New York, New York

44
Year of
Gilles Schnepp, 2002 World-leading specialist in products and systems www.legrandelectric.com

chairman and CEO for electrical installations and data networks in
residential housing, office buildings, and for industrial
use; distributes products in more than 160 countries.
Kenneth W. Freeman, 2005 Leading global manufacturer of doors and door www.masonite.com
chairman components, with 82 facilities in 18 countries across
Frederick Lynch, North America, Europe, South America, Asia, and Africa.
Tony DeNunzio, 2004 The leading non-food retailer in Benelux, operating www.maxeda.com
chairman and CEO “do-it-yourself,” department, and specialty stores.
John T. Casey, 1998 Provides cardiology and cardiovascular services www.medcath.com

chairman through the development, operation, and management
O. Edwin French, of hospitals and other specialized facilities focusing on
chief executive officer the needs of patients suffering from heart disease.
Bong Lim Teh, 2007 Engaged in the manufacture of precision machining www.mmi.com.sg
chairman and CEO and assembly components for customers in various
industries, such as data storage, photonics,
communications, semiconductor equipment,
automotive, oil and gas, medical, aerospace and
industrial automation.
David L. Calhoun, 2006 A global information and media company active in www.nielsen.com
chairman and CEO over 100 countries, with leading market positions
and recognized brands in marketing information
(ACNielsen), media information (Nielsen Media
Research), business publications (Billboard,
The Hollywood Reporter, Adweek) and trade shows.
45

Northgate Information Hemel Hempstead, £518 million 6,490

Solutions plc England

NuVox Communications Greenville, $535 million 1,761

South Carolina

NXP Eindhoven, €4.6 billion 37,627

the Netherlands

PagesJaunes Groupe Sèvres, France €1.2 billion 4,640

PRIMEDIA, Inc. Atlanta, Georgia $326 million 1,095

ProSiebenSat.1 Media AG Munich, Germany €3.2 billion 5,943

Rockwood Holdings, Inc. Princeton, $3.1 billion 9,525

New Jersey

46
Year of
Todd A. Fisher 2008 A leading global provider of specialist software and www.northgate-is.com
chairman outsourcing solutions to the human resources and
public service sectors.
David L. Solomon, 2000 An Integrated Communications Provider offering www.nuvox.com

chairman a comprehensive selection of voice, data, and security
James W. Akerhielm, services to business customers in 16 states in the
chief executive officer Southeast and Midwest.
Peter Bonfield, 2006 Creates semiconductors, system solutions and www.nxp.com

chairman software that deliver better sensory experiences in
Frans van Houten, mobile phones, personal media players, TVs, set-top
chief executive officer boxes, identification applications, cars and a wide
range of other electronic devices.
Jacques Garaïalde, 2006 Leading directories and Internet local search portal www.pagesjaunesgroupe.com
chairman in France – with smaller directory operations in Spain,
Michel Datchary, Morocco and Luxembourg.
Dean B. Nelson, 1989 The parent company of Consumer Source Inc., www.primedia.com
chairman a national publisher and distributor of free print
Robert Metz, and online consumer guides for the apartment,
chief executive officer auto and home industries.
Goetz Maeuser, 2007 One of the largest and most successful pan-European http://en.prosiebensat1.com
chairman broadcasting groups with 26 commercial TV stations,
Guillaume de Posch, 24 premium Pay TV channels and 22 radio networks.
Seifi Ghasemi, 2000 Global specialty chemicals and advanced materials www.rocksp.com
chairman and CEO company focused on high-value-added niche markets
in three primary segments: Specialty Chemicals,
Pigments & Additives, and Advanced Materials.
47

Sealy Trinity, $1.7 billion 6,099

North Carolina

Seven Media Group Sydney, Australia A$1.1 billion * 2,880

* Represents FY07 Revenue for the period ending June 30, 2007.

SunGard Wayne, $4.9 billion 19,516

Pennsylvania

Tarkett Nanterre, France €2.1 billion 8,856

TDC A/S Copenhagen, DKK39.3 billion 17,390

Denmark

Tianrui Group Cement Co., Ltd. Henan, China 1.85 billion RMB 3,000

48
Year of
Paul J. Norris, 2004 The largest bedding manufacturer in the world. www.sealy.com
chairman

Kerry Stokes, 2006 A 50/50 joint venture with Seven Network Limited http://au.tv.yahoo.com/tv/
chairman that consists of Australia’s leading free-to-air TV
David Leckie, network (Seven Network), second-largest magazine
chief executive officer business (Pacific Magazines), and second most-visited
entertainment portal (Yahoo!7) through a 50/50 joint
venture that was formed with Yahoo in February 2006.
Glenn Hutchins, 2005 Global leader in integrated software and processing www.sungard.com
chairman solutions.
Cristóbal Conde,
Didier Deconinck, 2007 Designs, manufactures, and sells PVC, wood, www.tarkett.com
chairman laminate, sports, and other specialty flooring products
Michel Giannuzzi, for the residential and commercial markets in Europe
chief executive officer and North America.
Henning Dyremose, 2006 Leading provider of telecommunications solutions www.tdc.com

chairman in Denmark and second-largest provider of
Jens Alder, telecommunications solutions in Switzerland,
chief executive officer with a significant presence in selected markets in
Northern and Central Europe.
Dr. Xiao Jiaxiang, 2007 One of China’s leading cement producers, Tianrui www.trcement.com
chairman and CEO Cement’s production capacity is entirely based on the
dry process New Suspension Pre-heater technology,
which is more energy efficient, more environment-friendly
and more cost-advantageous over its competitors.
49

Toys “R” Us, Inc. Wayne, $13.7 billion 72,000

New Jersey

U.N Ro-Ro Istanbul, Turkey €161 million 336

U.S. Foodservice Chicago, Illinois $20.2 billion 27,163

Visant Corporation Armonk, $1.3 billion 5,096

New York
Yageo Taipei, Taiwan NT$22.4 billion 9,750

Zhone Oakland, $175 million 461

California

50
Year of
Gerald L. Storch, 2005 One of the leading specialty toy and children’s www.toysrus.com
chairman and CEO products retailers in the world, selling merchandise
through a worldwide network of stores, including
Babies ‘R’ Us, the world’s largest baby product specialty
store chain.
John L. Pfeffer, 2007 A Mediterranean short-sea roll-on/roll-off (“ro-ro”) www.unroro.com.tr

chairman ferry operator and a market leader for trucked cargo
Cüneyt Solakoğlu, between Turkey and Western Europe.
Charlie Banks, 2007 The second largest broadline foodservice distributor www.usfoodservice.com
chairman in the U.S., providing food and related products to
Robert Aiken, independent restaurants, health care and hospitality
chief executive officer customers, educational institutions, and prominent
multi-unit restaurant companies.
Marc L. Reisch, 2004 A leading North American enterprise for school- www.visant.net
chairman and CEO related marketing and affinity products and services.
Pierre T.M. Chen, 2007 A world-class provider of passive-component services www.yageo.com.tw

chairman with capabilities on a global scale, including production
David J.L. Huang, and sales facilities in Asia, Europe and the Americas.
Mory Ejabat, 1999 Designs and manufactures network equipment for www.zhone.com
chairman and CEO telephone companies and cable operators worldwide
to deliver a rich array of voice, data, video, and
entertainment services.
51
KKR Offices
New York Menlo Park

Kohlberg Kravis Roberts & Co. L.P. Kohlberg Kravis Roberts & Co. L.P.
9 West 57th Street 2800 Sand Hill Road
Suite 4200 Suite 200
New York Menlo Park
New York 10019 California 94025
+1 (212) 750 8300 +1 (650) 233 6560
London Paris
Kohlberg Kravis Roberts & Co. Ltd. Kohlberg Kravis Roberts & Co. SAS
Stirling Square 24 rue Jean Goujon
7 Carlton Gardens 75008 Paris
London SW1Y 5AD +33 1 53 53 96 00
+44 20 7839 9800
Tokyo
Hong Kong KKR Japan Limited
KKR Asia Limited 6/F, Tokyo Ginko Kyokai Building
25/F, AIG Tower 1-3-1 Marunouchi, 1-Chome
1 Connaught Road, Central Chiyoda-ku
Hong Kong Tokyo 100 0005
+852 3602 7300 +813 6268 6000
Beijing Sydney
KKR Investment Consultancy (Beijing) KKR Australia Pty Limited
Company Limited Level 42, Gateway Building
15/F Beijing Yintai Office Tower C 1 Macquarie Place
No.2 Jianguomenwai Street Sydney NSW 2000
Chaoyang District Australia
Beijing 100022, China +61 2 8298 5500
+86 10 6563 7001
KKR Financial LLC

555 California Street
50th floor
San Francisco, CA 94104
+1 (415) 315 3620
52
Contents
About KKR 2
To Our Limited Partners 5
The Year in Review: Private Equity Investments 9
People 26
KKR and Its Principles 36
Investments of the KKR Funds 38
2007 Annual Review

KKR Annual Review 2007

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KKR Annual Review 2007

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2007 Annual Review

In addition to sponsoring and managing traditional private equity funds, which

By acquiring and monitoring leveraged businesses in its private equity portfolio,

Assets Under Management, 1992-2007

To Our Limited Partners

KKR’s careful approach to capitalizing portfolio companies was documented in a

Economic headwinds will adversely impact some portfolio companies more

Heinz-Joachim Neubürger, the former chief financial officer of Siemens AG,

Henry R. Kravis George R. Roberts

The Year in Review Private Equity Investments

We believe that our experience, networks of relationships, and industry expertise

U.S. Foodservice Laureate Education, Inc.

First Data Corporation Harman International

Northgate Information Solutions plc

U.N Ro-Ro Yageo

Alliance Boots (£12.4 billion) * is an international pharmacy-led health care

In January 2008, Richard W. Dreiling was appointed CEO of Dollar General.

* Figures in parentheses are the total enterprise value of an acquisition.

Operating in an industry that has a 30-year record of uninterrupted growth through

Energy and Natural Resources

First Data Corporation ($29.5 billion) is a leading provider of electronic

The payments processing industry expects to benefit from the continuing

KKR recruited Michael D. Capellas to become chairman and chief executive

Media and Communications

ProSiebenSat.1 (€3.2 billion) is a leading European media conglomerate

Bharti Infratel Ltd. is a leading Indian wireless infrastructure company

Biomet, Inc. ($11.6 billion) is a leading international manufacturer of orthopedic

Tarkett is the leading manufacturer of resilient flooring in Eastern Europe, with

Tarkett is the market leader in residential flooring and commercial flooring,

Tianrui, which has attracted an impressive team of executives, is one of 12 cement

MMI Holdings Ltd. ($757 million) is a precision engineering company that

MMI is one of the largest manufacturers of HDD components globally.

Northgate Information Solutions plc (£1.1 billion) is a U.K.-based provider of

Yageo Corporation is one of the world’s leading manufacturers of capacitors,

Harman International Industries, Inc. manufactures a wide range of audio and

In addition to its strength in developing innovative new technologies, Harman

Laureate Education, Inc. ($4.0 billion) is the world’s leading international

In developing countries, prestigious post-secondary schools tend to be

education alternatives. One of Laureate’s greatest assets is its global network

Laureate was acquired by a consortium of investors that included Douglas L.

U.N Ro-Ro (€933.0 million) is a Mediterranean short-sea roll-on/roll-off

The Year in Review Creating and Realizing Value

The Portfolio Management Committee, which oversees value-creation

Argillon Group, headquartered in Redwitz, Germany, is an international

BIS is a leading Australian provider of on-site and off-site materials handling

Bristol West is a provider of private passenger automobile insurance, specializing

FL Selenia, headquartered in Turin, Italy, is Europe’s largest independent

ITC Holdings Corp. is an independent electricity transmission company that HCA

La Costa Resort and Spa, located in Carlsbad, California, was an innovator in

Legrand is a global manufacturer of more than 130,000 items for electrical

Maxeda is the leading non-food retailer in the Benelux, operating “do-it-yourself,”

Rockwood Holdings, headquartered in Princeton, New Jersey, is a global producer

SBS Broadcasting is one of Europe’s leading broadcasting groups, operating

KKR’s investment executives come from a broad range of backgrounds in private

Our executives have developed networks of industry experts and an in-depth

Paul E. Raether, member Michael W. Michelson, member

Simon E. Brown, director

William J. Janetschek, chief financial officer

Johannes P. Huth, member Jacques Garaïalde, member

Heinz-Joachim Neubürger, managing director

Nicolas Cattelain, director

(Top) Tokyo-based executives include (seated, left to right)

Joseph Y. Bae, member Shusaku Minoda, managing director

Clifford K. Chiu, director

Avago Technologies San Jose, $1.55 billion * 3,610

Biomet, Inc. arsaw,