Exhibit 99.1





Report of Independent Registered


Public Accounting Firm








To the General Partner of ValueAct Holdings, L.P.


In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of operations, of changes in partners’ capital and redeemable noncontrolling interests and of cash flows present fairly, in all material aspects, the financial position of  ValueAct Holdings, L.P. and its Controlled Affiliates (collectively, the “Partnership”) at December 31, 2013, and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis of our opinion.





/s/ PricewaterhouseCoopers LLP


San Francisco, California


March 28, 2014











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ValueAct Holdings, L.P. and Controlled Affiliates


Consolidated Balance Sheets


December 31, 2014 (not covered by auditor's report) and 2013





2014                          (not covered by auditor's report)2013AssetsCash and cash equivalents$889,671,645$2,154,146,392Investments in securities, at fair value16,637,817,72612,442,920,948Interest and dividends receivable15,395,02015,757,687Receivable for securities sold105,920,215—Other receivables1,720,9822,647,485Unrealized gain on forward foreign currency contract—32,698Fixed assets, net18,148,2122,920,052Total assets$17,668,673,800$14,618,425,262Liabilities, Redeemable Noncontrolling Interests and Partners' CapitalWithdrawals payable$691,987,392$734,002,327Accounts payable, accrued expenses and unearned income5,043,2263,287,405Investments in securities sold not yet purchased, at fair value74,160,273—Payable for securities purchased35,733,880—Deferred performance and management fees payable45,531,14451,790,926Term loans and line of credit16,503,0777,500,000Contributions received in advance681,168,670315,502,000Total liabilities1,550,127,6621,112,082,658Commitments and contingencies (Note 11)Redeemable noncontrolling interests14,782,105,26612,453,349,151Partners' capital1,336,440,8721,052,993,453Total liabilities, redeemable noncontrolling interests and partners' capital$17,668,673,800$14,618,425,262


The accompanying notes are an integral part of these Consolidated Financial Statements.


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ValueAct Holdings, L.P. and Controlled Affiliates


Consolidated Statements of Operations


Years Ended December 31, 2014 (not covered by auditor's report), 2013 and 2012 (not covered by auditor's report)





2014                                 (not covered by auditor's report)20132012                                 (not covered by auditor's report)RevenuesDividends$160,795,348$189,307,519$66,436,730Interest income1,208,7832,105,3368,640Other income1,985,8048,429,533450,667Total income163,989,935199,842,38866,896,037ExpensesCompensation expense34,871,74931,600,97570,617,313Change in deferred performance and management fees payable7,540,06417,114,2009,262,088Professional fees1,292,1122,564,9451,067,463Interest expense312,8732,3062,108Other23,298,91314,393,64318,700,419Total expenses67,315,71165,676,06999,649,391Gain (loss) on investmentsNet realized gain1,083,278,0131,211,645,985546,135,331Net unrealized gain1,193,168,3532,636,814,6031,239,359,666Net gain on investments2,276,446,3663,848,460,5881,785,494,997Net income2,373,120,5903,982,626,9071,752,741,643Net income attributable to redeemable noncontrolling interests(1,816,499,451)(3,133,266,042)(1,450,196,540)Net income attributable to partners$556,621,139$849,360,865$302,545,103


The accompanying notes are an integral part of these Consolidated Financial Statements.


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ValueAct Holdings, L.P. and Controlled Affiliates


Consolidated Statements of Changes in Partners' Capital and Redeemable Noncontrolling Interests


Years Ended December 31, 2014 (not covered by auditor's report), 2013 and 2012 (not covered by auditor's report)





Partners' CapitalRedeemable Noncontrolling InterestsDecember 31, 2011 (not covered by auditor's report)$319,907,392$6,268,950,248Capital increase related to equity-based compensation (Note 8)61,559,216—Contributions—1,038,499,253Distributions/Withdrawals(184,312,622)(269,736,181)Net income302,545,1031,450,196,540December 31, 2012 (not covered by auditor's report)499,699,0898,487,909,860Capital increase related to equity-based compensation (Note 8)16,056,441—Contributions47,0001,981,772,707Distributions/Withdrawals(312,169,942)(1,149,599,458)Net income849,360,8653,133,266,042December 31, 20131,052,993,45312,453,349,151Capital increase related to equity-based compensation (Note 8)17,044,785—Contributions5,941,9391,514,256,875Distributions/Withdrawals(296,160,444)(1,002,000,211)Net income556,621,1391,816,499,451December 31, 2014 (not covered by auditor's report)$1,336,440,872$14,782,105,266


The accompanying notes are an integral part of these Consolidated Financial Statements.


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ValueAct Holdings, L.P. and Controlled Affiliates


Statements of Cash Flows


Years Ended December 31, 2014 (not covered by auditor's report), 2013 and 2012 (not covered by auditor's report)





2014                                     (not covered by auditor's report)20132012                                     (not covered by auditor's report)Cash flows from operating activitiesNet income$2,373,120,590$3,982,626,907$1,752,741,643Adjustments to reconcile net income to net cash (used in) provided by operating activitiesPurchases of investment securities(6,286,780,664)(4,268,430,927)(2,459,217,978)Proceeds from dispositions of investment securities4,367,261,8274,258,482,7292,302,220,275Proceeds from securities sold, not yet purchased75,228,698——Net realized gain on investment securities(1,083,278,013)(1,211,645,985)(546,135,331)Net unrealized gain on investment securities(1,193,168,353)(2,636,814,603)(1,239,359,666)Depreciation and amortization3,666,553246,897282,770Equity based compensation17,044,78516,056,44161,559,216Loss on sale of fixed assets515,356——Change in operating assets and liabilitiesReceivable for securities sold(105,920,215)—Interest and dividends receivable362,667(7,043,694)(633,713)Other receivables926,503(1,374,399)1,244,846Payable for securities purchased35,733,880—Deferred performance and management fees payable(6,259,782)6,212,5234,840,333Unrealized (gain) loss on forward foreign currency contract32,698(32,698)—Accounts payable, accrued expenses and unearned income1,755,821(23,155,990)5,125,883Net cash used in operating activities(1,799,757,649)115,127,201(117,331,722)Cash flows from investing activitiesPurchase of fixed assets(19,410,068)(2,196,711)(404,432)Net cash used in investing activities(19,410,068)(2,196,711)(404,432)Cash flows from financing activitiesContributions from redeemable noncontrolling interests1,198,523,6251,547,002,707766,759,253Contributions from partners6,173,18947,000—Distributions to partners(359,924,876)(238,455,595)(166,806,623)Withdrawals by redeemable noncontrolling interests(980,250,714)(756,862,853)(258,765,489)Payments received on loans to related parties—450,000200,000Proceeds from term loans13,580,0007,500,000—Payments on term loans(4,576,924)(450,000)(1,200,000)Contributions received in advance from redeemable noncontrolling interests681,168,670315,502,000434,770,000Net cash provided by financing activities554,692,970874,733,259774,957,141Net (increase) in cash and cash equivalents(1,264,474,747)987,663,749657,220,987Cash and cash equivalentsBeginning of year2,154,146,3921,166,482,643509,261,656End of year$889,671,645$2,154,146,392$1,166,482,643Supplemental disclosure of cash flow informationInterest paid$—$—$10,004


The accompanying notes are an integral part of these Consolidated Financial Statements.


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ValueAct Holdings, L.P. and Controlled Affiliates
 Notes to Consolidated Financial Statements
 Years Ended December 31, 2014 (not covered by auditor's report), 2013 and 2012 (not covered by auditor's report)


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|1. | Organization

ValueAct Holdings, L.P. (the “Partnership”) was organized as a Delaware limited partnership on October 30, 2007. The Partnership commenced operations on November 8, 2007 and will continue until dissolved under the provisions of the Partnership’s Limited Partnership Agreement (the “Partnership Agreement”). The principal purpose of the Partnership is to provide investment management services directly and/or through controlled affiliates to existing and future ValueAct funds and their clients.





The general partner of the Partnership is ValueAct Holdings GP, LLC (the “General Partner”). The General Partner has the full, exclusive and complete discretion to manage and control the business and affairs of the Partnership.





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|2. | Significant Accounting Policies

Basis of Accounting


The  accompanying  financial  statements  are  prepared  in  conformity  with  accounting  principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts and disclosures reported in the financial statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein.





Principles of Consolidation


The accompanying consolidated financial statements include the accounts of the Partnership and its controlled affiliates (collectively, the “Controlled Affiliates”). The Controlled Affiliates consist of the following:


NameTypeFormedCommenced OperationsVA Partners I, LLCDelaware Limited Liability CompanyOctober 30, 2007November 8, 2007VA Partners III, LLCDelaware Limited Liability CompanyJune 19, 2006July 1, 2006ValueAct Capital Management, L.P.Delaware Limited PartnershipDecember 16, 2004January 1, 2005





The financial statements of the Controlled Affiliates also include certain investment partnerships (collectively, the “ValueAct Funds”) managed by the Partnership. ValueAct Funds consist of the following:


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ValueAct Holdings, L.P. and Controlled Affiliates
 Notes to Consolidated Financial Statements
 Years Ended December 31, 2014 (not covered by auditor's report), 2013 and 2012 (not covered by auditor's report)


NameTypeFormedCommenced OperationsDate LiquidatedValueAct Capital Master Fund, L.P.British Virgin Islands Limited PartnershipSeptember 10, 2004October 1, 2004ValueAct Capital Partners, L.P.Delaware Limited PartnershipAugust 16, 2000October 20, 2000ValueAct Capital Partners II, L.P.Delaware Limited PartnershipAugust 16, 2000November 17, 2000ValueAct Capital International I, L.P.British Virgin Islands Limited PartnershipDecember 12, 2006January 1, 2007ValueAct Capital International II, L.P.British Virgin Islands Limited PartnershipMay 26, 2006June 1, 2006ValueAct AllCap Partners, L.P.Delaware Limited PartnershipJune 1, 2007July 1, 2007May 2, 2014ValueAct AllCap International, L.P.British Virgin Islands Limited PartnershipJune 30, 2007July 1, 2007March 28, 2014ValueAct SmallCap Master Fund, L.P.British Virgin Islands Limited PartnershipFebruary 2, 2007March 5, 2007December 27, 2013ValueAct SmallCap Partners, L.P.Delaware Limited PartnershipJanuary 17, 2007March 5, 2007December 6, 2013ValueAct SmallCap International, L.P.Delaware Limited PartnershipFebruary 2, 2007April 1, 2007December 20, 2013ValueAct Co-Invest Master Fund, L.P.British Virgin Islands Limited PartnershipSeptember 3, 2010March 1, 2013ValueAct Co-Invest Partners, L.P.Delaware Limited PartnershipSeptember 3, 2010March 1, 2013ValueAct Co-Invest International, L.P.British Virgin Islands Limited PartnershipSeptember 3, 2010March 1, 2013


The Partnership consolidates the Controlled Affiliates as a presumption exists that a general partner in a limited partnership controls the limited partnership and, therefore, should include the limited partnership in its consolidated financial statements unless the presumption is overcome through the substantive ability by the limited partners to remove the general partner or otherwise dissolve the limited partnership or there exists substantive participating rights by the limited partners.





The ValueAct Funds are accounted for as investment companies and reflect their investment at fair value with the unrealized appreciation (depreciation) resulting from changes in fair value reflected as a component of net income in the Consolidated Statements of Operations. The Consolidated Financial Statements have retained the specialized accounting of the underlying consolidated ValueAct Funds. In addition, the accompanying Consolidated Financial Statements present the combined activities, as they are entities under common management control.


All significant intercompany balances and transactions between the Partnership, the Controlled Affiliates and the ValueAct Funds have been eliminated in consolidation .





Cash and Cash Equivalents


Cash and cash equivalents include both investments with an original maturity of three months or less as well as amounts due from brokers.  Cash and cash  equivalents  in  the  amount  of  $889,241,803  and  $2,151,735,554  as  of December 31, 2014 and 2013, although not legally restricted, are not available to fund the general liquidity needs of the Partnership.





Concentration of Credit Risk


The Partnership and its Controlled Affiliates invest their cash primarily in deposits and money market funds with commercial banks and financial institutions. At times, cash balances at a limited number of banks and financial institutions may exceed federally insured amounts.





Investment Valuation


Marketable securities are valued at their last sales price on the valuation date or, if no sales occurred on such date, at the closing “bid” price if owned and the closing “asked” price if sold short. Other marketable securities traded in the over-the-counter market


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ValueAct Holdings, L.P. and Controlled Affiliates
 Notes to Consolidated Financial Statements
 Years Ended December 31, 2014 (not covered by auditor's report), 2013 and 2012 (not covered by auditor's report)


are valued at the closing bid price.  Unrealized gains and losses are reflected in the Consolidated Statements of Operations.





Substantially all securities transactions are cleared through, and held in custody by, a member firm of the New York Stock Exchange, Inc. Security transactions are recorded on the trade date basis. Realized gains and losses are determined on a specific identified cost basis. Interest is recorded on the accrual basis and dividends are recorded on the ex-dividend date.





Restricted securities are securities subject to Securities and Exchange Commission Rule 144 or other holding period restrictions, and cannot be sold without prior registration under the Securities Act of 1933, as amended, or pursuant to an exemption therefrom, and securities requiring termination of agreement with a third party before they are freely tradable in the public market.  These securities are valued as if they were marketable securities with liquidity discounts determined by the Partnership.


Nonmarketable securities are carried at fair value as determined by the General Partner in accordance with the Partnership Agreement.  Factors considered by the General Partner in determining fair value include cost, the type of investment, subsequent purchases of the same or similar investments by the Partnership or other investors, the current financial position and operating results of the company invested in, and such other factors as may be deemed relevant.


The General Partner’s estimate and assumption of fair value of the nonmarketable securities may differ significantly from the values that would have been used had a ready market existed, and the differences could be material.


The carrying amounts of cash and cash equivalents and short-term receivables and payables approximate their estimated fair values because of the short maturity of those instruments.


The books and records of the Partnership and the Controlled Affiliates are maintained in U.S. dollars.  Assets and liabilities denominated in foreign currencies are translated at the rates of exchange prevailing at the date of the financial statements.  Transactions in foreign currencies are translated at the rates of exchange prevailing at the time of the transaction.


The Partnership and the Controlled Affiliates do not isolate gains and losses on investments attributable to changes in foreign exchange rates from gains and losses from changes in market prices of the investments.  Such fluctuations are included with the net realized and unrealized gains and losses from investments.





Fixed Assets


Furniture, equipment, leasehold improvements, and other fixed assets are carried at cost less accumulated depreciation and amortization. Furniture is depreciated using the double declining method over a useful life of seven years. Equipment and other fixed assets are depreciated using the double declining method over a useful life of five years. Leasehold improvements are depreciated over the lesser of the lease term or a useful life of fifteen years.


Income Recognition


Management fee income is recognized in the period in which the service is rendered.  Performance fee income is recognized in the period in which it is earned, in accordance with the respective partnership agreements.


Withdrawals Payable


Withdrawals from Controlled Affiliates are recognized as liabilities, net of performance allocation, when the amount requested in the withdrawal notice becomes fixed.  This generally may occur either at the time of the receipt of notice, or on the last day of a fiscal period, depending on the nature of the request.  As a result, withdrawals paid after the end of the year, but based upon year-end capital balances are reflected as withdrawals payable at December 31.  Withdrawal notices received for which the dollar amount is not fixed remain in capital until the amount is determined.  Withdrawals payable include $179,072,207 and $107,242,172 payable to partners and $512,915,185 and $626,760,155 to redeemable noncontrolling interests as of December 31, 2014 and 2013, respectively.


Deferred Performance and Management Fees


Fees deferred in prior periods by the VA Partners I, LLC’s predecessor entity remain in the Partnership’s account at the respective Controlled Affiliate.  The deferred amount is reflected on the Partnership’s books as a liability.  Any future appreciation will be charged to the Partnership as reduction of income, and any future depreciation will be treated as a reduction of expense that would otherwise be allocated to the partners.


Financial Instruments and Credit Risk


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ValueAct Holdings, L.P. and Controlled Affiliates
 Notes to Consolidated Financial Statements
 Years Ended December 31, 2014 (not covered by auditor's report), 2013 and 2012 (not covered by auditor's report)


In the normal course of business, the ValueAct Funds purchase and sell various financial instruments.  These financial instruments include investments in securities, securities sold, not yet purchased and equity options.  As a result, the Partnership is exposed to market and credit risks.


Market risk represents the potential loss that can be caused by a change in the market value of a financial instrument.  The Partnership’s exposure to market risk is determined by a number of factors, including the size, composition, diversification of positions held, interest rates and market volatility.  The General Partner monitors the ValueAct Funds’ exposure to market risk by reviewing trading strategies, setting market risk limits and maintaining otherwise uncorrelated and diverse positions.


Credit risk represents the maximum potential loss that the ValueAct Funds would incur if the counterparties failed to perform pursuant to the terms of their agreements with the ValueAct Funds.  The ValueAct Funds regularly transact business with U.S. financial institutions and manage credit risk by limiting the total amount of arrangements outstanding, both by individual counterparty and in the aggregate, by monitoring the size and maturity structure of its portfolio and by applying uniform credit standards for all activities associated with credit risk.


Substantially all securities transactions are cleared through, and held in custody by, a member firm of the New York Stock Exchange, Inc.  The Partnership is subject to credit risk to the extent that the broker may be unable to fulfill its obligations either to return the ValueAct Funds’ securities or repay amounts owed.  In the normal course of their investment activities, the ValueAct Funds may be required to pledge investments as collateral, whereby the prime broker has the right, under the terms of its prime brokerage agreement, to sell or repledge the securities if the ValueAct Funds are unable to meet their margin requirements.


Due to the nature of the ValueAct Funds’ strategies, each portfolio may consist of certain illiquid or thinly traded investments, which may have a greater amount of both market and credit risk than many other fixed income or equity securities.  Such investments are not actively traded on a recognized security exchange.  Please refer to Note 14 for further disclosure of these items.


The ValueAct Funds invest in corporate promissory notes.  Until the notes are converted, sold, or mature, the Partnership is exposed to credit risk relating to whether the note issuers will meet their obligation when it comes due.


Income Taxes


As a partnership, the Partnership itself is not subject to U.S. Federal income taxes.  Each partner is individually liable for income taxes, if any, on their share of the Partnership’s net taxable income.  Accordingly, no federal or state income taxes are payable by the Partnership and no accruals have been provided for in the accompanying financial statements.


U.S. GAAP sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return.  The Partnership did not have any unrecognized tax benefits in the accompanying financial statements.  In the normal course of business, the Partnership is subject to examination by federal, state, local, and foreign jurisdictions, where applicable.  As of December 31, 2014, the tax years that remain subject to examination by the major tax jurisdictions under the statute of limitations is from the year 2010 forward (with limited exceptions).


Redeemable Noncontrolling Interests


Redeemable noncontrolling interests in consolidated subsidiaries (previously “Minority Interest”) represent the partners' capital in the ValueAct Funds held by third party investors.  These amounts are subject to periodic redemption by investors, as directed by the applicable partnership agreements.  When redeemable amounts become legally payable to investors, they are classified as a liability and included in withdrawals payable on the Consolidated Balance Sheets.  In addition, net investment income and net realized and unrealized gains or losses are consolidated within the Consolidated Statements of Operations.  The redeemable noncontrolling interests' share of changes in net income is reported as a separate component in the Consolidated Statements of Operations.


Basis for Presentation


The Partnership has reclassified certain prior period amounts to conform to the current presentation.  There is no impact on net income or cash flows from operations as a result of these reclassifications.


Recent Accounting Pronouncements


In August 2014, the Financial Accounting Standards Board (the "FASB") issued guidance on management's responsibility to assess and disclose an entity's ability to continue as a going concern. The guidance is effective for the Partnership in 2016. The Partnership does not believe the adoption of this guidance will have a material impact on the Partnership's financial position, results of operations or cash flows.


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ValueAct Holdings, L.P. and Controlled Affiliates
 Notes to Consolidated Financial Statements
 Years Ended December 31, 2014 (not covered by auditor's report), 2013 and 2012 (not covered by auditor's report)


In May 2014, the FASB issued a final standard on revenue from contracts with customers. The new standard provides a comprehensive model for revenue recognition. The new standard is effective for fiscal years beginning after December 15, 2016. The Partnership is evaluating the impact of this standard on its Consolidated Financial Statements.


In February 2015, the FASB issued a new standard that amended the current consolidation guidance. The new standard changes the analysis required to determine whether an entity is a variable interest entity and should be consolidated. The new standard is effective for fiscal years beginning after December 15, 2016, and early adoption is permitted. The Partnership is evaluating the impact of this new standard on its Consolidated Financial Statements.


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|3. | Fixed Assets, Net

The components of the Partnership’s fixed assets as of December 31, 2014 and 2013 are as follows: December 31, 2014 (not covered by auditor's report)CostAccumulated Depreciation and AmortizationNet Book ValueEquipment$1,198,197$(467,636)$730,561Furniture9,233,584(1,795,112)7,438,472Leasehold Improvements6,360,610(634,660)5,725,950Other5,316,536(1,063,307)4,253,229$22,108,927$(3,960,715)$18,148,212December 31, 2013CostAccumulated Depreciation and AmortizationNet Book ValueEquipment$907,483$(736,768)$170,715Furniture1,925,355(678,778)1,246,577Leasehold Improvements1,670,113(194,187)1,475,926Other93,175(66,341)26,834$4,596,126$(1,676,074)$2,920,052





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|4. | Investments in Securities

Investments in securities and securities sold not yet purchased included in the Partnership’s  Consolidated Balance Sheets at December 31, 2014 and 2013 are comprised of the following:












































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ValueAct Holdings, L.P. and Controlled Affiliates
 Notes to Consolidated Financial Statements
 Years Ended December 31, 2014 (not covered by auditor's report), 2013 and 2012 (not covered by auditor's report)


December 31,2014                                                    (not covered by auditor's report)2013Investments in securitiesSharesFair ValueSharesFair ValueCommon stocksUnited StatesBusiness services$—$23,747,207Consumer discretionaryTwenty First Century Fox Inc - B30,300,0001,117,767,000—EnergyBaker Hughes, Inc.14,997,500840,909,825—Halliburton Co.20,895,000821,800,350—Other—39,249,778Financial servicesCBRE Group Inc.31,322,2301,072,786,37832,162,764845,880,693IndustrialsRockwell Collins4,465,000377,203,20013,113,000969,312,960Other1,118,648,416497,675,882Information technologyAdobe Systems16,006,7531,163,690,94325,310,1161,515,544,436Microsoft Corporation74,238,2433,448,366,38766,865,5302,501,439,477Motorola Solutions Inc.17,588,5761,179,841,67828,907,6231,951,264,553Other441,617,062710,118,555Oil & gas services215,536,972228,792,890Total United States11,798,168,2119,283,026,431CanadaMaterials776,220,739—PharmaceuticalsValeant Pharmaceuticals International19,383,8772,774,026,63818,923,8772,221,663,160Total Canada3,550,247,3772,221,663,160GermanyFinancial services—122,030,650IrelandFinancial servicesWillis Group Holdings Ltd.18,423,835825,572,04618,214,700816,200,707SwitzerlandIndustrials190,576,240—United KingdomIndustrials273,253,852—Total Common stock16,637,817,72612,442,920,948Total Investments in securities$16,637,817,726$12,442,920,948Securities sold not yet purchasedCommon stockUnited KingdomConsumer discretionary(74,160,273)—Total Common stock(74,160,273)—Total Securities sold not yet purchased$(74,160,273)$—





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ValueAct Holdings, L.P. and Controlled Affiliates
 Notes to Consolidated Financial Statements
 Years Ended December 31, 2014 (not covered by auditor's report), 2013 and 2012 (not covered by auditor's report)


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|5. | Related-Party Transactions

The ValueAct Funds are charged a quarterly management fee by ValueAct Capital Management, L.P. (“the Management Company”), as compensation for managing the business and affairs of the ValueAct Funds, at the end of each fiscal quarter.  The management fee terms for each investor range between 1.00% and 2.00% per annum.  Certain limited partners that are affiliated with or employed by the General Partner of the ValueAct Funds are exempt from the management fee.  For purposes of calculating the management fee, the capital account balance of the ValueAct Funds shall be deemed to include the capital account balance of each ValueAct Funds’ feeder LP’s limited partners for the quarter.


In Accordance with the ValueAct Funds’ limited partnership agreements, the annual management fee rate charged to each feeder LP’s Tranche 1, Tranche 2, Tranche 3, Tranche 4, and Tranche 5 limited partners whose aggregate net asset value of capital accounts equals or exceeds $100,000,000, shall be reduced by 0.25%, however, the management fee rate with respect to these tranches shall not be reduced below 1% per annum.  The annual management fee rate charged to each feeder LP’s Tranche 1A limited partners whose aggregate net asset value of capital accounts equals or exceeds $200,000,000, shall be reduced by 0.25%.  The annual management fee rate charged to each feeder LP’s Tranche 3A and 5A limited partners whose aggregate net asset value of capital accounts equals or exceeds $100,000,000, shall be reduced by 0.25%.  In addition, the annual management fee rate charged to each feeder LP’s Tranche 3A and 5A limited partners whose aggregate net asset value of capital accounts equals or exceeds $300,000,000 shall be reduced an additional 0.25%.


The Management Company received $163,608,657  and $145,255,508 in management fees for the periods ended December 31, 2014 and 2013, respectively.  The management fees have been eliminated in consolidation.


In accordance with the ValueAct Funds’ limited partnership agreements, the amount of the fee paid out of the funds is reduced by the amount of director fees or other fees received by the Management Company from investments in which the ValueAct Funds participate.  Director and other fees of $1,400,188, $8,409,391 and $142,282 are included in other income in the accompanying Consolidated Statements of Operations for the periods ended December 31, 2014, 2013 and 2012 respectively.


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|6. | Allocations of Net Income or Loss

Net profit and net loss are allocated to the partners in proportion to their respective ownership percentages as of the first day of each fiscal period.  If, at the end of each Performance Allocation period the limited partners have cumulative profits, a portion of those profits shall be allocated to the General Partner.


The General Partner of the ValueAct Funds shall be allocated 20% of all profits allocated to limited partners (“Performance Allocation”).  The Performance Allocation can be subject to net loss carryovers, annual preferred return and hurdle rates between 6-12.5% and full catch-up provisions as described in the ValueAct Funds' limited partnership agreements.  The General Partner of the ValueAct Funds is entitled to the Performance Allocation at the end of the performance allocation period which is either at the end of each fiscal year or at the end of the applicable lock-up period as defined in the ValueAct Funds' limited partnership agreements.  The Performance Allocation to be allocated to the General Partner of the ValueAct Funds at the end of a multi-year lock-up period terminating beyond a fiscal year-end is accrued at the end of such fiscal year and is included in partners' capital and income solely for financial statement reporting purposes; however, accrued performance fees are not used to calculate each partner's participating percentages for purposes of the allocation of the ValueAct Funds' net income until the end of the lock-up period or when the limited partner withdraws.


The Agreement also allows the General Partner of the ValueAct Funds to reallocate all or a portion of the Performance Allocation to designated limited partners without the consent of the limited partners.  With respect to each of the limited partners, the General Partner of the ValueAct Funds will adjust the Performance Allocation charged at the ValueAct Funds’ master and feeder LP levels such that, to the extent possible, the cumulative Performance Allocation charged to limited partners of the feeder LPs, directly or indirectly, will in the aggregate equal the cumulative Performance Allocation that would have been charged if such feeder LPs and the master were a single entity.


The ValueAct Funds at times participates in public offerings of equity securities (“New Issues”).  Profits or losses resulting from the ValueAct Fund’s participation in such New Issues are allocated in accordance with the guidelines provided by the Financial Industry Regulatory Authority.


During the year ended December 31, 2014, $2,000,000 from New Issues was earned by the ValueAct Funds. In 2013 an 2012, there were no New Issues income earned by the ValueAct Funds.


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ValueAct Holdings, L.P. and Controlled Affiliates
 Notes to Consolidated Financial Statements
 Years Ended December 31, 2014 (not covered by auditor's report), 2013 and 2012 (not covered by auditor's report)


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|7. | Partners' Capital, Contributions, Withdrawals, and Distributions

A separate capital account is maintained for each partner.  Each capital account is equal to the partner’s contributions less withdrawals and distributions, and is adjusted for the partner’s allocable share of the Partnership’s profits and losses.


Partners may make voluntary capital contributions at the discretion of the Partnership’s General Partner.  Should the Partnership require additional working capital to meet its operational needs, the General Partner may request that certain partners make additional capital contributions.


Generally, no partner has the right to withdraw capital from the Partnership, except as otherwise provided in the Partnership Agreement.


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|8. | Equity-Based Compensation

The Partnership has granted equity to certain employees which entitles holders the right to receive proportionate distributions of income. These awards are accounted for as a book value plan under ASC 718, Compensation - Stock Compensation , such that the value is estimated on the date of grant based on the stated formula and is amortized to compensation expense on a straightline basis over the related vesting period. Equity-based awards that do not require future service are expensed immediately. Total unrecognized compensation cost for the Partnership related to non-vested equity awards was $28,103,731 at December 31, 2014, $45,014,594 at December 31, 2013 and $48,348,027 at December 31, 2012. This cost is expected to be recognized over the weighted average remaining vesting period of approximately 1.5 years. The total value of equity-based compensation recognized during fiscal year 2014 was $17,044,785, during fiscal year 2013 was $16,056,441 and during fiscal year 2012 was $61,559,216.





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|9. | Financial Guarantees

The Partnership indemnifies covered persons, as defined in the Partnership Agreement, from and against all claims, demands, liabilities, costs, expenses, damages, losses, suits, proceedings and actions in connection with activities of the Partnership.  The Partnership has not had prior claims or losses pursuant to these indemnifications and expects the risk of loss to be remote.


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|10. | Foreign Securities

The ValueAct Funds invest in securities of foreign companies which involve risks and considerations not typically associated with investing in U.S. companies.  These risks include devaluation of currencies, different securities transaction clearance and settlement practices, and future adverse political and economic developments.  Moreover, securities of foreign companies and their markets may be less liquid and their prices more volatile than those of securities of comparable U.S. companies.


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|11. | Commitments and Contingencies

The Partnership leases office space under agreements expiring between June 14, 2014 and December 31, 2020.  Expense for the periods ended December 31, 2014, 2013 and 2012 was $2,211,439, $648,290 and $643,836, respectively.  Future minimum lease payments at December 31, 2014 are as follows:


Years ending December 31,2015$2,729,38820162,651,37720172,696,78920182,742,19120192,787,59420202,832,993Total future minimum lease payments$16,440,332





As of December 31, 2014, the Partnership had a security deposit of $66,713 related to office space as required by the lessors.  As of December 31, 2013 there was $25,521 related to office space required by the lessors.


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ValueAct Holdings, L.P. and Controlled Affiliates
 Notes to Consolidated Financial Statements
 Years Ended December 31, 2014 (not covered by auditor's report), 2013 and 2012 (not covered by auditor's report)


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|12. | Term Loans and Line of Credit

On November 15, 2013, the Management Company entered into loan agreements with First Republic Bank (the “Lender”).  The agreements consists of a term commitment used for leasehold improvements in the principal amount of $14,000,000, a line of credit loan and a standby letter of credit loan used for working capital of the Management Company in the principal amounts of $3,582,161 and $1,417,839.  The loan agreements are secured with a first priority lien on all of the Management Company’s assets and all management fees paid and payable to the Management Company by ValueAct Capital Master Fund, L.P.  Under the terms of the loan agreements, the Management Company is required to maintain compliance with certain financial covenants.  As of December 31, 2014 and 2013, the Management Company was in compliance with the covenants.  The terms and amounts of these agreements, including the remaining capacity to use each facility, are disclosed below:


FacilityInterest RatesTermRemaining CapacityBalance at December 31, 2014                     (not covered by auditor's report)$3,582,161 Line of Credit2.5% (based on WSJ Prime - 0.75%) (no floor rate)Exp. July 24, 2014$2,161$3,580,000$1,417,839 Standby Letter of CreditN/AExp. March 31, 20211,417,839—$14,000,000 Term Commitment2.5% (based on WSJ Prime - 0.75%) (no floor rate)Exp. November 15, 20201,076,92312,923,077Total at December 31, 2014$2,496,923$16,503,077





FacilityInterest RatesTermRemaining CapacityBalance at December 31, 2013$3,582,161 Line of Credit2.5% (based on WSJ Prime - 0.75%) (no floor rate)Exp. July 24, 2014$82,161$3,500,000$1,417,839 Standby Letter of CreditN/AExp. March 31, 20211,417,839—$14,000,000 Term Commitment2.5% (based on WSJ Prime - 0.75%) (no floor rate)Exp. November 15, 202010,000,0004,000,000Total at December 31, 2013$11,500,000$7,500,000


Interest expense incurred on the above facilities totaled $312,873, $2,306 and $7,896 for the periods ended December 31, 2014, 2013 and 2012, respectively.


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|13. | Retirement Plan

The Management Company provides a defined contribution plan (the “Plan”) under Section 401(k) of the Internal Revenue Code to all eligible employees of the Partnership.  The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”).


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|14. | Fair Value Measurements

ASC 820, Fair Value Measurements and Disclosures , defines fair value as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction in the primary market between market participants at the measurement date.  In determining fair value, the Partnership uses various valuation approaches.  ASC 820 establishes a fair value hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.  Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Partnership.  Unobservable inputs reflect the Partnership’s assumption about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.


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ValueAct Holdings, L.P. and Controlled Affiliates
 Notes to Consolidated Financial Statements
 Years Ended December 31, 2014 (not covered by auditor's report), 2013 and 2012 (not covered by auditor's report)


The fair value hierarchy is categorized into three levels based on the inputs as follows:





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|Level 1 | Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Partnership has the ability to access.  The type of investments included in Level 1 includes listed equities.  Valuation adjustments and block discounts are not applied to Level 1 securities.  Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment.

|        |                                                                                                                                                                                                                                        
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|Level 2 | Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.  Investments which are generally included in this category include corporate bonds.

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|------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Level 3 | Valuations based on inputs that are unobservable and significant to the overall fair value measurement.  Investments that are included in this category generally include investments in illiquid securities.

The availability of valuation techniques and observable inputs can vary from security to security and is affected by a wide variety of factors, including the type of security, whether the security is new and not yet established in the marketplace, and other characteristics particular to the transaction.  To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment.  Those estimated values do not necessarily represent the amounts that may ultimately be realized due to the occurrence of future circumstances that cannot be reasonably determined.  In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy.  In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls is determined by the lowest level input that is significant to the fair value measurement.


The valuation process involved in Level 3 measurements for assets and liabilities is completed on a quarterly basis and is designed to provide consistency, oversight and review to the valuation of Level 3 investments. The General Partner utilizes a valuation committee, whose members include the Chief Investment Officer, Chief Operating Officer, and certain other employees of the Management Company or its Controlled Affiliates. The valuation committee is responsible for coordinating and implementing the Partnership’s quarterly valuation process. For investments classified as Level 3, investment professionals are responsible for gathering financial and operating data and company specific developments from the portfolio company management teams or other sources as appropriate.  An internal valuation is then developed by the Management Company. All internal valuations are reviewed and approved by the valuation committee.





The following tables present information about the Partnership’s assets and liabilities measured at fair value as of December 31, 2014 and 2013:


Quoted Prices in Active Markets for Identical Assets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs                  (Level 3)Balance as of December 31, 2014 (not covered by auditor's report)AssetsInvestments in securities, at fair valueCommon stocks$16,422,280,754$—$215,536,972$16,637,817,726Total assets$16,422,280,754$—$215,536,972$16,637,817,726LiabilitiesInvestments in securities sold short, at fair valueCommon stocks$(74,160,273)$—$—$(74,160,273)$(74,160,273)$—$—$(74,160,273)


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ValueAct Holdings, L.P. and Controlled Affiliates
 Notes to Consolidated Financial Statements
 Years Ended December 31, 2014 (not covered by auditor's report), 2013 and 2012 (not covered by auditor's report)


Quoted Prices in Active Markets for Identical Assets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs                  (Level 3)Balance as of December 31, 2013AssetsInvestments in securities, at fair valueCommon stocks$12,214,128,058$—$228,792,890$12,442,920,948Total assets$12,214,128,058$—$228,792,890$12,442,920,948


The changes in investments measured at fair value for which the Partnership has used Level 3 inputs to determine fair value are as follows: Years Ended December 31,2014                          (not covered by auditor's report)2013Balances at beginning of year$228,792,890$257,188,686Transfers in——Transfers out——Purchases (sales), net——Realized loss——Unrealized loss(13,255,918)(28,395,796)Balances at end of year$215,536,972$228,792,890


Realized and unrealized gains and losses are included in Net gain on investments in the Consolidated Statements of Operations.  The amount of Unrealized loss on assets held at year end, which was reported in the Consolidated Statements of Operations, was $13,255,918 and $28,395,796 for the years ended December 31, 2014 and 2013, respectively.


The following table summarizes the quantitative inputs and assumptions used for items categorized in Level 3 of the fair value hierarchy as of December 31, 2014 and 2013:


InvestmentsFair Value at December 31, 2014  (not covered by auditor's report)Valuation TechniqueUnobservable InputRangeEquity Securities$215,536,972Discounted cash flowsWeighted average cost of capital10% - 12%Long-term cash revenue growth rate3% - 8%Long-term cash EBITDA growth rate3% - 8%Long-term net cash capex growth rate0% - 5%





InvestmentsFair Value at December 31, 2013Valuation TechniqueUnobservable InputRangeEquity Securities$228,792,890Discounted cash flowsWeighted average cost of capital10% - 11%Long-term cash revenue growth rate3% - 8%Long-term cash EBITDA growth rate3% - 8%Long-term net cash capex growth rate0% - 5%


Realized and unrealized gains and losses are included in Net gain on investments in the Consolidated Statements of Operations.


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ValueAct Holdings, L.P. and Controlled Affiliates
 Notes to Consolidated Financial Statements
 Years Ended December 31, 2014 (not covered by auditor's report), 2013 and 2012 (not covered by auditor's report)


There were no transfers in or out of Levels 1, 2 or 3.


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|15. | Indemnifications

The Partnership enters into contracts that contain a variety of indemnifications.  The Partnership's maximum exposure under these agreements is unknown.  However, the Partnership has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.


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|16. | Subsequent Events

The Partnership has evaluated subsequent events through March 31, 2015, which is the date the financial statements were available to be issued.  No events or transactions have occurred or were pending that would have had a material effect on the financial statements as of December 31, 2014.


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