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, 2013 and 2012 (not covered by auditor's report)





20132012                          (not covered by auditor's report)AssetsCash and cash equivalents$2,154,146,392$1,166,482,643Investments in securities, at fair value12,442,920,9488,584,512,162Interest and dividends receivable15,757,6878,713,993Loans receivable from related parties—450,000Other assets2,647,4851,273,086Unrealized gain on forward foreign currency contract32,698—Fixed assets, net2,920,052970,238Total assets$14,618,425,262$9,762,402,122Liabilities, Redeemable Noncontrolling Interests and Partners' CapitalWithdrawals payable$734,002,327$267,551,375Accounts payable, accrued expenses and unearned income3,287,40526,443,395Deferred performance and management fees payable51,790,92645,578,403Term loans and line of credit7,500,000450,000Contributions received in advance315,502,000434,770,000Total liabilities1,112,082,658774,793,173Commitments and contingencies (Note 12)Redeemable noncontrolling interests in subsidiaries12,453,349,1518,487,909,860Partners' capital1,052,993,453499,699,089Total liabilities, redeemable noncontrolling interests and partners' capital$14,618,425,262$9,762,402,122


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, 2013, 2012 (not covered by auditor's report) and 2011 (not covered by auditor's report)





20132012                                 (not covered by auditor's report)2011                                  (not covered by auditor's report)RevenuesDividends$189,307,519$66,436,730$94,692,049Interest income2,105,3368,64068,060Other income8,429,533450,6672,432,138Total income199,842,38866,896,03797,192,247ExpensesCompensation expense31,600,97570,617,3138,608,020Change in deferred performance and management fees payable17,114,2009,262,0886,203,490Professional fees2,564,9451,067,4631,165,115Interest expense2,3062,10833,939Administrative fees4,040,5172,888,4792,364,040Other10,353,12615,811,9407,262,149Total expenses65,676,06999,649,39125,636,753Gain (loss) on investmentsNet realized gain1,211,645,985546,135,3311,100,919,643Net change in unrealized gain (loss)2,636,814,6031,239,359,666(346,036,498)Net gain on investments3,848,460,5881,785,494,997754,883,145Net income3,982,626,9071,752,741,643826,438,639Net income attributable to redeemable noncontrolling interests(3,133,266,042)(1,450,196,540)(646,681,182)Net income attributable to partners$849,360,865$302,545,103$179,757,457


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, 2013, 2012 (not covered by auditor's report) and 2011 (not covered by auditor's report)





Partners' CapitalRedeemable Noncontrolling InterestsDecember 31, 2010 (not covered by auditor's report)$257,252,070$4,469,144,024Contributions82,3261,739,392,378Distributions(117,184,461)(586,267,336)Net income179,757,457646,681,182December 31, 2011 (not covered by auditor's report)319,907,3926,268,950,248Capital increase related to equity-based compensation (Note 9)61,559,216—Contributions—1,038,499,253Distributions(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 9)16,056,441—Contributions47,0001,981,772,707Distributions(312,169,942)(1,149,599,458)Net income849,360,8653,133,266,042December 31, 2013$1,052,993,453$12,453,349,151


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, 2013, 2012 (not covered by auditor's report) and 2011 (not covered by auditor's report)





20132012                                     (not covered by auditor's report)2011                             (not covered by auditor's report)Cash flows from operating activitiesNet income$3,982,626,907$1,752,741,643$826,438,639Adjustments to reconcile net income to net cash provided by (used in) operating activitiesPurchases of investment securities(4,268,430,927)(2,459,217,978)(3,858,353,968)Proceeds from dispositions of investment securities4,258,482,7292,302,220,2752,727,112,934Net realized gain on investment securities(1,211,645,985)(546,135,331)(1,100,919,643)Net change in unrealized (gain) loss on investment securities(2,636,814,603)(1,239,359,666)346,036,498Depreciation and amortization246,897282,770211,145Equity based compensation16,056,44161,559,216—Change in operating assets and liabilitiesInterest and dividends receivable(7,043,694)(633,713)(6,262,652)Other assets(1,374,399)1,244,846694,718Deferred performance and management fees payable6,212,5234,840,3331,978,784Unrealized gain on forward foreign currency contract(32,698)——Accounts payable, accrued expenses and unearned income(23,155,990)5,125,88319,471,878Net cash provided by (used in) operating activities115,127,201(117,331,722)(1,043,591,667)Cash flows from investing activitiesPurchase of fixed assets(2,196,711)(404,432)(234,032)Net cash used in investing activities(2,196,711)(404,432)(234,032)Cash flows from financing activitiesContributions from redeemable noncontrolling interests1,547,002,707766,759,2531,733,318,378Contributions from partners47,000—82,326Distributions to partners(238,455,595)(166,806,623)(140,771,899)Withdrawals by redeemable noncontrolling interests(756,862,853)(258,765,489)(713,944,140)Payments received on loans to related parties450,000200,000555,000Proceeds from term loans7,500,000——Payments on term loans(450,000)(1,200,000)(3,455,000)Contributions received in advance from redeemable noncontrolling interests315,502,000434,770,000271,740,000Net cash provided by financing activities874,733,259774,957,1411,147,524,665Net increase in cash and cash equivalents987,663,749657,220,987103,698,966Cash and cash equivalentsBeginning of the year1,166,482,643509,261,656405,562,690End of year$2,154,146,392$1,166,482,643$509,261,656Supplemental disclosure of cash flow informationInterest paid$—$10,004$33,939


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, 2013, 2012 (not covered by auditor's report) and 2011 (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.





Prior Period Adjustment


In connection with the preparation of the 2013 financial statements, the Partnership determined that the manner in which it accounted for certain 2012 equity-based compensation was incorrect. Upon issuance of the equity-based compensation, the Partnership recorded a liability rather than recording an increase in partners' capital in the amount of $61,559,216. The General Partner assessed the materiality of this error and determined that the 2012 financial statements were not materially misstated; however, it determined that the most appropriate manner to make the adjustment is to revise the 2012 financial statements. Accordingly, the General Partner elected to revise the 2012 financial statements. As a result, for the year ended December 31, 2012, Partners' Capital was increased by $61,559,216 and accounts payable, accrued expenses and unearned income was decreased by the same amount.





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, LLC*Delaware Limited Liability CompanyJune 19, 2006July 1, 2006ValueAct Capital Management, LLCDelaware Limited Liability CompanyDecember 16, 2004January 1, 2005ValueAct Capital Management, L.P.Delaware Limited PartnershipDecember 16, 2004January 1, 2005


* On July 5, 2012 VA Partners III, LLC ceased operations and was formally dissolved.





The financial statements of the Controlled Affiliates also consolidate 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, 2013, 2012 (not covered by auditor's report) and 2011 (not covered by auditor's report)


NameTypeFormedCommenced OperationsValueAct 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, 2007ValueAct AllCap International, L.P.British Virgin Islands Limited PartnershipJune 30, 2007July 1, 2007ValueAct 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.





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. Amounts due from brokers represent cash on deposit with financial institutions pending reinvestment and balances due from brokers for unsettled trades.





Cash and cash  equivalents  in  the  amount  of  $2,151,735,554  and  $1,165,789,677  as  of December 31, 2013 and 2012, although not legally restricted, are not available to fund the general liquidity needs of the Partnership.





Concentration of Credit Risk


The Partnership and subsidiaries invest their cash primarily in deposits and money market funds with commercial banks and financial institutions. At times, cash balances 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 are valued at the closing bid price.  Unrealized gains and losses are reflected in the 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 SEC 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


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ValueAct Holdings, L.P. and Controlled Affiliates
 Notes to Consolidated Financial Statements
 Years Ended December 31, 2013, 2012 (not covered by auditor's report) and 2011 (not covered by auditor's report)


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 over a useful life of seven years. Equipment and other fixed assets are depreciated 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.





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 $107,242,172 and $33,527,825 payable to partners and $626,760,155 and $234,023,550 to redeemable noncontrolling interests as of December 31, 2013 and 2012, respectively.





Deferred Performance and Management Fees


Fees deferred in prior periods by the VA Partners I, LLC’s predecessor entity, which is controlled by certain partners of the Partnership and is thus considered a related party, 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


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


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ValueAct Holdings, L.P. and Controlled Affiliates
 Notes to Consolidated Financial Statements
 Years Ended December 31, 2013, 2012 (not covered by auditor's report) and 2011 (not covered by auditor's report)


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 16 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.





Accounting principles generally accepted in the United States of America set 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, 2013, 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 presented within the consolidated balance sheets outside of permanent equity because they 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 sheet. 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.





Accounting Pronouncements


In June 2013, the Financial Accounting Standards Board issued an update to the guidance for determining whether a public or private company is an investment company. The new guidance clarifies the characteristics of an investment company and amends certain disclosure and measurement requirements. The new guidance is effective for interim and fiscal periods beginning after December 15, 2013 (early application is prohibited). The Partnership is evaluating the impact of this guidance and does not expect it to have a significant impact on the Partnership's consolidated financial statements.





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|3. | Fixed Assets, Net

The components of the Partnership’s fixed assets, net as of December 31, 2013 and 2012 are as follows:


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ValueAct Holdings, L.P. and Controlled Affiliates
 Notes to Consolidated Financial Statements
 Years Ended December 31, 2013, 2012 (not covered by auditor's report) and 2011 (not covered by auditor's report)


December 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)$2,920,052December 31, 2012 (not covered by auditor's report)CostAccumulated Depreciation and AmortizationNet Book ValueEquipment$831,237$(627,100)$204,137Furniture811,789(619,932)191,857Leasehold Improvements670,244(140,724)529,520Other93,175(48,451)44,724$2,406,445$(1,436,207)$970,238





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|4. | Investments in Securities

Investments  in  securities included  in  the  Partnership’s consolidated balance sheets at December 31, 2013 and 2012 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, 2013, 2012 (not covered by auditor's report) and 2011 (not covered by auditor's report)


December 31,20132012                                                 (not covered by auditor's report)Investments in SecuritiesSharesFair ValueSharesFair ValueCommon stocksUnited StatesBusiness services$23,747,207$16,265,431Energy39,249,778444,774,366Financial servicesCBRE Group Inc.32,162,764845,880,69332,000,000636,800,000Moodys Corp.——15,034,073756,514,553Other—24,762,000IndustrialsRockwell Collins13,113,000969,312,96010,542,900613,280,493Other497,675,882171,780,875Information technologyAdobe Systems25,310,1161,515,544,43631,303,3621,179,510,680Microsoft Corporation66,865,5302,501,439,477——Motorola Solutions Inc.28,907,6231,951,264,55328,907,6231,609,576,448Other710,118,555555,556,453Medical equipment—418,385,258Oil & gas services228,792,890257,188,686Total United States9,283,026,4316,684,395,243CanadaPharmaceuticalsValeant Pharmaceuticals International18,923,8772,221,663,16017,559,3021,049,519,481GermanyFinancial Services122,030,650—United KingdomIndustrials—79,712,118IrelandFinancial ServicesWillis Group Holdings Ltd.18,214,700816,200,70711,285,690378,409,186Total common stocks12,442,920,9488,192,036,028PartnershipsUnited StatesAuto parts wholesale—390,413,570Financial services—2,062,564Total partnerships—392,476,134Total investments in securities$12,442,920,948$8,584,512,162





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|5. | Forward Foreign Currency Contracts

ValueAct Funds may enter into a forward foreign currency contract to hedge against foreign currency exchange rate risk on its


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ValueAct Holdings, L.P. and Controlled Affiliates
 Notes to Consolidated Financial Statements
 Years Ended December 31, 2013, 2012 (not covered by auditor's report) and 2011 (not covered by auditor's report)


non-U.S. dollar denominated securities or to facilitate settlement of a foreign currency denominated portfolio transaction. A forward foreign currency contract is an agreement between two parties to buy and sell a currency at a set price with delivery and settlement at a future date. The contract is marked to market daily and the change in value is recorded by the ValueAct Funds as an unrealized gain or loss. When a forward foreign currency contract is closed, through either delivery of the currencies or offset by entering into another forward foreign currency contract, the ValueAct Funds recognizes a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value of the contract at the time it is closed.





Forward foreign currency contracts involve elements of market risk in excess of the amounts reflected on the Statement of Assets and Liabilities. The ValueAct Funds bears the risk of an unfavorable change in the foreign exchange rate underlying the forward foreign currency contract. Risks may also arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of their contracts. As of December 31, 2013, the Partnership had the following open contract:





Settlement DateCounterpartyContract To DeliverIn Exchange ForUnrealized Gain (Loss)ASC 820 Fair Value HierarchyJanuary 21, 2014Morgan StanleyEUR 72,661,217USD 100,000,000$32,698Level 2





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|6. | 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 fees paid by the ValueAct Funds to the Management Company 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 $8,409,391, $142,282 and $2,158,334 are included in other income in the accompanying statements of operations for the periods ended December 31, 2013, 2012 and 2011, respectively.





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|7. | Allocation of ValueAct Funds' 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 Agreement. The General Partner of the ValueAct Funds is entitled to the Performance Allocation at the end 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 Agreement. 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 fee is


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ValueAct Holdings, L.P. and Controlled Affiliates
 Notes to Consolidated Financial Statements
 Years Ended December 31, 2013, 2012 (not covered by auditor's report) and 2011 (not covered by auditor's report)


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 participate in public offerings of equity securities (“New Issues”).  Profits or losses resulting from the ValueAct Funds' participation in such New Issues are allocated in accordance with the guidelines provided by the Financial Industry Regulatory Authority.





During the years ended December 31, 2013, 2012 and 2011, there was no New Issue income earned by the ValueAct Funds.





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|8. | 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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|9. | 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 straight-line 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 $45,014,594 at December 31, 2013, $48,348,027 at December 31, 2012 and $11,044,490 at December 31, 2011. This cost is expected to be recognized over the weighted average remaining vesting period of 2.9 years. The total value of equity-based compensation recognized during fiscal year 2013 was $16,056,441, during fiscal year 2012 was $61,559,216 and during fiscal year 2011 was $2,761,122.





Years Ended December 31,20132012                          (not covered by auditor's report)2011                         (not covered by auditor's report)Unrecognized equity-based compensation cost at beginning of year$48,348,027$11,044,490$—Equity-based compensation related to additional award grants12,723,00898,862,75313,805,612Equity-based compensation expense recognized(16,056,441)(61,559,216)(2,761,122)Unrecognized equity-based compensation cost at end of year$45,014,594$48,348,027$11,044,490





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|10. | 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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ValueAct Holdings, L.P. and Controlled Affiliates
 Notes to Consolidated Financial Statements
 Years Ended December 31, 2013, 2012 (not covered by auditor's report) and 2011 (not covered by auditor's report)


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|11. | 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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|12. | 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, 2013, 2012 and 2011 was $648,290, $643,836 and $639,397, respectively. Future minimum lease payments at December 31, 2013  are  as follows:





Year ending December 31,2014$2,208,29320152,729,38820162,651,37720172,696,78920182,742,191Thereafter5,620,587Total future minimum lease payments$18,648,625





As of December 31, 2013, the Partnership had a security deposit of $25,521 related to office space as required by the lessors.  As of December 31, 2012 there was no deposit related to office space required by the lessors.





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|13. | 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 consist of a term commitment used for leasehold improvements in the principal amount of $14,000,000 and a line of credit loan used for working capital of the Management Company in the principal amount of $5,000,000. 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, 2013 and 2012, 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, 2013$5,000,000 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


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ValueAct Holdings, L.P. and Controlled Affiliates
 Notes to Consolidated Financial Statements
 Years Ended December 31, 2013, 2012 (not covered by auditor's report) and 2011 (not covered by auditor's report)


FacilityInterest RatesTermRemaining CapacityBalance at December 31, 2012                     (not covered by auditor's report)Facility 21.5% FixedExp. May 4, 2013$—$450,000Facility 5Prime + 0%, no floorExp. Jul. 24, 20133,500,000—Total at December 31, 2012$3,500,000$450,000


Interest expense incurred on the above facilities totaled $2,306, $7,896 and $17,646 for the periods ended December 31, 2013, 2012 and 2011, respectively.





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|14. | Loans Receivable from Related Parties

The Management Company has entered into promissory note arrangements with various related parties of the Management Company. Each arrangement was initially funded through a borrowing facility at First Republic Bank (Note 13). At December 31, 2013 and 2012, the  total amount receivable from related parties was $0 and $450,000, respectively.





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|15. | 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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|16. | 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.





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





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.





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.





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


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ValueAct Holdings, L.P. and Controlled Affiliates
 Notes to Consolidated Financial Statements
 Years Ended December 31, 2013, 2012 (not covered by auditor's report) and 2011 (not covered by auditor's report)


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 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. 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, 2013 and 2012:


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, 2013AssetsCommon stocks$12,214,128,058$—$228,792,890$12,442,920,948Total assets$12,214,128,058$—$228,792,890$12,442,920,948
 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, 2012 (not covered by auditor's report)AssetsCommon stocks$7,934,847,342$—$257,188,686$8,192,036,028Partnership—392,476,134—392,476,134Total assets$7,934,847,342$392,476,134$257,188,686$8,584,512,162


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 31,20132012                          (not covered by auditor's report)Balances at beginning of year$257,188,686$257,188,686Transfers in——Transfers out——Purchases (sales), net——Realized loss——Unrealized loss(28,395,796)—Balances at end of year$228,792,890$257,188,686


Realized and unrealized gains and losses are included in net gain on investments in the statement of operations. The change in unrealized gain (loss) on assets held  at  year  end,  which  was reported in the statement of operations, was ($28,395,796) and $0 for the years ended December 31, 2013 and 2012, 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, 2013 and 2012:


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ValueAct Holdings, L.P. and Controlled Affiliates
 Notes to Consolidated Financial Statements
 Years Ended December 31, 2013, 2012 (not covered by auditor's report) and 2011 (not covered by auditor's report)


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%





InvestmentsFair Value at December 31, 2012 (not covered by auditor's report)Valuation TechniqueUnobservable InputRangeEquity Securities$257,188,686Discounted 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%


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








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|17. | Subsequent Events

The General Partner has evaluated subsequent events through March 28, 2014, which is the date the financial statements were available to be issued. Subsequent to December 31, 2013, ValueAct AllCap Partners, L.P. and ValueAct AllCap International, L.P. ceased operations and were formally dissolved. There are no other events or transactions that occurred or were pending that would have had a material effect on the financial statements as of December 31, 2013.





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