PSH-Annual-Report

Annual Report December 31, 2014Notes to Financial Statements (continued)17. PS FUND 1, LLC (continued)Based on the Letter Agreement, the Third PartyTransaction triggered a clause that entitled Valeantto an amount equal to 15% of the net transactionprofits (the “Net Transaction Profits”) in respect ofAllergan securities other than Valeant’s $75.9million contribution. The Net Transaction Profitsconsist of the net profits after deducting any thirdparty expenses for commissions and fees andexpenses from financing and derivatives, withoutdeducting any legal, investment banking or otheradvisory fees incurred by the PS Entities.On November 20, 2014, PSCM and Valeantagreed, in an amended letter agreement, that theoriginal Letter Agreement had terminated andagreed that the Net Transaction Profits would becalculated using the Allergan closing stock price onNovember 17, 2014 (the “Amended LetterAgreement”). The 15% of Net Transaction Profitsowed to Valeant totaled $344,160,930representing 1,645,129 shares of Allergan(inclusive of dividends in respect of the shares),and the shares were allocated to Valeant’s capitalaccount in PSF1. Based on the Amended LetterAgreement, upon this allocation Valeant was nolonger a member of PSF1 and instructed PSCM tosell Valeant’s total Allergan shares on its behalf. Asof December 31, 2014, the PS Entities are the solemembers of PSF1.18. EARNINGS PER SHAREBasic and diluted earnings per share is calculatedby dividing the profit for the year attributable to thePublic Shares and Class B Shares over theweighted average number of Public Shares, PublicShares (Adjusted) and Class B Sharesoutstanding, respectively. In accordance withIFRS, the weighted average shares outstandingcalculated for the Public Shares and Class BShares were 60,032,137 and 1,250,000,000,respectively. This calculation requires that theweighted average shares be calculated for theentire year by multiplying the number of sharesoutstanding by a time weighting factor thatrepresents the number of days that the shareswere outstanding during the year. In this case thatfactor is equal to the 92 days out of 365 as thePublic Phase began on October 1, 2014. To betterrepresent the Public Shares’ EPS, the InvestmentManager has also calculated the Public Shares(Adjusted) using a weighted average sharesoutstanding of 240,128,546, which represents theshares outstanding as of the date of the IPO.19. EVENTS AFTER THE REPORTINGPERIODEffective February 3, 2015, William F. Doyle, amember of PSCM’s investment team wasappointed as a board member of Zoetis Inc.The Investment Manager has evaluated the needfor disclosures and/or adjustments resulting fromsubsequent events during the period between theend of the reporting period and the date ofauthorization of the financial statements. Thisevaluation together with the Directors’ reviewthereof did not result in any additional subsequentevents that necessitated disclosures and/oradjustments.PERSHING SQUARE HOLDINGS, LTD. 69