Pershing Square Activist Presentation Deck
Cash Net Income Reconciliation:
Major Non-Cash Expense Adjustments
Valeant removes certain non-cash expenses to better match Net
Income with recurring Free Cash Flow
▸ Amortization of Intangible Assets ($1.9bn charge, 2013)
■ GAAP requires companies to amortize the accounting value of
acquired assets
■ This amortization is purely a GAAP accounting convention and is
unrelated to the economic value of the asset
► Acquired In-Process R&D Impairments ($154mm charge, 2013)
■ These are impairments of pipeline assets that Valeant is required to
capitalize under GAAP purchase accounting rules
■ These impairments do not impact the company's free cash flow in the
reporting period or management's expectation of future free cash flow
■ Valeant underwrites all of its acquisitions assuming the value of the
target's pipeline is zero
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