EX-99.2 3 s001514x3_ex99-2.htm EXHIBIT 99.2

Exhibit 99.2
NON-GAAP FINANCIAL MEASURES
In certain sections of this offering memorandum, including “Summary—Summary Pro Forma Combined and Historical Consolidated Financial Data,” we present Adjusted EBITDA, and in certain sections of this offering memorandum, including “Unaudited Pro Forma and Historical Condensed Combined Financial Statements,” we present Adjusted Operating Income (“AOI”) for the Insurance segment. Adjusted EBITDA and Adjusted Operating Income are “non-GAAP financial measures” as defined under the rules of the SEC.
Adjusted EBITDA represents EBITDA (net income (loss) attributable to HC2 Holdings, Inc., adjusted for depreciation and amortization, interest expense and income tax (benefit) expense), adjusted to exclude our Insurance segment and add back or deduct certain items that management believes are non-recurring in nature or not comparable from period to period. For the definition of Adjusted EBITDA employed by HC2, see footnote 1 to the summary historical financial data table, in “Summary—Summary Pro Forma Combined and Historical Consolidated Financial Data.”
Our management uses Adjusted EBITDA as a supplemental financial measure to assess:

· | the financial performance of our assets without regard to our Insurance segment, financing methods, capital structure, taxes, historical cost basis or non-recurring expenses;

· | our liquidity and operating performance over time in relation to other companies that own similar assets and calculate Adjusted EBITDA in a similar manner; and

· | the ability of our assets to generate cash sufficient to pay potential interest cost.

We use Adjusted EBITDA as presented in this offering memorandum as a supplemental measure of our performance. Adjusted EBITDA is not defined under generally accepted accounting principles in the United States (“GAAP” or “US GAAP”) and is not a measure of operating income, operating performance or liquidity presented in accordance with GAAP.
Adjusted EBITDA has limitations as an analytical tool and when assessing our operating performance or liquidity, investors and others should not consider this data in isolation or as a substitute for net income (loss) attributable to HC2 Holdings, Inc., cash flow from operating activities or other cash flow data calculated in accordance with GAAP.
Further, the results presented by Adjusted EBITDA cannot be achieved without incurring the costs that the measure excludes: interest, taxes, depreciation and amortization. Please see the audited and unaudited financial statements and the notes thereto of HC2 incorporated by reference into this offering memorandum.
For management’s definition of AOI, see note 6 to the unaudited pro forma condensed combined financial statements in “Unaudited Pro Forma and Historical Condensed Combined Financial Statements.”
Management believes that insurance AOI measures provide investors with meaningful information for gaining an understanding of certain results and provides insight into an organization’s operating trends and facilitates comparisons between peer companies. However, insurance AOI has certain limitations, including that we may not calculate it the same as other companies in our industry and therefore should be read together with the Company's results calculated in accordance with GAAP.

Using insurance AOI as a performance measure has inherent limitations as an analytical tool as compared to income (loss) from operations or other US GAAP financial measures, as this non-GAAP measure excludes certain items, including items that are recurring in nature, which may be meaningful to investors. As a result of the exclusions, insurance AOI should not be considered in isolation and does not purport to be an alternative to income (loss) from operations or other US GAAP financial measures as a measure of our operating performance.
Management believes that insurance AOI provides a meaningful financial metric that helps investors understand certain results and profitability for our Insurance segment. While these adjustments are an integral part of the overall performance of the Insurance segment, market conditions impacting these items can overshadow the underlying performance of the business. Accordingly, we believe using a measure which excludes their impact is effective in analyzing the trends of our operations. Please see the audited and unaudited financial statements and the notes thereto of HC2 and the Insurance Companies incorporated by reference into this offering memorandum.
Adjusted EBITDA Reconciliations
The calculation of Adjusted EBITDA, as defined by us, consists of net income (loss) attributable to HC2 Holdings, Inc., excluding net income (loss) attributable to our Insurance segment, as adjusted for depreciation and amortization; interest expense, income tax (benefit) expense; gain (loss) on sale or disposal of assets; lease termination costs; asset impairment expense; interest expense; other income (expense), net; foreign currency gain (loss); gain (loss) from discontinued operations; noncontrolling interest; share-based compensation expense; acquisition related costs; and other costs. Such adjustments exclude any results and amounts attributable to our Insurance segment. Adjusted EBITDA is a metric used by management and frequently used by the financial community. Adjusted EBITDA provides insight into an organization’s operating trends and facilitates comparisons between peer companies, since interest, taxes, depreciation, amortization and the other items listed in the definition of Adjusted EBITDA can differ greatly between organizations as a result of differing capital structures and tax strategies. Adjusted EBITDA can also be a useful measure of a company’s ability to service debt and is one of the measures used for determining debt covenant compliance. Adjusted EBITDA excludes certain items that are unusual in nature or not comparable from period to period. While management believes that non-US GAAP measurements are useful supplemental information, such adjusted results are not intended to replace the Company’s US GAAP financial results. We also exclude the results of our Insurance segment in our calculation of Adjusted EBITDA, as we believe that Adjusted EBITDA is not a commonly used metric in the insurance business and that including the results of our insurance business in our Adjusted EBITDA would impair the ability of such measure to provide investors with meaningful information for gaining an understanding of our results. The following table provides the reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable GAAP measure:

|  | Last 12 months ended September 30, 2016 |
|  | Manufacturing |  |  | Marine Services |  |  | Telecom |  |  | Utilities |  |  | Life Sciences |  |  | Other and Eliminations |  |  | Non-operating Corporate |  |  | HC2 Holdings, Inc. ex Insurance |  |  | Insurance |  |  | HC2 Holdings, Inc. |
Net income (loss) attributable to HC2 Holdings, Inc. |  | $ | 28,979 |  |  | $ | 11,672 |  |  | $ | 7,085 |  |  | $ | 123 |  |  | $ | (3,536 | ) |  | $ | (45,308 | ) |  | $ | (33,180 | ) |  | $ | (34,165 | ) |  | $ | (10,360 | ) |  | $ | (44,525 | )
Adjustments to reconcile net income (loss) attributable to HC2 Holdings, Inc. to Adjusted EBITDA: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | 1,789 |  |  |  | 20,025 |  |  |  | 512 |  |  |  | 1,908 |  |  |  | 99 |  |  |  | 2,343 |  |  |  | 4 |  |  |  | 26,680 |  |  |  |  |  |  |  |  |
Depreciation and amortization (included in cost of revenue) |  |  | 4,972 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 4,972 |  |  |  |  |  |  |  |  |
Asset impairment expense |  |  | — |  |  |  | 547 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 547 |  |  |  |  |  |  |  |  |
(Gain) loss on sale or disposal of assets |  |  | (637 | ) |  |  | (31 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | — |  |  |  | (667 | ) |  |  |  |  |  |  |  |
Lease termination costs |  |  | — |  |  |  | — |  |  |  | 239 |  |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | — |  |  |  | 240 |  |  |  |  |  |  |  |  |
Interest expense |  |  | 1,232 |  |  |  | 4,598 |  |  |  | — |  |  |  | 152 |  |  |  | — |  |  |  | 1 |  |  |  | 35,441 |  |  |  | 41,424 |  |  |  |  |  |  |  |  |
Loss on early extinguishment of debt |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  |  |  |  |  |  |
Other (income) expense, net |  |  | (367 | ) |  |  | (439 | ) |  |  | (2,564 | ) |  |  | (409 | ) |  |  | (3,224 | ) |  |  | 16,662 |  |  |  | (60 | ) |  |  | 9,599 |  |  |  |  |  |  |  |  |
Foreign currency (gain) loss (included in cost of revenue) |  |  | — |  |  |  | (3,205 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (3,205 | ) |  |  |  |  |  |  |  |
Income tax (benefit) expense |  |  | 16,025 |  |  |  | (534 | ) |  |  | (237 | ) |  |  | (347 | ) |  |  | (1,037 | ) |  |  | 8,616 |  |  |  | (39,684 | ) |  |  | (17,198 | ) |  |  |  |  |  |  |  |
Loss from discontinued operations |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (23 | ) |  |  | — |  |  |  | (23 | ) |  |  |  |  |  |  |  |
Noncontrolling interest |  |  | 1,409 |  |  |  | 563 |  |  |  | — |  |  |  | 292 |  |  |  | (2,771 | ) |  |  | (2,063 | ) |  |  | — |  |  |  | (2,570 | ) |  |  |  |  |  |  |  |
Share-based compensation expense |  |  | — |  |  |  | 1,307 |  |  |  | — |  |  |  | 133 |  |  |  | 255 |  |  |  | 238 |  |  |  | 8,437 |  |  |  | 10,370 |  |  |  |  |  |  |  |  |
Acquisition and nonrecurring items |  |  | 428 |  |  |  | 266 |  |  |  | 18 |  |  |  | 97 |  |  |  | 23 |  |  |  | — |  |  |  | 6,996 |  |  |  | 7,828 |  |  |  |  |  |  |  |  |
Other Costs (1) |  |  | — |  |  |  | 2,181 |  |  |  | 12 |  |  |  | — |  |  |  | — |  |  |  | (76 | ) |  |  | — |  |  |  | 2,117 |  |  |  |  |  |  |  |  |
Adjusted EBITDA |  | $ | 53,830 |  |  | $ | 36,950 |  |  | $ | 5,065 |  |  | $ | 1,949 |  |  | $ | (10,191 | ) |  | $ | (19,608 | ) |  | $ | (22,046 | ) |  | $ | 45,949 |  |  |  |  |  |  |  |  |

(in thousands)

(1) | Other Costs represents GMSL restructuring costs, consisting primarily of severance expense, during the fourth quarter of 2015.

|  | 9 months ended September 30, 2016 |
|  | Manufacturing |  |  | Marine Services |  |  | Telecom |  |  | Utilities |  |  | Life Sciences |  |  | Other and Eliminations |  |  | Non-operating Corporate |  |  | HC2 Holdings, Inc. ex Insurance |  |  | Insurance |  |  | HC2 Holdings, Inc. |
Net income (loss) attributable to HC2 Holdings, Inc. |  | $ | 20,710 |  |  | $ | 8,780 |  |  | $ | 4,007 |  |  | $ | 68 |  |  | $ | (2,991 | ) |  | $ | (21,264 | ) |  | $ | (30,417 | ) |  | $ | (21,107 | ) |  | $ | (11,978 | ) |  | $ | (33,085 | )
Adjustments to reconcile net income (loss) attributable to HC2 Holdings, Inc. to Adjusted EBITDA: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | 1,263 |  |  |  | 15,747 |  |  |  | 389 |  |  |  | 1,479 |  |  |  | 87 |  |  |  | 1,050 |  |  |  | 4 |  |  |  | 20,019 |  |  |  |  |  |  |  |  |
Depreciation and amortization (included in cost of revenue) |  |  | 3,048 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 3,048 |  |  |  |  |  |  |  |  |
Asset impairment expense |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  |  |  |  |  |  |
(Gain) loss on sale or disposal of assets |  |  | (963 | ) |  |  | (10 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (973 | ) |  |  |  |  |  |  |  |
Lease termination costs |  |  | — |  |  |  | — |  |  |  | 179 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 179 |  |  |  |  |  |  |  |  |
Interest expense |  |  | 917 |  |  |  | 3,683 |  |  |  | — |  |  |  | 142 |  |  |  | — |  |  |  | 1 |  |  |  | 26,871 |  |  |  | 31,614 |  |  |  |  |  |  |  |  |
Loss on early extinguishment of debt |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  |  |  |  |  |  |
Other (income) expense, net |  |  | (88 | ) |  |  | (1,190 | ) |  |  | (574 | ) |  |  | (399 | ) |  |  | (3,223 | ) |  |  | 9,888 |  |  |  | (311 | ) |  |  | 4,103 |  |  |  |  |  |  |  |  |
Foreign currency (gain) loss (included in cost of revenue) |  |  | — |  |  |  | (1,970 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1,970 | ) |  |  |  |  |  |  |  |
Income tax (benefit) expense |  |  | 12,641 |  |  |  | (756 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (21,481 | ) |  |  | (9,596 | ) |  |  |  |  |  |  |  |
Loss from discontinued operations |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  |  |  |  |  |  |
Noncontrolling interest |  |  | 1,240 |  |  |  | 510 |  |  |  | — |  |  |  | 249 |  |  |  | (2,302 | ) |  |  | (2,062 | ) |  |  | — |  |  |  | (2,365 | ) |  |  |  |  |  |  |  |
Share-based compensation expense |  |  | — |  |  |  | 1,307 |  |  |  | — |  |  |  | 107 |  |  |  | 184 |  |  |  | 238 |  |  |  | 4,833 |  |  |  | 6,669 |  |  |  |  |  |  |  |  |
Acquisition and nonrecurring items |  |  | 428 |  |  |  | 266 |  |  |  | 18 |  |  |  | 27 |  |  |  | — |  |  |  | — |  |  |  | 3,335 |  |  |  | 4,073 |  |  |  |  |  |  |  |  |
Other Costs |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  |  |  |  |  |  |
Adjusted EBITDA |  | $ | 39,196 |  |  | $ | 26,367 |  |  | $ | 4,019 |  |  | $ | 1,673 |  |  | $ | (8,245 | ) |  | $ | (12,149 | ) |  | $ | (17,166 | ) |  | $ | 33,694 |  |  |  |  |  |  |  |  |

(in thousands)

|  | 9 months ended September 30, 2015 |
|  | Manufacturing |  |  | Marine Services |  |  | Telecom |  |  | Utilities |  |  | Life Sciences |  |  | Other and Eliminations |  |  | Non-operating Corporate |  |  | HC2 Holdings, Inc. ex Insurance |  |  | Insurance |  |  | HC2 Holdings, Inc. |
Net income (loss) attributable to HC2 Holdings, Inc. |  | $ | 16,182 |  |  | $ | 17,963 |  |  | $ | (299 | ) |  | $ | (329 | ) |  | $ | (4,030 | ) |  | $ | 5,768 |  |  | $ | (59,089 | ) |  | $ | (23,834 | ) |  | $ | (291 | ) |  | $ | (24,125 | )
Adjustments to reconcile net income (loss) attributable to HC2 Holdings, Inc. to Adjusted EBITDA: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | 1,490 |  |  |  | 12,978 |  |  |  | 294 |  |  |  | 1,206 |  |  |  | 8 |  |  |  | 641 |  |  |  | — |  |  |  | 16,617 |  |  |  |  |  |  |  |  |
Depreciation and amortization (included in cost of revenue) |  |  | 5,735 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 5,735 |  |  |  |  |  |  |  |  |
Asset impairment expense |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  |  |  |  |  |  |
(Gain) loss on sale or disposal of assets |  |  | (69 | ) |  |  | (117 | ) |  |  | 50 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (136 | ) |  |  |  |  |  |  |  |
Lease termination costs |  |  | — |  |  |  | — |  |  |  | 1,124 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,124 |  |  |  |  |  |  |  |  |
Interest expense |  |  | 1,064 |  |  |  | 2,888 |  |  |  | — |  |  |  | 32 |  |  |  | — |  |  |  | — |  |  |  | 25,223 |  |  |  | 29,207 |  |  |  |  |  |  |  |  |
Loss on early extinguishment of debt |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  |  |  |  |  |  |
Other (income) expense, net |  |  | (164 | ) |  |  | (2,091 | ) |  |  | (314 | ) |  |  | (32 | ) |  |  | — |  |  |  | (1,010 | ) |  |  | 4,991 |  |  |  | 1,380 |  |  |  |  |  |  |  |  |
Foreign currency (gain) loss (included in cost of revenue) |  |  | — |  |  |  | (804 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (804 | ) |  |  |  |  |  |  |  |
Income tax (benefit) expense |  |  | 12,188 |  |  |  | 178 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (16,349 | ) |  |  | 2,151 |  |  |  | (1,832 | ) |  |  |  |  |  |  |  |
Loss from discontinued operations |  |  | 20 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 24 |  |  |  | — |  |  |  | 44 |  |  |  |  |  |  |  |  |
Noncontrolling interest |  |  | 967 |  |  |  | 563 |  |  |  | — |  |  |  | (310 | ) |  |  | (1,212 | ) |  |  | — |  |  |  | — |  |  |  | 8 |  |  |  |  |  |  |  |  |
Share-based payment expense |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 23 |  |  |  | — |  |  |  | — |  |  |  | 7,378 |  |  |  | 7,401 |  |  |  |  |  |  |  |  |
Acquisition and nonrecurring items |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 4,701 |  |  |  | 4,701 |  |  |  |  |  |  |  |  |
Other Costs |  |  | — |  |  |  | — |  |  |  | 109 |  |  |  | — |  |  |  | — |  |  |  | 76 |  |  |  | — |  |  |  | 109 |  |  |  |  |  |  |  |  |
Adjusted EBITDA |  | $ | 37,413 |  |  | $ | 31,558 |  |  | $ | 964 |  |  | $ | 590 |  |  | $ | (5,234 | ) |  | $ | (10,850 | ) |  | $ | (14,645 | ) |  | $ | 39,720 |  |  |  |  |  |  |  |  |

(in thousands)

|  | Year ended December 31, 2015 |
|  | Manufacturing |  |  | Marine Services |  |  | Telecom |  |  | Utilities |  |  | Life Sciences |  |  | Other |  |  | Non-operating Corporate |  |  | HC2 Holdings, Inc. ex insurance |  |  | Insurance |  |  | HC2 Holdings, Inc. |
Net income (loss) attributable to HC2 Holdings, Inc. |  | $ | 24,451 |  |  | $ | 20,855 |  |  | $ | 2,779 |  |  | $ | (274 | ) |  | $ | (4,575 | ) |  | $ | (18,276 | ) |  | $ | (61,852 | ) |  | $ | (36,892 | ) |  | $ | 1,327 |  |  | $ | (35,565 | )
Adjustments to reconcile net income (loss) attributable to HC2 Holdings, Inc. to Adjusted EBITDA: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | 2,016 |  |  |  | 17,256 |  |  |  | 417 |  |  |  | 1,635 |  |  |  | 20 |  |  |  | 1,934 |  |  |  | — |  |  |  | 23,278 |  |  |  |  |  |  |  |  |
Depreciation and amortization (included in cost of revenue) |  |  | 7,659 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 7,659 |  |  |  |  |  |  |  |  |
Asset impairment expense |  |  | — |  |  |  | 547 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 547 |  |  |  |  |  |  |  |  |
(Gain) loss on sale or disposal of assets |  |  | 257 |  |  |  | (138 | ) |  |  | 50 |  |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | — |  |  |  | 170 |  |  |  |  |  |  |  |  |
Lease termination costs |  |  | — |  |  |  | — |  |  |  | 1,184 |  |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | — |  |  |  | 1,185 |  |  |  |  |  |  |  |  |
Interest expense |  |  | 1,379 |  |  |  | 3,803 |  |  |  | — |  |  |  | 42 |  |  |  | — |  |  |  | — |  |  |  | 33,793 |  |  |  | 39,017 |  |  |  |  |  |  |  |  |
Loss on early extinguishment of debt |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  |  |  |  |  |  |
Other (income) expense, net |  |  | (443 | ) |  |  | (1,340 | ) |  |  | (2,304 | ) |  |  | (42 | ) |  |  | (1 | ) |  |  | 5,764 |  |  |  | 5,242 |  |  |  | 6,876 |  |  |  |  |  |  |  |  |
Foreign currency (gain) loss (included in cost of revenue) |  |  | — |  |  |  | (2,039 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (2,039 | ) |  |  |  |  |  |  |  |
Income tax (benefit) expense |  |  | 15,572 |  |  |  | 400 |  |  |  | (237 | ) |  |  | (347 | ) |  |  | (1,037 | ) |  |  | (7,733 | ) |  |  | (16,052 | ) |  |  | (9,434 | ) |  |  |  |  |  |  |  |
Loss from discontinued operations |  |  | 20 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | — |  |  |  | 21 |  |  |  |  |  |  |  |  |
Noncontrolling interest |  |  | 1,136 |  |  |  | 616 |  |  |  | — |  |  |  | (267 | ) |  |  | (1,681 | ) |  |  | (1 | ) |  |  | — |  |  |  | (197 | ) |  |  |  |  |  |  |  |
Share-based payment expense |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 49 |  |  |  | 71 |  |  |  | — |  |  |  | 10,982 |  |  |  | 11,102 |  |  |  |  |  |  |  |  |
Acquisition related costs |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 70 |  |  |  | 23 |  |  |  | — |  |  |  | 8,362 |  |  |  | 8,455 |  |  |  |  |  |  |  |  |
Other costs |  |  | — |  |  |  | 2,181 |  |  |  | 121 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,302 |  |  |  |  |  |  |  |  |
Adjusted EBITDA |  | $ | 52,047 |  |  | $ | 42,141 |  |  | $ | 2,010 |  |  | $ | 866 |  |  | $ | (7,180 | ) |  | $ | (18,309 | ) |  | $ | (19,525 | ) |  | $ | 52,050 |  |  |  |  |  |  |  |  |

(in thousands)

|  | As Reported |  |  | Proforma Year ended December 31, 2014 |
|  | HC2 Holdings, Inc. Actual |  |  | Manufacturing (1) |  |  | Marine Services (2) |  |  | Telecom (3) |  |  | Utilities (4) |  |  | Life Sciences |  |  | Non-operating Corporate |  |  | Other |  |  | HC2 Holdings, Inc. |
Net income (loss) attributable to HC2 Holdings, Inc. |  | $ | (14,391 | ) |  | $ | 19,278 |  |  | $ | 17,718 |  |  | $ | (1,068 | ) |  | $ | 236 |  |  | $ | (3,759 | ) |  | $ | (51,410 | ) |  | $ | 29,219 |  |  | $ | 10,214 |
Adjustments to reconcile net income (loss) attributable to HC2 Holdings, Inc. to Adjusted EBITDA: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | 6,334 |  |  |  | 4,139 |  |  |  | 14,776 |  |  |  | 528 |  |  |  | 484 |  |  |  | 1 |  |  |  | — |  |  |  | — |  |  |  | 19,928 |
Depreciation and amortization (included in cost of revenue) |  |  | 4,350 |  |  |  | 4,350 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 4,350 |
Asset impairment expense |  |  | 291 |  |  |  | — |  |  |  | — |  |  |  | 291 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 291 |
(Gain) loss on sale or disposal of assets |  |  | (162 | ) |  |  | (2 | ) |  |  | 104 |  |  |  | (160 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (58 | )
Lease termination costs |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Interest expense |  |  | 12,347 |  |  |  | 1,627 |  |  |  | 4,708 |  |  |  | 1 |  |  |  | 20 |  |  |  | — |  |  |  | 10,700 |  |  |  | — |  |  |  | 17,056 |
Loss on early extinguishment of debt |  |  | 11,969 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 11,969 |  |  |  | — |  |  |  | 11,969 |
Other (income) expense, net |  |  | (702 | ) |  |  | (476 | ) |  |  | (2,410 | ) |  |  | (831 | ) |  |  | (1,431 | ) |  |  | — |  |  |  | 217 |  |  |  | 1,610 |  |  |  | (3,321 | )
Foreign currency (gain) loss (included in cost of revenue) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Income tax (benefit) expense |  |  | (22,869 | ) |  |  | 13,318 |  |  |  | 1,069 |  |  |  | 58 |  |  |  | 103 |  |  |  | — |  |  |  | (963 | ) |  |  | (31,828 | ) |  |  | (18,243 | )
Loss from discontinued operations |  |  | 146 |  |  |  | 35 |  |  |  | 3,007 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 157 |  |  |  | 3,199 |
Noncontrolling interest |  |  | 2,559 |  |  |  | 3,569 |  |  |  | 3,059 |  |  |  | — |  |  |  | 229 |  |  |  | (1,038 | ) |  |  | — |  |  |  | 1 |  |  |  | 5,820 |
Share-based payment expense |  |  | 11,028 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 11,028 |  |  |  | — |  |  |  | 11,028 |
Acquisition related costs |  |  | 13,044 |  |  |  | — |  |  |  | 7,966 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 5,078 |  |  |  | — |  |  |  | 13,044 |
Other costs |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Adjusted EBITDA (5) |  | $ | 23,944 |  |  | $ | 45,838 |  |  | $ | 49,997 |  |  | $ | (1,181 | ) |  | $ | (359 | ) |  | $ | (4,796 | ) |  | $ | (13,381 | ) |  | $ | (841 | ) |  | $ | 75,277 |

(in thousands)

(1) | Manufacturing includes financials pro forma for the five months ended May 26, 2014, prior to our acquisition of a controlling interest.
(2) | Marine Services includes financials pro forma for the period ended September 22, 2014, prior to our acquisition of a controlling interest.
(3) | Telecom financials do not include any pro forma adjustments.
(4) | Utilities includes financials pro forma for the seven months ended July 31, 2014, prior to our acquisition of a controlling interest.
(5) | Adjusted EBITDA is not calculated for our Insurance segment, but included for purposes of reconciling to the consolidated Net income (loss) attributable to HC2 Holdings, Inc.