Condensed Financial Statements of KCG Holdings, Inc. (parent only)

Presented below are the Condensed Statements of Financial Condition, Operations and Cash Flows for the Company on an unconsolidated basis.

Statements of Financial Condition

KCG Holdings, Inc. (parent only)



	December 31,
	2014		2013
	(in thousands)
Assets
Cash and cash equivalents	$	302,700	$	253,017
Receivable from subsidiaries	21,851		60,460
Investments in subsidiaries	1,122,254		1,359,779
Income taxes receivable	13,999		90
Deferred tax asset, net	137,009		143,028
Subordinated loans to subsidiaries	280,000		250,000
Other assets	19,397		21,182
Total assets	$	1,897,210	$	2,087,556
Liabilities and equity
Liabilities
Accrued compensation expense	$	13,208	$	—
Payable to subsidiaries	42,478		25,705
Accrued expenses and other liabilities	13,947		12,314
Debt	305,000		540,000
Total liabilities	374,633		578,019
Total equity	1,522,577		1,509,537
Total liabilities and equity	$	1,897,210	$	2,087,556

Statements of Operations

KCG Holdings, Inc. (parent only)



	For the year ended December 31,
	2014			2013			2012
	(in thousands)
Revenues
Investment income and other, net	$	3,415		$	3,717		$	5,981
Total revenues	3,415			3,717			5,981
Expenses
Employee compensation and benefits	50,256			31,970			(12,251		)
Interest	11,939			28,476			1,195
Depreciation and amortization	—			698			1,395
Professional fees	9,211			30,488			4,997
Business development	3,625			—			—
Other	25,460			29,829			1,493
Total expenses	100,491			121,461			(3,171		)
(Loss) income before income taxes and equity in earnings of subsidiaries	(97,076		)	(117,744		)	9,152
Income tax benefit	(35,972		)	(120,761		)	—
Income (loss) before equity in earnings of subsidiaries	(61,104		)	3,017			9,152
Equity in earnings of subsidiaries	122,206			123,155			6,999
Net income	$	61,102		$	126,172		$	16,151

Statements of Cash Flows

KCG Holdings, Inc. (parent only)



	For the year ended December 31,
	2014			2013			2012
	(In thousands)
Cash flows from operating activities
Net income	$	61,102		$	126,172		$	16,151
Adjustments to reconcile net income to net cash used in operating activities
Equity in earnings of subsidiaries	(122,206		)	(123,155		)	(6,999		)
Writedown and amortization of debt issuance costs	12,548			16,931			52
Amortization of intangibles	—			698			1,395
Stock-based compensation	16,997			—			—
Decrease (increase) in operating assets
Subordinated loan receivable	(30,000		)	(250,000		)	—
Receivable from subsidiaries	38,609			(67,523		)	(97,375		)
Deferred tax asset	(13,909		)	(144,109		)	—
Income taxes receivable	6,019			(90		)	—
Other assets	(10,763		)	(15,351		)	31,031
(Decrease) increase in operating liabilities
Payable to subsidiaries	16,773			(2,024		)	11,756
Accrued compensation expense	8,839			—			—
Accrued expenses and other liabilities	1,633			59,561			5,106
Net cash used in operating activities	(14,358		)	(398,890		)	(38,883		)
Cash flows from investing activities
Cash acquired upon acquisition of Knight Capital Group, Inc.	—			509,133			—
Cash received from sale of Urban Financial of America, LLC	—			85,406			—
Dividends received from subsidiaries	807,715			646,425			161,606
Capital contributions to subsidiaries	(397,089		)	(238,909		)	(70,794		)
Net cash provided by investing activities	410,626			1,002,055			90,812
Cash flows from financing activities
Proceeds from issuance of Credit Agreement	—			535,000			—
Partial repayment of Credit Agreement	(235,000		)	(300,000		)	—
Proceeds from issuance of Senior Secured Notes	—			305,000			—
Repayment of notes payable	—			(15,000		)	—
Payment of debt issuance costs	—			(34,592		)	—
Issuance of equity to General Atlantic	—			55,000			—
Payment to former Knight Capital Group, Inc. stockholders	—			(720,000		)	—
Repayment of Knight Convertible Notes	—			(257,741		)	—
Funding of collateral account for Knight Convertible Notes	—			(117,259		)	—
Payment out of collateral account for Knight Convertible Notes	—			117,259			—
Proceeds from stock issuance	—			—			12,320
Member distributions	—			(21,002		)	(62,234		)
Cost of common stock repurchased	(111,585		)	(11,324		)	—
Net cash used in financing activities	(346,585		)	(464,659		)	(49,914		)
Effect of exchange rate changes on cash and cash equivalents	—			—			—
Increase in cash and cash equivalents	49,683			138,506			2,015
Cash and cash equivalents at beginning of period	253,017			114,511			112,496
Cash and cash equivalents at end of period	$	302,700		$	253,017		$	114,511
Supplemental disclosure of cash flow information:
Cash paid for interest	$	28,426		$	26,239		$	1,116
Cash paid for income taxes	$	15,456		$	365		$	—

The condensed financial statements of KCG Holdings, Inc. (parent only; the “Parent Company”) should be read in conjunction with the Consolidated Financial Statements of the Company and the Notes thereto. As noted in Footnote 1 "Organization and Description of Business", the Mergers were treated as a purchase of Knight by GETCO for accounting and financial reporting purposes.

The Statements of Operations and Cash Flows included in this footnote for the year ended December 31, 2013 include the combined financial results and cash flows for GETCO Holding Company, LLC for the six month period January 1, 2013 to June 30, 2013 and for KCG Holdings, Inc. for the six month period July 1, 2013 to December 31, 2013. These combined Statements of Operations and Cash Flows were presented for comparability to the prior year, 2012.