Rcs Capital (RCAPQ) 8-K Index to Consolidated Financial Statements

Exhibit 99.2

RCS Capital Corporation

Unaudited Pro Forma Consolidated Statement of Financial Condition as of June 30, 2014 and
Unaudited Pro Forma Consolidated Statement of Operations for the Six Months Ended June 30, 2014
and for the Year Ended December 31, 2013

The unaudited Pro Forma Consolidated Statement of Financial Condition and the unaudited Pro Forma Consolidated Statements of Operations have been prepared through the application of Pro Forma adjustments to the historical Statement of Financial Condition and Statement of Operations of RCS Capital Corporation (the “Company” or “RCAP”) reflecting the recent acquisitions and the related financing, as detailed below. The Company completed the acquisition of Cetera Financial Holdings, Inc. together with its consolidated subsidiaries (“Cetera”); Summit Financial Services Group, Inc. together with its consolidated subsidiaries (“Summit”); JP Turner & Company, LLC and JP Turner & Company Capital Management, LLC (collectively; “JP Turner”); First Allied Holdings Inc. together with its consolidated subsidiaries (“First Allied”); Hatteras Investment Partners LLC, Hatteras Investment Management LLC, Hatteras Capital Investment Management, LLC, Hatteras Alternative Mutual Funds LLC, and Hatteras Capital Investment Partners, LLC together with their respective consolidated subsidiaries (“Hatteras”); Investors Capital Holdings, Ltd. together with its consolidated subsidiaries (“ICH”); and Validus/Strategic Capital Partners, LLC. (“Strategic Capital”), which closed on April 29, 2014; June 11, 2014; June 12, 2014, June 30, 2014, June 30, 2014, July 11, 2014, and August 29, 2014, respectively. Cetera, Summit, JP Turner, First Allied, Hatteras, ICH and Strategic Capital are collectively referred to as the “Completed Acquisitions”. The Company’s acquisition of First Allied, which occurred on June 30, 2014, was accounted for at historical cost in a manner similar to a pooling-of-interest accounting because First Allied and the Company were under the common control of RCAP Holdings at the time of the acquisition of First Allied by RCAP Holdings, and accordingly is included in the entire period from September 25, 2013. The Company’s pending acquisitions, which include Trupoly, Inc., Docupace Technologies, LLC, VSR Group, Inc., and Girard Securities, Inc. were not considered significant acquisitions and were not included in the unaudited Pro Forma Consolidated Statement of Financial Condition and the unaudited Pro Forma Consolidated Statement of Operations. The unaudited Pro Forma Consolidated Statement of Operations for the year ended December 31, 2013 includes pro forma adjustments to reflect the acquisitions of the Completed Acquisitions (except that, with respect to First Allied, the pro forma adjustments only relate to the period prior to September 25, 2013) and exchange by RCAP Holdings, LLC, (“RCAP Holdings”) of all the Class B units owned by it in the Company’s operating subsidiaries for 23,999,999 shares of the Company’s Class A common stock par value $0.001 per share (the “Exchange”). The unaudited Pro Forma Consolidated Statement of Financial Condition as of June 30, 2014 and the Unaudited Pro Forma Consolidated Statement of Operations for the six months ended June 30, 2014 do not require pro forma adjustments for the Exchange.

The unaudited Pro Forma Consolidated Statement of Financial Condition and the related unaudited Pro Forma adjustments for June 30, 2014 was prepared as if the ICH and Strategic Capital acquisitions occurred on June 30, 2014 and should be read in conjunction with the Company’s historical consolidated financial statements and notes in its quarterly report on Form 10-Q for the six months ended June 30, 2014. The unaudited Pro Forma Consolidated Statement of Financial Condition is not necessarily indicative of what the actual financial position would have been had the Company acquired ICH and Strategic Capital as of June 30, 2014 nor does it purport to present the future financial position of the Company. The unaudited Pro Forma Consolidated Statement of Financial Condition and the related unaudited Pro Forma adjustments for June 30, 2014 were prepared as if these transactions occurred on June 30, 2014. However the acquisitions have both closed as of this filing and therefore, the stock prices used to prepare the unaudited Pro Forma Consolidated Statement of Financial Condition and the related Pro Forma adjustments were the actual closing stock prices on the date of closing for each respective acquisition.

The unaudited Consolidated Pro Forma Statements of Operations and the related unaudited Pro Forma adjustments for the six months ended June 30, 2014 and year ended December 31, 2013 were prepared as if the acquisitions occurred on January 1, 2013, and should be read in conjunction with the Company’s historical consolidated financial statements and notes thereto and the Completed Acquisitions’ historical financial statements and notes thereto (based on the significance test performed by the Company, the consolidated financial statements for ICH, JP Turner, and Strategic Capital are not included). The unaudited Pro Forma Consolidated Statements of Operations for the six months ended June 30, 2014 and for the year ended December 31, 2013 are not necessarily indicative of what the actual results of operations would have been had the Company acquired the Completed Acquisitions on January 1, 2013, nor does it purport to present the future results of operations of the Company. The unaudited Pro Forma Consolidated Statements of Operations and the related Pro Forma adjustments were prepared as if these transactions occurred on January 1, 2013.

Pursuant to an agreement, RCS Capital Management LLC (“RCS Capital Management”) implements the Company’s business strategy, as well as the business strategy of the operating subsidiaries, and performs executive and management services for the Company and operating subsidiaries, subject to oversight, directly or indirectly, by the Company’s Board of Directors. For purposes of the Consolidated Pro Forma Statement of Operations for the six months ended June 30, 2014 there were no quarterly fees charged due to the fact that, based on the pro forma results, the quarterly fee calculation was negative.

From an income tax perspective, it has been assumed for any acquisition that is an asset acquisition that historical deferred tax balances of the target will be eliminated as post-acquisition book and tax bases will generally be equal. For any acquisition that is a stock acquisition, historical deferred tax balances are generally assumed to survive and be potentially further impacted by purchase accounting, as described more fully in the footnotes below.

We have entered into a tax receivable agreement with RCAP Holdings, pursuant to which we pay RCAP Holdings 85% of the amount of the reduction, if any, in U.S. federal, state and local income tax liabilities that we realize (or are deemed to realize upon an early termination of the tax receivable agreement or a change of control) as a result of any increases in tax basis created by RCAP Holdings’ exchanges. These Pro Forma consolidated financial statements assume RCAP Holdings’ exchanges will be effectuated in a tax-free manner in accordance with Internal Revenue Code Section 351; therefore, the tax receivable agreement will not be triggered and RCAP Holdings will not receive payments from the Company for income tax purposes.

Certain reclassifications have been made to the historical Statement of Financial Condition and Statement of Operations of the Completed Acquisitions to conform to the Company’s presentation. For example, if one of the Completed Acquisitions had an expense line item for which the Company has no comparable line item, other expenses was used unless the amount was material, in which case a new line item was added.

1

Unaudited Pro Forma Consolidated Statement of Financial Condition
June 30, 2014
(in thousands)

	RCAP Historical(1)		ICH Historical(2)			ICH Acquisition Related Adjustments(3)			Strategic Capital Historical(4)		Strategic Capital Merger Related Adjustments(5)			RCAP Pro Forma
Assets
Cash and cash equivalents	$	443,113	$	5,021		$	(8,412	)(6)	$	6,100	$	(65,400	)(12)	$	380,422
Restricted cash		26,000		—			—			—		—			26,000
Cash and securities segregated under federal and other regulations		5,999		—			—			—		—			5,999
Available-for-sale securities		445		—			—			—		—			445
Trading securities		9,661		324			—			—		—			9,985
Fees and commissions receivable:
Due from related parties		1,579		—			—			—		—			1,579
Due from non-related parties		77,181		6,078			(243	)(7)		3,815		—			86,831
Reimbursable expenses receivable:
Due from related parties		13,439		—			—			—		—			13,439
Due from non-related parties		193		—			—			—		—			193
Receivable from customers		18,243		—			—			—		—			18,243
Investment banking fees receivable:
Due from related parties		2,466		—			—			—		—			2,466
Due from non-related parties		3,375		—			—			—		—			3,375
Receivables from broker, dealers, clearing organizations and other		13,421		—			—			—		—			13,421
Due from RCAP Holdings and related parties		913		—			—			—		—			913
Prepaid expenses		15,952		—			—			452		—			16,404
Deferred tax asset		—		1,373			(1,373	)(8)		—		—			—
Property and equipment		23,005		32			—			82		—			23,119
Deferred compensation plan investments		79,611		2,250			—			—		—			81,861
Notes receivable		66,342		1,949			(399	)(8)		—		—			67,892
Deferred offering and financing fees		31,036		—			—			—		—			31,036
Intangible Assets		1,114,716		—			33,800	(8)		—		127,367	(13)		1,275,883
Goodwill		395,242		—			26,263	(8)		—		95,935	(13)		517,440
Other assets		47,364		1,207			—			247		—			48,818
Total assets	$	2,389,296	$	18,234		$	49,636		$	10,696	$	157,902		$	2,625,764
Liabilities, Mezzanine Equity and Stockholders’ Equity
Payable to customers	$	20,805	$	—		$	—		$	—	$	—		$	20,805
Payable to broker-dealers		20,639		—			—			—		—			20,639
Commissions payable		98,598		3,633			(243	)(7)		1,609		—			103,597
Accrued expenses and accounts payable
Due to related parties		3,265		—			—			—		—			3,265
Due to non-related parties		67,182		2,458			—			1,980		—			71,620
Deferred revenue		13,994		263			—			—		—			14,257
Derivative contracts		94,327		—			—			—		—			94,327
Other liabilities		42,073		—			—			—		—			42,073
Deferred compensation plan accrued liabilities		79,030		2,611			—			—		—			81,641
Net deferred tax liability		286,819		—			12,147	(8)		—		50,946	(13)		349,912
Contingent and deferred consideration		48,889		—			—			—		104,063	(13)		152,952
Subordinated borrowings		—		2,000			—			—		—			2,000
Long-term debt		818,703		876			—			—		—			819,579
Total liabilities		1,594,324		11,841			11,904			3,589		155,009			1,776,667
Mezzanine Equity
Mezzanine-Preferred stock		275,510		—			—			—		—			275,510
Stockholders’ Equity
Class A common stock	$	63	$	—		$	2	(9)	$	—	$	—		$	65
Class B common stock		—		—			—			—		—			—
Common stock		—		72			(72	)(10)		—		—			—
Additional paid in capital		509,191		13,196			30,927	(11)		—		10,000	(14)		563,314
Accumulated other comprehensive income		7		—			—			—		—			7
Treasury stock		—		(30	)		30	(10)		—		—			—
Retained earnings		—		(6,845	)		6,845	(10)		—		—			—
Member’s equity		—		—			—			7,107		(7,107	)(15)		—
Total stockholders’ equity		509,261		6,393			37,732			7,107		2,893			563,386
Non-controlling interest		10,201		—			—			—		—			10,201
Total liabilities and equity	$	2,389,296	$	18,234		$	49,636		$	10,696	$	157,902		$	2,625,764

2

RCS Capital Corporation
 
Notes to Unaudited Pro Forma
Consolidated Statement of Financial Condition

(1) Reflects the consolidated historical Statement of Financial Condition of the Company as of the date indicated.

(2) Reflects the historical Condensed Consolidated Balance Sheet of ICH as of the date indicated.

(3) Reflects pro forma adjustments to record the assets and liabilities of ICH at their fair values and the purchase of all outstanding shares of ICH common stock for $52.5 million paid $8.4 million in cash and $44.1 million of freely tradable shares of the Company’s stock, or 2,029,261 shares, par value $0.001 per share, issued on July 11, 2014.

(4) Reflects the historical Consolidated Statement of Financial Condition of Strategic Capital as of the date indicated.

(5) Reflects pro forma adjustments to record the assets and liabilities of Strategic Capital at their fair values for (i) $65.4 million in cash consideration paid on August 29, 2014, (ii) $10.0 million of the Company’s Class A common stock consideration, or 464,317 shares, par value $0.001 per share issued on August 29, 2014, (iii) deferred cash payments with a fair value of $10.0 million, which the Company has agreed to make on November 27, 2014 and (iv) estimated additional future consideration of $94.1 million, which will be based on the consolidated estimated EBITDA generated by the business of Strategic Capital for fiscal years ending December 31, 2015 and December 31, 2016. The estimated fair-value of the earn-out, which is defined in the Strategic Capital purchase agreement, was calculated as follows (in millions):

	2015			2016			Total Estimated Earn-Out
Estimated EBITDA	$	20.6		$	35.7
Factor(i)		7.0			6.5
Product	$	144.2		$	232.1
Factor(ii)		25	%		25	%
Potential Earn Out	$	36.1		$	58.0		$	94.1

(i) Reflects a discounted multiplier per the purchase agreement between the Company and the sellers of Strategic Capital.

(ii) Reflects an agreed upon percentage between the Company and the sellers of Strategic Capital to incentivize the performance of Strategic Capital after the closing date based on the 2015 and 2016 EBITDA multiplied by the aforementioned factor.

(6) Reflects the use of $8.4 million of available cash to fund the cash consideration portion of the ICH acquisition.

(7) Reflects the elimination of the Company’s historical third-party receivables and payables with ICH which upon acquisition became classified as intercompany receivables and payables and eliminate in consolidation.

(8) Reflects the preliminary adjustment to record goodwill and other intangible assets including intangibles for client relationships. The amount includes the recording of $61.6 million of new goodwill, tangible and intangible assets, which include intangibles related to the acquisition of ICH’s broker-dealer and investment advisory businesses. Amounts are preliminary and will be finalized once the purchase price allocation to the assets and liabilities acquired is finalized. In accordance with accounting principles generally accepted in the United States, the Company allocates the purchase price of acquired entities to identifiable intangible assets acquired based on their respective fair values. The identifiable intangible assets of ICH are primarily related to client relationships which have useful lives of 14 to 18 years and internally developed software, non-compete agreements and trade names that have useful lives of 6 years, 5 years and indefinite, respectively. Factors considered in the analysis of such intangible assets include the estimate and probability of future revenues attributable to financial advisors and retention rates which are used to derive economic cash flows that are present valued at an appropriate rate of return over their respective useful lives. The adjustment also includes the write-down in the fair value of advisor notes receivable of $0.4 million to their fair value. The deferred tax liability of $12.1 million relates to timing differences between book and taxable expense related to the intangible assets, which is netted against a

3

RCS Capital Corporation
 
Notes to Unaudited Pro Forma
Consolidated Statement of Financial Condition

$1.4 million deferred tax asset. In making estimates of fair values for purposes of allocating the purchase price, the Company utilized an independent appraisal. Certain items will be finalized once additional information is received. Accordingly, these allocations are subject to revision when final information is available, although the Company does not expect future revisions to have a significant impact on its financial position or results of operations.

(9) Reflects the par value of the Company’s Class A common stock to be issued in connection with the ICH acquisition.

(10) Reflects the elimination of ICH’s common stock, treasury stock and retained earnings balances.

(11) Primarily reflects the issuance of the Company’s freely tradable Class A common stock for the equity portion of the consideration due in connection with the ICH acquisition partially offset by the elimination of ICH’s historical additional paid-in capital balance. These Pro Forma financial statements were prepared based on the volume weighted average trading price of a share of RCAP Class A common stock for the five consecutive trading days immediately preceding the closing of the merger.

	(in millions)
Excess price of the Company’s Class A common stock above par value	$	44.1
Elimination of ICH’s additional paid-in capital		(13.2	)
Total	$	30.9

(12) Reflects the use of $65.4 million of cash funded for the cash consideration portion of the Strategic Capital acquisition.

(13) Reflects the preliminary adjustment to record goodwill and intangible assets of $223.3 million, which relate to the acquisition of Strategic Capital’s broker-dealer businesses. Amounts are preliminary and will be finalized once the purchase price allocation to the assets and liabilities acquired is finalized. In accordance with accounting principles generally accepted in the United States, the Company allocates the purchase price of acquired entities to identifiable intangible assets acquired based on their respective fair values. The Company is in the process of engaging an independent appraisal expert to conduct the purchase price allocation; therefore, information regarding the amount, types of and useful lives of the intangibles are unknown at the time of this filing. The Company allocated the excess purchase price between goodwill and intangibles based on the allocation used in the acquisition of a similar company. All items will be finalized once additional information is received. Accordingly, these allocations are subject to revision when final information is available, although the Company does not expect future revisions to have a significant impact on its financial position or results of operations. The estimated deferred tax liability of $50.9 million relates to timing differences between book and taxable expense related to the incremental intangible assets. The purchase agreement also includes an EBITDA based earn-out for an estimated $94.1 million as well as $10 million in cash due 90-days after closing.

(14) Primarily reflects the issuance of 464,317 shares of the Company’s Class A common stock for the equity portion of the consideration due in connection with the Strategic Capital acquisition.

(15) Reflects the elimination of Strategic Capital’s member’s equity.

4

Unaudited Pro Forma Consolidated Statement of Operations
June 30, 2014
(in thousands)

	RCAP Historical(1)			Cetera Historical(2)			Cetera Acquisition Related Adjustments			Cetera Financing Related Adjustments(3)			Summit Historical(4)			Summit Acquisition Related Adjustments
Revenues:
Selling commissions:
Related party products	$	262,011		$	—		$	—		$	—		$	—		$	—
Non-related party products		159			—			—			—			—			—
Dealer manager fees:
Related party products		123,070			—			—			—			—			—
Non-related party products		72			—			—			—			—			—
Retail commissions		223,118			242,723			(8,251	)(10)		—			44,953			(2,638	)(16)
Investment banking fees:
Related party products		49,409			—			—			—			—			—
Non-related party products		3,375			—			—			—			—			—
Advisory and asset-based fees (non-related party)		137,025			137,362			—			—			—			—
Transfer agency revenue (related party products)		9,024			—			—			—			—			—
Services revenue:
Related party products		20,181			—			—			—			—			—
Non-related party products		166			—			—			—			—			—
Reimbursable expenses:
Related party products		7,870			—			—			—			—			—
Non-related party products		62			—			—			—			—			—
Other		82,843			29,642			(1,789	)(10)		—			1,470			(378	)(16)
Total revenues		918,385			409,727			(10,040	)		—			46,423			(3,016	)
Expenses:
Wholesale commissions:
Related party products		234,151			—			(8,251	)(10)		—			—			(2,638	)(16)
Non-related party products		152			—			—			—			—			—
Wholesale reallowance:
Related party products		35,616			—			(1,789	)(10)		—			—			(378	)(16)
Non-related party products		28			—			—			—			—			—
Retail commissions and advisory		321,602			333,208			—			—			36,773			—
Internal commission, payroll and benefits		117,985			37,405			—			—			4,546			167	(17)
Conferences and seminars		13,459			2,881			—			—			389			—
Travel		3,720			1,579			—			—			153			—
Marketing and advertising		10,682			966			—			—			438			—
Professional fees:
Related party expense allocation		1,271			—			—			—			—			—
Non-related party expenses		12,149			6,277			—			—			485			—
Data processing		11,985			7,221			—			—			277			—
Incentive fee		—			—			—			—			—			—
Quarterly fee (related party)		2,029			—			—			—			—			—
Acquisition related costs		13,262			20,907			(20,907	)(11)		—			4,653			(4,653	)(18)
Interest expense		12,930			5,439			(5,439	)(12)		22,500	(15)		—			—
Occupancy		9,616			3,940			—			—			347			—
Depreciation and amortization		17,546			6,114			20,379	(13)		—			120			1,409	(19)
Service, sub-advisor and mutual fund exp		7,105			—			—			—			—			—
Outperformance bonus (related party)		9,709			—			—			—			—			—
Other		9,024			16,137			—			—			1,338			—
Total expenses		844,021			442,074			(16,007	)		22,500			49,519			(6,093	)
Income (loss) before taxes		74,364			(32,347	)		5,967			(22,500	)		(3,096	)		3,077
Provision (benefit) for income taxes		13,743			(10,125	)		2,387	(14)		(9,000	)(15)		157			1,231	(20)
Net income (loss)		60,621			(22,222	)		3,580			(13,500	)		(3,253	)		1,846
Less: net income (loss) attributable to non-controlling interests		9,120			—			—			—			—			—
Less: preferred dividends and deemed dividends		198,077			—			—			—			—			—
Net income (loss) attributable to Class A common stockholders	$	(146,576	)	$	(22,222	)	$	3,580		$	(13,500	)	$	(3,253	)	$	1,846
Earnings per share:
Basic	$	(4.21	)
Diluted	$	(4.53	)
Weighted average common shares:
Basic		34,976
Diluted		37,623

5

Unaudited Pro Forma Consolidated Statement of Operations
June 30, 2014
(in thousands)

	RCAP Historical(1)			JP Turner Historical(5)		JP Turner Acquisition Related Adjustments			Hatteras Historical(6)		Hatteras Acquisition Related Adjustments
Revenues:
Selling commissions:
Related party products	$	262,011		$	—	$	—		$	—	$	—
Non-related party products		159			—		—			—		—
Dealer manager fees:
Related party products		123,070			—		—			—		—
Non-related party products		72			—		—			—		—
Retail commissions		223,118			29,309		(9,967	)(21)		—		—
Investment banking fees:
Related party products		49,409			—		—			—		—
Non-related party products		3,375					—			—		—
Advisory and asset-based fees (non-related party)		137,025			—		—			27,874		—
Transfer agency revenue (related party products)		9,024			—		—			—		—
Services revenue:
Related party products		20,181			—		—			—		—
Non-related party products		166			—		—			—		—
Reimbursable expenses:
Related party products		7,870			—		—			—		—
Non-related party products		62			—		—			—		—
Other		82,843			9,181		(1,433	)(21)		1,837		—
Total revenues		918,385			38,490		(11,400	)		29,711		—
Expenses:
Wholesale commissions:
Related party products		234,151			—		(9,967	)(21)		—		—
Non-related party products		152			—		—			—		—
Wholesale reallowance:
Related party products		35,616			—		—			—		—
Non-related party products		28			—		(1,433	)(21)		—		—
Retail commissions and advisory		321,602			31,060		—			—		—
Internal commission, payroll and benefits		117,985			2,553		138	(22)		7,081		—
Conferences and seminars		13,459			—		—			—		—
Travel		3,720			—		—			—		—
Marketing and advertising		10,682			—		—			—		—
Professional fees:
Related party expense allocation		1,271			—		—			—		—
Non-related party expenses		12,149			—		—			—		—
Data processing		11,985			493		—			—		—
Incentive fee		—			—		—			—		—
Quarterly fee (related party)		2,029			—		—			—		—
Acquisition related costs		13,262			10		(10	)(23)		560		(560	)(25)
Interest expense		12,930			—		—			63		(63	)(26)
Occupancy		9,616			341		—			—		—
Depreciation and amortization		17,546			27		665	(24)		82		1,966	(27)
Service, sub-advisor and mutual fund exp		7,105			—		—			15,388		—
Outperformance bonus (related party)		9,709			—		—			—		—
Other		9,024			1,713		—			2,053		—
Total expenses		844,021			36,197		(10,607	)		25,227		1,343
Income (loss) before taxes		74,364			2,293		(793	)		4,484		(1,343	)
Provision (benefit) for income taxes		13,743			—		—			1,619		(537	)(28)
Net income (loss)		60,621			2,293		(793	)		2,865		(806	)
Less: net income (loss) attributable to non-controlling interests		9,120			—		—			—		—
Less: preferred dividends and deemed dividends		198,077			—		—			—		—
Net income (loss) attributable to Class A common stockholders	$	(146,576	)	$	2,293	$	(793	)	$	2,865	$	(806	)

6

Unaudited Pro Forma Consolidated Statement of Operations
June 30, 2014
(in thousands)

	RCAP Historical(1)			ICH Historical(7)			ICH Acquisition Related Adjustments			Strategic Capital Historical(8)		Strategic Capital Acquisition Related Adjustments			RCAP Adjustments(9)			Total RCAP Pro Forma
Revenues:
Selling commissions:
Related party products	$	262,011		$	—		$	—		$	—	$	—		$	—		$	262,011
Non-related party products		159			—			—			75,659		—			—			75,818
Dealer manager fees:
Related party products		123,070			—			—			—		—			—			123,070
Non-related party products		72			—			—			35,871		—			—			35,943
Retail commissions		223,118			37,395			(2,667	)(29)		—		—			—			553,975
Investment banking fees:
Related party products		49,409			—			—			—		—			—			49,409
Non-related party products		3,375			—			—			—		—			—			3,375
Advisory and asset-based fees (non-related party)		137,025			10,093			—			—		—			—			312,354
Transfer agency revenue (related party products)		9,024			—			—			—		—			—			9,024
Services revenue:
Related party products		20,181			—			—			—		—			—			20,181
Non-related party products		166			—			—			—		—			—			166
Reimbursable expenses:
Related party products		7,870			—			—			—		—			—			7,870
Non-related party products		62			—			—			—		—			—			62
Other		82,843			2,090			(487	)(29)		1,670		—			—			124,646
Total revenues		918,385			49,578			(3,154	)		113,200		—			—			1,577,904
Expenses:
Wholesale commissions:
Related party products		234,151			—			(2,667	)(29)		—		—			—			210,628
Non-related party products		152			—			—			75,659		—			—			75,811
Wholesale reallowance:
Related party products		35,616			—			(487	)(29)		—		—			—			32,962
Non-related party products		28			—			—			13,458		—			—			12,053
Retail commissions and advisory		321,602			39,732			—			—		—			—			762,375
Internal commission, payroll and benefits		117,985			3,400			258	(30)		15,193		—			—			188,726
Conferences and seminars		13,459			—			—			291		—			—			17,020
Travel		3,720			—			—			626		—			—			6,078
Marketing and advertising		10,682			650			—			—		—			—			12,736
Professional fees:
Related party expense allocation		1,271			—			—			—		—			—			1,271
Non-related party expenses		12,149			3,572						466		—			—			22,949
Data processing		11,985			630			—			—		—			—			20,606
Incentive fee		—			—			—			—		—			—			—
Quarterly fee (related party)		2,029			—			—			—		—			(2,029	)(37)		—
Acquisition related costs		13,262			451			(451	)(31)		240		(240	)(34)		(13,262	)(38)		—
Interest expense		12,930			101			—			—		—			—			35,531
Occupancy		9,616			153			—			—		—			—			14,397
Depreciation and amortization		17,546			69			1,083	(32)		11		4,899	(35)		—			54,370
Service, sub-advisor and mutual fund exp		7,105			—			—			—		—			—			22,493
Outperformance bonus (related party)		9,709			—			—			—		—			—			9,709
Other		9,024			1,151			—			591		—			—			32,007
Total expenses		844,021			49,909			(2,264	)		106,535		4,659			(15,291	)		1,531,722
Income (loss) before taxes		74,364			(331	)		(890	)		6,665		(4,659	)		15,291			46,182
Provision (benefit) for income taxes		13,743			247			(356	)(33)		—		(1,864	)(36)		2,498	(39)		18,473	(41)
Net income (loss)		60,621			(578	)		(534	)		6,665		(2,795	)		12,793			27,709
Less: net income (loss) attributable to non-controlling interests		9,120			—			—			—		—			—			9,120
Less: preferred dividends and deemed dividends		198,077			—			—			—		—			6,195	(40)		204,272
Net income (loss) attributable to Class A common stockholders	$	(146,576	)	$	(578	)	$	(534	)	$	6,665	$	(2,795	)	$	6,598		$	(185,683	)
Earnings per share:
Basic	$	(4.21	)															$	(4.28	)(43)
Diluted	$	(4.53	)															$	(4.29	)(43)
Weighted average common shares:
Basic		34,976														8,588	(42)		43,564	(42)
Diluted		37,623														7,825	(42)		45,448	(42)

7

RCS Capital Corporation
 
Notes to Unaudited Pro Forma Consolidated Statement of Operations

(1) Reflects the historical Consolidated Statement of Income of the Company for the period indicated. The Company’s historical Consolidated Statement of Income includes results for Cetera, Summit, and JP Turner from the date of their acquisition, April 29, 2014, June 11, 2014, and June 12, 2014, respectively, through June 30, 2014. Furthermore, the Company’s acquisition of First Allied, which occurred on June 30, 2014, was accounted for at historical cost in a manner similar to a pooling-of-interest accounting because First Allied and the Company were under the common control of RCAP Holdings at the time of the acquisition of First Allied by RCAP Holdings, and accordingly is included in the entire period.

(2) Reflects the historical Consolidated Statement of Income of Cetera from January 1, 2014 until the date of the acquisition.

(3) Reflects the pro forma adjustment to record six months of interest expense on the Cetera financing.

(4) Reflects the historical Condensed Consolidated Statement of Income of Summit from January 1, 2014 until the date of the acquisition.

(5) Reflects the historical Consolidated Statement of Income of JP Turner from January 1, 2014 until the date of the acquisition.

(6) Reflects the historical Combined Statement of Revenue and Expenses of Hatteras from January 1, 2014 until its acquisition on June 30, 2014.

(7) Reflects the historical Condensed Consolidated Statement of Operations of ICH for the period indicated.

(8) Reflects the historical Consolidated Statement of Income of Strategic Capital for the period indicated.

(9) Reflects pro forma adjustments to the historical Statement of Operations of the Company to reflect the impact of certain related party transactions. Refer to Notes 37, 38 and 42 for additional detail. Also, reflects the reversal of the total tax provision (benefits) in order to record a consolidated tax provision on an assumed tax rate of 40%, which is reflected in Notes 39 and 41. Additionally, the pro forma adjustments reflect the 7% convertible preferred dividend from January 1, 2014 through April 29, 2014. See Note 40 for additional detail.

(10) Reflects the elimination of the Company’s historical retail commissions revenues, dealer-manager fees, wholesale commission expenses and wholesale reallowance expenses derived from transactions with Cetera which after the acquisition became intercompany revenues/expenses that eliminate in consolidation.

(11) Reflects the elimination of acquisition related costs incurred in connection with the Cetera acquisition.

(12) Reflects the elimination of interest expense due to the repayment of Cetera’s historical long-term debt concurrent with the acquisition.

(13) Reflects the amortization and depreciation expense on Cetera’s intangible and fixed assets for the six months ended June 30, 2014 assuming their useful life will be approximately 14 years and 1 year, respectively. The amortization expense for each acquisition was calculated by dividing the individual intangible assets by the useful life which was determined by the independent appraisal firm. The total individual intangible assets for each acquisition were then divided by the total annual amortization expense to derive the overall useful life for the combined group of intangible assets acquired.

	Fair value (in millions)		Useful life (yrs)		Amortization/depreciation expense (in millions)		Amortization/depreciation expense for six months ended (in millions)
	$	943.0		13.7	$	68.8	$	34.4	(i)
	$	4.3		1.0	$	4.3	$	2.1	(ii)
					$	73.1	$	36.5

(i) Pro forma adjustment excludes $16.1 million of existing amortization recorded by Cetera.

(ii) Pro forma adjustment includes $2.1 million of depreciation related to proprietary technology which was fair valued at $4.3 million and had a useful life of 1 year. The proprietary technology was classified as a fixed asset on the Company’s Statement of Financial Condition.

8

RCS Capital Corporation
 
Notes to Unaudited Pro Forma Consolidated Statement of Operations

(14) Reflects the income tax effect of the pro forma adjustments to Cetera’s historical consolidated financial statements for the six months ended June 30, 2014.

	(in millions)
Pro forma Adjustments	$	6.0
Tax effect @ 40%(i)	$	2.4

(i) Reflects tax effect of Cetera’s pro forma adjustments using an assumed tax rate of 40%.

(15) Reflects the pro forma adjustments to the Company’s historical consolidated statements of operations for the six months ended June 30, 2014 for interest expense on long-term debt and convertible notes issued in connection with the transactions. The tax benefit effect for this expense is $9.0 million using an assumed tax rate of 40%. The U.S. Securities and Exchange Commission Financial Reporting Manual (the “SEC FRM”) Section 3260.1, which requires disclosure of the effect on income of a  1/8% variance in interest rates, is not applicable since the long-term debt and the convertible notes interest is calculated using a floor of 1% LIBOR.

(16) Reflects the elimination of the Company’s historical retail commissions revenues, dealer-manager fees, wholesale commission expenses and wholesale reallowance expenses derived from transactions with Summit which after the acquisition became intercompany revenues/expenses that eliminate in consolidation.

(17) Reflects the amortization expense for forgivable loans based on a fair value of $1.0 million and a 3 year useful life.

(18) Reflects the elimination of acquisition related costs incurred by Summit in connection with the acquisition.

(19) Reflects the amortization expense on Summit’s intangible assets primarily related to client relationships for the six months ended June 30, 2014 assuming their useful life will be approximately 10 years as determined by an independent appraisal based on the expected future cash flows. The amortization expense for each acquisition was calculated by dividing the individual intangible assets by the useful life which was determined by the independent appraisal firm. The total individual intangible assets for each acquisition were then divided by the total annual amortization expense to derive the overall useful life for the combined group of intangible assets acquired.

	Fair value (in millions)		Useful life (yrs)		Amortization expense (in millions)		Amortization expense for six months ended (in millions)(i)
	$	31.2		9.8	$	3.2	$	1.6

(i) Pro forma adjustment excludes $0.2 million of existing amortization recorded by Summit and is included in the Company’s historical results.

(20) Reflects the income tax effect of the pro forma adjustments to Summit’s historical consolidated financial statements for the six months ended June 30, 2014.

	(in millions)
Pro forma Adjustments	$	3.1
Tax effect @ 40%(i)	$	1.2

(i) Reflects tax effect of Summit’s pro forma adjustments using an assumed tax rate of 40%.

(21) Reflects the elimination of the Company’s historical retail commissions revenues, dealer-manager fees, wholesale commission expenses and wholesale reallowance expenses derived from transactions with JP Turner which after the acquisition became intercompany revenues/expenses that eliminate in consolidation.

(22) Reflects the amortization expense for forgivable loans based on a fair value of $1.7 million and a 6 year useful life.

(23) Reflects the elimination of acquisition related costs incurred by JP Turner in connection with the acquisition.

9

RCS Capital Corporation
 
Notes to Unaudited Pro Forma Consolidated Statement of Operations

(24) Reflects the amortization expense on JP Turner’s intangible assets for the six months ended June 30, 2014 assuming their useful life will be approximately 10 years. The amortization expense for each acquisition was calculated by dividing the individual intangible assets by the useful life which was determined by the independent appraisal firm. The total individual intangible assets for each acquisition were then divided by the total annual amortization expense to derive the overall useful life for the combined group of intangible assets acquired.

	Fair value (in millions)		Useful life (yrs)		Amortization expense (in millions)		Amortization expense for six months ended (in millions)(i)
	$	14.2		9.6	$	1.5	$	0.8

(i) Pro forma adjustment excludes $0.1 million of existing amortization recorded by JP Turner and is included in the Company’s historical results.

(25) Reflects the elimination of acquisition related costs incurred by Hatteras in connection with the acquisition.

(26) Reflects the elimination of interest expense due to the repayment of Hatteras’ line of credit and notes payable concurrent with the acquisition.

(27) Reflects the amortization expense on Hatteras’ intangible assets primarily related to customer relationships with fund of hedge funds products that are structured as mutual funds for the six months ended June 30, 2014 assuming their useful life will be approximately 12 years as determined by an independent appraisal based on the expected future cash flows. The amortization expense for each acquisition was calculated by dividing the individual intangible assets by the useful life which was determined by the independent appraisal firm. The total individual intangible assets for each acquisition were then divided by the total annual amortization expense to derive the overall useful life for the combined group of intangible assets acquired.

	Fair value (in millions)		Useful life (yrs)		Amortization expense (in millions)		Amortization expense for six months ended (in millions)
	$	48.8		12.4	$	3.9	$	2.0

(28) Reflects the pro forma income tax adjustments to Hatteras’ historical combined financial statements:

	(in millions)
Pro forma Adjustments		(1.3	)
Tax effect @ 40%(i)	$	(0.5	)

(i) Reflects tax effect of Hatteras’ historical income before taxes and pro forma adjustments using an assumed tax rate of 40% as if it was taxed as a corporation.

(29) Reflects the elimination of the Company’s historical retail commissions revenues, dealer-manager fees, wholesale commission expenses and wholesale reallowance expenses derived from transactions with ICH which after the acquisition became intercompany revenues/expenses that eliminate in consolidation.

(30) Reflects the amortization expense for forgivable loans based on a fair value of $1.6 million and a 3 year useful life.

(31) Reflects the elimination of acquisition related costs incurred by ICH in connection with the acquisition.

10

RCS Capital Corporation
 
Notes to Unaudited Pro Forma Consolidated Statement of Operations

(32) Reflects the amortization expense on ICH’s intangible assets primarily related to client relationships for the six months ended June 30, 2014 assuming their useful life will be approximately 16 years as determined by an independent appraisal based on the expected future cash flows. The amortization expense for each acquisition was calculated by dividing the individual intangible assets by the useful life which was determined by the independent appraisal firm. The total individual intangible assets for each acquisition were then divided by the total annual amortization expense to derive the overall useful life for the combined group of intangible assets acquired.

	Fair value (in millions)		Useful life (yrs)		Amortization expense (in millions)		Amortization expense for six months ended (in millions)
	$	33.8		15.6	$	2.2	$	1.1

(33) Reflects the income tax effect of the pro forma adjustments to ICH’s historical consolidated financial statements for the six months ended June 30, 2014.

	(in millions)
Pro forma Adjustments	$	(0.9	)
Tax effect @ 40%(i)	$	(0.4	)

(i) Reflects tax effect of ICH’s pro forma adjustments using an assumed tax rate of 40%.

(34) Reflects the elimination of acquisition related costs incurred by Strategic Capital in connection with the acquisition.

(35) Reflects the amortization expense on Strategic Capital intangible assets for the six months ended June 30, 2014 assuming their useful life will be approximately 13 years. The amortization expense for each acquisition was calculated by dividing the individual intangible assets by the useful life which was determined based on the useful life of intangible assets in the acquisition of a similar company. The Company is in the process of engaging an independent appraisal expert to conduct the purchase price allocation; therefore, information regarding the amount, types of and useful lives of the intangibles are best estimates at the time of this filing. The total individual intangible assets for each acquisition were then divided by the total annual amortization expense to derive the overall useful life for the combined group of intangible assets acquired. The tax effect of this adjustment is using an assumed 40% tax rate.

	Fair value (in millions)		Useful life (yrs)		Amortization expense (in millions)		Amortization expense for six months ended (in millions)
	$	127.4		13.0	$	9.8	$	4.9

(36) Reflects the Pro Forma income tax adjustments to Strategic Capital’ historical combined financial statements:

	(in millions)
Pro forma Adjustments		(4.7	)
Tax effect @ 40%(i)	$	(1.9	)

(37) Reflects the reversal of the Company’s quarterly fee expense for the six months ended June 30, 2014. Pursuant to an agreement, RCS Capital Management implements the Company’s business strategy, as well as the business strategy of the operating subsidiaries, and performs executive and management services for the Company and operating subsidiaries, subject to oversight, directly or indirectly, by the Company’s Board of Directors.

(38) Reflects the elimination of the Company’s acquisition related costs incurred in connection with the acquisitions.

(39) Reflects the reversal of the total tax provision (benefits) in order to record a consolidated tax provision on an assumed tax rate of 40%, which is reflected in Note 41.

11

RCS Capital Corporation
 
Notes to Unaudited Pro Forma Consolidated Statement of Operations

(40) Reflects the pro forma adjustment to record the 7% convertible preferred dividend from January 1, 2014 through April 29, 2014. The Company issued 14,657,980 shares of convertible preferred stock to finance the Cetera acquisition in a private placement. The shareholders of convertible preferred stock are entitled to a dividend of 7% of the liquidation preference in cash and a dividend of 8% of the liquidation preference if a quarterly dividend is not paid in cash on the dividend payment date.

(41) Reflects pro forma adjustment to record the income tax provision based on the assumed 40% tax rate.

(42) Reflects the number of shares issued for the Summit, JP Turner, First Allied, ICH, and Strategic Capital acquisitions, assuming that the acquisitions had occurred on January 1, 2013. Additionally, reflects the exchange by RCAP Holdings of all but one of its 24.0 million shares of the Company’s Class B common stock and all of its Class B units in the Company’s operating subsidiaries for 24.0 million shares of the Company’s Class A common stock, assuming that the exchange had occurred on January 1, 2013.

	Basic Shares issued (in thousands)		Diluted Shares issued (in thousands)
Company’s historical weighted average number of shares outstanding		34,976		37,623
Adjustment to the total number of shares		8,588		7,825
Total pro forma weighted average number of shares outstanding as of June 30, 2014		43,564		45,448

(43) Reflects pro forma earnings per share calculation based on the following assumptions (in thousands, except per share amounts):

	Income (Numerator)			Weighted Average Shares (Denominator)		Per Share Amount
Net loss attributable to Class A common stockholders	$	(185,683	)		43,564	$	(4.26	)
Allocation of earnings to participating securities:
Allocation of earnings to unvested RSU holders		(711	)		—		(0.02	)
Basic Earnings:
Net loss attributable to Class A common stockholders		(186,394	)		43,564		(4.28	)
Effect of Dilutive Securities:
Shares issuable upon exercise of Luxor’s put option(i)		(8,466	)		1,884		(0.01	)
Diluted Earnings:
Net loss attributable to Class A common stockholders	$	(194,860	)		45,448	$	(4.29	)

(i) The reduction in the numerator represents an $8.5 million gain in the fair value of the derivative for the period of issuance to June 30, 2014.

12

Unaudited Pro Forma Consolidated Statement of Operations
December 31, 2013
(in thousands)

	RCAP Historical(1)		Cetera Historical(2)		Walnut Historical(3)			Tower Square Historical(4)			Cetera Acquisition Related Adjustments			Walnut Acquisition Related Adjustments			Tower Square Acquisition Related Adjustments			Cetera Financing Related Adjustments(5)
Revenues:
Selling commissions:
Related party products	$	400,560	$	—	$	—		$	—		$	—		$	—		$	—		$	—
Non-related party products		116,074		—		—			—			—			—			—			—
Dealer manager fees:
Related party products		227,420		—		—			—			—			—			—			—
Non-related party products		56,381		—		—			—			—			—			—			—
Retail commissions		47,936		636,951		34,715			17,061			(40,924	)(13)		—			—			—
Investment banking fees:
Related party products		45,484		—		—			—			—			—			—			—
Non-related party products		—		—		—			—			—			—			—			—
Advisory and asset-based fees (non-related party)		38,996		347,632		37,671			7,710			—			—			—			—
Transfer agency revenue (related party products)		8,667		—		—			—			—			—			—			—
Services revenue:
Related party products		24,968		—		—			—			—			—			—			—
Non-related party products		492		—		—			—			—			—			—			—
Reimbursable expenses:
Related party products		6,375		—		—			—			—			—			—			—
Non-related party products		100		—		—			—			—			—			—			—
Other		1,614		87,094		3,476			1,751			(9,235	)(13)		—			—			—
Total revenues		975,067		1,071,677		75,862			26,522			(50,159	)		—			—			—
Expenses:
Wholesale commissions:
Related party products		395,859		—		—			—			(40,924	)(13)		—			—			—
Non-related party products		115,610		—		—			—			—			—			—			—
Wholesale reallowance:
Related party products		63,964		—		—			—			(9,235	)(13)		—			—			—
Non-related party products		19,462		—		—			—			—			—			—			—
Retail commissions and advisory		69,009		854,931		66,335			23,005			—			—			—			—
Internal commission, payroll and benefits		128,457		91,273		3,900			1,499			—			—			—			—
Conferences and seminars		26,997		—		—			—			—			—			—			—
Travel		8,213		—		—			—			—			—			—			—
Marketing and advertising		8,575		10,604		—			—			—			—			—			—
Professional fees:
Related party expense allocation		930		—		—			—			—			—			—			—
Non-related party expenses		5,296		15,287		—			—			—			—			—			—
Data processing		7,920		15,512		4,437			1,551			—			—			—			—
Incentive fee		273		—		—			—			—			—			—			—
Quarterly fee (related party)		5,996		—		—			—			—			—			—			—
Acquisition related costs		4,587		10,110		—			—			(10,110	)(14)		—			—			—
Interest expense		234		11,886		79			74			(11,886	)(15)		—			—			71,578	(20)
Occupancy		4,809		10,514		—			—			—			—			—			—
Depreciation and amortization		2,207		17,989		—			—			58,780	(16)		1,296	(18)		602	(19)		—
Service, sub-advisor and mutual fund exp		2,426		—		—			—			—			—			—			—
Outperformance bonus (related party)		492		—		—			—			—			—			—			—
Other		3,893		28,269		3,540			1,465			—			—			—			—
Total expenses		875,209		1,066,375		78,291			27,594			(13,375	)		1,296			602			71,578
Income (loss) before taxes		99,858		5,302		(2,429	)		(1,072	)		(36,784	)		(1,296	)		(602	)		(71,578	)
Provision (benefit) for income taxes		1,843		2,184		(886	)		(376	)		(14,714	)(17)		(518	)(18)		(241	)(19)		(28,631	)(20)
Net income (loss)		98,015		3,118		(1,543	)		(696	)		(22,070	)		(778	)		(361	)		(42,947	)
Less: net income (loss) attributable to non-controlling interests		95,749		—		—			—			—			—			—			—
Less: preferred dividends and deemed dividends		—		—		—			—			—			—			—			—
Net income (loss) attributable to Class A common stockholders	$	2,266	$	3,118	$	(1,543	)	$	(696	)	$	(22,070	)	$	(778	)	$	(361	)	$	(42,947	)
Earnings per share:
Basic	$	0.29
Diluted	$	0.28
Weighted average common shares:
Basic		7,885
Diluted		8,025

13

Unaudited Pro Forma Consolidated Statement of Operations
December 31, 2013
(in thousands)

	RCAP Historical(1)		Summit Historical(6)		Summit Acquisition Related Adjustments			JP Turner Historical(7)			JP Turner Acquisition Related Adjustments			Hatteras Historical(8)		Hatteras Acquisition Related Adjustments
Revenues:
Selling commissions:
Related party products	$	400,560	$	—	$	—		$	—		$	—		$	—	$	—
Non-related party products		116,074		—		—			—						—		—
Dealer manager fees:
Related party products		227,420		—		—			—			—			—		—
Non-related party products		56,381		—		—			—						—		—
Retail commissions		47,936		81,838		(4,216	)(21)		77,504			(24,485	)(26)		—		—
Investment banking fees:
Related party products		45,484		—		—			—			—			—		—
Non-related party products		—		—		—			2,036			—			—		—
Advisory and asset-based fees (non-related party)		38,996		—		—			—			—			41,662		—
Transfer agency revenue (related party products)		8,667		—		—			—			—			—		—
Services revenue:
Related party products		24,968		—		—			—			—			—		—
Non-related party products		492		—		—			—			—			—		—
Reimbursable expenses:
Related party products		6,375		—		—			—			—			—		—
Non-related party products		100		—		—			—			—			—		—
Other		1,614		5,781		(601	)		2,791			—			5,895		—
Total revenues		975,067		87,619		(4,817	)		82,331			(24,485	)		47,557		—
Expenses:
Wholesale commissions:
Related party products		395,859		—		(4,216	)(21)		—			(21,176	)(26)		—		—
Non-related party products		115,610		—		—			—			—			—		—
Wholesale reallowance:
Related party products		63,964		—		(601	)(21)		—			(3,309	)(26)		—		—
Non-related party products		19,462		—		—			—			—			—		—
Retail commissions and advisory		69,009		69,237		—			67,098			—			—		—
Internal commission, payroll and benefits		128,457		7,515		333	(22)		5,919			277	(27)		12,848		—
Conferences and seminars		26,997		—		—			—			—			—		—
Travel		8,213		—		—			—			—			—		—
Marketing and advertising		8,575		—		—			—			—			—		—
Professional fees:
Related party expense allocation		930		—		—			—			—			—		—
Non-related party expenses		5,296		—		—			—			—			—		—
Data processing		7,920		456		—			1,031			—			—		—
Incentive fee		273		—		—			—			—			—		—
Quarterly fee (related party)		5,996		—		—			—			—			—		—
Acquisition related costs		4,587		1,196		(1,196	)(23)		146			(146	)(28)		1,214		(1,214	)(30)
Interest expense		234		—		—			—			—			156		(156	)(31)
Occupancy		4,809		791		—			794			—			—		—
Depreciation and amortization		2,207		200		3,184	(24)		77			1,475	(29)		645		3,932	(32)
Service, sub-advisor and mutual fund exp		2,426		—		—			—			—			23,997		—
Outperformance bonus (related party)		492		—		—			—			—			—		—
Other		3,893		4,027		—			10,480			—			3,504		—
Total expenses		875,209		83,422		(2,496	)		85,545			(22,879	)		42,364		2,562
Income (loss) before taxes		99,858		4,197		(2,321	)		(3,214	)		(1,606	)		5,193		(2,562	)
Provision (benefit) for income taxes		1,843		1,648		(928	)(25)		—			—			—		1,052	(33)
Net income (loss)		98,015		2,549		(1,393	)		(3,214	)		(1,606	)		5,193		(3,614	)
Less: net income (loss) attributable to non-controlling interests		95,749		—		—			—			—			968		(968	)(34)
Less: preferred dividends and deemed dividends		—		—		—			—			—			—		—
Net income (loss) attributable to Class A common stockholders	$	2,266	$	2,549	$	(1,393	)	$	(3,214	)	$	(1,606	)	$	4,225	$	(2,646	)

14

Unaudited Pro Forma Consolidated Statement of Operations
December 31, 2013
(in thousands)

	RCAP Historical(1)		First Allied Historical(9)			First Allied Merger Related Adjustments			ICH Historical(10)			ICH Acquisition Related Adjustments
Revenues:
Selling commissions:
Related party products	$	400,560	$	—		$	—		$	—		$	—
Non-related party products		116,074		—			—			—			—
Dealer manager fees:
Related party products		227,420		—			—			—			—
Non-related party products		56,381		—			—			—			—
Retail commissions		47,936		139,021			(14,201	)(35)		72,029			(4,433	)(41)
Investment banking fees:
Related party products		45,484		—			—			—			—
Non-related party products		—		—			—			—			—
Advisory and asset-based fees (non-related party)		38,996		84,661			—			17,964			—
Transfer agency revenue (related party products)		8,667		—			—			—			—
Services revenue:
Related party products		24,968		—			—			—			—
Non-related party products		492		—			—			—			—
Reimbursable expenses:
Related party products		6,375		—			—			—			—
Non-related party products		100		—			—			—			—
Other		1,614		35,005			(3,088	)(35)		3,210			(969	)(41)
Total revenues		975,067		258,687			(17,289	)		93,203			(5,402	)
Expenses:
Wholesale commissions:
Related party products		395,859		—			(14,201	)(35)		—			(4,433	)(41)
Non-related party products		115,610		—			—			—			—
Wholesale reallowance:
Related party products		63,964		—			(3,049	)(35)		—			(969	)(41)
Non-related party products		19,462		—			—			—			—
Retail commissions and advisory		69,009		187,721			—			74,718			—
Internal commission, payroll and benefits		128,457		40,266			(6,480	)(36)		7,027			517	(42)
Conferences and seminars		26,997		—			—			—			—
Travel		8,213		1,385			—			—			—
Marketing and advertising		8,575		3,539			—			1,621			—
Professional fees:
Related party expense allocation		930		—			—			—			—
Non-related party expenses		5,296		5,558			(2,598	)(36)		6,998
Data processing		7,920		2,264			—			1,491			—
Incentive fee		273		—			—			—			—
Quarterly fee (related party)		5,996		—			—			—			—
Acquisition related costs		4,587		—			—			846			(846	)(43)
Interest expense		234		669			(669	)(37)		158			—
Occupancy		4,809		3,435			637	(38)		254			—
Depreciation and amortization		2,207		3,471			2,141	(39)		243			2,167	(44)
Service, sub-advisor and mutual fund exp		2,426		—			—			—			—
Outperformance bonus (related party)		492		—			—			—			—
Other		3,893		16,239			—			2,411			—
Total expenses		875,209		264,547			(24,219	)		95,767			(3,564	)
Income (loss) before taxes		99,858		(5,860	)		6,930			(2,564	)		(1,838	)
Provision (benefit) for income taxes		1,843		(2,120	)		2,772	(40)		(828	)		(735	)(45)
Net income (loss)		98,015		(3,740	)		4,158			(1,736	)		(1,103	)
Less: net income (loss) attributable to non-controlling interests		95,749		—			—			—			—
Less: preferred dividends and deemed dividends		—		—			—			—			—
Net income (loss) attributable to Class A common stockholders	$	2,266	$	(3,740	)	$	4,158		$	(1,736	)	$	(1,103	)

15

Unaudited Pro Forma Consolidated Statement of Operations
December 31, 2013
(in thousands)

	RCAP Historical(1)		Strategic Capital Historical(11)			Strategic Capital Acquisition Related Adjustments			RCAP Adjustments(12)			Total RCAP Pro Forma
Revenues:
Selling commissions:
Related party products	$	400,560	$	—		$	—		$	—		$	400,560
Non-related party products		116,074		42,627			—			—			158,701
Dealer manager fees:
Related party products		227,420		—			—			—			227,420
Non-related party products		56,381		18,158			—			—			74,539
Retail commissions		47,936		—			—			—			1,018,796
Investment banking fees:
Related party products		45,484		—			—			—			45,484
Non-related party products		—		—			—			—			2,036
Advisory and asset-based fees (non-related party)		38,996		—			—			—			576,296
Transfer agency revenue (related party products)		8,667		—			—			—			8,667
Services revenue:
Related party products		24,968		—			—			—			24,968
Non-related party products		492		—			—			—			492
Reimbursable expenses:
Related party products		6,375		—			—			—			6,375
Non-related party products		100		—			—			—			100
Other		1,614		5,375			—			—			138,099
Total revenues		975,067		66,160			—			—			2,682,533
Expenses:
Wholesale commissions:
Related party products		395,859		—			—			—			310,909
Non-related party products		115,610		—			—			—			115,610
Wholesale reallowance:
Related party products		63,964		—			—			—			46,801
Non-related party products		19,462		—			—			—			19,462
Retail commissions and advisory		69,009		42,627			—			—			1,454,681
Internal commission, payroll and benefits		128,457		14,778			—			—			308,129
Conferences and seminars		26,997		—			—			—			26,997
Travel		8,213		1,667			—			—			11,265
Marketing and advertising		8,575		6,559			—			—			30,898
Professional fees:
Related party expense allocation		930		—			—			—			930
Non-related party expenses		5,296		565			—			—			31,106
Data processing		7,920		—			—			—			34,662
Incentive fee		273		—			—			7,673	(47)		7,946
Quarterly fee (related party)		5,996		—			—			(5,996	)(48)		—
Acquisition related costs		4,587		—			—			(4,587	)(49)		—
Interest expense		234		—			—			—			72,123
Occupancy		4,809		472			—			—			21,706
Depreciation and amortization		2,207		32			9,797	(46)		—			108,238
Service, sub-advisor and mutual fund exp		2,426		—			—			—			26,423
Outperformance bonus (related party)		492		—			—			—			492
Other		3,893		612			—			(1,390	)(49)		73,050
Total expenses		875,209		67,312			9,797			(4,300	)		2,701,428
Income (loss) before taxes		99,858		(1,152	)		(9,797	)		4,300			(18,895	)
Provision (benefit) for income taxes		1,843		—			(3,919	)(46)		44,397	(50)		—
Net income (loss)		98,015		(1,152	)		(5,878	)		(40,097	)		(18,895	)
Less: net income (loss) attributable to non-controlling interests		95,749		—			—			(95,749	)(51)		—
Less: preferred dividends and deemed dividends		—		—			—			18,900	(52)		18,900
Net income (loss) attributable to Class A common stockholders	$	2,266	$	(1,152	)	$	(5,878	)	$	36,752		$	(37,795	)
Earnings per share:
Basic	$	0.29										$	(0.92	)(53)
Diluted	$	0.28										$	(0.92	)(53)
Weighted average common shares:
Basic		7,885								33,111	(53)		40,996	(53)
Diluted		8,025								32,971	(53)		40,996	(53)

16

RCS Capital Corporation
 
Notes to Unaudited Pro Forma Consolidated Statement of Operations

(1) Reflects the historical Consolidated Statement of Income of the Company for the period indicated, which has been restated to include First Allied results from the period of common control, or September 25, 2013, through December 31, 2013.

(2) Reflects the historical Consolidated Statement of Income of Cetera for the period indicated.

(3) Reflects the historical Statement of Operations of Walnut Street Securities, Inc. (“Walnut”) for the eight months ended August 31, 2013. Cetera did not acquire Walnut until the third quarter of 2013; therefore, the historical Consolidated Statement of Income of Cetera only includes Walnut for four months. Walnut did not have any transactions for this period with the Company or Cetera. As such, no intercompany elimination adjustments are reflected in the pro forma financial statements. The results of Walnut for the eight months ended August 31, 2013 and 2012 include overhead charges from affiliates prior to the acquisition by Cetera of $2.6 million and $2.8 million, respectively. Following the acquisition of Walnut by Cetera, Walnut ceased operating as a separate entity and its operations were moved to a more efficient shared service platform and a substantial portion of Walnut’s employees were not hired by Cetera. Therefore, we do not believe that these overhead charges are indicative of overhead allocable to Walnut following the acquisition or that the results of operations for of Walnut for the eight months ended August 31, 2013 and 2012 are indicative of what its operating performance would have been if it had been owned by Cetera during the eight months ended August 31, 2013 and 2012.

(4) Reflects the historical Statement of Operations of Tower Square Securities, Inc. (“Tower Square”) for the eight months ended August 31, 2013. Cetera did not acquire Tower Square until the third quarter of 2013; therefore, the historical Consolidated Statement of Income of Cetera only includes Tower Square for four months. Tower Square did not have any transactions for this period with the Company or Cetera. As such, no intercompany elimination adjustments are reflected in the pro forma financial statements. The results of Tower Square for the eight months ended August 31, 2013 and 2012 include overhead charges from affiliates prior to the acquisition by Cetera of $1.1 million and $1.4 million, respectively. Following the acquisition of Tower Square by Cetera, Tower Square ceased operating as a separate entity and its operations were moved to a more efficient shared service platform and a substantial portion of Tower Square’s employees were not hired by Cetera. Therefore, we do not believe that these overhead charges are indicative of overhead allocable to Tower Square following the acquisition or that the results of operations for of Tower Square for the eight months ended August 31, 2013 and 2012 are indicative of what its operating performance would have been if it had been owned by Cetera during the eight months ended August 31, 2013 and 2012.

(5) Reflects pro forma adjustments to record Cetera financing related interest expense adjustment. This adjustment excludes a portion of the commitment in respect of the first lien term facility which is subject to automatic reduction if certain of the pending acquisitions are abandoned or terminated.

(6) Reflects the historical Condensed Consolidated Statement of Income of Summit for the period indicated.

(7) Reflects the historical Consolidated Statement of Income of JP Turner for the period indicated.

(8) Reflects the historical Combined Statement of Revenue and Expenses of Hatteras for the period indicated.

(9) Reflects the historical Consolidated Statement of Operations of First Allied from January 1, 2013 through September 25, 2013, the date on which First Allied came under common control with the Company, after which First Allied’s operating results are included in the Consolidated Statement of Operations of the Company. First Allied’s historical financial statements comprise a predecessor and successor period as RCAP Holdings acquired First Allied on September 25, 2013. As a result of the acquisition, the push down basis of accounting was applied at September 25, 2013, and as a result, depreciation and amortization expense was increased and occupancy expense was increased.

(10) Reflects the historical Condensed Consolidated Statement of Operations of ICH for the period indicated. ICH has a fiscal year that ends on March 31; therefore, in order to present a statement of operations for December 31, 2013 that reflects twelve months of activity, the amounts were derived by adding:

(i) ICH’s Condensed Consolidated Statement of Operations data for the nine months ended December 31, 2013.

(ii) ICH’s Condensed Consolidated Statement of Operations data for the year ended March 31, 2013; less ICH’s Condensed Consolidated Statement of Operations data for the nine months ended December 31, 2012.

17

RCS Capital Corporation
 
Notes to Unaudited Pro Forma Consolidated Statement of Operations

(11) Reflects the historical Consolidated Statement of Income of Strategic Capital for the period indicated.

(12) Reflects pro forma adjustments to the historical Statement of Operations of the Company to reflect the impact of certain related party transactions. Also, reflects the assumption that the Company will not recognize the tax benefit associated with the 2013 loss as a result of being in a cumulative loss position, stemming from increased interest expense and amortization expense following the completion of the pending acquisitions.

(13) Reflects the elimination of the Company’s historical selling commissions revenues, dealer-manager fees, third party commission expenses and third-party reallowance expenses derived from transactions with Cetera for the year ended December 31, 2013 which upon acquisition became intercompany revenues/expenses that eliminate in consolidation.

(14) Reflects the elimination of transaction expenses incurred in connection with the Cetera acquisition.

(15) Reflects the elimination of interest expense due to the repayment of Cetera’s long-term debt concurrent with the acquisition.

(16) Reflects the amortization and depreciation expense on Cetera’s intangible and fixed assets for the year ended December 31, 2013 assuming their useful life will be approximately 14 years and 1 year, respectively. The amortization expense for each acquisition was calculated by dividing the individual intangible assets by the useful life which was determined by the independent appraisal firm. The total individual intangible assets for each acquisition were then divided by the total annual amortization expense to derive the overall useful life for the combined group of intangible assets acquired.

	Fair value (in millions)		Useful life (yrs)		Amortization/depreciation expense (in millions)
	$	943.0		13.7	$	68.8	(i)
	$	4.3		1.0	$	4.3	(ii)
					$	73.1

(i) Excludes $14.3 million of existing amortization of intangible assets recorded by Cetera.

(ii) The amortization expense also includes $4.3 million of depreciation related to proprietary technology which was fair valued at $4.3 million and had a useful life of 1 year. The proprietary technology was classified as a fixed asset on the Company’s Statement of Financial Condition.

(17) Reflects the income tax effect of the pro forma adjustments to Cetera’s historical consolidated financial statements for the year ended December 31, 2013.

	(in millions)
Pro forma Adjustments	$	(36.8	)
Tax effect @ 40%(i)	$	(14.7	)

(i) Reflects tax effect of Cetera’s pro forma adjustments using an assumed tax rate of 40%.

(18) Reflects Walnut’s amortization expense of intangible assets for eight months prior to acquisition by Cetera. The amortization expense is based on a fair value of $15.3 million and an approximate useful life of 7.9 years. The tax effect of this adjustment is $0.5 million using an assumed 40% tax rate.

(19) Reflects Tower Square’s amortization expense of intangible assets for eight months prior to acquisition by Cetera. The amortization expense is based on a fair value of $7.1 million and an approximate useful life of 7.9 years. The tax effect of this adjustment is $0.2 million using an assumed 40% tax rate.

(20) Reflects the pro forma adjustments to the Company’s historical consolidated statements of operations for the year ended December 31, 2013 for interest expense on long-term debt and convertible notes issued. The tax benefit effect for this expense is $28.6 million using an assumed tax rate of 40%. The SEC FRM 3260.1, which requires disclosure of the effect on income of a  1/8% variance in interest rates, is not applicable since the long-term debt and the convertible notes interest is calculated using a floor of 1% LIBOR.

18

RCS Capital Corporation
 
Notes to Unaudited Pro Forma Consolidated Statement of Operations

(21) Reflects the elimination of the Company’s historical selling commissions revenues, dealer-manager fees, third party commission expenses and third-party reallowance expenses derived from transactions with Summit for the year ended December 31, 2013 which upon acquisition become intercompany revenues/expenses that eliminate in consolidation.

(22) Reflects the amortization expense for forgivable loans based on a fair value of $1.0 million and a 3 year useful life.

(23) Reflects the elimination of transaction expenses incurred by Summit in connection with the acquisition.

(24) Reflects the amortization expense on Summit’s intangible assets primarily related to client relationships for the year ended December 31, 2013 assuming their useful life will be approximately 10 years as determined by an independent appraisal based on the expected future cash flows. The amortization expense for each acquisition was calculated by dividing the individual intangible assets by the useful life which was determined by the independent appraisal firm. The total individual intangible assets for each acquisition were then divided by the total annual amortization expense to derive the overall useful life for the combined group of intangible assets acquired.

	Fair value (in millions)		Useful life (yrs)		Amortization expense (in millions)
	$	31.2		9.8	$	3.2

(25) Reflects the income tax effect of the pro forma adjustments to Summit’s historical consolidated financial statements for the year ended December 31, 2013.

	(in millions)
Pro forma Adjustments	$	(2.3	)
Tax effect @ 40%(i)	$	(0.9	)

(i) Reflects tax effect of Summit’s pro forma adjustments using an assumed tax rate of 40%.

(26) Reflects the elimination of the Company’s historical selling commissions revenues, dealer-manager fees, third party commission expenses and third-party reallowance expenses derived from transactions with JP Turner for the year ended December 31, 2013 which upon acquisition became intercompany revenues/expenses that eliminate in consolidation.

(27) Reflects the amortization expense for forgivable loans based on a fair value of $1.7 million and a 6 year useful life.

(28) Reflects the elimination of transaction expenses incurred by JP Turner in connection with the acquisition.

(29) Reflects the amortization expense on JP Turner’s intangible assets for the year ended December 31, 2013 assuming their useful life will be approximately 10 years. The amortization expense for each acquisition was calculated by dividing the individual intangible assets by the useful life which was determined by the independent appraisal firm. The total individual intangible assets for each acquisition were then divided by the total annual amortization expense to derive the overall useful life for the combined group of intangible assets acquired.

	Fair value (in millions)		Useful life (yrs)		Amortization expense (in millions)
	$	14.2		9.6	$	1.5

(30) Reflects the elimination of transaction expenses incurred by Hatteras in connection with the acquisition.

(31) Reflects the elimination of interest expense due to the anticipated repayment of Hatteras’ line of credit and notes payable concurrent with the acquisition.

(32) Reflects the amortization expense on Hatteras’ intangible assets primarily related to customer relationships with fund of hedge funds products that are structured as mutual funds for the year ended December 31, 2013 assuming their useful life will be approximately 12 years as determined by an independent appraisal based on the expected future cash flows. The amortization expense for each acquisition was calculated by dividing the individual intangible assets by the useful life which was determined by the independent appraisal firm. The total individual intangible assets for each acquisition

19

RCS Capital Corporation
 
Notes to Unaudited Pro Forma Consolidated Statement of Operations

were then divided by the total annual amortization expense to derive the overall useful life for the combined group of intangible assets acquired.

	Fair value (in millions)		Useful life (yrs)		Amortization expense (in millions)
	$	48.8		12.4	$	3.9

(33) Reflects the Pro Forma income tax adjustments to Hatteras’ historical combined financial statements:

	(in millions)
Historical income before taxes	$	5.2
Pro forma Adjustments		(2.6	)
Total income before taxes		2.6
Tax effect @ 40%(i)	$	1.0

(i) Reflects tax effect of Hatteras’ historical income before taxes and pro forma adjustments using an assumed tax rate of 40% as if it was taxed as a corporation.

(34) Reflects the pro forma adjustments to Hatteras’ combined historical financial statements for the year ended December 31, 2013 to reflect the fact that following the acquisition there is no longer a non-controlling interest.

(35) Reflects the elimination of the Company’s historical selling commissions revenues, dealer-manager fees, third party commission expenses and third-party reallowance expenses derived from transactions with First Allied for the year ended December 31, 2013 which upon acquisition became intercompany revenues/expenses that eliminate in consolidation. Also, for other revenues only, assumes First Allied’s interest bearing stockholder note receivables were settled in connection with the acquisition by RCAP Holdings, LLC for $39; therefore, the related interest income is eliminated.

(36) Reflects the elimination of transaction expenses incurred by First Allied in connection with the acquisition by RCAP Holdings, LLC.

(37) Reflects the elimination of interest expense due to the repayment of First Allied’s term loan acquisition by RCAP Holdings, LLC.

(38) Reflects the reversal of nine months of accretion into income of an unfavorable lease accrual which was on First Allied’s statement of income when it was acquired by RCAP Holdings, LLC in September 2013. Assumes the unfavorable lease accrual would have been reversed January 1, 2013 had the Company acquired First Allied on January 1, 2013.

(39) Reflects the amortization expense on First Allied’s intangible assets for the year ended December 31, 2013 assuming their useful life will be approximately 12 years. The amortization expense for each acquisition was calculated by dividing the individual intangible assets by the useful life which was determined by the independent appraisal firm. The total individual intangible assets for each acquisition were then divided by the total annual amortization expense to derive the overall useful life for the combined group of intangible assets acquired.

	Fair value (in millions)		Useful life (yrs)		Amortization expense (in millions)(i)
	$	83.0		12.0	$	6.9

(i) For the year ended December 31, 2013, First Allied recorded a $7.1 million depreciation and amortization expense, which includes a $4.8 million expense for the amortization of intangible assets. As such, an incremental adjustment of $2.1 million is required in order to reflect a full year’s amortization of intangible assets.

20

RCS Capital Corporation
 
Notes to Unaudited Pro Forma Consolidated Statement of Operations

(40) Reflects the income tax effect of the pro forma adjustments to First Allied’s historical consolidated financial statements for the year ended December 31, 2013.

	(in millions)
Pro forma Adjustments	$	6.9
Tax effect @ 40%(i)	$	2.8

(i) Reflects tax effect of First Allied’s pro forma adjustments using an assumed tax rate of 40%.

(41) Reflects the elimination of the Company’s historical selling commissions revenues, dealer-manager fees, third party commission expenses and third-party reallowance expenses derived from transactions with ICH for the year ended December 31, 2013 which upon acquisition became intercompany revenues/expenses that eliminate in consolidation.

(42) Reflects the amortization expense for forgivable loans based on a fair value of $1.6 million and a 3 year useful life.

(43) Reflects the elimination of transaction expenses incurred by ICH in connection with the acquisition.

(44) Reflects the amortization expense on ICH’s intangible assets primarily related to client relationships for the year ended December 31, 2013 assuming their useful life will be approximately 16 years as determined by an independent appraisal based on the expected future cash flows. The amortization expense for each acquisition was calculated by dividing the individual intangible assets by the useful life which was determined by the independent appraisal firm. The total individual intangible assets for each acquisition were then divided by the total annual amortization expense to derive the overall useful life for the combined group of intangible assets acquired.

	Fair value (in millions)		Useful life (yrs)		Amortization expense (in millions)
	$	33.8		15.6	$	2.2

(45) Reflects the income tax effect of the pro forma adjustments to ICH’s historical consolidated financial statements for the year ended December 31, 2013.

	(in millions)
Pro forma Adjustments	$	(1.8	)
Tax effect @ 40%(i)	$	(0.7	)

(i) Reflects tax effect of ICH’s pro forma adjustments using an assumed tax rate of 40%.

(46) Reflects the amortization expense on Strategic Capital intangible assets for the year ended December 31, 2013 assuming their useful life will be approximately 13 years. The amortization expense for each acquisition was calculated by dividing the individual intangible assets by the useful life which was determined based on the useful life of intangible assets in the acquisition of a similar company. The Company is in the process of engaging an independent appraisal expert to conduct the purchase price allocation; therefore, information regarding the amount, types of and useful lives of the intangibles are our best estimates at the time of this filing. The total individual intangible assets for each acquisition were then divided by the total annual amortization expense to derive the overall useful life for the combined group of intangible assets acquired. The tax effect of this adjustment is using an assumed 40% tax rate.

	Fair value (in millions)		Useful life (yrs)		Amortization expense (in millions)
	$	127.4		13.0	$	9.8

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RCS Capital Corporation
 
Notes to Unaudited Pro Forma Consolidated Statement of Operations

(47) Reflects the pro forma adjustment of the Company’s incentive fee that is based on the Company’s earnings and stock price. The incentive fee is an amount (if such amount is a positive number) equal to the difference between: (1) the product of (x) 20% and (y) the difference between (i) the Company’s Core Earnings, for the previous 12-month period, and (ii) the product of (A) (X) the weighted average of the issue price per share (or deemed price per share) of the Company’s common stock of all of the Company’s cash and non-cash issuances of common stock from and after June 5, 2013 multiplied by (Y) the weighted average number of all shares of common stock outstanding (including any restricted shares of Class A common stock and any other shares of Class A common stock underlying awards granted under the Company’s equity plan) in the case of this clause (Y), in the previous 12-month period, and (B) 8.0%; and (2) the sum of any incentive fee paid to RCS Capital Management with respect to the first three calendar quarters of such previous 12-month period;provided,however, that no incentive fee is payable with respect to any calendar quarter unless the Company’s cash flows for the 12 most recently completed calendar quarters is greater than zero. Core Earnings is a non-GAAP measure and is derived as follows:

Calculation (in thousands, except share price)
RCAP Pro forma net income	$	(18,895	)
Incentive fee	$	7,946
Pro forma net income (loss) excluding incentive fee	$	(10,949	)
Exclusions:
Non-cash equity compensation expense		(9,908	)
Depreciation and amortization		(108,238	)
Unrealized (loss) gain		7,287
Other non-cash items		—
Total exclusions		(110,859	)
Core earnings (a)		99,910
Weighted average of share price of all public offerings (b)	$	18.35
Weighted average number of all shares outstanding in previous 12-month period (c)		40,996
Product of (b) × (c)		752,277
Multiplier		8	%
Result (d)		60,182
Result (a) minus (d)		39,728
Multiplier		20	%
Total incentive fee (Result times Multiplier)(i)	$	7,946

(i) Reflects the total incentive fee for the year-ended December 31, 2013. The pro forma adjustment equals $7.9 million less $0.3 million already recorded on the financial statements.

(48) Reflects the reversal of the Company’s quarterly fee expense for the year ended December 31, 2013. Pursuant to an agreement, RCS Capital Management implements the Company’s business strategy, as well as the business strategy of the operating subsidiaries, and performs executive and management services for the Company and operating subsidiaries, subject to oversight, directly or indirectly, by the Company’s Board of Directors.

(49) Reflects the elimination of the Company’s acquisition related costs incurred in connection with the acquisitions.

(50) Reflects the assumption that the Company will not recognize the tax benefit associated with the 2013 loss as a result of being in a cumulative loss position, stemming from increased interest expense and amortization expense following the completion of the pending acquisitions.

(51) Reflects the exchange by RCAP Holdings of all but one of its 24.0 million shares of the Company’s Class B common stock and all of its Class B units in the Company’s operating subsidiaries for 24.0 million shares of the Company’s Class A common stock, assuming that the exchange had occurred

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RCS Capital Corporation
 
Notes to Unaudited Pro Forma Consolidated Statement of Operations

on January 1, 2013. As a result of this exchange, RCAP Holdings is entitled to both economic and voting rights and; therefore, no longer has a non-controlling interest in the Company (other than a de minimis interest and, as of April 28, 2014, 310,947 earned LTIP Units).

(52) Reflects the pro forma adjustment to record the 7% convertible preferred dividend from January 1, 2013 through December 31, 2013. The Company issued 14,657,980 shares of convertible preferred stock to finance the Cetera acquisition in a private placement. The shareholders of convertible preferred stock are entitled to a dividend of 7% of the liquidation preference in cash and a dividend of 8% of the liquidation preference if a quarterly dividend is not paid in cash on the dividend payment date.

(53) Reflects the number of shares issued for the Summit, JP Turner, First Allied, ICH, and Strategic Capital acquisitions, assuming that the acquisitions had occurred on January 1, 2013. Additionally, reflects the exchange by RCAP Holdings of all but one of its 24.0 million shares of the Company’s Class B common stock and all of its Class B units in the Company’s operating subsidiaries for 24.0 million shares of the Company’s Class A common stock, assuming that the exchange had occurred on January 1, 2013. The Company assumes the same number of shares for the basic and diluted earnings per share calculations because of the loss from the operations, which has an anti-dilutive effect.

	Shares issued (in thousands)
Company’s historical weighted average number of shares outstanding				7,885
First Allied Acquisition		11,265
Less: weighted average number of shares outstanding related to the First Allied acquisition from the date of common control		5,385
First Allied – incremental number of shares as if the acquisition occurred on January 1, 2013				5,880
Summit Acquisition				499
JP Turner Acquisition				239
ICH Acquisition				2,029
Strategic Capital Acquisition				464
Exchange				24,000
Total(i)				33,111
Total pro forma weighted average number of shares outstanding as of December 31, 2014				40,996

(i) Reflects the total incremental shares needed to adjust the pro forma basic weighted average number of shares to 41.0 million. For the pro forma diluted weighted number of shares, the Company recorded 33.0 million shares to adjust the diluted weighted average number of shares to 41.0 million.

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