NOTE 3 - CONSOLIDATING FINANCIAL INFORMATION

The following table presents the consolidating balance sheets as of December 31, 2014 (in thousands):



	RAI			RSO		Eliminations			Consolidated
ASSETS
Cash	$	27,542		$	—	$	—		$	27,542
Restricted cash	725			—		—			725
Receivables	790			—		(154		)	636
Receivables from managed entities and related parties, net	32,745			—		(2,442		)	30,303
Investments in real estate, net	17,097			—		—			17,097
Investment securities, at fair value	23,964			—		(14,424		)	9,540
Investments in unconsolidated loan manager	39,655			—		—			39,655
Investments in unconsolidated entities	20,125			—		(7,036		)	13,089
Assets of consolidated VIE - RSO:
Cash and cash equivalents (including restricted cash)	—			202,043		—			202,043
Investments, at fair value	—			296,506		—			296,506
Loans	—			2,038,993		(558		)	2,038,435
Investments in real estate and unconsolidated entities	—			60,007		—			60,007
Other assets - RSO	—			131,590		(109		)	131,481
Total assets of consolidated VIE - RSO	—			2,729,139		(667		)	2,728,472
Property and equipment, net	5,063			—		—			5,063
Deferred tax assets, net	32,818			—		(9,514		)	23,304
Other assets	5,416			—		—			5,416
Total assets	$	205,940		$	2,729,139	$	(34,237	)	$	2,900,842

LIABILITIES AND EQUITY
Liabilities:
Accrued expenses and other liabilities	$	22,279		$	—	$	—		$	22,279
Payables to managed entities and related parties	3,124			—		(109		)	3,015
Borrowings	20,970			—		(558		)	20,412
Liabilities of consolidated VIE - RSO:
Borrowings	—			1,716,871		261			1,717,132
Other liabilities	—			60,157		(2,596		)	57,561
Total liabilities of consolidated VIE - RSO	—			1,777,028		(2,335		)	1,774,693
Total liabilities	46,373			1,777,028		(3,002		)	1,820,399
Commitments and contingencies

Equity:
Common stock	335			—		—			335
Additional paid-in capital	308,134			—		—			308,134
Accumulated deficit	(17,439		)	—		(6,224		)	(23,663		)
Treasury stock, at cost	(120,182		)	—		—			(120,182		)
Accumulated other comprehensive loss	(11,587		)	—		10,557			(1,030		)
Total stockholders’ equity	159,261			—		4,333			163,594
Noncontrolling interests	306			—		—			306
Noncontrolling interests attributable to consolidated VIE - RSO	—			952,111		(35,568		)	916,543
Total equity	159,567			952,111		(31,235		)	1,080,443
	$	205,940		$	2,729,139	$	(34,237	)	$	2,900,842

The following table presents the consolidating statement of operations for the year ended December 31, 2014 (in thousands):



	RAI			RSO			Eliminations			Consolidated
REVENUES:
Real estate	$	54,861		$	—		$	—		$	54,861
Financial fund management	28,400			—			—			28,400
Commercial finance	(164		)	—			—			(164		)
	83,097			—			—			83,097
Revenues from consolidated VIE - RSO	—			99,446			—			99,446
Elimination of consolidated VIE - RSO revenues attributed to operating segments	—			—			(13,264		)	(13,264		)
Total revenues	83,097			99,446			(13,264		)	169,279
COSTS AND EXPENSES:
Real estate	37,411			—			—			37,411
Financial fund management	14,824			—			—			14,824
Commercial finance	979			—			—			979
General and administrative	11,118			—			—			11,118
Provision for credit losses	3,058			—			—			3,058
Depreciation and amortization	1,819			—			—			1,819
	69,209			—			—			69,209
Expenses from consolidated VIE - RSO	—			62,783			2,212			64,995
Elimination of consolidated VIE - RSO expenses attributed to operating segments	—			—			(12,601		)	(12,601		)
Total expenses	69,209			62,783			(10,389		)	121,603
OPERATING INCOME	13,888			36,663			(2,875		)	47,676

OTHER INCOME (EXPENSE):
Gain on sale of investment securities, net	445			—			—			445
Interest expense	(1,905		)	—			—			(1,905		)
Other income, net	2,532			—			(2,289		)	243
Other income, net, from consolidated VIE - RSO	—			25,505			—			25,505
Elimination of consolidated VIE - RSO other income, net	—			—			51			51
	1,072			25,505			(2,238		)	24,339
Income from operations before taxes	14,960			62,168			(5,113		)	72,015
Income tax provision	5,853			—			(2,212		)	3,641
Net income	9,107			62,168			(2,901		)	68,374
Net income attributable to noncontrolling interests	(89		)	—			—			(89		)
Net income attributable to noncontrolling interests - RSO	—			(18,141		)	(43,176		)	(61,317		)
Net income attributable to common shareholders	$	9,018		$	44,027		$	(46,077	)	$	6,968

The following table presents the consolidating statement of cash flows for the year ended December 31, 2014 (in thousands):



	RAI			RSO			Eliminations			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	9,107		$	62,168		$	(2,901	)	$	68,374
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,937			—			—			1,937
Provision for credit losses	3,058			—			—			3,058
Unrealized gain on trading securities	232			—			(22		)	210
Equity in earnings of unconsolidated entities	(4,682		)	—			483			(4,199		)
Distributions from unconsolidated entities	6,759			—			—			6,759
Gain on sale of leases and loans	(12		)	—			—			(12		)
Gain on sale of investment securities, net	(1,945		)	—			95			(1,850		)
Gain on sale of assets	(445		)	—			—			(445		)
Deferred income tax provision	5,388			—			—			5,388
Equity-based compensation expense	2,003			—			—			2,003
Trading securities purchases and sales, net	1,588			—			—			1,588
Changes in operating assets and liabilities	(5,547		)	—			—			(5,547		)
Adjustments to reconcile net income of VIE - RSO to net cash provided by operating activities	—			50,604			(32		)	50,572
Net cash provided by operating activities	17,441			112,772			(2,377		)	127,836
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(430		)	—			—			(430		)
Principal payments received on real estate loans and real estate	25			—			—			25
Investments in unconsolidated real estate entities	(1,709		)	—			—			(1,709		)
Principal payments on leases and loans	22			—			—			22
Purchase of loans and securities by consolidated VIE - RSO	—			(1,200,711		)	—			(1,200,711		)
Principal payments and proceeds from sales received by consolidated VIE - RSO	—			858,751			—			858,751
Purchase of loans and investments	(8,222		)	—			—			(8,222		)
Proceeds from sale of loans and investments	796			—			—			796
Decrease in restricted cash of consolidated VIE - RSO	—			(23,568		)	—			(23,568		)
Other investing activity of consolidated VIE - RSO	—			(23,603		)	(479		)	(24,082		)
Net cash used in investing activities	(9,518		)	(389,131		)	(479		)	(399,128		)



	RAI			RSO			Eliminations		Consolidated
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in borrowings	2,520			—			—		2,520
Principal payments on borrowings	(3,321		)	—			392		(2,929		)
Net borrowings of debt by consolidated VIE - RSO	—			207,604			—		207,604
Dividends paid	(4,272		)	—			—		(4,272		)
Dividends paid on common stock by consolidated VIE - RSO	—			(104,225		)	2,289		(101,936		)
Proceeds from issuance of common stock	15,584			—			—		15,584
Net proceeds from issuance of common stock by consolidated VIE - RSO	—			196,198			—		196,198
Repurchases of common stock	(10,591		)	—			—		(10,591		)
Decrease in restricted cash	(154		)	—			—		(154		)
Other financing activity of consolidated VIE - RSO	—			(23,218		)	175		(23,043		)
Net cash (used in) provided by financing activities	(234		)	276,359			2,856		278,981

Increase in cash	7,689			—			—		7,689
Cash, beginning of year	19,853			—			—		19,853
Cash, end of year	$	27,542		$	—		$	—	$	27,542