UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
FORM 10-Q
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2019
or
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _______________ to _______________ 
Commission File Number: 001-31458 
Drive Shack Inc.
(Exact name of registrant as specified in its charter)
Maryland
 
81-0559116
(State or other jurisdiction of incorporation
 
(I.R.S. Employer Identification No.)
or organization)
 
 
218 W. 18th Street, 3rd Floor, New York, NY
 
10011
(Address of principal executive offices)
 
(Zip Code)
(646) 585-5591
(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbols(s)
Name of each exchange on which registered
Common Stock, $0.01 par value per share
DS
New York Stock Exchange (NYSE)
9.75% Series B Cumulative Redeemable Preferred Stock, $0.01 par value per share
DS-PB
New York Stock Exchange (NYSE)
8.05% Series C Cumulative Redeemable Preferred Stock, $0.01 par value per share
DS-PC
New York Stock Exchange (NYSE)
8.375% Series D Cumulative Redeemable Preferred Stock, $0.01 par value per share
DS-PD
New York Stock Exchange (NYSE)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes S No £
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
S Yes   £ No 


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer £ Accelerated filer S Non-accelerated filer £
Smaller reporting company £ Emerging growth company £
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. £
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes £ No S
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the last practicable date.
Common stock, $0.01 par value per share: 67,033,104 shares outstanding as of July 26, 2019.


CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

This report contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements relate to, among other things, our operating performance, the performance of our investments, the stability of our earnings, and our financing needs. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “endeavor,” “seek,” “anticipate,” “estimate,” “overestimate,” “underestimate,” “believe,” “could,” “project,” “forecast,” “predict,” “continue” or other similar words or expressions. Forward-looking statements are based on certain assumptions, discuss future expectations, describe future plans and strategies, contain projections of results of operations or of financial condition or state other forward-looking information. Our ability to predict results or the actual outcome of future plans or strategies is inherently uncertain. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward-looking statements. These forward-looking statements involve risks, uncertainties and other factors that may cause our actual results in future periods to differ materially from forecasted results. Factors which could have a material adverse effect on our operations and future prospects include, but are not limited to:

•
the ability to retain and attract members and guests to our properties;
•
changes in global, national and local economic conditions, including, but not limited to, changes in consumer spending patterns, a prolonged economic slowdown and a downturn in the real estate market;
•
effects of unusual weather patterns and extreme weather events, geographical concentrations with respect to our operations and seasonality of our business;
•
competition within the industries in which we operate or may pursue additional investments, including competition for sites for our Entertainment Golf venues;
•
material increases in our expenses, including, but not limited to, unanticipated labor issues, rent or costs with respect to our workforce, and costs of goods, utilities and supplies;
•
our inability to sell or exit certain properties and unforeseen changes to our ability to develop, redevelop or renovate certain properties;
•
our ability to further invest in our business and implement our strategies;
•
difficulty monetizing our real estate debt investments;
•
liabilities with respect to inadequate insurance coverage, accidents or injuries on our properties, adverse litigation judgments or settlements, or membership deposits;
•
changes to and failure to comply with relevant regulations and legislation, including in order to maintain certain licenses and permits, and environmental regulations in connection with our operations;
•
inability to execute on our growth and development strategy by successfully developing, opening and operating new venues;
•
impacts of any failure of our information technology and cybersecurity systems;
•
the impact of any current or further legal proceedings and regulatory investigations and inquiries; and
•
other risks detailed from time to time below, particularly in Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, and in our subsequent filings with the Securities and Exchange Commission, which we refer to as the SEC in this Quarterly Report on Form 10-Q.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. The factors noted above could cause our actual results to differ significantly from those contained in any forward-looking statement.

Readers are cautioned not to place undue reliance on any of these forward-looking statements, which reflect our management’s views only as of the date of this report. We are under no duty to update any of the forward-looking statements after the date of this report to conform these statements to actual results.


SPECIAL NOTE REGARDING EXHIBITS
 
In reviewing the agreements included as exhibits to this Quarterly Report on Form 10-Q, please remember they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about Drive Shack Inc. (the “Company” or the “Registrant”) or the other parties to the agreements.  The agreements contain representations and warranties by each of the parties to the applicable agreement.  These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:
 
•
should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;
•
have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;
•
may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and
•
were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time.  Additional information about the Company may be found elsewhere in this Quarterly Report on Form 10-Q and the Company’s other public filings, which are available without charge through the SEC’s website at http://www.sec.gov.
 
The Company acknowledges that, notwithstanding the inclusion of the foregoing cautionary statements, it is responsible for considering whether additional specific disclosures of material information regarding material contractual provisions are required to make the statements in this report not misleading.
 




DRIVE SHACK INC.  
FORM 10-Q
 
INDEX
 
 
PAGE
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



PART I.   FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

DRIVE SHACK INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share data)
 
(Unaudited)
 
 
 
June 30, 2019
 
December 31, 2018
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
39,683

 
$
79,235

Restricted cash
4,299

 
3,326

Accounts receivable, net
6,341

 
7,518

Real estate assets, held-for-sale, net
33,355

 
75,862

Real estate securities, available-for-sale
3,071

 
2,953

Other current assets
20,471

 
20,505

Total current assets
107,220

 
189,399

Restricted cash, noncurrent
258

 
258

Property and equipment, net of accumulated depreciation
177,619

 
132,605

Operating lease right-of-use assets
225,666

 
—

Intangibles, net of accumulated amortization
20,115

 
48,388

Other investments
23,300

 
22,613

Other assets
4,897

 
8,684

Total assets
$
559,075

 
$
401,947

 
 
 
 
Liabilities and Equity
 
 
 
Current liabilities
 
 
 
Obligations under finance leases
$
7,675

 
$
5,489

Membership deposit liabilities
8,793

 
8,861

Accounts payable and accrued expenses
41,375

 
45,284

Deferred revenue
10,905

 
18,793

Real estate liabilities, held-for-sale
33

 
2,947

Other current liabilities
28,075

 
22,285

Total current liabilities
96,856

 
103,659

Credit facilities and obligations under finance leases - noncurrent
15,433

 
10,489

Operating lease liabilities - noncurrent
195,347

 
—

Junior subordinated notes payable
51,196

 
51,200

Membership deposit liabilities, noncurrent
94,156

 
90,684

Deferred revenue, noncurrent
5,930

 
6,016

Other liabilities
3,035

 
5,232

Total liabilities
$
461,953

 
$
267,280

 
 
 
 
Commitments and contingencies


 


 
 
 
 
Equity
 
 
 
Preferred stock, $0.01 par value, 100,000,000 shares authorized, 1,347,321 shares of 9.75% Series B Cumulative Redeemable Preferred Stock, 496,000 shares of 8.05% Series C Cumulative Redeemable Preferred Stock, and 620,000 shares of 8.375% Series D Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share, issued and outstanding as of June 30, 2019 and December 31, 2018
$
61,583

 
$
61,583

Common stock, $0.01 par value, 1,000,000,000 shares authorized, 67,033,104 and 67,027,104 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively
670

 
670

Additional paid-in capital
3,178,478

 
3,175,843

Accumulated deficit
(3,145,487
)
 
(3,105,307
)
Accumulated other comprehensive income
1,878

 
1,878

Total equity
$
97,122

 
$
134,667

 
 
 
 
Total liabilities and equity
$
559,075

 
$
401,947


See notes to Consolidated Financial Statements.

1


DRIVE SHACK INC. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(dollars in thousands, except share data)

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
Revenues
 

 
 

 
 

 
 

Golf operations
$
57,386

 
$
69,150

 
$
102,092

 
$
122,704

Sales of food and beverages
14,229

 
21,854

 
23,475

 
34,960

Total revenues
71,615

 
91,004

 
125,567

 
157,664

 
 
 
 
 
 
 
 
Operating costs
 
 
 
 
 
 
 
Operating expenses
58,720

 
67,042

 
106,443

 
124,421

Cost of sales - food and beverages
3,904

 
6,193

 
6,601

 
10,233

General and administrative expense
13,607

 
10,268

 
25,226

 
19,462

Depreciation and amortization
5,122

 
4,315

 
10,046

 
9,863

Pre-opening costs
1,700

 
247

 
2,879

 
1,803

Impairment
118

 
—

 
4,206

 
1,473

Realized and unrealized (gain) on investments
—

 
(89
)
 
—

 
(331
)
Total operating costs
83,171

 
87,976

 
155,401

 
166,924

Operating income (loss)
(11,556
)
 
3,028

 
(29,834
)
 
(9,260
)
 
 
 
 
 
 
 
 
Other income (expenses)
 
 
 
 
 
 
 
Interest and investment income
265

 
469

 
608

 
915

Interest expense, net
(1,795
)
 
(4,601
)
 
(3,947
)
 
(8,650
)
Other income (loss), net
127

 
(3,699
)
 
5,614

 
(4,105
)
Total other income (expenses)
(1,403
)
 
(7,831
)
 
2,275

 
(11,840
)
Loss before income tax
(12,959
)
 
(4,803
)
 
(27,559
)
 
(21,100
)
Income tax expense
—

 
—

 
—

 
—

Net Loss
(12,959
)
 
(4,803
)
 
(27,559
)
 
(21,100
)
Preferred dividends
(1,395
)
 
(1,395
)
 
(2,790
)
 
(2,790
)
Loss Applicable to Common Stockholders
$
(14,354
)
 
$
(6,198
)
 
$
(30,349
)
 
$
(23,890
)
 
 
 
 
 
 
 
 
Loss Applicable to Common Stock, per share
 

 
 

 
 

 
 

Basic
$
(0.21
)
 
$
(0.09
)
 
$
(0.45
)
 
$
(0.36
)
Diluted
$
(0.21
)
 
$
(0.09
)
 
$
(0.45
)
 
$
(0.36
)
 
 
 
 
 
 
 
 
Weighted Average Number of Shares of Common Stock Outstanding
 

 
 

 
 

 
 

Basic
67,029,610

 
66,977,104

 
67,028,364

 
66,977,104

Diluted
67,029,610

 
66,977,104

 
67,028,364

 
66,977,104


See notes to Consolidated Financial Statements.

2


DRIVE SHACK INC. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)
(dollars in thousands, except share data)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
Net loss
$
(12,959
)
 
$
(4,803
)
 
$
(27,559
)
 
$
(21,100
)
Other comprehensive income (loss):
 

 
 

 
 

 
 

Net unrealized gain on available-for-sale securities
—

 
30

 
—

 
63

Other comprehensive income
—

 
30

 
—

 
63

Total comprehensive loss
$
(12,959
)
 
$
(4,773
)
 
$
(27,559
)
 
$
(21,037
)
Comprehensive loss attributable to Drive Shack Inc. stockholders’ equity
$
(12,959
)
 
$
(4,773
)
 
$
(27,559
)
 
$
(21,037
)
  
See notes to Consolidated Financial Statements.

3


DRIVE SHACK INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2019 AND 2018
(dollars in thousands, except share data)
 
Drive Shack Inc. Stockholders
 
Preferred Stock
 
Common Stock
 

 

 

 

 
Shares
 
Amount
 
Shares
 
Amount
 
Additional Paid-
in Capital
 
Accumulated
Deficit
 
Accumulated Other Comp.
Income
 
Total Equity (Deficit)
Equity (deficit) - December 31, 2017
2,463,321

 
$
61,583

 
66,977,104

 
$
670

 
$
3,173,281

 
$
(3,065,853
)
 
$
1,370

 
$
171,051

Dividends declared
—

 
—

 
—

 
—

 
—

 
(1,395
)
 
—

 
(1,395
)
Stock-based compensation
—

 
—

 
—

 
—

 
278

 
—

 
—

 
278

Adoption of ASC 606
—

 
—

 
—

 
—

 
—

 
4,809

 
—

 
4,809

Comprehensive income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
—

 
—

 
—

 
—

 
—

 
(16,297
)
 
—

 
(16,297
)
Other comprehensive income
—

 
—

 
—

 
—

 
—

 
—

 
33

 
33

Total comprehensive loss
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(16,264
)
Equity (deficit) - March 31, 2018
2,463,321

 
$
61,583

 
66,977,104

 
$
670

 
$
3,173,559

 
$
(3,078,736
)
 
$
1,403

 
$
158,479

Dividends declared
—

 
—

 
—

 
—

 
—

 
(1,395
)
 
—

 
(1,395
)
Stock-based compensation
—

 
—

 
—

 
—

 
530

 
—

 
—

 
530

Comprehensive income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
—

 
—

 
—

 
—

 
—

 
(4,803
)
 
—

 
(4,803
)
Other comprehensive income
—

 
—

 
—

 
—

 
—

 
—

 
30

 
30

Total comprehensive loss
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(4,773
)
Equity (deficit) - June 30, 2018
2,463,321

 
$
61,583

 
66,977,104

 
$
670

 
$
3,174,089

 
$
(3,084,934
)
 
$
1,433

 
$
152,841

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity (deficit) - December 31, 2018
2,463,321

 
$
61,583

 
67,027,104

 
$
670

 
$
3,175,843

 
$
(3,105,307
)
 
$
1,878

 
$
134,667

Dividends declared
—

 
—

 
—

 
—

 
—

 
(1,395
)
 
—

 
(1,395
)
Stock-based compensation
—

 
—

 
—

 
—

 
1,222

 
—

 
—

 
1,222

Adoption of ASC 842
—

 
—

 
—

 
—

 
—

 
(9,831
)
 
 
 
(9,831
)
Comprehensive income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
—

 
—

 
—

 
—

 
—

 
(14,600
)
 
—

 
(14,600
)
Other comprehensive income
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Total comprehensive loss
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(14,600
)
Equity (deficit) - March 31, 2019
2,463,321

 
$
61,583

 
67,027,104

 
$
670

 
$
3,177,065

 
$
(3,131,133
)
 
$
1,878

 
$
110,063

Dividends declared
—

 
—

 
—

 
—

 
—

 
(1,395
)
 
—

 
(1,395
)
Stock-based compensation
—

 
—

 
—

 
—

 
1,384

 
—

 
—

 
1,384

Purchase of common stock (directors)
—

 
—

 
6,000

 
—

 
29

 
—

 
—

 
29

Comprehensive income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
—

 
—

 
—

 
—

 
—

 
(12,959
)
 
—

 
(12,959
)
Other comprehensive income
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Total comprehensive loss
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(12,959
)
Equity (deficit) - June 30, 2019
2,463,321

 
$
61,583

 
67,033,104

 
$
670

 
$
3,178,478

 
$
(3,145,487
)
 
$
1,878

 
$
97,122


See notes to Consolidated Financial Statements.

4



DRIVE SHACK INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(dollars in thousands, except share data)

 
Six Months Ended June 30,
 
2019
 
2018
Cash Flows From Operating Activities
 
 
 
Net loss
$
(27,559
)
 
$
(21,100
)
Adjustments to reconcile net loss to net cash used in operating activities:
 

 
 

Depreciation and amortization
10,046

 
9,863

Amortization of discount and premium
(122
)
 
588

Other amortization
6,826

 
5,481

Amortization of revenue on golf membership deposit liabilities
(874
)
 
(726
)
Amortization of prepaid golf membership dues
(6,855
)
 
(12,990
)
Stock-based compensation
2,606

 
808

Impairment
4,206

 
1,473

Equity in earnings from equity method investments, net of distributions
(685
)
 
(766
)
Other (gains) losses, net
(4,573
)
 
4,055

Unrealized (gain) on investments
—

 
(331
)
Loss on extinguishment of debt
22

 
141

Change in:
 

 
 

Accounts receivable, net, other current assets and other assets - noncurrent
(1,579
)
 
(182
)
Accounts payable and accrued expenses, deferred revenue, other current liabilities and other liabilities - noncurrent
(5,685
)
 
1,801

Net cash used in operating activities
(24,226
)
 
(11,885
)
Cash Flows From Investing Activities
 

 
 

Proceeds from sale of property and equipment
32,665

 
—

Acquisition and additions of property and equipment and intangibles
(42,569
)
 
(27,877
)
Net cash used in investing activities
(9,904
)
 
(27,877
)
Cash Flows From Financing Activities
 
 
 
Repayments of debt obligations
(2,691
)
 
(2,344
)
Golf membership deposits received
1,012

 
1,735

Preferred stock dividends paid
(2,790
)
 
(2,790
)
Other financing activities
20

 
(232
)
Net cash used in financing activities
(4,449
)
 
(3,631
)
Net Decrease in Cash and Cash Equivalents, Restricted Cash and Restricted Cash, noncurrent
(38,579
)
 
(43,393
)
Cash and Cash Equivalents, Restricted Cash and Restricted Cash, noncurrent, Beginning of Period
82,819

 
173,688

Cash and Cash Equivalents, Restricted Cash and Restricted Cash, noncurrent, End of Period
$
44,240

 
$
130,295

 
 
 
 
Supplemental Schedule of Non-Cash Investing and Financing Activities
 
 
 
Preferred stock dividends declared but not paid
$
930

 
$
930

Additions to finance lease assets and liabilities
$
10,652

 
$
2,416

Additions to property and equipment and accounts payable
$
2,816

 
$
6,882

Additions for operating lease right-of-use assets and operating lease liabilities
$
207,450

 
$
—


See notes to Consolidated Financial Statements.


5
DRIVE SHACK INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
JUNE 30, 2019
(dollars in tables in thousands, except share data)
 


1. ORGANIZATION
Drive Shack Inc., which is referred to, together with its subsidiaries, as “Drive Shack Inc.” or the “Company” is a leading owner and operator of golf-related leisure and entertainment businesses. The Company, a Maryland corporation, was formed in 2002, and its common stock is traded on the NYSE under the symbol “DS.”
The Company conducts its business through the following segments: (i) Entertainment Golf venues, (ii) Traditional Golf properties and (iii) corporate. For a further discussion of the reportable segments, see Note 4.
The Company opened its first Entertainment Golf venue in Orlando, Florida on April 7, 2018. The Company expects to open a chain of next-generation Entertainment Golf venues across the United States and internationally, which combine golf, competition, dining and fun.
The Company’s Traditional Golf business is one of the largest operators of golf properties in the United States. As of June 30, 2019, the Company owned, leased or managed 61 properties across 10 states.


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation — The accompanying Consolidated Financial Statements and related notes of the Company have been prepared in accordance with accounting principles generally accepted in the United States for interim financial reporting and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared under U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted. In the opinion of management, all adjustments considered necessary for a fair presentation of the Company’s financial position, results of operations and cash flows have been included and are of a normal and recurring nature. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These financial statements should be read in conjunction with the Company’s Consolidated Financial Statements for the year ended December 31, 2018 and notes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC on March 15, 2019. Capitalized terms used herein, and not otherwise defined, are defined in the Company’s Consolidated Financial Statements for the year ended December 31, 2018.

As of June 30, 2019, the Company’s significant accounting policies for these financial statements are summarized below and should be read in conjunction with the Summary of Significant Accounting Policies detailed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.




6
DRIVE SHACK INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
JUNE 30, 2019
(dollars in tables in thousands, except share data)
 

Realized and Unrealized (Gain) Loss on Investments and Other Income (Loss), Net — These items are comprised of the following:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
Unrealized (gain) on non-hedge derivative instruments
—

 
(89
)
 
—

 
(331
)
Realized and unrealized (gain) loss on investments
$
—

 
$
(89
)
 
$
—

 
$
(331
)
 
 
 
 
 
 
 
 
Loss on lease modifications and terminations
$
—

 
$
(25
)
 
$
—

 
$
(796
)
Loss on extinguishment of debt, net
(6
)
 
(89
)
 
(22
)
 
(141
)
Collateral management fee income, net
129

 
146

 
256

 
301

Equity in earnings of equity method investments
344

 
387

 
685

 
766

Gain (loss) on sale of long-lived assets and intangibles
(362
)
 
882

 
4,666

 
676

Other income (loss) (A)
22

 
(5,000
)
 
29

 
(4,911
)
Other income (loss), net
$
127

 
$
(3,699
)
 
$
5,614

 
$
(4,105
)

(A)
During the three months ended June 30, 2018, the Company recorded a net loss of approximately $4.9 million related to the settlement of a legal dispute and a related discharge of liabilities assumed by the counterparty to the settlement. See Note 13 for additional information.
Property and Equipment, Net — Long-lived assets to be disposed of by sale, which meet certain criteria, are reclassified to real estate held-for-sale and measured at the lower of their carrying amount or fair value less costs of sale. The Company suspends depreciation and amortization for assets held-for-sale. Subsequent changes to the estimated fair value less costs to sell could impact the measurement of assets held-for-sale. Decreases are recognized as an impairment loss and recorded in "Impairment" on the Consolidated Statements of Operations. To the extent the fair value increases, any previously reported impairment is reversed. Real estate held-for-sale is recorded in “Real estate assets, held-for-sale, net” and “Real estate liabilities, held-for-sale” on the Consolidated Balance Sheets.

Leasing Arrangements — The Company evaluates at lease inception whether an arrangement is or contains a lease by providing the Company with the right to control an asset. Operating leases are accounted for on balance sheet with the Right of Use (“ROU”) assets and lease liabilities recognized in "Operating lease right-of-use assets," "Other current liabilities" and "Operating lease liabilities - noncurrent" in the Consolidated Balance Sheets. Finance lease ROU assets, current lease liabilities and noncurrent lease liabilities are recognized in "Property and equipment, net of accumulated depreciation," and "Obligations under finance leases" and "Credit facilities and obligations under finance leases - noncurrent" in the Consolidated Balance Sheets, respectively.

All lease liabilities are measured at the present value of the associated payments, discounted using the Company’s incremental borrowing rate determined using a portfolio approach based on the rate of interest that the Company would pay to borrow on a collateralized basis an amount equal to the lease payments for similar term and in a similar economic environment on a collateralized basis. ROU assets, for both operating and finance leases, are initially measured based on the lease liability, adjusted for initial direct costs, prepaid rent, and lease incentives received. The operating lease ROU assets are subsequently measured at the carrying amount of the lease liability adjusted for initial direct costs, prepaid or accrued lease payments, and lease incentives. Depreciation of the finance lease ROU assets are subsequently calculated using the straight-line method over the shorter of the estimated useful lives or the expected lease terms and recorded in "Depreciation and amortization" on the Consolidated Statements of Operations.

In addition to the fixed minimum payments required under the lease arrangements, certain leases require variable lease payments, which are payment of the excess of various percentages of gross revenue or net operating income over the minimum rental payments as well as payment of taxes assessed against the leased property. The leases generally also require the payment for the cost of insurance and maintenance. Variable lease payments are recognized when the associated activity occurs and contingency is resolved.

The Company has elected to combine lease and non-lease components for all lease contracts. Additionally, the Company does not recognize ROU assets and lease liabilities for arrangements with lease terms of 12 months or less and lease payments are recognized on a straight-line basis over the lease term with variable lease payments recognized in the period in which the obligation is incurred.


7
DRIVE SHACK INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
JUNE 30, 2019
(dollars in tables in thousands, except share data)
 

Other Investment — The Company owns an approximately 22% economic interest in a limited liability company which owns preferred equity secured by a commercial real estate project. The Company accounts for this investment as an equity method investment. As of June 30, 2019 and December 31, 2018, the carrying value of this investment was $23.3 million and $22.6 million, respectively. The Company evaluates its equity method investment for other-than-temporary impairment whenever events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable. The evaluation of recoverability is based on management’s assessment of the financial condition and near-term prospects of the commercial real estate project, the length of time and the extent to which the market value of the investment has been less than cost, availability and cost of financing, demand for space, competition for tenants, changes in market rental rates, and operating costs.  As these factors are difficult to predict and are subject to future events that may alter management’s assumptions, the values estimated by management in its recoverability analyses may not be realized, and actual losses or impairment may be realized in the future.

Impairment of Long-lived Assets — The Company periodically reviews the carrying amounts of its long-lived assets, including real estate held-for-use and held-for-sale, as well as finite-lived intangible assets, to determine whether current events or circumstances indicate that such carrying amounts may not be recoverable. The assessment of recoverability is based on management’s estimates by comparing the sum of the estimated undiscounted cash flows generated by the underlying asset, or other appropriate grouping of assets, to its carrying value to determine whether an impairment existed at its lowest level of identifiable cash flows. If the carrying amount of the asset is greater than the expected undiscounted cash flows to be generated by such asset, an impairment is recognized to the extent the carrying value of such asset exceeds its fair value. The Company generally measures fair value by considering sale prices for similar assets or by discounting estimated future cash flows using an appropriate discount rate.

Other Current Assets

The following table summarizes the Company's other current assets:
 
 
June 30, 2019
 
December 31, 2018
Prepaid expenses
 
$
2,372

 
$
2,651

Deposits
 
2,516

 
2,494

Inventory
 
2,743

 
2,855

Miscellaneous current assets, net
 
12,840

 
12,505

Other current assets
 
$
20,471

 
$
20,505

 
Other Assets

The following table summarizes the Company's other assets:
 
 
June 30, 2019
 
December 31, 2018
Prepaid expenses
 
$
261

 
$
277

Deposits
 
2,097

 
2,140

Miscellaneous assets, net
 
2,539

 
6,267

Other assets
 
$
4,897

 
$
8,684



8
DRIVE SHACK INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
JUNE 30, 2019
(dollars in tables in thousands, except share data)
 

Other Current Liabilities

The following table summarizes the Company's other current liabilities:
 
 
June 30, 2019
 
December 31, 2018
Security deposits payable
 
$
5,933

 
$
14,188

Operating lease liabilities
 
15,835

 
—

Accrued rent
 
2,315

 
2,885

Dividends payable
 
930

 
930

Miscellaneous current liabilities
 
3,062

 
4,282

Other current liabilities
 
$
28,075

 
$
22,285


Other Liabilities

The following table summarized the Company's other liabilities:
 
 
June 30, 2019
 
December 31, 2018
Security deposits payable
 
$
319

 
$
91

Service obligation intangible
 
1,954

 
2,759

Accrued rent
 
—

 
1,617

Miscellaneous liabilities
 
762

 
765

Other liabilities
 
$
3,035

 
$
5,232


Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-02 Leases (Topic 842). The standard requires lessees to recognize most leases on the balance sheet and addresses certain aspects of lessor accounting. On January 1, 2019, the Company adopted ASU 2016-02 using a modified retrospective approach. The Company has utilized the effective date transition method and accordingly is not required to adjust its comparative period financial information for effects of ASU 2016-02. The Company has elected to adopt practical expedients which permits it to not reassess its prior conclusions about lease identification, lease classification and initial direct costs under the new standard. The Company elected to combine lease and non-lease components for all lease contracts and also elected not to recognize ROU assets and lease liabilities for leases with terms of 12 months or less. The Company has also elected to adopt the practical expedient for land easements which permits it not to evaluate existing and expired land easements under the new standard. The adoption of ASU 2016-02 had a material impact on the Company’s Consolidated Balance Sheets, resulting in the recognition of operating lease right-of-use assets and operating lease liabilities of $225.6 million and $205.9 million, respectively, with the difference primarily due to reclassifications of leasehold intangibles and an adjustment to accumulated deficit. There was no material impact on the Consolidated Statements of Operations.

In June 2016, the FASB issued ASU 2016-13 Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. The standard changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. For available-for-sale debt securities, entities will be required to record allowances rather than reduce the carrying amount under the other-than-temporary impairment model. In November 2018, the FASB issued ASU 2018-19 Codification Improvements to Topic 326, Financial Instruments - Credit Losses, which clarifies that operating lease receivables accounted for under ASC 842 are not in the scope of this guidance. In April 2019, the FASB issued ASU 2019-04 Codification Improvements to Topic 326, Financial Instruments - Credit Losses, which addresses certain fair value disclosure requirements, the measurement basis under the measurement alternative and which equity securities have to be remeasured at historical exchange rates. In May 2019, the FASB issued Financial Instruments - Credit Losses (Topic 326), Targeted Transition Relief, which allows entities to elect to measure assets in the scope of ASC 326-20, using the fair value option when ASU 2016-13 is adopted. The effective date of the standards will be for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 and early adoption is permitted for annual periods beginning after December 15, 2018. Entities will apply the standard's provisions as a cumulative-effect adjustment to retained earnings as of the beginning of

9
DRIVE SHACK INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
JUNE 30, 2019
(dollars in tables in thousands, except share data)
 

the first reporting period in which the guidance is effective. The Company is currently evaluating the new guidance to determine the impact it may have on its Consolidated Financial Statements.

In August 2018, the FASB issued ASU 2018-15 Intangibles-Goodwill and Other-Internal Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The standard requires a customer in a cloud computing arrangement (i.e., a hosting arrangement) that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets or expense as incurred. That guidance requires certain costs incurred during the application development stage to be capitalized and other costs incurred during the preliminary project and post-implementation stages to be expensed as they are incurred. Capitalized implementation costs related to a hosting arrangement that is a service contract will be amortized over the term of the hosting arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use.  The effective date of the standard will be for annual periods beginning after December 15, 2019. Early adoption is permitted, including adoption in any interim period. Entities can either apply the guidance prospectively to all implementation costs incurred after the date of adoption or retrospectively. The Company is currently evaluating the timing for adoption and the impact it may have on its Consolidated Financial Statements.

3. REVENUES

The majority of the Company’s revenue is recognized at a point in time which is at the time of sale to customers at the Company’s Entertainment Golf venues and Traditional Golf properties, including green fees, cart rentals, bay play, events and sales of food, beverages and merchandise.

The Company’s revenue is all generated within the Entertainment and Traditional Golf segments. The following tables disaggregate revenue by category: Entertainment golf venues, public and private golf properties (owned and leased) and managed golf properties.
 
 
Three Months Ended June 30, 2019
 
Six Months Ended June 30, 2019
 
 
Ent. golf venues
 
Public golf properties
 
Private golf properties
 
Managed golf properties
 
Total
 
Ent. golf venues
 
Public golf properties
 
Private golf properties
 
Managed golf properties
 
Total
Golf operations
 
$
607

 
$
28,902

 
$
13,352

 
$
14,525

 
$
57,386

 
$
1,288

 
$
46,366

 
$
28,806

 
$
25,632

 
$
102,092

Sales of food and beverages
 
872

 
10,116

 
3,241

 
—

 
14,229

 
1,911

 
15,593

 
5,971

 
—

 
23,475

Total revenues
 
$
1,479

 
$
39,018

 
$
16,593

 
$
14,525

 
$
71,615

 
$
3,199

 
$
61,959

 
$
34,777

 
$
25,632

 
$
125,567

 
 
Three Months Ended June 30, 2018
 
Six Months Ended June 30, 2018
 
 
Ent. golf venues
 
Public golf properties
 
Private golf properties
 
Managed golf properties
 
Total
 
Ent. golf venues
 
Public golf properties
 
Private golf properties
 
Managed golf properties
 
Total
Golf operations
 
$
855

 
$
34,609

 
$
26,891

 
$
6,795

 
$
69,150

 
$
855

 
$
56,979

 
$
52,840

 
$
12,030

 
$
122,704

Sales of food and beverages
 
952

 
12,307

 
8,595

 
—

 
21,854

 
952

 
19,514

 
14,494

 
—

 
34,960

Total revenues
 
$
1,807

 
$
46,916

 
$
35,486

 
$
6,795

 
$
91,004

 
$
1,807

 
$
76,493

 
$
67,334

 
$
12,030

 
$
157,664


4. SEGMENT REPORTING
 
The Company currently has three reportable segments: (i) Entertainment Golf venues, (ii) Traditional Golf properties and (iii) corporate. The chief operating decision maker (“CODM”) for each segment is our Chief Executive Officer, who reviews discrete financial information for each reportable segment to manage the Company, including resource allocation and performance assessment.

The Company opened its inaugural Entertainment Golf venue in Orlando, Florida on April 7, 2018 and expects to continue opening a chain of next-generation Entertainment Golf venues across the United States and internationally, which combine golf, competition, dining and fun. 

10
DRIVE SHACK INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
JUNE 30, 2019
(dollars in tables in thousands, except share data)
 


Additionally, the Company's Traditional Golf business is one of the largest operators of golf properties in the United States. As of June 30, 2019, the Company owned, leased or managed 61 Traditional Golf properties across 10 states. 

The corporate segment consists primarily of investments in loans and securities, interest income on short-term investments, general and administrative expenses as a public company, interest expense on the junior subordinated notes payable (Note 8) and income tax expense (Note 14).
 
Summary financial data on the Company’s segments is given below, together with a reconciliation to the same data for the Company as a whole:
 
 
Entertainment Golf
 
Traditional Golf
 
Corporate
 
Total
Six Months Ended June 30, 2019
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
Golf operations
 
$
1,288

 
$
100,804

 
$
—

 
$
102,092

Sales of food and beverages
 
1,911

 
21,564

 
—

 
23,475

Total revenues
 
3,199

 
122,368

 
—

 
125,567

Operating costs
 
 
 
 
 
 
 
 
Operating expenses (A)
 
3,605

 
102,838

 
—

 
106,443

Cost of sales - food and beverages
 
501

 
6,100

 
—

 
6,601

General and administrative expense (B)
 
6,930

 
8,212

 
8,510

 
23,652

General and administrative expense - acquisition and transaction expenses (C)
 
963

 
333

 
278

 
1,574

Depreciation and amortization
 
1,670

 
8,335

 
41

 
10,046

Pre-opening costs (D)
 
2,879

 
—

 
—

 
2,879

Impairment
 
118

 
4,088

 
—

 
4,206

Realized and unrealized (gain) on investments
 
—

 
—

 
—

 
—

Total operating costs
 
16,666

 
129,906

 
8,829

 
155,401

Operating loss
 
(13,467
)
 
(7,538
)
 
(8,829
)
 
(29,834
)
Other income (expenses)
 
 
 
 
 
 
 
 
Interest and investment income
 
246

 
61

 
301

 
608

Interest expense (E)
 
(142
)
 
(4,051
)
 
(1,256
)
 
(5,449
)
Capitalized interest (E)
 
—

 
413

 
1,089

 
1,502

Other (loss) income, net
 
(7
)
 
4,688

 
933

 
5,614

Total other income (expenses)
 
97

 
1,111

 
1,067

 
2,275

Income tax expense
 
—

 
—

 
—

 
—

Net loss
 
(13,370
)
 
(6,427
)
 
(7,762
)
 
(27,559
)
Preferred dividends
 
—

 
—

 
(2,790
)
 
(2,790
)
Loss applicable to common stockholders
 
$
(13,370
)
 
$
(6,427
)
 
$
(10,552
)
 
$
(30,349
)

11
DRIVE SHACK INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
JUNE 30, 2019
(dollars in tables in thousands, except share data)
 

Summary segment financial data (continued).
 
 
Entertainment Golf
 
Traditional Golf
 
Corporate
 
Total
Three Months Ended June 30, 2019
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
Golf operations
 
$
607

 
$
56,779

 
$
—

 
$
57,386

Sales of food and beverages
 
872

 
13,357

 
—

 
14,229

Total revenues
 
1,479

 
70,136

 
—

 
71,615

Operating costs
 
 
 
 
 
 
 
 
Operating expenses (A)
 
1,857

 
56,863

 
—

 
58,720

Cost of sales - food and beverages
 
251

 
3,653

 
—

 
3,904

General and administrative expense (B)
 
3,551

 
4,316

 
4,565

 
12,432

General and administrative expense - acquisition and transaction expenses (C)
 
806

 
179

 
190

 
1,175

Depreciation and amortization
 
961

 
4,118

 
43

 
5,122

Pre-opening costs (D)
 
1,700

 
—

 
—

 
1,700

Impairment
 
118

 
—

 
—

 
118

Realized and unrealized loss on investments
 
—

 
—

 
—

 
—

Total operating costs
 
9,244

 
69,129

 
4,798

 
83,171

Operating (loss) income
 
(7,765
)
 
1,007

 
(4,798
)
 
(11,556
)
Other income (expenses)
 
 
 
 
 
 
 
 
Interest and investment income
 
114

 
23

 
128

 
265

Interest expense (E)
 
(142
)
 
(1,861
)
 
(629
)
 
(2,632
)
Capitalized interest (E)
 
—

 
226

 
611

 
837

Other (loss) income, net
 
—

 
(343
)
 
470

 
127

Total other income (expenses)
 
(28
)
 
(1,955
)
 
580

 
(1,403
)
Income tax expense
 
—

 
—

 
—

 
—

Net loss
 
(7,793
)
 
(948
)
 
(4,218
)
 
(12,959
)
Preferred dividends
 
—

 
—

 
(1,395
)
 
(1,395
)
Loss applicable to common stockholders
 
$
(7,793
)
 
$
(948
)
 
$
(5,613
)
 
$
(14,354
)

 
 
Entertainment Golf
 
Traditional Golf
 
Corporate (F)
 
Total
June 30, 2019
 
 
 
 
 
 
 
 
Total assets
 
180,343

 
336,484

 
42,248

 
559,075

Total liabilities
 
46,035

 
354,116

 
61,802

 
461,953

Preferred stock
 
—

 
—

 
61,583

 
61,583

Equity attributable to common stockholders
 
$
134,308

 
$
(17,632
)
 
$
(81,137
)
 
$
35,539

 
 
 
 
 
 
 
 
 
Additions to property and equipment (including finance leases) during the six months ended June 30, 2019
 
$
47,249

 
$
6,490

 
$
1,648

 
$
55,387



12
DRIVE SHACK INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
JUNE 30, 2019
(dollars in tables in thousands, except share data)
 

Summary segment financial data (continued).

 
 
Entertainment Golf
 
Traditional Golf
 
Corporate
 
Total
Six Months Ended June 30, 2018
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
Golf operations
 
$
855

 
$
121,849

 
$
—

 
$
122,704

Sales of food and beverages
 
952

 
34,008

 
—

 
34,960

Total revenues
 
1,807

 
155,857

 
—

 
157,664

Operating costs
 
 
 
 
 
 
 
 
Operating expenses (A)
 
1,835

 
122,586

 
—

 
124,421

Cost of sales - food and beverages
 
228

 
10,005

 
—

 
10,233

General and administrative expense (B)
 
2,638

 
8,467

 
6,257

 
17,362

General and administrative expense - acquisition and transaction expenses (C)
 
1,454

 
508

 
138

 
2,100

Depreciation and amortization
 
535

 
9,320

 
8

 
9,863

Pre-opening costs (D)
 
1,803

 
—

 
—

 
1,803

Impairment
 
—

 
1,326

 
147

 
1,473

Realized and unrealized (gain) on investments
 
—

 
(331
)
 
—

 
(331
)
Total operating costs
 
8,493

 
151,881

 
6,550

 
166,924

Operating (loss) income
 
(6,686
)
 
3,976

 
(6,550
)
 
(9,260
)
Other income (expenses)
 
 
 
 
 
 
 
 
Interest and investment income
 
112

 
96

 
707

 
915

Interest expense (E)
 
—

 
(8,099
)
 
(1,064
)
 
(9,163
)
Capitalized interest (E)
 
—

 
342

 
171

 
513

Other (loss) income, net
 
—

 
(5,166
)
 
1,061

 
(4,105
)
Total other income (expenses)
 
112

 
(12,827
)
 
875

 
(11,840
)
Income tax expense
 
—

 
—

 
—

 
—

Net loss
 
(6,574
)
 
(8,851
)
 
(5,675
)
 
(21,100
)
Preferred dividends
 
—

 
—

 
(2,790
)
 
(2,790
)
Loss applicable to common stockholders
 
$
(6,574
)
 
$
(8,851
)
 
$
(8,465
)
 
$
(23,890
)



13
DRIVE SHACK INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
JUNE 30, 2019
(dollars in tables in thousands, except share data)
 

Summary segment financial data (continued).
 
 
Entertainment Golf
 
Traditional Golf
 
Corporate
 
Total
Three Months Ended June 30, 2018
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
Golf operations
 
$
855

 
$
68,295

 
$
—

 
$
69,150

Sales of food and beverages
 
952

 
20,902

 
—

 
21,854

Total revenues
 
1,807

 
89,197

 
—

 
91,004

Operating costs
 
 
 
 
 
 
 
 
Operating expenses (A)
 
1,835

 
65,207

 
—

 
67,042

Cost of sales - food and beverages
 
228

 
5,965

 
—

 
6,193

General and administrative expense (B)
 
1,535

 
4,313

 
3,961

 
9,809

General and administrative expense - acquisition and transaction expenses (C)
 
200

 
200

 
59

 
459

Depreciation and amortization
 
504

 
3,808

 
3

 
4,315

Pre-opening costs (D)
 
247

 
—

 
—

 
247

Impairment
 
—

 
—

 
—

 
—

Realized and unrealized (gain) on investments
 
—

 
(89
)
 
—

 
(89
)
Total operating costs
 
4,549

 
79,404

 
4,023

 
87,976

Operating (loss) income
 
(2,742
)
 
9,793

 
(4,023
)
 
3,028

Other income (expenses)
 
 
 
 
 
 
 
 
Interest and investment income
 
84

 
45

 
340

 
469

Interest expense (E)
 
—

 
(4,161
)
 
(570
)
 
(4,731
)
Capitalized interest (E)
 
—

 
87

 
43

 
130

Other (loss) income, net
 
—

 
(4,228
)
 
529

 
(3,699
)
Total other income (expenses)
 
84

 
(8,257
)
 
342

 
(7,831
)
Income tax expense