Drive Shack Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

INTANGIBLES, NET OF ACCUMULATED AMORTIZATION

INTANGIBLES, NET OF ACCUMULATED AMORTIZATION

6 Months Ended

Jun. 30, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLES, NET OF ACCUMULATED AMORTIZATION

8. INTANGIBLES, NET OF ACCUMULATED AMORTIZATION

The following table summarizes Newcastle’s intangible assets related to its senior housing real estate and golf business:



	June 30, 2014							December 31, 2013
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Value		Gross Carrying Amount		Accumulated Amortization			Net Carrying Value
Senior Housing
In-place resident lease intangibles	$	134,772	$	(45,895	)	$	88,877	$	112,267	$	(21,902	)	$	90,365
Non-compete intangibles	1,600		(383		)	1,217		1,600		(223		)	1,377
Land lease intangibles	3,442		(24		)	3,418		3,498		(1		)	3,497
PILOT intangible	3,700		(276		)	3,424		3,700		(124		)	3,576
Other intangibles	6,955		(49		)	6,906		2,046		(2		)	2,044
Total Senior Housing	150,469		(46,627		)	103,842		123,111		(22,252		)	100,859
Golf
Trade name	700		(12		)	688		700		—			700
Leasehold intangibles	52,066		(2,702		)	49,364		52,066		—			52,066
Management contracts	39,000		(2,399		)	36,601		39,000		—			39,000
Internally-developed software	800		(80		)	720		800		—			800
Membership base	5,400		(386		)	5,014		5,400		—			5,400
Nonamortizable liquor license	900		—			900		900		—			900
Total Golf	98,866		(5,579		)	93,287		98,866		—			98,866

Total Intangibles	$	249,335	$	(52,206	)	$	197,129	$	221,977	$	(22,252	)	$	199,725

In the senior housing business, the gross carrying amount of the in-place resident lease intangibles is amortized on a straight-line basis over the average length of stay of the residents: 24 months for assisted living and memory care facilities and 33 months for independent living facilities. If the in-place resident lease is terminated prior to the lease expiration, the unamortized costs are written off at that time. The gross carrying amount of the non-compete intangibles is amortized on a straight-line basis of 5 years as stated within the respective agreements. The gross carrying amount of the land lease intangibles is amortized over the stated term within the respective agreements, 74 years and 82 years. The gross carrying amount of the PILOT intangible is amortized over the stated term within the agreement of 13 years. Other intangibles are amortized on a straight-line basis of 13 to 40 years.

In the golf business, the weighted average amortization periods for amortizable intangible assets are 29.5 years for trade name, 7.8 years for leasehold intangibles, 7.7 years for management contracts, 4.5 years for internally-developed software, and 6.5 years for membership base.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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