Drive Shack Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

SEGMENT REPORTING (Tables)

SEGMENT REPORTING (Tables)

12 Months Ended

Dec. 31, 2017

Summary financial data on the Company’s segments is given below, together with reconciliation to the same data for the Company as a whole:



	Traditional Golf			Entertainment Golf			Debt Investments			Corporate			Total
Year Ended December 31, 2017
Revenues
Golf course operations	$	221,737		$	—		$	—		$	—		$	221,737
Sales of food and beverages	70,857			—			—			—			70,857
Total revenues	292,594			—			—			—			292,594
Operating costs													—
Operating expenses (A)	247,585			320			—			—			247,905
Cost of sales - food and beverages	20,959			—			—			—			20,959
General and administrative expense	3,086			347			20			4,434			7,887
General and administrative expense - acquisition and transaction expenses (B)	677			7,139			—			921			8,737
Management fee and termination payment to affiliate	—			—			—			21,410			21,410
Depreciation and amortization	24,260			44			—			—			24,304
Impairment	—			—			60			—			60
Realized and unrealized loss on investments	199			—			6,044			—			6,243
Total operating costs	296,766			7,850			6,124			26,765			337,505
Operating loss	(4,172		)	(7,850		)	(6,124		)	(26,765		)	(44,911		)
Other income (expenses)													—
Interest and investment income	159			—			22,190			813			23,162
Interest expense, net (C)	(15,277		)	—			(2,532		)	(1,772		)	(19,581		)
Loss on extinguishment of debt	(294		)	—			—			—			(294		)
Other (loss) income, net	(1,468		)	—			1,856			—			388
Total other income (expenses)	(16,880		)	—			21,514			(959		)	3,675
Income tax expense (D)	—			—			—			965			965
Net (loss) income	(21,052		)	(7,850		)	15,390			(28,689		)	(42,201		)
Preferred dividends	—			—			—			(5,580		)	(5,580		)
(Loss) income applicable to common stockholders	$	(21,052	)	$	(7,850	)	$	15,390		$	(34,269	)	$	(47,781	)



	Traditional Golf		Entertainment Golf		Debt Investments (E)		Corporate		Total
December 31, 2017
Total assets	334,925		41,046		23,991		136,686		536,648
Total liabilities	300,176		9,328		165		55,928		365,597
Preferred stock	—		—		—		61,583		61,583
Equity attributable to common stockholders	$	34,749	$	31,718	$	23,826	$	19,175	$	109,468

Additions to property and equipment (including capital leases) during the year ended December 31, 2017	$	16,284	$	27,295	$	—	$	67	$	43,646

Summary segment financial data (continued).



	Traditional Golf			Entertainment Golf			Debt Investments			Corporate			Total
Year Ended December 31, 2016
Revenues
Golf course operations	$	226,255		$	—		$	—		$	—		$	226,255
Sales of food and beverages	72,625			—			—			—			72,625
Total revenues	298,880			—			—			—			298,880
Operating costs
Operating expenses (A)	254,353			—			—			—			254,353
Cost of sales - food and beverages	21,593			—			—			—			21,593
General and administrative expense	2,708			12			93			6,675			9,488
General and administrative expense - acquisition and transaction expenses (B)	1,594			1,555			—			1,205			4,354
Management fee and termination payment to affiliate	—			—			—			10,704			10,704
Depreciation and amortization	26,496			—			—			—			26,496
Impairment	6,232			—			4,149			—			10,381
Realized and unrealized (gain) loss on investments	(294		)	—			979			—			685
Total operating costs	312,682			1,567			5,221			18,584			338,054
Operating loss	(13,802		)	(1,567		)	(5,221		)	(18,584		)	(39,174		)
Other income (expenses)
Interest and investment income	134			—			91,107			50			91,291
Interest expense, net (C)	(12,470		)	—			(38,112		)	(2,286		)	(52,868		)
Loss on extinguishment of debt	(780		)	—			—			—			(780		)
Gain on deconsolidation	—			—			82,130			—			82,130
Other loss, net	(2,379		)	—			(695		)	—			(3,074		)
Total other income (expenses)	(15,495		)	—			134,430			(2,236		)	116,699
Income tax expense	188			1			—			—			189
Net (loss) income	(29,485		)	(1,568		)	129,209			(20,820		)	77,336
Preferred dividends	—			—			—			(5,580		)	(5,580		)
Net income attributable to noncontrolling interest	(257		)	—			—			—			(257		)
(Loss) income applicable to common stockholders	$	(29,742	)	$	(1,568	)	$	129,209		$	(26,400	)	$	71,499



	Traditional Golf		Entertainment Golf		Debt Investments (E)		Corporate			Total
December 31, 2016
Total assets	341,035		1,425		707,533		121,965			1,171,958
Total liabilities	286,002		1,116		603,257		63,516			953,891
Preferred stock	—		—		—		61,583			61,583
Equity (deficit) attributable to common stockholders	$	55,033	$	309	$	104,276	$	(3,134	)	$	156,484

Additions to property and equipment (including capital leases) during the year ended December 31, 2016	$	11,912	$	659	$	—	$	—		$	12,571

Summary segment financial data (continued).




	Traditional Golf			Entertainment Golf		Debt Investments			Corporate			Discontinued Operations		Eliminations (F)			Total
Year Ended December 31, 2015
Revenues
Golf course operations	$	224,419		$	—	$	—		$	—		$	—	$	—		$	224,419
Sales of food and beverages	71,437			—		—			—			—		—			71,437
Total revenues	295,856			—		—			—			—		—			295,856
Operating costs
Operating expenses (A)	254,553			—		—			—			—		—			254,553
Cost of sales - food and beverages	22,549			—		—			—			—		—			22,549
General and administrative expense	2,983			—		291			7,640			—		—			10,914
General and administrative expense - acquisition and transaction expenses (B)	1,364			—		60			(301		)	—		—			1,123
Management fee and termination payment to affiliate	—			—		—			10,692			—		—			10,692
Depreciation and amortization	28,682			—		—			(48		)	—		—			28,634
Impairment	—			—		11,896			—			—		—			11,896
Realized and unrealized loss (gain) on investments	9			—		(22,273		)	—			—		—			(22,264		)
Total operating costs	310,140			—		(10,026		)	17,983			—		—			318,097
Operating (loss) income	(14,284		)	—		10,026			(17,983		)	—		—			(22,241		)
Other income (expenses)
Interest and investment income	152			—		98,721			23			—		(3,005		)	95,891
Interest expense, net (C)	(16,520		)	—		(44,831		)	(3,783		)	—		3,005			(62,129		)
Gain on extinguishment of debt	14,818			—		488			—			—		—			15,306
Other (loss) income, net	(1,629		)	—		(3,999		)	54			—		—			(5,574		)
Inter-segment elimination (F)	3,005			—		(3,005		)	—			—		—			—
Total other income (expenses)	(174		)	—		47,374			(3,706		)	—		—			43,494
Income tax expense	345			—		—			—			—		—			345
(Loss) income from continuing operations	(14,803		)	—		57,400			(21,689		)	—		—			20,908
Income from discontinued operations, net of tax	—			—		—			—			646		—			646
Net (loss) income	(14,803		)	—		57,400			(21,689		)	646		—			21,554
Preferred dividends	—			—		—			(5,580		)	—		—			(5,580		)
Net loss attributable to noncontrolling interest	293			—		—			—			—		—			293
(Loss) income applicable to common stockholders	$	(14,510	)	$	—	$	57,400		$	(27,269	)	$	646	$	—		$	16,267

Additions to property and equipment (including capital leases) during the year ended December 31, 2015	$	7,637		$	—	$	—		$	—		$	—	$	—		$	7,637

(A)

Operating expenses includes rental expenses recorded under operating leases for carts and equipment in the amount of $3.0 million, $3.8 million and $4.6 million for the years ended December 31, 2017, 2016 and 2015, respectively. Operating expenses also includes amortization of favorable and unfavorable lease intangibles in the amount of $4.1 million, $4.5 million and $4.9 million for the years ended December 31, 2017, 2016 and 2015, respectively. In addition, straight-line rent associated with our Entertainment Golf venues is included in operating expenses.


(B)	Acquisition and transaction expense includes costs related to completed and potential acquisitions and transactions which may include advisory, legal, accounting, valuation and other professional or consulting fees. Transaction expenses also include personnel and other Entertainment Golf development and business costs which do not qualify for capitalization.


(C)	Interest expense, net includes the accretion of membership deposit liabilities in the amount of $6.5 million, $5.8 million and $5.8 million for the years ended December 31, 2017, 2016 and 2015, respectively. Interest expense is net of $0.2 million related to capitalized interest for Entertainment Golf for the year ended December 31, 2017.


(D)	Effective January 1, 2017, the Company revoked its election to be treated as a REIT. As a result, the Company is subject to U.S. federal corporate income tax and the provision for income taxes is recorded in the corporate segment.


(E)	Total assets in the Debt Investments segment includes an equity method investment in the amount of $21.1 million and $19.3 million as of December 31, 2017 and 2016, respectively, recorded in other investments on the Consolidated Balance Sheets. See Note 2 for additional information.


(F)	Represents interest paid by the Traditional Golf segment to the Debt Investments segment related to the Traditional Golf debt which was refinanced by the Company in June 2016 (see Note 7).