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

Quarterly report pursuant to Section 13 or 15(d)

SEGMENT REPORTING (Tables)

SEGMENT REPORTING (Tables)

6 Months Ended

Jun. 30, 2018

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:



	Traditional Golf			Entertainment Golf			Corporate			Total
Six Months Ended June 30, 2018
Revenues
Golf operations	$	121,849		$	855		$	—		$	122,704
Sales of food and beverages	34,008			952			—			34,960
Total revenues	155,857			1,807			—			157,664
Operating costs
Operating expenses (A)	122,586			1,835			—			124,421
Cost of sales - food and beverages	10,005			228			—			10,233
General and administrative expense	8,467			2,638			6,257			17,362
General and administrative expense - acquisition and transaction expenses (B)	508			1,454			138			2,100
Depreciation and amortization	9,320			535			8			9,863
Pre-opening costs (C)	—			1,803			—			1,803
Impairment	1,326			—			147			1,473
Realized and unrealized (gain) on investments	(331		)	—			—			(331		)
Total operating costs	151,881			8,493			6,550			166,924
Operating income (loss)	3,976			(6,686		)	(6,550		)	(9,260		)
Other income (expenses)
Interest and investment income	96			112			707			915
Interest expense (D)	(8,099		)	—			(1,064		)	(9,163		)
Capitalized interest (D)	342			—			171			513
Other (loss) income, net	(5,166		)	—			1,061			(4,105		)
Total other income (expenses)	(12,827		)	112			875			(11,840		)
Income tax expense	—			—			—			—
Net loss	(8,851		)	(6,574		)	(5,675		)	(21,100		)
Preferred dividends	—			—			(2,790		)	(2,790		)
Loss applicable to common stockholders	$	(8,851	)	$	(6,574	)	$	(8,465	)	$	(23,890	)

Summary segment financial data (continued).



	Traditional Golf			Entertainment Golf			Corporate			Total
Three Months Ended June 30, 2018
Revenues
Golf operations	$	68,295		$	855		$	—		$	69,150
Sales of food and beverages	20,902			952			—			21,854
Total revenues	89,197			1,807			—			91,004
Operating costs
Operating expenses (A)	65,207			1,835			—			67,042
Cost of sales - food and beverages	5,965			228			—			6,193
General and administrative expense	4,313			1,535			3,961			9,809
General and administrative expense - acquisition and transaction expenses (B)	200			200			59			459
Depreciation and amortization	3,808			504			3			4,315
Pre-opening costs (C)	—			247			—			247
Impairment	—			—			—			—
Realized and unrealized (gain) on investments	(89		)	—			—			(89		)
Total operating costs	79,404			4,549			4,023			87,976
Operating income (loss)	9,793			(2,742		)	(4,023		)	3,028
Other income (expenses)
Interest and investment income	45			84			340			469
Interest expense (D)	(4,161		)	—			(570		)	(4,731		)
Capitalized interest (D)	87			—			43			130
Other (loss) income, net	(4,228		)	—			529			(3,699		)
Total other income (expenses)	(8,257		)	84			342			(7,831		)
Income tax expense	—			—			—			—
Net income (loss)	1,536			(2,658		)	(3,681		)	(4,803		)
Preferred dividends	—			—			(1,395		)	(1,395		)
Income (loss) applicable to common stockholders	$	1,536		$	(2,658	)	$	(5,076	)	$	(6,198	)



	Traditional Golf		Entertainment Golf		Corporate (E)			Total
June 30, 2018
Total assets	322,989		86,951		101,339			511,279
Total liabilities	291,565		9,431		57,442			358,438
Preferred stock	—		—		61,583			61,583
Equity attributable to common stockholders	$	31,424	$	77,520	$	(17,686	)	$	91,258

Additions to property and equipment (including capital leases) during the six months ended June 30, 2018	$	7,596	$	16,828	$	—		$	24,424

Summary segment financial data (continued).



	Traditional Golf			Entertainment Golf			Corporate (F)			Total
Six Months Ended June 30, 2017
Revenues
Golf operations	$	106,935		$	—		$	—		$	106,935
Sales of food and beverages	33,566			—			—			33,566
Total revenues	140,501			—			—			140,501
Operating costs
Operating expenses (A)	112,537			—			—			112,537
Cost of sales - food and beverages	10,041			—			—			10,041
General and administrative expense	8,298			43			3,282			11,623
General and administrative expense - acquisition and transaction expenses (B)	486			2,319			117			2,922
Management fee to affiliate	—			—			5,354			5,354
Depreciation and amortization	11,765			—			—			11,765
Pre-opening costs (C)	—			50			—			50
Impairment	—			—			32			32
Realized and unrealized loss on investments	285			—			6,391			6,676
Total operating costs	143,412			2,412			15,176			161,000
Operating loss	(2,911		)	(2,412		)	(15,176		)	(20,499		)
Other income (expenses)
Interest and investment income	72			—			14,211			14,283
Interest expense, net (D)	(7,670		)	—			(2,895		)	(10,565		)
Other (loss) income, net	(834		)	—			1,004			170
Total other income (expenses)	(8,432		)	—			12,320			3,888
Income tax expense	—			—			1,049			1,049
Net loss	(11,343		)	(2,412		)	(3,905		)	(17,660		)
Preferred dividends	—			—			(2,790		)	(2,790		)
Loss applicable to common stockholders	$	(11,343	)	$	(2,412	)	$	(6,695	)	$	(20,450	)

Summary segment financial data (continued).



	Traditional Golf			Entertainment Golf			Corporate (F)			Total
Three Months Ended June 30, 2017
Revenues
Golf operations	$	60,639		$	—		$	—		$	60,639
Sales of food and beverages	20,721			—			—			20,721
Total revenues	81,360			—			—			81,360
Operating costs
Operating expenses (A)	62,028			—			—			62,028
Cost of sales - food and beverages	6,009			—			—			6,009
General and administrative expense	4,106			27			1,657			5,790
General and administrative expense - acquisition and transaction expenses (B)	210			1,058			—			1,268
Management fee to affiliate	—			—			2,677			2,677
Depreciation and amortization	5,972			—			—			5,972
Pre-opening costs (C)	—			50			—			50
Impairment	—			—			32			32
Realized and unrealized loss on investments	165			—			3,122			3,287
Total operating costs	78,490			1,135			7,488			87,113
Operating income (loss)	2,870			(1,135		)	(7,488		)	(5,753		)
Other income (expenses)
Interest and investment income	33			—			6,362			6,395
Interest expense, net (D)	(3,853		)	—			(1,278		)	(5,131		)
Other (loss) income, net	(210		)	—			503			293
Total other income (expenses)	(4,030		)	—			5,587			1,557
Income tax expense	—			—			510			510
Net loss	(1,160		)	(1,135		)	(2,411		)	(4,706		)
Preferred dividends	—			—			(1,395		)	(1,395		)
Loss applicable to common stockholders	$	(1,160	)	$	(1,135	)	$	(3,806	)	$	(6,101	)

(A)

Operating expenses includes rental expenses recorded under operating leases for carts and equipment in the amount of $0.6 million and $1.1 million for the three and six months ended June 30, 2018, respectively, and $0.8 million and $1.6 million for the three and six months ended June 30, 2017, respectively. Operating expenses also includes amortization of favorable and unfavorable lease intangibles in the amount of $1.0 million and $2.1 million for the three and six months ended June 30, 2018, respectively, and $1.1 million and $2.1 million for the three and six months ended June 30, 2017, respectively.


(B)	Acquisition and transaction expenses include costs related to completed and potential acquisitions and transactions which may include advisory, legal, accounting, valuation and other professional or consulting fees.


(C)	Pre-opening costs are expensed as incurred and consist primarily of site-related marketing expenses, pre-opening rent, employee payroll, travel and related expenses, training costs, food, beverage and other restaurant operating expenses incurred prior to opening an Entertainment Golf venue.

(D)

Interest expense includes the accretion of membership deposit liabilities in the amount of $1.7 million and $3.4 million for the three and six months ended June 30, 2018, respectively, and $1.6 million and $3.2 million for the three and six months ended June 30, 2017, respectively. Interest expense and capitalized interest total to interest expense, net on the Consolidated Statements of Operations.


(E)	Total assets in the corporate segment include an equity method investment in the amount of $21.9 million as of June 30, 2018 recorded in other investments on the Consolidated Balance Sheets. See Note 2 for additional information.


(F)	The Debt Investments segment and corporate segment as reported previously are combined to conform to the current period's presentation.