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

Quarterly report pursuant to Section 13 or 15(d)

REVENUES

REVENUES

9 Months Ended

Sep. 30, 2018

Revenue from Contract with Customer [Abstract]

On January 1, 2018, the Company adopted the new accounting standard ASC 606, Revenue from Contracts with Customers, and all the related amendments (“new revenue standard”) for all contracts using the modified retrospective method. The Company recognized the cumulative effect of initially applying the new revenue standard as a decrease to the 2018 opening balance of accumulated deficit of $4.8 million and a corresponding decrease to other current liabilities, and the same decreases are applied to the September 30, 2018 balances. The adjustment was due to the recognition of breakage on gift cards and gift certificates offered at the Company's Traditional Golf properties that were not expected to be redeemed based on historical redemption rates. The recognition of breakage on gift cards and gift certificates on an ongoing basis is expected to have an immaterial impact to the Company’s net income (loss). Also in accordance with the new revenue standard, certain operating costs incurred at the Company’s managed Traditional Golf properties and the reimbursements of those operating costs will now be recognized in Operating expenses and Golf operations, respectively. The reimbursements do not include a profit margin and therefore this change will have no net impact to the Company’s operating income (loss).

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

Per the modified retrospective method, comparative information has not been restated to conform to these changes and continues to be reported under the accounting standards in effect for those periods. In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on the Consolidated Statements of Operations was as follows:

Consolidated Statement of Operations



	Three Months Ended September 30, 2018						Nine Months Ended September 30, 2018
	As reported		Balances under prior accounting		Effect of Change		As reported		Balances under prior accounting		Effect of Change
Revenues
Golf operations	$	68,928	$	61,499	$	7,429	$	191,632	$	173,417	$	18,215
Operating Costs
Operating expenses	$	70,330	$	62,901	$	7,429	$	194,751	$	176,536	$	18,215

The Company’s revenue is all generated within the Traditional and Entertainment Golf segments. The following table disaggregates revenue by category: public and private golf properties (owned and leased), managed golf properties and Entertainment golf venues.



	Three Months Ended September 30, 2018										Nine Months Ended September 30, 2018
	Public golf properties		Private golf properties		Managed golf properties		Ent. golf venues		Total		Public golf properties		Private golf properties		Managed golf properties		Ent. golf venues		Total
Golf operations	34,689		25,362		8,167		710		68,928		91,668		78,202		20,197		1,565		191,632
Sales of food and beverages	10,757		6,904		—		830		18,491		30,271		21,398		—		1,782		53,451
Total revenues	$	45,446	$	32,266	$	8,167	$	1,540	$	87,419	$	121,939	$	99,600	$	20,197	$	3,347	$	245,083