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)

9 Months Ended

Sep. 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
Nine Months Ended September 30, 2018
Revenues
Golf operations	$	190,067		$	1,565		$	—		$	191,632
Sales of food and beverages	51,669			1,782			—			53,451
Total revenues	241,736			3,347			—			245,083
Operating costs
Operating expenses (A)	191,152			3,599			—			194,751
Cost of sales - food and beverages	14,981			432			—			15,413
General and administrative expense	12,781			4,515			9,448			26,744
General and administrative expense - acquisition and transaction expenses (B)	706			2,024			137			2,867
Depreciation and amortization	13,198			1,148			12			14,358
Pre-opening costs (C)	—			2,048			—			2,048
Impairment	5,498			—			147			5,645
Realized and unrealized (gain) on investments	(283		)	—			—			(283		)
Total operating costs	238,033			13,766			9,744			261,543
Operating income (loss)	3,703			(10,419		)	(9,744		)	(16,460		)
Other income (expenses)
Interest and investment income	144			196			1,042			1,382
Interest expense (D)	(12,149		)	—			(1,661		)	(13,810		)
Capitalized interest (D)	580			—			290			870
Other (loss) income, net	(8,715		)	—			1,558			(7,157		)
Total other income (expenses)	(20,140		)	196			1,229			(18,715		)
Income tax expense	—			—			—			—
Net loss	(16,437		)	(10,223		)	(8,515		)	(35,175		)
Preferred dividends	—			—			(4,185		)	(4,185		)
Loss applicable to common stockholders	$	(16,437	)	$	(10,223	)	$	(12,700	)	$	(39,360	)

Summary segment financial data (continued).



	Traditional Golf			Entertainment Golf			Corporate			Total
Three Months Ended September 30, 2018
Revenues
Golf operations	$	68,218		$	710		$	—		$	68,928
Sales of food and beverages	17,661			830			—			18,491
Total revenues	85,879			1,540			—			87,419
Operating costs
Operating expenses (A)	68,565			1,765			—			70,330
Cost of sales - food and beverages	4,976			204			—			5,180
General and administrative expense	4,313			1,878			3,189			9,380
General and administrative expense - acquisition and transaction expenses (B)	199			570			—			769
Depreciation and amortization	3,877			614			4			4,495
Pre-opening costs (C)	—			245			—			245
Impairment	4,172			—			—			4,172
Realized and unrealized loss on investments	48			—			—			48
Total operating costs	86,150			5,276			3,193			94,619
Operating loss	(271		)	(3,736		)	(3,193		)	(7,200		)
Other income (expenses)
Interest and investment income	48			85			334			467
Interest expense (D)	(4,050		)	—			(597		)	(4,647		)
Capitalized interest (D)	238			—			119			357
Other (loss) income, net	(3,548		)	—			496			(3,052		)
Total other income (expenses)	(7,312		)	85			352			(6,875		)
Income tax expense	—			—			—			—
Net loss	(7,583		)	(3,651		)	(2,841		)	(14,075		)
Preferred dividends	—			—			(1,395		)	(1,395		)
Loss applicable to common stockholders	$	(7,583	)	$	(3,651	)	$	(4,236	)	$	(15,470	)



	Traditional Golf		Entertainment Golf		Corporate (E)			Total
September 30, 2018
Total assets	300,404		99,470		86,891			486,765
Total liabilities	279,775		10,097		57,925			347,797
Preferred stock	—		—		61,583			61,583
Equity attributable to common stockholders	$	20,629	$	89,373	$	(32,617	)	$	77,385

Additions to property and equipment (including capital leases) during the nine months ended September 30, 2018	$	11,651	$	25,689	$	—		$	37,340

Summary segment financial data (continued).



	Traditional Golf			Entertainment Golf			Corporate (F)			Total
Nine Months Ended September 30, 2017
Revenues
Golf operations	$	168,969		$	—		$	—		$	168,969
Sales of food and beverages	53,223			—			—			53,223
Total revenues	222,192			—			—			222,192
Operating costs
Operating expenses (A)	175,920			—			—			175,920
Cost of sales - food and beverages	15,762			—			—			15,762
General and administrative expense	12,418			53			5,412			17,883
General and administrative expense - acquisition and transaction expenses (B)	558			4,122			171			4,851
Management fee to affiliate	—			—			8,032			8,032
Depreciation and amortization	17,936			16			—			17,952
Pre-opening costs (C)	—			191			—			191
Impairment	—			—			60			60
Realized and unrealized loss on investments	317			—			6,044			6,361
Total operating costs	222,911			4,382			19,719			247,012
Operating loss	(719		)	(4,382		)	(19,719		)	(24,820		)
Other income (expenses)
Interest and investment income	114			—			22,587			22,701
Interest expense (D)	(11,575		)	—			(3,835		)	(15,410		)
Capitalized interest (D)	75			—			—			75
Other (loss) income, net	(1,044		)	—			1,416			372
Total other income (expenses)	(12,430		)	—			20,168			7,738
Income tax expense	—			—			1,047			1,047
Net loss	(13,149		)	(4,382		)	(598		)	(18,129		)
Preferred dividends	—			—			(4,185		)	(4,185		)
Loss applicable to common stockholders	$	(13,149	)	$	(4,382	)	$	(4,783	)	$	(22,314	)

Summary segment financial data (continued).



	Traditional Golf			Entertainment Golf			Corporate (F)			Total
Three Months Ended September 30, 2017
Revenues
Golf operations	$	62,034		$	—		$	—		$	62,034
Sales of food and beverages	19,657			—			—			19,657
Total revenues	81,691			—			—			81,691
Operating costs
Operating expenses (A)	63,384			—			—			63,384
Cost of sales - food and beverages	5,721			—			—			5,721
General and administrative expense	4,119			10			2,128			6,257
General and administrative expense - acquisition and transaction expenses (B)	72			1,804			55			1,931
Management fee to affiliate	—			—			2,678			2,678
Depreciation and amortization	6,171			16			—			6,187
Pre-opening costs (C)	—			141			—			141
Impairment	—			—			28			28
Realized and unrealized loss (gain) on investments	32			—			(347		)	(315		)
Total operating costs	79,499			1,971			4,542			86,012
Operating income (loss)	2,192			(1,971		)	(4,542		)	(4,321		)
Other income (expenses)
Interest and investment income	42			—			8,376			8,418
Interest expense (D)	(3,905		)	—			(940		)	(4,845		)
Capitalized interest (D)	75			—			—			75
Other (loss) income, net	(211		)	—			413			202
Total other income (expenses)	(3,999		)	—			7,849			3,850
Income tax benefit	—			—			(2		)	(2		)
Net loss (income)	(1,807		)	(1,971		)	3,309			(469		)
Preferred dividends	—			—			(1,395		)	(1,395		)
(Loss) Income applicable to common stockholders	$	(1,807	)	$	(1,971	)	$	1,914		$	(1,864	)

(A)

Operating expenses include rental expenses recorded under operating leases for carts and equipment in the amount of $0.5 million and $1.6 million for the three and nine months ended September 30, 2018, respectively, and $0.7 million and $2.3 million for the three and nine months ended September 30, 2017, respectively. Operating expenses also include amortization of favorable and unfavorable lease intangibles in the amount of $1.0 million and $3.1 million for the three and nine months ended September 30, 2018, respectively, and $1.0 million and $3.1 million for the three and nine months ended September 30, 2017, respectively.


(B)	Acquisition and transaction expenses include costs related to completed and potential acquisitions and transactions, which may include advisory, legal, accounting 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 $5.1 million for the three and nine months ended September 30, 2018, respectively, and $1.6 million and $4.8 million for the three and nine months ended September 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 $22.3 million as of September 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.