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, 2019

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:



	Entertainment Golf			Traditional Golf			Corporate			Total
Six Months Ended June 30, 2019
Revenues
Golf operations	$	1,288		$	100,804		$	—		$	102,092
Sales of food and beverages	1,911			21,564			—			23,475
Total revenues	3,199			122,368			—			125,567
Operating costs
Operating expenses (A)	3,605			102,838			—			106,443
Cost of sales - food and beverages	501			6,100			—			6,601
General and administrative expense (B)	6,930			8,212			8,510			23,652
General and administrative expense - acquisition and transaction expenses (C)	963			333			278			1,574
Depreciation and amortization	1,670			8,335			41			10,046
Pre-opening costs (D)	2,879			—			—			2,879
Impairment	118			4,088			—			4,206
Realized and unrealized (gain) on investments	—			—			—			—
Total operating costs	16,666			129,906			8,829			155,401
Operating loss	(13,467		)	(7,538		)	(8,829		)	(29,834		)
Other income (expenses)
Interest and investment income	246			61			301			608
Interest expense (E)	(142		)	(4,051		)	(1,256		)	(5,449		)
Capitalized interest (E)	—			413			1,089			1,502
Other (loss) income, net	(7		)	4,688			933			5,614
Total other income (expenses)	97			1,111			1,067			2,275
Income tax expense	—			—			—			—
Net loss	(13,370		)	(6,427		)	(7,762		)	(27,559		)
Preferred dividends	—			—			(2,790		)	(2,790		)
Loss applicable to common stockholders	$	(13,370	)	$	(6,427	)	$	(10,552	)	$	(30,349	)

Summary segment financial data (continued).



	Entertainment Golf			Traditional Golf			Corporate			Total
Three Months Ended June 30, 2019
Revenues
Golf operations	$	607		$	56,779		$	—		$	57,386
Sales of food and beverages	872			13,357			—			14,229
Total revenues	1,479			70,136			—			71,615
Operating costs
Operating expenses (A)	1,857			56,863			—			58,720
Cost of sales - food and beverages	251			3,653			—			3,904
General and administrative expense (B)	3,551			4,316			4,565			12,432
General and administrative expense - acquisition and transaction expenses (C)	806			179			190			1,175
Depreciation and amortization	961			4,118			43			5,122
Pre-opening costs (D)	1,700			—			—			1,700
Impairment	118			—			—			118
Realized and unrealized loss on investments	—			—			—			—
Total operating costs	9,244			69,129			4,798			83,171
Operating (loss) income	(7,765		)	1,007			(4,798		)	(11,556		)
Other income (expenses)
Interest and investment income	114			23			128			265
Interest expense (E)	(142		)	(1,861		)	(629		)	(2,632		)
Capitalized interest (E)	—			226			611			837
Other (loss) income, net	—			(343		)	470			127
Total other income (expenses)	(28		)	(1,955		)	580			(1,403		)
Income tax expense	—			—			—			—
Net loss	(7,793		)	(948		)	(4,218		)	(12,959		)
Preferred dividends	—			—			(1,395		)	(1,395		)
Loss applicable to common stockholders	$	(7,793	)	$	(948	)	$	(5,613	)	$	(14,354	)



	Entertainment Golf		Traditional Golf			Corporate (F)			Total
June 30, 2019
Total assets	180,343		336,484			42,248			559,075
Total liabilities	46,035		354,116			61,802			461,953
Preferred stock	—		—			61,583			61,583
Equity attributable to common stockholders	$	134,308	$	(17,632	)	$	(81,137	)	$	35,539

Additions to property and equipment (including finance leases) during the six months ended June 30, 2019	$	47,249	$	6,490		$	1,648		$	55,387

Summary segment financial data (continued).



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

Summary segment financial data (continued).



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


(A)	Operating expenses include rental expenses recorded under operating leases for carts and equipment in the amount of $0.2 million and $0.5 million for the three and six months ended June 30, 2019, respectively, and $0.6 million and $1.1 million for the three and six months ended June 30, 2018, respectively.


(B)	General and administrative expenses include severance expense in the amount of $0.7 million and $1.1 million for the three and six months ended June 30, 2019, respectively, and zero and $0.1 million for the three and six months ended June 30, 2018.


(C)	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.


(D)	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 operating expenses incurred prior to opening an Entertainment Golf venue.

(E)

Interest expense includes the accretion of membership deposit liabilities in the amount of $1.6 million and $3.6 million for the three and six months ended June 30, 2019, respectively, and $1.7 million and $3.4 million for the three and six months ended June 30, 2018, respectively. Interest expense and capitalized interest are combined in interest expense, net on the Consolidated Statements of Operations.


(F)	Total assets in the corporate segment include an equity method investment in the amount of $23.3 million as of June 30, 2019 recorded in other investments on the Consolidated Balance Sheets.