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

SEGMENT REPORTING (Tables)

12 Months Ended

Dec. 31, 2019

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



	Entertainment Golf			Traditional Golf			Corporate			Total
Year Ended December 31, 2019
Revenues
Golf operations	$	7,806		$	208,691		$	—		$	216,497
Sales of food and beverages	11,974			43,593			—			55,567
Total revenues	19,780			252,284			—			272,064
Operating costs
Operating expenses (A)	16,403			212,903			—			229,306
Cost of sales - food and beverages	2,984			12,233			—			15,217
General and administrative expense (B)	14,081			16,812			12,008			42,901
General and administrative expense - acquisition and transaction expenses (C)	3,490			798			787			5,075
Depreciation and amortization	5,935			16,266			195			22,396
Pre-opening costs (D)	9,040			—			—			9,040
Impairment and other losses	10,196			5,217			—			15,413
Realized and unrealized loss on investments	—			—			—			—
Total operating costs	62,129			264,229			12,990			339,348
Operating loss	(42,349		)	(11,945		)	(12,990		)	(67,284		)
Other income (expenses)
Interest and investment income	321			105			529			955
Interest expense (E)	(355		)	(8,238		)	(2,415		)	(11,008		)
Capitalized interest (E)	—			586			1,662			2,248
Other income (loss), net	—			19,069			1,807			20,876
Total other income (expenses)	(34		)	11,522			1,583			13,071
Income tax expense	62			8			571			641
Net loss	(42,445		)	(431		)	(11,978		)	(54,854		)
Preferred dividends	—			—			(5,580		)	(5,580		)
Loss applicable to common stockholders	$	(42,445	)	$	(431	)	$	(17,558	)	$	(60,434	)



	Entertainment Golf		Traditional Golf			Corporate (F)			Total
December 31, 2019
Total assets	163,583		308,456			43,952			515,991
Total liabilities	36,375		350,968			63,073			450,416
Preferred stock	—		—			61,583			61,583
Equity (loss) attributable to common stockholders	$	127,208	$	(42,512	)	$	(80,704	)	$	3,992

Additions to property and equipment (including finance leases) during the year ended December 31, 2019	$	62,543	$	14,966		$	1,764		$	79,273

Summary segment financial data (continued).



	Entertainment Golf			Traditional Golf			Corporate			Total
Year Ended December 31, 2018
Revenues
Golf operations	$	2,191		$	242,455		$	—		$	244,646
Sales of food and beverages	2,713			67,010			—			69,723
Total revenues	4,904			309,465			—			314,369
Operating costs
Operating expenses (A)	5,398			246,396			—			251,794
Cost of sales - food and beverages	640			19,513			—			20,153
General and administrative expense (B)	6,382			16,702			11,271			34,355
General and administrative expense - acquisition and transaction expenses (C)	2,679			1,024			502			4,205
Depreciation and amortization	1,886			17,814			4			19,704
Pre-opening costs (D)	2,483			—			—			2,483
Impairment and other losses	—			8,093			147			8,240
Realized and unrealized loss on investments	—			(131		)	—			(131		)
Total operating costs	19,468			309,411			11,924			340,803
Operating (loss) income	(14,564		)	54			(11,924		)	(26,434		)
Other income (expenses)
Interest and investment income	281			194			1,319			1,794
Interest expense (E)	—			(16,046		)	(2,274		)	(18,320		)
Capitalized interest (E)	—			1,121			560			1,681
Other income, net	—			846			2,034			2,880
Total other income (expenses)	281			(13,885		)	1,639			(11,965		)
Income tax expense	—			—			284			284
Net loss	(14,283		)	(13,831		)	(10,569		)	(38,683		)
Preferred dividends	—			—			(5,580		)	(5,580		)
Loss applicable to common stockholders	$	(14,283	)	$	(13,831	)	$	(16,149	)	$	(44,263	)



	Entertainment Golf		Traditional Golf		Corporate (F)			Total
December 31, 2018
Total assets	117,416		225,904		58,627			401,947
Total liabilities	13,561		196,836		56,883			267,280
Preferred stock	—		—		61,583			61,583
Equity attributable to common stockholders	$	103,855	$	29,068	$	(59,839	)	$	73,084

Additions to property and equipment (including finance leases) during the year ended December 31, 2018	$	55,924	$	14,042	$	—		$	69,966

Summary segment financial data (continued).




	Entertainment Golf			Traditional Golf			Corporate			Total
Year Ended December 31, 2017
Revenues
Golf 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)	—			232,796			—			232,796
Cost of sales - food and beverages	—			20,959			—			20,959
General and administrative expense (B)	147			16,073			6,456			22,676
General and administrative expense - acquisition and transaction expenses (C)	7,139			677			921			8,737
Management fee and termination payment to affiliate	—			—			21,410			21,410
Depreciation and amortization	44			24,260			—			24,304
Pre-opening costs (D)	320			—			—			320
Impairment and other losses	—			—			60			60
Realized and unrealized loss on investments	—			199			6,044			6,243
Total operating costs	7,650			294,964			34,891			337,505
Operating loss	(7,650		)	(2,370		)	(34,891		)	(44,911		)
Other income (expenses)
Interest and investment income	—			159			23,003			23,162
Interest expense (E)	—			(15,523		)	(4,304		)	(19,827		)
Capitalized interest (E)	—			246			—			246
Other (loss) income, net	—			(1,762		)	1,856			94
Total other income (expenses)	—			(16,880		)	20,555			3,675
Income tax expense	—			—			965			965
Net loss	(7,650		)	(19,250		)	(15,301		)	(42,201		)
Preferred dividends	—			—			(5,580		)	(5,580		)
Loss applicable to common stockholders	$	(7,650	)	$	(19,250	)	$	(20,881	)	$	(47,781	)

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


(A)	Operating expenses includes rental expenses recorded under operating leases for carts and equipment in the amount of $0.9 million, $1.9 million and $3.0 million for the years ended December 31, 2019, 2018 and 2017, respectively.


(B)	General and administrative expenses include severance expense in the amount of $2.3 million, $0.1 million and zero for the years ended December 31, 2019, 2018 and 2017, respectively.


(C)	Acquisition and transaction expense includes costs related to completed and potential acquisitions and transactions and strategic initiatives 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, lease expense, 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 $7.2 million, $6.9 million and $6.5 million for the years ended December 31, 2019, 2018 and 2017, respectively. Interest expense and capitalized interest total to interest expense, net on the Consolidated Statements of Operations.


(F)	Total assets in the corporate segment includes an equity method investment in the amount of $24.0 million and $22.6 million as of December 31, 2019 and 2018, respectively, recorded in other investments on the Consolidated Balance Sheets. See Note 2 for additional information.