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

Annual report pursuant to Section 13 and 15(d)

REVENUES

REVENUES

12 Months Ended

Dec. 31, 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. 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 a point in time which is at the time of sale to customers at the Company’s Entertainment Golf venues and Traditional Golf properties, 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 Balance Sheet



	December 31, 2018
	As reported			Balances under prior accounting			Effect of Change (A)
Liabilities
Other current liabilities	$	22,285		$	27,094		$	(4,809	)
Equity
Accumulated Deficit	$	(3,105,307	)	$	(3,110,116	)	$	4,809


(A)	Represents the cumulative effect adjustment to the 2018 opening balance.

Consolidated Statement of Operations



	Year Ended December 31, 2018
	As reported		Balances under prior accounting		Effect of Change
Revenues
Golf operations	$	244,646	$	222,581	$	22,065
Operating Costs
Operating expenses	$	251,794	$	229,729	$	22,065

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



	Year Ended December 31, 2018
	Entertainment golf venues		Public golf properties		Private golf properties		Managed golf properties		Total
Golf operations	2,191		116,009		101,669		24,777		244,646
Sales of food and beverages	2,713		39,280		27,730		—		69,723
Total revenues	$	4,904	$	155,289	$	129,399	$	24,777	$	314,369