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

Annual report pursuant to Section 13 and 15(d)

SEGMENT REPORTING (Tables)

SEGMENT REPORTING (Tables)

12 Months Ended

Dec. 31, 2018

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, 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	6,382			16,702			11,271			34,355
General and administrative expense - acquisition and transaction expenses (B)	2,679			1,024			502			4,205
Depreciation and amortization	1,886			17,814			4			19,704
Pre-opening costs (C)	2,483			—			—			2,483
Impairment	—			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 income (loss)	(14,564		)	54			(11,924		)	(26,434		)
Other income (expenses)										—
Interest and investment income	281			194			1,319			1,794
Interest expense (D)	—			(16,046		)	(2,274		)	(18,320		)
Capitalized interest (D)	—			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 (E)	—			—			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 (loss) attributable to common stockholders	$	103,855	$	29,068	$	(59,839	)	$	73,084

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

Summary segment financial data (continued).



	Entertainment Golf			Traditional Golf			Corporate (G)			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	147			16,073			6,456			22,676
General and administrative expense - acquisition and transaction expenses (B)	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 (C)	320			—			—			320
Impairment	—			—			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 (D)	—			(15,523		)	(4,304		)	(19,827		)
Capitalized interest (D)	—			246			—			246
Other (loss) income, net	—			(1,762		)	1,856			94
Total other income (expenses)	—			(16,880		)	20,555			3,675
Income tax expense (E)	—			—			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	)



	Entertainment Golf		Traditional Golf		Corporate (F)(G)		Total
December 31, 2017
Total assets	41,046		334,925		160,677		536,648
Total liabilities	9,328		300,176		56,093		365,597
Preferred stock	—		—		61,583		61,583
Equity attributable to common stockholders	$	31,718	$	34,749	$	43,001	$	109,468

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

Summary segment financial data (continued).




	Entertainment Golf			Traditional Golf			Corporate (G)			Total
Year Ended December 31, 2016
Revenues
Golf operations	$	—		$	226,255		$	—		$	226,255
Sales of food and beverages	—			72,625			—			72,625
Total revenues	—			298,880			—			298,880
Operating costs
Operating expenses (A)	—			239,021			—			239,021
Cost of sales - food and beverages	—			21,593			—			21,593
General and administrative expense	12			16,556			8,252			24,820
General and administrative expense - acquisition and transaction expenses (B)	1,555			1,594			1,205			4,354
Management fee and termination payment to affiliate	—			—			10,704			10,704
Depreciation and amortization	—			26,496			—			26,496
Impairment	—			6,232			4,149			10,381
Realized and unrealized (gain) loss on investments	—			(294		)	979			685
Total operating costs	1,567			311,198			25,289			338,054
Operating loss	(1,567		)	(12,318		)	(25,289		)	(39,174		)
Other income (expenses)
Interest and investment income	—			134			91,157			91,291
Interest expense (D)	—			(12,470		)	(40,398		)	(52,868		)
Gain on deconsolidation	—			—			82,130			82,130
Other loss, net	—			(3,159		)	(695		)	(3,854		)
Total other income (expenses)	—			(15,495		)	132,194			116,699
Income tax expense	1			188			—			189
Net (loss) income	(1,568		)	(28,001		)	106,905			77,336
Preferred dividends	—			—			(5,580		)	(5,580		)
Net income attributable to noncontrolling interest	—			(257		)	—			(257		)
(Loss) income applicable to common stockholders	$	(1,568	)	$	(28,258	)	$	101,325		$	71,499

Additions to property and equipment (including capital leases) during the year ended December 31, 2016	$	659		$	11,912		$	—		$	12,571

(A)

Operating expenses includes rental expenses recorded under operating leases for carts and equipment in the amount of $1.9 million, $3.0 million and $3.8 million for the years ended December 31, 2018, 2017 and 2016, respectively. Operating expenses also includes amortization of favorable and unfavorable lease intangibles in the amount of $4.1 million, $4.1 million and $4.5 million for the years ended December 31, 2018, 2017 and 2016, respectively.


(B)	Acquisition and transaction expense includes costs related to completed and potential acquisitions and transactions which may include advisory, legal, accounting, valuation 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 $6.9 million, $6.5 million and $5.8 million for the years ended December 31, 2018, 2017 and 2016, respectively. Interest expense and capitalized interest total to interest expense, net on the Consolidated Statements of Operations.


(E)	Effective January 1, 2017, the Company revoked its election to be treated as a REIT. As a result, the Company is subject to U.S. federal corporate income tax and the provision for income taxes is recorded in the corporate segment.


(F)	Total assets in the corporate segment includes an equity method investment in the amount of $22.6 million and $21.1 million as of December 31, 2018 and 2017, respectively, recorded in other investments on the Consolidated Balance Sheets. See Note 2 for additional information.


(G)	The Debt Investments segment and corporate segment as reported previously are combined to conform to the current period's presentation.