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

Annual report pursuant to Section 13 and 15(d)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of realized/unrealized (gain) loss on investments and other income (loss), net

Realized and Unrealized (Gain) Loss on Investments and Other Income (Loss), Net — These items are comprised of the following:


	Year Ended December 31,
	2021		2020		2019









Gain on sale of traditional golf properties, net (A)	$	—	$	16,447	$	19,338

Collateral management fee income, net	191		259		440
Equity in earnings, net of impairment from equity method investments (B)	—		(24,020)		1,381
Other income (loss)	464		(297)		(283)
Other income (loss), net	$	655	$	(7,611)	$	20,876

(A)During the year ended December 31, 2020, the Company sold one traditional golf property, resulting in net proceeds of $33.6 million. This property had a carrying value of $17.0 million and resulted in a gain of $16.6 million. During the year ended December 31, 2019, the Company sold eleven traditional golf properties, resulting in net proceeds of $74.3 million. These traditional golf properties had a carrying value of $54.7 million and resulted in a gain on sale of $19.4 million.

(B)Equity in earnings, net of impairment from equity method investments - During the year ended December 31, 2020, the Company recorded an other-than-temporary impairment charge of $24.7 million on the Company's equity method investment.

Schedule of property and equipment

Depreciation is calculated using the straight-line method based on the lesser of the following estimated useful lives or the lease term:


Buildings and improvements			10-40 years
Finance leases - equipment			2-6 years
Furniture, fixtures, and equipment			2-7 years

The following table summarizes the Company's property and equipment:


	December 31, 2021						December 31, 2020
	Gross Carrying Amount		Accumulated Depreciation		Net Carrying Value		Gross Carrying Amount		Accumulated Depreciation		Net Carrying Value
Land	$	6,770	$	—	$	6,770	$	6,770	$	—	$	6,770
Buildings and improvements	155,086		(46,399)		108,687		142,635		(40,198)		102,437
Furniture, fixtures and equipment	56,809		(28,821)		27,988		51,622		(24,422)		27,200
Finance leases - equipment	29,886		(15,602)		14,284		34,339		(15,296)		19,043
Construction in progress	21,531		—		21,531		13,975		—		13,975
Total Property and Equipment	$	270,082	$	(90,822)	$	179,260	$	249,341	$	(79,916)	$	169,425

Below is a summary of the traditional golf properties sold during 2020 and 2019 (in millions). No traditional golf properties were sold during 2021:


During the three months ended	Number of Golf Properties Sold	Sale Price		Net Proceeds (A)		Transaction Costs		Carrying Value		Gain (Loss) (B)		Management Agreements Executed Subsequent to Sale


March 31, 2019 (C)	3	$	28.7	$	25.5	$	0.5	$	20.3	$	5.2	1
June 30, 2019 (D)	4	$	19.7	$	17.9	$	0.8	$	18.3	$	(0.4)	1
September 30, 2019	1	$	12.5	$	12.3	$	0.2	$	5.2	$	7.0	1
December 31, 2019	3	$	19.1	$	18.6	$	0.4	$	10.9	$	7.7	2
December 31, 2020	1	$	34.5	$	33.6	$	0.9	$	17.0	$	16.6	1

(A)Net proceeds are inclusive of transaction costs.

(B)The gain (loss) on sale is recorded in pre-tax other income (loss), net on the Consolidated Statements of Operations.

(C)The Company received sale proceeds of $17.7 million during the three months ended March 31, 2019, consisting of $18.2 million for the golf properties sold during the three months ended March 31, 2019, and $2.2 million for golf properties that were sold during December 2018, less $2.7 million that was remitted to buyers for golf properties that were sold during December 2018. The Company previously received a $9.4 million cash deposit in 2018 related to a golf property that was sold in 2019. The difference between the sales price and the net proceeds was primarily due to prepaid membership dues that we are obligated to remit to the buyer, including $2.1 million payable to the buyer of a golf property sold during the three months ended March 31, 2019.

(D)The Company received sale proceeds of $14.9 million during the three months ended June 30, 2019, consisting of $18.4 million for the golf properties sold during the three months ended June 30, 2019, less $3.5 million that was remitted to buyers for golf properties that were sold in 2018 and the first quarter of 2019.

Schedule of intangible assets

Amortization of all intangible assets is calculated using the straight-line method based on the following estimated useful lives:


Trade name			30 years
Management contracts			2 - 26 years
Internally-developed software			3 - 5 years
Membership base			7 years
Liquor licenses			Nonamortizable

Schedule of restricted cash from continuing operations

Restricted cash consisted of:


	December 31,
	2021		2020
CDO trustee accounts	$	103	$	114
Restricted cash for construction-in-progress	1,884		1,182
Restricted cash - traditional golf	1,561		1,566
Restricted cash - entertainment golf	730		185
Restricted cash, current and noncurrent	$	4,278	$	3,047

Schedule of other current assets

The following table summarizes the Company's other current assets:


	December 31,
	2021		2020
Managed property receivables	19,316		3,236
Prepaid expenses	2,524		3,158
Deposits	1,827		767
Inventory	2,229		1,950
Miscellaneous current assets, net	4,138		5,299
Other current assets	$	30,034	$	14,410

Schedule of other assets

The following table summarizes the Company's other assets:


	December 31,
	2021		2020
Prepaid expenses	$	2,156	$	2,154
Deposits	3,335		2,504
Miscellaneous assets, net	1,047		2,107
Other assets	$	6,538	$	6,765

Schedule of other current liabilities

The following table summarizes the Company's other current liabilities:


	December 31,
	2021		2020
Operating lease liabilities	$	16,519	$	19,894

Accrued rent	3,455		4,318
Dividends payable	930		—
Miscellaneous current liabilities	5,620		4,005
Other current liabilities	$	26,524	$	28,217

Schedule of amortization of discount and premium and other amortization

Amortization of Discount and Premium and Other Amortization — As reflected in the Consolidated Statements of Cash Flows, these items are comprised of the following:


	Year Ended December 31,
	2021			2020		2019
Accretion of net premium on securities, loans and other investments	$	(568)		$	(413)	$	(267)
Amortization of net discount on debt obligations and deferred financing costs	(8)			(10)		(8)
Amortization of discount and premium	$	(576)	-576000	$	(423)	$	(275)

Amortization of leasehold intangibles	$	—		$	—	$	—
Accretion of membership deposit liability	8,198			8,160		7,225
Other amortization	$	8,198		$	8,160	$	7,225