Drive Shack Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

REVENUES

REVENUES

6 Months Ended

Jun. 30, 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 is due to the recognition of breakage on gift cards and gift certificates offered at the Company's Traditional Golf properties that are 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 the time of sale to customers at the Company’s Traditional Golf properties and Entertainment Golf venues, 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 Balance Sheet and Statement of Operations was as follows:

Consolidated Balance Sheet



	June 30, 2018
	As reported			Balances without Adoption of ASC 606			Effect of Change
Liabilities
Other current liabilities	$	15,145		$	19,954		$	(4,809	)

Equity
Accumulated Deficit	$	(3,084,934	)	$	(3,089,743	)	$	4,809

Consolidated Statement of Operations



	Three Months Ended June 30, 2018						Six Months Ended June 30, 2018
	As reported		Balances without Adoption of ASC 606		Effect of Change		As reported		Balances without Adoption of ASC 606		Effect of Change
Revenues
Golf operations	$	69,150	$	63,022	$	6,128	$	122,704	$	111,919	$	10,785

Operating Costs
Operating expenses	$	67,042	$	60,914	$	6,128	$	124,421	$	113,636	$	10,785

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



	Three Months Ended June 30, 2018										Six Months Ended June 30, 2018
	Public golf properties		Private golf properties		Managed golf properties		Ent. golf venues		Total		Public golf properties		Private golf properties		Managed golf properties		Ent. golf venues		Total
Golf operations	34,609		26,891		6,795		855		69,150		56,979		52,840		12,030		855		122,704
Sales of food and beverages	12,307		8,595		—		952		21,854		19,514		14,494		—		952		34,960
Total revenues	$	46,916	$	35,486	$	6,795	$	1,807	$	91,004	$	76,493	$	67,334	$	12,030	$	1,807	$	157,664