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

Quarterly report pursuant to Section 13 or 15(d)

SEGMENT REPORTING (Tables)

SEGMENT REPORTING (Tables)

9 Months Ended

Sep. 30, 2019

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



	Entertainment Golf			Traditional Golf			Corporate			Total
Nine Months Ended September 30, 2019
Revenues
Golf operations	$	2,720		$	160,169		$	—		$	162,889
Sales of food and beverages	4,167			33,193			—			37,360
Total revenues	6,887			193,362			—			200,249
Operating costs
Operating expenses (A)	6,807			163,090			—			169,897
Cost of sales - food and beverages	1,106			9,352			—			10,458
General and administrative expense (B)	10,349			12,713			10,977			34,039
General and administrative expense - acquisition and transaction expenses (C)	3,094			539			309			3,942
Depreciation and amortization	3,119			12,528			122			15,769
Pre-opening costs (D)	7,229			—			—			7,229
Impairment and other losses	1,270			4,807			—			6,077
Realized and unrealized (gain) on investments	—			—			—			—
Total operating costs	32,974			203,029			11,408			247,411
Operating loss	(26,087		)	(9,667		)	(11,408		)	(47,162		)
Other income (expenses)
Interest and investment income	311			84			404			799
Interest expense (E)	(245		)	(6,140		)	(1,856		)	(8,241		)
Capitalized interest (E)	—			583			1,650			2,233
Other (loss) income, net	(7		)	11,582			1,380			12,955
Total other income (expenses)	59			6,109			1,578			7,746
Income tax expense	—			—			162			162
Net loss	(26,028		)	(3,558		)	(9,992		)	(39,578		)
Preferred dividends	—			—			(4,185		)	(4,185		)
Loss applicable to common stockholders	$	(26,028	)	$	(3,558	)	$	(14,177	)	$	(43,763	)

Summary segment financial data (continued).



	Entertainment Golf			Traditional Golf			Corporate			Total
Three Months Ended September 30, 2019
Revenues
Golf operations	$	1,431		$	59,366		$	—		$	60,797
Sales of food and beverages	2,256			11,629			—			13,885
Total revenues	3,687			70,995			—			74,682
Operating costs
Operating expenses (A)	3,202			60,252			—			63,454
Cost of sales - food and beverages	604			3,252			—			3,856
General and administrative expense (B)	3,433			4,500			2,467			10,400
General and administrative expense - acquisition and transaction expenses (C)	2,117			207			31			2,355
Depreciation and amortization	1,450			4,192			81			5,723
Pre-opening costs (D)	4,350			—			—			4,350
Impairment and other losses	1,152			720			—			1,872
Realized and unrealized loss on investments	—			—			—			—
Total operating costs	16,308			73,123			2,579			92,010
Operating loss	(12,621		)	(2,128		)	(2,579		)	(17,328		)
Other income (expenses)
Interest and investment income	64			24			103			191
Interest expense (E)	(103		)	(2,088		)	(599		)	(2,790		)
Capitalized interest (E)	—			169			560			729
Other (loss) income, net	—			6,896			445			7,341
Total other income (expenses)	(39		)	5,001			509			5,471
Income tax expense	—			—			162			162
Net (loss) income	(12,660		)	2,873			(2,232		)	(12,019		)
Preferred dividends	—			—			(1,395		)	(1,395		)
(Loss) income applicable to common stockholders	$	(12,660	)	$	2,873		$	(3,627	)	$	(13,414	)



	Entertainment Golf		Traditional Golf			Corporate (F)			Total
September 30, 2019
Total assets	176,366		319,279			40,261			535,906
Total liabilities	42,841		346,593			62,816			452,250
Preferred stock	—		—			61,583			61,583
Equity attributable to common stockholders	$	133,525	$	(27,314	)	$	(84,138	)	$	22,073

Additions to property and equipment (including finance leases) during the nine months ended September 30, 2019	$	56,977	$	10,661		$	1,733		$	69,371

Summary segment financial data (continued).



	Entertainment Golf			Traditional Golf			Corporate			Total
Nine Months Ended September 30, 2018
Revenues
Golf operations	$	1,565		$	190,067		$	—		$	191,632
Sales of food and beverages	1,782			51,669			—			53,451
Total revenues	3,347			241,736			—			245,083
Operating costs
Operating expenses (A)	3,599			191,152			—			194,751
Cost of sales - food and beverages	432			14,981			—			15,413
General and administrative expense (B)	4,515			12,781			9,448			26,744
General and administrative expense - acquisition and transaction expenses (C)	2,024			706			137			2,867
Depreciation and amortization	1,148			13,198			12			14,358
Pre-opening costs (D)	2,048			—			—			2,048
Impairment and other losses	—			5,498			147			5,645
Realized and unrealized (gain) on investments	—			(283		)	—			(283		)
Total operating costs	13,766			238,033			9,744			261,543
Operating (loss) income	(10,419		)	3,703			(9,744		)	(16,460		)
Other income (expenses)
Interest and investment income	196			144			1,042			1,382
Interest expense (E)	—			(12,149		)	(1,661		)	(13,810		)
Capitalized interest (E)	—			580			290			870
Other (loss) income, net	—			(8,715		)	1,558			(7,157		)
Total other income (expenses)	196			(20,140		)	1,229			(18,715		)
Income tax expense	—			—			—			—
Net loss	(10,223		)	(16,437		)	(8,515		)	(35,175		)
Preferred dividends	—			—			(4,185		)	(4,185		)
Loss applicable to common stockholders	$	(10,223	)	$	(16,437	)	$	(12,700	)	$	(39,360	)

Summary segment financial data (continued).



	Entertainment Golf			Traditional Golf			Corporate			Total
Three Months Ended September 30, 2018
Revenues
Golf operations	$	710		$	68,218		$	—		$	68,928
Sales of food and beverages	830			17,661			—			18,491
Total revenues	1,540			85,879			—			87,419
Operating costs
Operating expenses (A)	1,765			68,565			—			70,330
Cost of sales - food and beverages	204			4,976			—			5,180
General and administrative expense (B)	1,878			4,313			3,189			9,380
General and administrative expense - acquisition and transaction expenses (C)	570			199			—			769
Depreciation and amortization	614			3,877			4			4,495
Pre-opening costs (D)	245			—			—			245
Impairment and other losses	—			4,172			—			4,172
Realized and unrealized loss on investments	—			48			—			48
Total operating costs	5,276			86,150			3,193			94,619
Operating loss	(3,736		)	(271		)	(3,193		)	(7,200		)
Other income (expenses)
Interest and investment income	85			48			334			467
Interest expense (E)	—			(4,050		)	(597		)	(4,647		)
Capitalized interest (E)	—			238			119			357
Other (loss) income, net	—			(3,548		)	496			(3,052		)
Total other income (expenses)	85			(7,312		)	352			(6,875		)
Income tax expense	—			—			—			—
Net loss	(3,651		)	(7,583		)	(2,841		)	(14,075		)
Preferred dividends	—			—			(1,395		)	(1,395		)
Loss applicable to common stockholders	$	(3,651	)	$	(7,583	)	$	(4,236	)	$	(15,470	)


(A)	Operating expenses include rental expenses recorded under operating leases for carts and equipment in the amount of $0.2 million and $0.7 million for the three and nine months ended September 30, 2019, respectively, and $0.5 million and $1.6 million for the three and nine months ended September 30, 2018, respectively.


(B)	General and administrative expenses include severance expense in the amount of $0.5 million and $1.6 million for the three and nine months ended September 30, 2019, respectively, and zero and $0.1 million for the three and nine months ended September 30, 2018, respectively.


(C)	Acquisition and transaction expenses include costs related to completed and potential acquisitions and transactions, 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 $1.8 million and $5.4 million for the three and nine months ended September 30, 2019, respectively, and $1.7 million and $5.1 million for the three and nine months ended September 30, 2018, respectively. Interest expense and capitalized interest are combined in interest expense, net on the Consolidated Statements of Operations.


(F)	Total assets in the corporate segment include an equity method investment in the amount of $23.6 million as of September 30, 2019 recorded in other investments on the Consolidated Balance Sheets.