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001-31458
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81-0559116
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(Commission
File Number)
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(IRS Employer
Identification No.)
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111 W 19th St, 8th Fl.
New York, New York
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10011
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(Address of principal executive offices)
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(Zip Code)
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☐
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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☐
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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☐
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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☐
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 2.02.
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Results of Operations and Financial Condition.
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Item 9.01.
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Financial Statements and Exhibits.
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(d) Exhibits
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Exhibit
Number
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|
Description
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|
|
|
|
Press release, dated August 3, 2018, issued by Drive Shack Inc.
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|
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DRIVE SHACK INC.
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|
(Registrant)
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|
|
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/s/ Lawrence A. Goodfield, Jr.
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|
Lawrence A. Goodfield, Jr.
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Chief Financial Officer, Chief Accounting Officer & Treasurer
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§ |
Drive Shack – The Company opened its first venue in Orlando, Florida, in April 2018.
|
o |
The Company has announced five additional venues to date, which are in various stages of development, and are expected to open throughout 2019 and early 2020.
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§ |
American Golf – As of June 30, 2018, the Company owned, leased or managed 74 golf properties across 12 states. These courses are located predominately in high-volume, top-tier cities across the U.S.
|
o |
The Company is monetizing its 26 owned properties. As of the date of this release, 1 property was sold and 15 properties were under contract or had a letter of intent for purchase. The remaining properties are being actively marketed and the Company aims to achieve all sales by early 2019.
|
o |
The Company entered the year aiming to terminate or restructure 14 of its lease agreements. During the first six months of the year, 2 properties have been terminated or converted to management agreements. The Company continues to pursue the remaining 12 agreements.
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§ |
GAAP Loss of $6 million, or $0.09 per share, for the three months ended June 30, 2018, compared to a loss of $6 million, or $0.09 per share, in the prior year corresponding period.
|
§ |
GAAP Loss of $24 million, or $0.36 per share, for the six months ended June 30, 2018, compared to a loss of $20 million, or $0.31 per share, in the prior year corresponding period.
|
o |
Year-over-year decrease is primarily due to lower interest income because of the repayment of the resorts-related loan and sale of agency securities, partially offset by stronger year-over-year performance in the traditional golf business.
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Three Months Ended
June 30,
|
Six Months Ended
June 30,
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|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
GAAP Loss
|
$
|
(6) million |
$
|
(6) million |
$
|
(24) million |
$
|
(20) million | ||||||||
GAAP Loss per WA Basic Share
|
$
|
(0.09
|
)
|
$
|
(0.09
|
)
|
$
|
(0.36
|
)
|
$
|
(0.31
|
)
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Revenues
|
||||||||||||||||
Golf operations
|
$
|
69,150
|
$
|
60,639
|
$
|
122,704
|
$
|
106,935
|
||||||||
Sales of food and beverages
|
21,854
|
20,721
|
34,960
|
33,566
|
||||||||||||
Total revenues
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91,004
|
81,360
|
157,664
|
140,501
|
||||||||||||
Operating costs
|
||||||||||||||||
Operating expenses
|
67,042
|
62,028
|
124,421
|
112,537
|
||||||||||||
Cost of sales - food and beverages
|
6,193
|
6,009
|
10,233
|
10,041
|
||||||||||||
General and administrative expense
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10,268
|
7,058
|
19,462
|
14,545
|
||||||||||||
Management fee to affiliate
|
—
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2,677
|
—
|
5,354
|
||||||||||||
Depreciation and amortization
|
4,315
|
5,972
|
9,863
|
11,765
|
||||||||||||
Pre-opening costs
|
247
|
50
|
1,803
|
50
|
||||||||||||
Impairment
|
—
|
32
|
1,473
|
32
|
||||||||||||
Realized and unrealized (gain) loss on investments
|
(89
|
)
|
3,287
|
(331
|
)
|
6,676
|
||||||||||
Total operating costs
|
87,976
|
87,113
|
166,924
|
161,000
|
||||||||||||
Operating income (loss)
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3,028
|
(5,753
|
)
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(9,260
|
)
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(20,499
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)
|
|||||||||
Other income (expenses)
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||||||||||||||||
Interest and investment income
|
469
|
6,395
|
915
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14,283
|
||||||||||||
Interest expense, net
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(4,601
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)
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(5,131
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)
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(8,650
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)
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(10,565
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)
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||||||||
Other (loss) income, net
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(3,699
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)
|
293
|
(4,105
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)
|
170
|
||||||||||
Total other income (expenses)
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(7,831
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)
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1,557
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(11,840
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)
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3,888
|
||||||||||
Loss before income tax
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(4,803
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)
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(4,196
|
)
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(21,100
|
)
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(16,611
|
)
|
||||||||
Income tax expense
|
—
|
510
|
—
|
1,049
|
||||||||||||
Net Loss
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(4,803
|
)
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(4,706
|
)
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(21,100
|
)
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(17,660
|
)
|
||||||||
Preferred dividends
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(1,395
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)
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(1,395
|
)
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(2,790
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)
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(2,790
|
)
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||||||||
Loss Applicable to Common Stockholders
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$
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(6,198
|
)
|
$
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(6,101
|
)
|
$
|
(23,890
|
)
|
$
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(20,450
|
)
|
||||
Loss Applicable to Common Stock, per share
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||||||||||||||||
Basic
|
$
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(0.09
|
)
|
$
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(0.09
|
)
|
$
|
(0.36
|
)
|
$
|
(0.31
|
)
|
||||
Diluted
|
$
|
(0.09
|
)
|
$
|
(0.09
|
)
|
$
|
(0.36
|
)
|
$
|
(0.31
|
)
|
||||
Weighted Average Number of Shares of Common Stock Outstanding
|
||||||||||||||||
Basic
|
66,977,104
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66,874,155
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66,977,104
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66,858,155
|
||||||||||||
Diluted
|
66,977,104
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66,874,155
|
66,977,104
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66,858,155
|
June 30, 2018
|
||||||||
(Unaudited)
|
December 31, 2017
|
|||||||
Assets
|
||||||||
Current Assets
|
||||||||
Cash and cash equivalents
|
$
|
125,659
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$
|
167,692
|
||||
Restricted cash
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3,859
|
5,178
|
||||||
Accounts receivable, net
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9,877
|
8,780
|
||||||
Real estate assets, held-for-sale
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165,261
|
2,000
|
||||||
Real estate securities, available-for-sale
|
2,425
|
2,294
|
||||||
Other current assets
|
25,171
|
21,568
|
||||||
Total Current Assets
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332,252
|
207,512
|
||||||
Restricted cash, noncurrent
|
777
|
818
|
||||||
Property and equipment, net of accumulated depreciation
|
93,592
|
241,258
|
||||||
Intangibles, net of accumulated amortization
|
53,716
|
57,276
|
||||||
Other investments
|
21,901
|
21,135
|
||||||
Other assets
|
9,041
|
8,649
|
||||||
Total Assets
|
$
|
511,279
|
$
|
536,648
|
||||
Liabilities and Equity
|
||||||||
Current Liabilities
|
||||||||
Obligations under capital leases
|
$
|
5,158
|
$
|
4,652
|
||||
Membership deposit liabilities
|
8,972
|
8,733
|
||||||
Accounts payable and accrued expenses
|
44,506
|
36,797
|
||||||
Deferred revenue
|
10,614
|
31,207
|
||||||
Real estate liabilities, held-for-sale
|
9,651
|
—
|
||||||
Other current liabilities
|
15,145
|
22,596
|
||||||
Total Current Liabilities
|
94,046
|
103,985
|
||||||
Credit facilities and obligations under capital leases
|
112,268
|
112,105
|
||||||
Junior subordinated notes payable
|
51,204
|
51,208
|
||||||
Membership deposit liabilities, noncurrent
|
87,832
|
86,523
|
||||||
Deferred revenue, noncurrent
|
7,608
|
6,930
|
||||||
Other liabilities
|
5,480
|
4,846
|
||||||
Total Liabilities
|
$
|
358,438
|
$
|
365,597
|
||||
Commitments and contingencies
|
||||||||
Equity
|
||||||||
Preferred stock, $0.01 par value, 100,000,000 shares authorized, 1,347,321 shares of 9.75% Series B Cumulative Redeemable Preferred Stock, 496,000 shares of 8.05% Series C Cumulative Redeemable Preferred Stock, and 620,000 shares of 8.375% Series D Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share, issued and outstanding as of June 30, 2018 and December 31, 2017
|
$
|
61,583
|
$
|
61,583
|
||||
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 66,977,104 and 66,977,104 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively
|
670
|
670
|
||||||
Additional paid-in capital
|
3,174,089
|
3,173,281
|
||||||
Accumulated deficit
|
(3,084,934
|
)
|
(3,065,853
|
)
|
||||
Accumulated other comprehensive income
|
1,433
|
1,370
|
||||||
Total Equity
|
$
|
152,841
|
$
|
171,051
|
||||
Total Liabilities and Equity
|
$
|
511,279
|
$
|
536,648
|
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