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Section 1: 8-K (8-K)


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 

 
FORM 8-K
 


CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 3, 2018
 


Drive Shack Inc.
(Exact name of registrant as specified in its charter)
 


Maryland
(State or other jurisdiction of incorporation)
 
 
001-31458
81-0559116
(Commission
File Number)
(IRS Employer
Identification No.)
 
 
111 W 19th St, 8th Fl.
New York, New York
10011
(Address of principal executive offices)
(Zip Code)
   
Registrant’s telephone number, including area code (516) 268-7460
 
N/A
(Former name or former address, if changed since last report.)
 


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
     
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
 


 
Item 2.02.
Results of Operations and Financial Condition.
 
On August 3, 2018, Drive Shack Inc. (the “Company”) issued a press release announcing the Company’s results for its fiscal quarter ended June 30, 2018. A copy of the Company’s press release is attached to this Current Report on Form 8-K (the “Current Report”) as Exhibit 99.1 and is incorporated herein solely for purposes of this Item 2.02 disclosure.
 
This Current Report, including the exhibit attached hereto, is being furnished and shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into any of the Company’s filings under the Securities Act of 1933, as amended, or the Exchange Act, unless expressly set forth as being incorporated by reference into such filing.
 
Item 9.01.
Financial Statements and Exhibits.
    
(d)   Exhibits
 
Exhibit
 Number
  
Description
 
 
  
Press release, dated August 3, 2018, issued by Drive Shack Inc.


SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
DRIVE SHACK INC.
 
(Registrant)
 
 
 
/s/ Lawrence A. Goodfield, Jr.
 
Lawrence A. Goodfield, Jr.
 
Chief Financial Officer, Chief Accounting Officer & Treasurer
 
 
Date:  August 3, 2018


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Section 2: EX-99.1 (EXHIBIT 99.1)


Exhibit 99.1
 
          

Investor Relations
516-268-7460

DRIVE SHACK INC. ANNOUNCES SECOND QUARTER 2018 RESULTS AND DECLARES THIRD QUARTER 2018 PREFERRED STOCK DIVIDENDS

NEW YORK—(BUSINESS WIRE) — August 3, 2018 — Drive Shack Inc. (NYSE: DS; the “Company”) today reported the following information for the second quarter ended June 30, 2018.

BUSINESS HIGHLIGHTS
§
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.
§
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.

SECOND QUARTER 2018 FINANCIAL RESULTS
§
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.
 
   
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
   
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
)

WA:  Weighted Average

THIRD QUARTER 2018 PREFERRED STOCK DIVIDENDS

Drive Shack Inc.’s Board of Directors declared dividends on the Company's preferred stock for the period beginning August 1, 2018 and ending October 31, 2018. The dividends are payable on October 31, 2018 to holders of record of preferred stock on October 1, 2018. The Company will pay dividends of $0.609375, $0.503125 and $0.523438 per share on the 9.750% Series B, 8.050% Series C and 8.375% Series D preferred stock, respectively.

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ADDITIONAL INFORMATION
For additional information that management believes to be useful for investors, please refer to the presentation posted on the Investor Relations section of the Company’s website, http://ir.driveshack.com. For consolidated information, please refer to the Company’s most recent Quarterly Report on Form 10-Q or Annual Report on Form 10-K, which are available on the Company’s website, http://ir.driveshack.com.

EARNINGS CONFERENCE CALL
The Company’s management will host a conference call on Friday, August 3, 2018 at 9:00 A.M. Eastern Time. A copy of the earnings release will be posted to the Investor Relations section of Drive Shack Inc.’s website, http://ir.driveshack.com.

All interested parties are welcome to participate on the live call. The conference call may be accessed by dialing 1-866-913-6930 (from within the U.S.) or 1-409-983-9881 (from outside of the U.S.) ten minutes prior to the scheduled start of the call; please reference conference ID “7369948.”

A simultaneous webcast of the conference call will be available to the public on a listen-only basis at http://ir.driveshack.com. Please allow extra time prior to the call to visit the website and download any necessary software required to listen to the internet broadcast.

A telephonic replay of the conference call will also be available two hours following the call’s completion through 11:30 P.M. Eastern Time on Friday, August 17, 2018 by dialing 1-800-585-8367 (from within the U.S.) or 1-404-537-3406 (from outside of the U.S.); please reference conference ID “7369948.”

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Consolidated Statements of Operations (Unaudited)
($ in thousands, except share data)

   
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
   
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
   
10,268
     
7,058
     
19,462
     
14,545
 
Management fee to affiliate
   
     
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)
   
3,028
     
(5,753
)
   
(9,260
)
   
(20,499
)
Other income (expenses)
                               
Interest and investment income
   
469
     
6,395
     
915
     
14,283
 
Interest expense, net
   
(4,601
)
   
(5,131
)
   
(8,650
)
   
(10,565
)
Other (loss) income, net
   
(3,699
)
   
293
     
(4,105
)
   
170
 
Total other income (expenses)
   
(7,831
)
   
1,557
     
(11,840
)
   
3,888
 
Loss before income tax
   
(4,803
)
   
(4,196
)
   
(21,100
)
   
(16,611
)
Income tax expense
   
     
510
     
     
1,049
 
Net Loss
   
(4,803
)
   
(4,706
)
   
(21,100
)
   
(17,660
)
Preferred dividends
   
(1,395
)
   
(1,395
)
   
(2,790
)
   
(2,790
)
Loss Applicable to Common Stockholders
 
$
(6,198
)
 
$
(6,101
)
 
$
(23,890
)
 
$
(20,450
)
                                 
Loss Applicable to Common Stock, per share
                               
Basic
 
$
(0.09
)
 
$
(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
     
66,874,155
     
66,977,104
     
66,858,155
 
Diluted
   
66,977,104
     
66,874,155
     
66,977,104
     
66,858,155
 

3


Consolidated Balance Sheets
($ in thousands, except share data)

   
June 30, 2018
       
   
(Unaudited)
   
December 31, 2017
 
Assets
           
Current Assets
           
Cash and cash equivalents
 
$
125,659
   
$
167,692
 
Restricted cash
   
3,859
     
5,178
 
Accounts receivable, net
   
9,877
     
8,780
 
Real estate assets, held-for-sale
   
165,261
     
2,000
 
Real estate securities, available-for-sale
   
2,425
     
2,294
 
Other current assets
   
25,171
     
21,568
 
Total Current Assets
   
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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ABOUT DRIVE SHACK INC.
Drive Shack Inc. is a leading owner and operator of golf-related leisure and entertainment businesses.

FORWARD-LOOKING STATEMENTS
Certain items in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the timing and frequency of opening new Drive Shack venues, the Company’s ability to consummate the sales of its owned golf courses and the Company’s ability to terminate or restructure its lease agreements. These statements are based on management's current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements, many of which are beyond Drive Shack’s control. The Company can give no assurance that its expectations will be attained. Accordingly, you should not place undue reliance on any forward-looking statements contained in this press release. For a discussion of some of the risks and important factors that could cause actual results to differ from such forward-looking statements, see the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s most recent Quarterly Report on Form 10-Q or Annual Report on Form 10-K.  Furthermore, new risks and uncertainties emerge from time to time, and it is not possible for the Company to predict or assess the impact of every factor that may cause its actual results to differ from those contained in any forward-looking statements. Such forward-looking statements speak only as of the date of this press release. The Company expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.
 
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