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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 6, 2019 (August 6, 2019)
 

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.)

218 W 18th St, 3rd Fl.
New York, New York
 
10011
(Address of principal executive offices)
 
(Zip Code)
 
Registrant’s telephone number, including area code (646) 585-5591

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 §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.

Securities registered pursuant to Section 12(b) of the Act:

 
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
 
Common Stock, $0.01 par value per share
DS
New York Stock Exchange (NYSE)
 
9.75% Series B Cumulative Redeemable Preferred Stock, $0.01 par value per share
DS-PB
New York Stock Exchange (NYSE)
 
8.05% Series C Cumulative Redeemable Preferred Stock, $0.01 par value per share
DS-PC
New York Stock Exchange (NYSE)
 
8.375% Series D Cumulative Redeemable Preferred Stock, $0.01 par value per share
DS-PD
New York Stock Exchange (NYSE)



Item 2.02.
Results of Operations and Financial Condition.

On August 6, 2019, Drive Shack Inc. (the “Company”) issued a press release announcing the Company’s results for its fiscal quarter ended June 30, 2019. 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.

Item 2.02 of 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
   
Press Release, dated August 6, 2019


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/ Nicholas M. Foley
 
   
Secretary
 
   
Date:  August 6, 2019
 



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Section 2: EX-99.1 (EXHIBIT 99.1)


Exhibit 99.1


August 6, 2019

Drive Shack Announces Leadership Addition and Second Quarter 2019 Earnings Results

NEW YORK, August 6, 2019 (BUSINESS WIRE) – Drive Shack Inc. (NYSE: DS; the “Company”), an owner and operator of golf entertainment venues and traditional golf courses, is excited to announce the appointment of Hana Khouri as President of the Company.

“Hana has a track record of successfully operating golf entertainment venues and extensive knowledge of the industry,” said Wes Edens, Chairman of the Company’s Board of Directors.  “I am confident that she is the right person to lead our expansion and execute the strategic priorities of this business.”

Ms. Khouri worked at Topgolf alongside Ken May, Chief Executive Officer of Drive Shack, from 2013-2018, serving in various roles including National Director of Operations and International Director of Operations. During this time, she oversaw the opening of more than 20 Topgolf locations globally.

Additionally, the Company announced a new venue format referred to as the “Urban Box.” This smaller, indoor store is designed for dense, urban locations and will expand U.S. store potential by over 100 markets. The indoor concept is set to debut alongside Drive Shack’s mid-size venue in 2020.

The Company also announced that during the quarter it completed the sale of two public golf properties in New Jersey and California and two private golf properties in Tennessee and Washington for total gross proceeds of approximately $20 million.

For the three months ended June 30, 2019, the Company reported a loss of $14 million, or ($0.21) per share, compared to a loss of $6 million, or ($0.09) share, in the corresponding period of the prior year.  The difference is primarily related to the amount of decreased operating results associated with the sale of traditional golf properties.

The Board of Directors of the Company declared dividends on the Company’s preferred stock for the period beginning August 1, 2019 and ending October 31, 2019.  The dividends are payable on October 31, 2019, to holders of record of preferred stock on October 1, 2019, in an amount equal to $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.

Conference Call Today
Management will hold a conference call to discuss these results today at 9:00 a.m. Eastern Time.  The conference call can be accessed over the phone 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 “9575248.”

A copy of the earnings release will be posted to the Investor Relations section of Drive Shack Inc.’s website, http://ir.driveshack.com.

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 Tuesday, August 6, 2019 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 “9575248.”

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.

About Drive Shack
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, but not limited to, statements regarding the Company’s (a) future sales of selected owned golf properties, including without limitation statements relating to the timing and amount of anticipated proceeds, (b) our plans and expectations to optimize the operation of, and grow, our existing leased and managed golf properties, (c) redeployment of cash from our generated liquidity, (d) targeted multiples, yields and returns, (e) our ability to terminate or restructure leases and (f) the Company’s current business plan and expectations relating to our Drive Shack venues, including (i) the number of venues that we may be able to develop, (ii) timing and frequency for opening venues, (iii) financial performance of these venues and capital expenditure costs, (iv) the growth of the golf, golf entertainment, and eatertainment industry and business, and (v) our ability to enhance technology.  These statements are based on management’s current expectations and beliefs and are subject to a number of risks, trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements, many of which are beyond our control. We cannot give any assurances that management’s current expectations will be attained. For a discussion of some of the risks and important factors that could cause actual results to differ materially 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 periodic reports filed with the Securities and Exchange Commission (“SEC”), which are available on the Company’s website (www.http://ir.driveshack.com). In addition, new risks and uncertainties emerge from time to time, and it is not possible to predict or assess the impact of every factor that may cause actual results to differ from those contained in any forward-looking statements. Accordingly, you should not place undue reliance on any forward-looking statements contained in this Press Release. Forward-looking statements speak only as of the date of this Press Release. We expressly disclaim any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.

2

Consolidated Balance Sheets

   
(Unaudited)
       
   
June 30, 2019
   
December 31, 2018
 
Assets
           
Current assets
           
Cash and cash equivalents
 
$
39,683
   
$
79,235
 
Restricted cash
   
4,299
     
3,326
 
Accounts receivable, net
   
6,341
     
7,518
 
Real estate assets, held-for-sale, net
   
33,355
     
75,862
 
Real estate securities, available-for-sale
   
3,071
     
2,953
 
Other current assets
   
20,471
     
20,505
 
Total current assets
   
107,220
     
189,399
 
Restricted cash, noncurrent
   
258
     
258
 
Property and equipment, net of accumulated depreciation
   
177,619
     
132,605
 
Operating lease right-of-use assets
   
225,666
     
 
Intangibles, net of accumulated amortization
   
20,115
     
48,388
 
Other investments
   
23,300
     
22,613
 
Other assets
   
4,897
     
8,684
 
Total assets
 
$
559,075
   
$
401,947
 
                 
Liabilities and Equity
               
Current liabilities
               
Obligations under finance leases
 
$
7,675
   
$
5,489
 
Membership deposit liabilities
   
8,793
     
8,861
 
Accounts payable and accrued expenses
   
41,375
     
45,284
 
Deferred revenue
   
10,905
     
18,793
 
Real estate liabilities, held-for-sale
   
33
     
2,947
 
Other current liabilities
   
28,075
     
22,285
 
Total current liabilities
   
96,856
     
103,659
 
Credit facilities and obligations under finance leases - noncurrent
   
15,433
     
10,489
 
Operating lease liabilities - noncurrent
   
195,347
     
 
Junior subordinated notes payable
   
51,196
     
51,200
 
Membership deposit liabilities, noncurrent
   
94,156
     
90,684
 
Deferred revenue, noncurrent
   
5,930
     
6,016
 
Other liabilities
   
3,035
     
5,232
 
Total liabilities
 
$
461,953
   
$
267,280
 
                 
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, 2019 and December 31, 2018
 
$
61,583
   
$
61,583
 
                 
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 67,033,104 and 67,027,104 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively
   
670
     
670
 
Additional paid-in capital
   
3,178,478
     
3,175,843
 
Accumulated deficit
   
(3,145,487
)
   
(3,105,307
)
Accumulated other comprehensive income
   
1,878
     
1,878
 
Total equity
 
$
97,122
   
$
134,667
 
                 
Total liabilities and equity
 
$
559,075
   
$
401,947
 

3

Consolidated Statements of Operations

   
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
   
2019
   
2018
   
2019
   
2018
 
Revenues
                       
Golf operations
 
$
57,386
   
$
69,150
   
$
102,092
   
$
122,704
 
Sales of food and beverages
   
14,229
     
21,854
     
23,475
     
34,960
 
Total revenues
   
71,615
     
91,004
     
125,567
     
157,664
 
Operating costs
                               
Operating expenses
   
58,720
     
67,042
     
106,443
     
124,421
 
Cost of sales - food and beverages
   
3,904
     
6,193
     
6,601
     
10,233
 
General and administrative expense
   
13,607
     
10,268
     
25,226
     
19,462
 
Depreciation and amortization
   
5,122
     
4,315
     
10,046
     
9,863
 
Pre-opening costs
   
1,700
     
247
     
2,879
     
1,803
 
Impairment
   
118
     
     
4,206
     
1,473
 
Realized and unrealized (gain) on investments
   
     
(89
)
   
     
(331
)
Total operating costs
   
83,171
     
87,976
     
155,401
     
166,924
 
Operating income (loss)
   
(11,556
)
   
3,028
     
(29,834
)
   
(9,260
)
                                 
Other income (expenses)
                               
Interest and investment income
   
265
     
469
     
608
     
915
 
Interest expense, net
   
(1,795
)
   
(4,601
)
   
(3,947
)
   
(8,650
)
Other income (loss), net
   
127
     
(3,699
)
   
5,614
     
(4,105
)
Total other income (expenses)
   
(1,403
)
   
(7,831
)
   
2,275
     
(11,840
)
Loss before income tax
   
(12,959
)
   
(4,803
)
   
(27,559
)
   
(21,100
)
Income tax expense
   
     
     
     
 
Net Loss
   
(12,959
)
   
(4,803
)
   
(27,559
)
   
(21,100
)
Preferred dividends
   
(1,395
)
   
(1,395
)
   
(2,790
)
   
(2,790
)
Loss Applicable to Common Stockholders
 
$
(14,354
)
 
$
(6,198
)
 
$
(30,349
)
 
$
(23,890
)
                                 
Loss Applicable to Common Stock, per share
                               
Basic
 
$
(0.21
)
 
$
(0.09
)
 
$
(0.45
)
 
$
(0.36
)
Diluted
 
$
(0.21
)
 
$
(0.09
)
 
$
(0.45
)
 
$
(0.36
)
Weighted Average Number of Shares of Common Stock Outstanding
                               
Basic
   
67,029,610
     
66,977,104
     
67,028,364
     
66,977,104
 
Diluted
   
67,029,610
     
66,977,104
     
67,028,364
     
66,977,104
 

For Investor Relations Inquiries:
Austin Pruitt
Drive Shack Inc.
646-585-5591
IR@driveshack.com


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