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EX-10.1 - EX-10.1 - MOHEGAN TRIBAL GAMING AUTHORITYa20141231ex101.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549 
_________________________________
FORM 10-Q
 _____________________________________
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2014
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to                    
Commission file number 033-80655
 __________________________________________
MOHEGAN TRIBAL GAMING AUTHORITY
(Exact name of registrant as specified in its charter)
 __________________________________________ 
Not Applicable
 
06-1436334
(State or other jurisdiction
of incorporation or organization)
 
(IRS Employer
Identification No.)
 
 
One Mohegan Sun Boulevard, Uncasville, CT
 
06382
(Address of principal executive offices)
 
(Zip Code)
(860) 862-8000
(Registrant’s telephone number, including area code)
 ___________________________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:    Yes  x    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer  o
Accelerated filer  o
Non-accelerated filer  x
Smaller reporting company  o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):     Yes  ¨    No  x



MOHEGAN TRIBAL GAMING AUTHORITY
INDEX TO FORM 10-Q
 
 
Page
Number
PART I.
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
PART II.
 
 
 
 
Item 1.
 
 
 
Item 1A.
 
 
 
Item 6.
 
 
 
Signatures.



PART I. FINANCIAL INFORMATION

Item 1.
Financial Statements

MOHEGAN TRIBAL GAMING AUTHORITY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
 
 
December 31,
2014
 
September 30,
2014
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
74,187

 
$
49,108

Restricted cash
360

 
675

Receivables, net
31,714

 
30,640

Inventories
15,811

 
14,544

Other current assets
19,754

 
16,997

Total current assets
141,826

 
111,964

Non-current assets:
 
 
 
Property and equipment, net
1,404,358

 
1,424,068

Goodwill
39,459

 
39,459

Other intangible assets, net
407,156

 
405,109

Other assets, net
74,949

 
75,360

Total assets
$
2,067,748

 
$
2,055,960

LIABILITIES AND CAPITAL
 
 
 
Current liabilities:
 
 
 
Current portion of long-term debt
$
33,219

 
$
29,308

Current portion of relinquishment liability
18,865

 
25,194

Due to Mohegan Tribe
3,750

 
2,250

Current portion of capital leases
801

 
793

Trade payables
13,169

 
24,086

Construction payables
1,056

 
5,832

Accrued interest payable
29,385

 
8,659

Other current liabilities
129,925

 
127,175

Total current liabilities
230,170

 
223,297

Non-current liabilities:
 
 
 
Long-term debt, net of current portion
1,676,784

 
1,675,958

Due to Mohegan Tribe, net of current portion
21,920

 
23,420

Capital leases, net of current portion
2,142

 
2,345

Other long-term liabilities
6,433

 
6,113

Total liabilities
1,937,449

 
1,931,133

Commitments and Contingencies


 


Capital:
 
 
 
Retained earnings
129,824

 
125,058

Mohegan Tribal Gaming Authority capital
129,824

 
125,058

Non-controlling interests
475

 
(231
)
Total capital
130,299

 
124,827

Total liabilities and capital
$
2,067,748

 
$
2,055,960

The accompanying notes are an integral part of these condensed consolidated financial statements.


3


MOHEGAN TRIBAL GAMING AUTHORITY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(in thousands)
(unaudited)
 
 
For the
 
For the
 
Three Months Ended
 
Three Months Ended
 
December 31, 2014
 
December 31, 2013
Revenues:
 
 
 
Gaming
$
277,734

 
$
274,753

Food and beverage
22,671

 
22,719

Hotel
12,226

 
10,692

Retail, entertainment and other
28,299

 
29,505

Gross revenues
340,930

 
337,669

Less-Promotional allowances
(24,198
)
 
(24,846
)
Net revenues
316,732

 
312,823

Operating costs and expenses:
 
 
 
Gaming
166,099

 
176,302

Food and beverage
10,811

 
10,099

Hotel
3,503

 
3,720

Retail, entertainment and other
12,244

 
12,776

Advertising, general and administrative
45,815

 
46,942

Corporate
7,639

 
9,432

Depreciation and amortization
20,053

 
19,118

(Gain) loss on disposition of assets
739

 
(1
)
Pre-opening

 
1,162

Relinquishment liability reassessment
56

 

Total operating costs and expenses
266,959

 
279,550

Income from operations
49,773

 
33,273

Other income (expense):
 
 
 
Accretion of discount to the relinquishment liability
(227
)
 
(551
)
Interest income
1,834

 
1,644

Interest expense, net of capitalized interest
(36,255
)
 
(38,969
)
Loss on early extinguishment of debt

 
(62,083
)
Other expense, net
(728
)
 
(704
)
Total other expense
(35,376
)
 
(100,663
)
Net income (loss)
14,397

 
(67,390
)
Loss attributable to non-controlling interests
369

 
136

Net income (loss) attributable to Mohegan Tribal Gaming Authority
$
14,766

 
$
(67,254
)

The accompanying notes are an integral part of these condensed consolidated financial statements.


4


MOHEGAN TRIBAL GAMING AUTHORITY
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL
(in thousands)
(unaudited)
 
 
Total                 
 
Mohegan Tribal  Gaming Authority
 
Non-controlling      
Interests
Balance, September 30, 2014
$
124,827

 
$
125,058

 
$
(231
)
Contributions from members
1,075

 

 
1,075

Net income (loss)
14,397

 
14,766

 
(369
)
Distributions to Mohegan Tribe
(10,000
)
 
(10,000
)
 

Balance, December 31, 2014
$
130,299

 
$
129,824

 
$
475

 
 
 
 
 
 
Balance, September 30, 2013
$
199,385

 
$
199,236

 
$
149

Net income (loss)
(67,390
)
 
(67,254
)
 
(136
)
Distributions to Mohegan Tribe
(10,000
)
 
(10,000
)
 

Balance, December 31, 2013
$
121,995

 
$
121,982

 
$
13


The accompanying notes are an integral part of these condensed consolidated financial statements.


5


MOHEGAN TRIBAL GAMING AUTHORITY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) (unaudited)
 
For the Three Months Ended
 
For the Three Months Ended
 
December 31, 2014
 
December 31, 2013
Cash flows provided by (used in) operating activities:
 
 
 
Net income (loss)
$
14,397

 
$
(67,390
)
Adjustments to reconcile net income (loss) to net cash flows provided by (used in) operating activities:
 
 
 
Depreciation and amortization
20,053

 
19,118

Relinquishment liability reassessment
56

 

Accretion of discount to the relinquishment liability
227

 
551

Cash paid for accretion of discount to the relinquishment liability
(276
)
 
(621
)
Loss on early extinguishment of debt

 
58,287

Payments of tender offer costs and discounts

 
(48,155
)
Amortization of debt issuance costs and accretion of bond discounts
1,911

 
2,326

Provision for losses on receivables
794

 
802

(Gain) loss on disposition of assets
739

 
(1
)
Loss from unconsolidated affiliates
778

 
696

Changes in operating assets and liabilities:
 
 
 
(Increase) decrease in receivables
(1,047
)
 
3,376

Increase in inventories
(1,267
)
 
(1,192
)
Increase in other assets
(4,529
)
 
(2,851
)
Increase (decrease) in trade payables
(10,780
)
 
4,739

Increase in accrued interest
20,726

 
9,338

Increase in other liabilities
4,851

 
8,273

Net cash flows provided by (used in) operating activities
46,633

 
(12,704
)
Cash flows provided by (used in) investing activities:
 
 
 
Purchases of property and equipment, including decrease in construction payables of $4,776 and $2,366, respectively
(5,760
)
 
(15,168
)
Issuance of third-party loans and advances
(336
)
 
(382
)
Payments received on third-party loans
38

 
532

(Increase) decrease in restricted cash, net
(1,784
)
 
7,518

Proceeds from asset sales
27

 
5

Investments in the New England Black Wolves
(500
)
 

Investments in unconsolidated affiliates

 
(29
)
Net cash flows used in investing activities
(8,315
)
 
(7,524
)
Cash flows provided by (used in) financing activities:
 
 
 
Prior Bank Credit Facility repayments - Term

 
(393,000
)
Prior Term Loan Facility repayments, net of discount

 
(222,103
)
Senior Secured Credit Facility borrowings - Revolving
107,000

 
56,000

Senior Secured Credit Facility repayments - Revolving
(103,000
)
 
(42,000
)
Senior Secured Credit Facility borrowings - Term Loan A, net of discount

 
124,343

Senior Secured Credit Facility repayments - Term Loan A
(1,563
)
 

Senior Secured Credit Facility borrowings - Term Loan B, net of discount

 
720,952

Senior Secured Credit Facility repayments - Term Loan B
(1,825
)
 

Line of Credit borrowings
113,051

 
78,794

Line of Credit repayments
(110,134
)
 
(69,441
)
Repayments to Mohegan Tribe

 
(1,375
)
Repayments of other long-term debt
(103
)
 
(190,935
)
Principal portion of relinquishment liability payments
(6,336
)
 
(6,034
)
Distributions to Mohegan Tribe
(10,000
)
 
(10,000
)
Payments of financing fees

 
(12,437
)
Payments on capital lease obligations
(329
)
 
(558
)
Net cash flows provided by (used in) financing activities
(13,239
)
 
32,206

Net increase in cash and cash equivalents
25,079

 
11,978

Cash and cash equivalents at beginning of period
49,108

 
63,624

Cash and cash equivalents at end of period
$
74,187

 
$
75,602

Supplemental disclosure:
 
 
 
Cash paid during the period for interest
$
13,193

 
$
27,579

The accompanying notes are an integral part of these condensed consolidated financial statements.

6


MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 1—ORGANIZATION:
The Mohegan Tribe of Indians of Connecticut (the “Mohegan Tribe” or the “Tribe”) established the Mohegan Tribal Gaming Authority (the “Authority”) in July 1995 with the exclusive authority to conduct and regulate gaming activities for the Tribe on Tribal lands and the non-exclusive authority to conduct such activities elsewhere. The Tribe is a federally-recognized Indian tribe with an approximately 544-acre reservation situated in Southeastern Connecticut, adjacent to Uncasville, Connecticut. Under the Indian Gaming Regulatory Act of 1988, federally-recognized Indian tribes are permitted to conduct full-scale casino gaming operations on tribal lands, subject to, among other things, the negotiation of a compact with the affected state. The Tribe and the State of Connecticut entered into a compact (the “Mohegan Compact”), which was approved by the United States Secretary of the Interior. The Authority is primarily engaged in the ownership, operation and development of gaming facilities. In October 1996, the Authority opened Mohegan Sun, a gaming and entertainment complex situated on a 185-acre site on the Tribe's reservation. The Authority is governed by a nine-member Management Board, whose members also comprise the Mohegan Tribal Council, the governing body of the Tribe. Any change in the composition of the Mohegan Tribal Council results in a corresponding change in the Authority's Management Board.
As of December 31, 2014, the following subsidiaries were wholly-owned by the Authority: Mohegan Basketball Club, LLC (“MBC”), Mohegan Golf, LLC (“Mohegan Golf”), Mohegan Lacrosse, LLC (“Mohegan Lacrosse”), Mohegan Commercial Ventures-PA, LLC (“MCV-PA”), Mohegan Ventures-Northwest, LLC (“Mohegan Ventures-NW”), Mohegan Ventures Wisconsin, LLC (“MVW”), MTGA Gaming, LLC (“MTGA Gaming”), Downs Lodging, LLC ("Downs Lodging") and Mohegan Gaming Advisors, LLC ("Mohegan Gaming Advisors").
MBC owns and operates the Connecticut Sun, a professional basketball team in the Women's National Basketball Association (the “WNBA”). MBC currently owns a 4.2% membership interest in WNBA, LLC.
Mohegan Golf owns and operates the Mohegan Sun Golf Club in Southeastern Connecticut.
In October 2014, the Authority formed Mohegan Lacrosse as a wholly-owned unrestricted subsidiary. Mohegan Lacrosse holds a 50% membership interest in New England Black Wolves, LLC (“NEBW”), which was formed with an unrelated third-party to own and operate the New England Black Wolves, a professional indoor lacrosse team in the National Lacrosse League.
MCV-PA holds a 0.01% general partnership interest in each of Downs Racing, L.P., Backside, L.P., Mill Creek Land, L.P. and Northeast Concessions, L.P. (collectively, along with MCV-PA, the “Pocono Subsidiaries”), while the Authority holds the remaining 99.99% limited partnership interest in each entity. Downs Racing, L.P. (“Downs Racing”) owns and operates Mohegan Sun Pocono, a gaming and entertainment facility situated on a 400-acre site in Plains Township, Pennsylvania, and several off-track wagering facilities located elsewhere in Pennsylvania (collectively, the “Pennsylvania Facilities”). The Authority views Mohegan Sun and the Pennsylvania Facilities as two separate operating segments.
Mohegan Ventures-NW and a subsidiary of the Tribe hold 49.15% and 10.85% membership interests in Salishan-Mohegan, LLC (“Salishan-Mohegan”), respectively. Salishan-Mohegan was formed with an unrelated third-party to participate in the development and management of a proposed casino to be owned by the federally-recognized Cowlitz Indian Tribe of Washington (the “Cowlitz Tribe”) and to be located in Clark County, Washington (the “Cowlitz Project”). Salishan-Mohegan holds 100% membership interests in Salishan-Mohegan Two, LLC and Interchange Development Group, LLC, both of which were formed to acquire certain property related to the Cowlitz Project.
MVW holds a 100% membership interest in Wisconsin Tribal Gaming, LLC (“WTG”), which was formed to participate in the development of a proposed casino to be owned by the federally-recognized Menominee Indian Tribe of Wisconsin (the “Menominee Tribe”) and to be located in Kenosha, Wisconsin (the “Menominee Project”).
MTGA Gaming holds a 100% membership interest in Mohegan Gaming & Hospitality, LLC (“MG&H”), an unrestricted subsidiary of the Authority. MG&H holds a 100% membership interest in Mohegan Resorts, LLC (“Mohegan Resorts”). Mohegan Resorts holds a 100% membership interest in Mohegan Resorts Mass, LLC, which was formed to pursue potential gaming opportunities in the Commonwealth of Massachusetts. Mohegan Resorts also holds 100% membership interests in Mohegan Resorts New York, LLC and Mohegan Gaming New York, LLC (collectively, the “Mohegan New York Entities”). The Mohegan New York Entities were formed to pursue potential gaming opportunities in the State of New York.
Downs Lodging, an unrestricted subsidiary of the Authority, was formed to develop, finance and build Project Sunlight, a hotel and convention center located at Mohegan Sun Pocono.

7

MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

Mohegan Gaming Advisors, an unrestricted subsidiary of the Authority, was formed to pursue gaming opportunities outside the State of Connecticut, including management contracts and consulting agreements for casino and entertainment properties in the United States. Mohegan Gaming Advisors holds 100% membership interests in MGA Holding NJ, LLC ("MGA Holding NJ") and MGA Gaming NJ, LLC (collectively, the "Mohegan New Jersey Entities"). The Mohegan New Jersey Entities were formed to pursue management contracts and consulting agreements in the State of New Jersey. In October 2012, MGA Holding NJ acquired a 10% ownership interest in Resorts Casino Hotel in Atlantic City, New Jersey.
Mohegan Gaming Advisors also holds 100% membership interests in MGA Holding MA, LLC (“MGA Holding MA”) and MGA Gaming MA, LLC (“MGA Gaming MA”). MGA Holding MA holds a 100% membership interest in MGA Palmer Partners, LLC (“MGA Palmer Partners”). MGA Palmer Partners holds a 100% membership interest in Mohegan Sun Massachusetts, LLC (together with MGA Holding MA, MGA Gaming MA and MGA Palmer Partners, the “Mohegan MA Entities”). The Mohegan MA Entities were formed to pursue potential gaming opportunities in the Commonwealth of Massachusetts.
In addition, Mohegan Gaming Advisors holds 100% membership interests in MGA Holding PA, LLC and MGA Gaming PA, LLC (collectively, the “Mohegan PA Entities”). The Mohegan PA Entities were formed to pursue potential gaming opportunities in the Commonwealth of Pennsylvania.
Additionally, Mohegan Gaming Advisors holds a 100% membership interest in MGA Holding FL, LLC (“MGA Holding FL”). MGA Holding FL holds a 100% membership interest in MGA Miami, LLC (together with MGA Holding FL, the “Mohegan FL Entities”). The Mohegan FL Entities were formed to pursue potential gaming opportunities in the State of Florida.

NOTE 2—BASIS OF PRESENTATION:
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In accordance with Rule 10-01, the accompanying unaudited condensed consolidated financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete consolidated financial statements. The accompanying year-end condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. In management's opinion, all adjustments, including normal recurring accruals and adjustments, necessary for a fair statement of the Authority's operating results for the interim period, have been included. In addition, certain amounts in the accompanying 2014 supplemental condensed consolidating financial statements have been reclassified to conform to the 2015 presentation.
The gaming market in the Northeastern United States is seasonal in nature, with peak gaming activities often occurring at Mohegan Sun and Mohegan Sun Pocono during the months of May through August. Accordingly, the Authority's operating results for the three months ended December 31, 2014 are not necessarily indicative of operating results for other interim periods or an entire fiscal year.
The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Authority's Annual Report on Form 10-K for the fiscal year ended September 30, 2014.
Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of the Authority and its majority and wholly-owned subsidiaries and entities. In accordance with authoritative guidance issued by the Financial Accounting Standards Board (the “FASB”) pertaining to consolidation of variable interest entities, the accounts of Salishan-Mohegan are consolidated into the accounts of Mohegan Ventures-NW and the accounts of NEBW are consolidated into the accounts of Mohegan Lacrosse as Mohegan Ventures-NW and Mohegan Lacrosse are deemed to be the primary beneficiaries. In consolidation, all inter-company balances and transactions were eliminated.





8

MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

Long-Term Receivables
Long-term receivables consist primarily of receivables from affiliates and others. The following table presents a reconciliation of long-term receivables, including current portions, and the related reserves for doubtful collection of these long-term receivables (in thousands):
 
Long-Term Receivables
 
Affiliates
 
Others
 
Total
Balance, September 30, 2014 (1)
$
66,596

 
$
2,612

 
$
69,208

Additions:
 
 
 
 
 
   Issuance of affiliate advances and other loans, including interest receivable
2,452

 
21

 
2,473

Deductions:
 
 
 
 
 
   Payments received

 
(38
)
 
(38
)
Balance, December 31, 2014 (1)
$
69,048

 
$
2,595

 
$
71,643

__________
(1)
Includes interest receivable of $37.5 million and $35.7 million as of December 31, 2014 and September 30, 2014, respectively. The WTG receivables no longer accrue interest pursuant to a release and reimbursement agreement entered into in September 2010.
 
Reserves for Doubtful Collection of Long-Term Receivables
 
Affiliates        
 
Others
 
Total             
Balance, September 30, 2014
$
26,833

 
$
796

 
$
27,629

Additions:
 
 
 
 
 
   Charges to bad debt expense
736

 
8

 
744

Deductions:
 
 
 
 
 
   Adjustments

 
(2
)
 
(2
)
Balance, December 31, 2014
$
27,569

 
$
802

 
$
28,371

Fair Value of Financial Instruments
The fair value amounts presented below are reported to satisfy disclosure requirements pursuant to authoritative guidance issued by the FASB pertaining to disclosures about fair values of financial instruments and are not necessarily indicative of amounts that the Authority could realize in a current market transaction.
The Authority applies the following fair value hierarchy, which prioritizes the inputs utilized to measure fair value into three levels:
Level 1 - Quoted prices for identical assets or liabilities in active markets;
Level 2 - Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets or valuations based on models where the significant inputs are observable or can be corroborated by observable market data; and
Level 3 - Valuations based on models where the significant inputs are unobservable. The unobservable inputs reflect the Authority's estimates or assumptions that market participants would utilize in pricing such assets or liabilities.
The Authority's assessment of the significance of a particular input requires judgment and may affect the valuation of financial assets and liabilities and their placement within the fair value hierarchy.
The carrying amount of cash and cash equivalents, receivables, trade payables and promissory notes and certain credit facilities approximates fair value. The estimated fair value of the Authority's financing facilities and notes were as follows (in thousands):
 
December 31, 2014
 
Carrying Value         
 
Fair Value         
Senior Secured Credit Facility - Revolving
$
41,000

 
$
38,335

Senior Secured Credit Facility - Term Loan A
$
118,266

 
$
111,625

Senior Secured Credit Facility - Term Loan B
$
714,881

 
$
702,826

2013 9 3/4% Senior Unsecured Notes
$
500,000

 
$
512,500

2005 6 7/8% Senior Subordinated Notes
$
9,654

 
$
9,615

2012 11% Senior Subordinated Notes
$
271,862

 
$
268,310


9

MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

The estimated fair values of the Authority's financing facilities and notes were based on Level 2 inputs (quoted market prices or prices of similar instruments) on or about December 31, 2014.
New Accounting Standards
In May 2014, the FASB issued an accounting standard update on revenue recognition that will be applied to all contracts with customers. The update requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects what it expects in exchange for the goods or services. It also requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. This guidance will be required to be applied on a retrospective basis, using one of two methodologies, and will be effective for annual reporting periods beginning after December 15, 2016, with early application not being permitted. The Authority is currently evaluating the impact that this guidance will have on its financial position and results of operations.
In August 2014, the FASB issued an accounting standard update which provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. The update requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date the financial statements are issued. It also requires management to provide certain disclosures if conditions or events raise substantial doubt about the entity's ability to continue as a going concern. This guidance will be required for annual reporting periods ending after December 15, 2016, and interim reporting periods thereafter, with early application permitted. The Authority is currently evaluating the impact that this guidance will have on its financial position and results of operations.
NOTE 3—LONG-TERM DEBT:
Long-term debt consisted of the following (in thousands, including current maturities):
 
December 31,
2014
 
September 30,
2014
Senior Secured Credit Facility - Revolving, due June 2018
$
41,000

 
$
37,000

Senior Secured Credit Facility - Term Loan A, due June 2018, net of discount of $484 and $523, respectively
118,266

 
119,789

Senior Secured Credit Facility - Term Loan B, due June 2018, net of discount of $7,819 and $8,337, respectively
714,881

 
716,188

2013 9 3/4% Senior Unsecured Notes, due September 2021
500,000

 
500,000

2005 6 7/8% Senior Subordinated Notes, due February 2015
9,654

 
9,654

2012 11 % Senior Subordinated Notes, due September 2018, net of discount of $3,328 and $3,506, respectively
271,862

 
271,684

Line of Credit
5,958

 
3,041

2009 Mohegan Tribe Promissory Note, due September 2015
1,750

 
1,750

2012 Mohegan Tribe Minor's Trust Promissory Note, due March 2017
16,500

 
16,500

2013 Mohegan Tribe Promissory Note, due December 2018
7,420

 
7,420

Downs Lodging Credit Facility, due July 2016
45,000

 
45,000

Other
3,382

 
2,910

Long-term debt, excluding capital leases
1,735,673

 
1,730,936

Less: current portion of long-term debt
(36,969
)
 
(31,558
)
Long-term debt, net of current portion
$
1,698,704

 
$
1,699,378

Senior Secured Credit Facilities
In November 2013, the Authority entered into a loan agreement among the Authority, the Tribe, the Guarantors as defined below, RBS Citizens, N.A. as Administrative and Collateral Agent and the other lenders and financial institutions party thereto, providing for $955.0 million in aggregate principal amount of senior secured credit facilities (the “Senior Secured Credit Facilities”), comprised of a $100.0 million senior secured revolving credit facility (the “Revolving Facility”), a $125.0 million senior secured term loan A facility (the “Term Loan A Facility”) and a $730.0 million senior secured term loan B facility (the “Term Loan B Facility"). The Senior Secured Credit Facilities mature on June 15, 2018, subject to extension based on the satisfaction of certain conditions to November 19, 2018 (in the case of the Revolving Facility and the Term Loan A Facility) and November 19, 2019 (in the case of the Term Loan B Facility).
The Term Loan A Facility amortizes in equal quarterly installments in an aggregate annual amount equal to 5.0% of the original principal amount for the first year after the closing date, 7.5% of the original principal amount for the second year after the closing date and 10.0% of the original principal amount in each year thereafter, with the balance payable on the maturity date of the Term Loan A Facility. The Term Loan B Facility amortizes in equal quarterly installments in an aggregate annual amount equal to 1.0% of the original principal amount. Amortization of the Term Loan A Facility and Term Loan B Facility began with

10

MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

the first full fiscal quarter after the closing date.
As of December 31, 2014, amounts outstanding under the Revolving Facility, Term Loan A Facility and Term Loan B Facility totaled $41.0 million, $118.8 million and $722.7 million, respectively. As of December 31, 2014, letters of credit issued under the Revolving Facility totaled $3.1 million, of which no amount was drawn. Inclusive of letters of credit, which reduce borrowing availability under the Revolving Facility, and after taking into account restrictive financial covenant requirements, the Authority had approximately $49.9 million of borrowing capacity under its Revolving Facility and Line of Credit as of December 31, 2014.
Borrowings under the Senior Secured Credit Facilities incur interest as follows: (i) for base rate loans under the Revolving Facility and Term Loan A Facility, a base rate equal to the highest of (a) the prime rate, (b) the federal funds rate plus 50 basis points and (c) the one-month LIBOR rate plus 100 basis points (the highest of (a), (b) and (c), the “base rate”), plus a leverage-based margin of 250 to 350 basis points; (ii) for Eurodollar rate loans under the Revolving Facility and Term Loan A Facility, the applicable LIBOR rate plus a leverage-based margin of 350 to 450 basis points; (iii) for base rate loans under the Term Loan B Facility, the base rate (subject to a 2.0% floor) plus 350 basis points; and (iv) for Eurodollar rate loans under the Term Loan B Facility, the applicable LIBOR rate (subject to a 1.0% floor) plus 450 basis points. The Authority also is required to pay a leverage-based commitment fee of between 37.5 and 50 basis points for unused commitments under the Revolving Facility. Interest on base rate loans is payable quarterly in arrears. Interest on Eurodollar rate loans of three months or less is payable at the end of each applicable interest period and for Eurodollar rate loans of more than three months, interest is payable at intervals of three months duration after the beginning of such interest period.
As of December 31, 2014, the $41.0 million outstanding under the Revolving Facility was comprised of a $16.0 million base rate loan based on a base rate of 3.25% plus 350 basis points and a $25.0 million Eurodollar rate loan based on a Eurodollar rate of 0.16% plus 450 basis points. The commitment fee was 0.50% as of December 31, 2014. As of December 31, 2014, the $118.8 million outstanding under the Term Loan A Facility was based on a Eurodollar rate of 0.26% plus 450 basis points. As of December 31, 2014, the $722.7 million outstanding under the Term Loan B Facility was based on the Eurodollar rate floor of 1.0% plus 450 basis points. As of December 31, 2014 and September 30, 2014, accrued interest, including commitment fees, on the Senior Secured Credit Facilities was $185,000 and $212,000, respectively.
The Authority's obligations under the Senior Secured Credit Facilities are fully and unconditionally guaranteed, jointly and severally, by the Pocono Subsidiaries, MBC, Mohegan Golf, Mohegan Ventures-NW, MVW, WTG and MTGA Gaming (collectively, the “Guarantors”). The Senior Secured Credit Facilities are collateralized by a first priority lien on substantially all of the Authority's property and assets and those of the Guarantors (other than MBC), including the assets that comprise Mohegan Sun Pocono and a leasehold mortgage on the land and improvements that comprise Mohegan Sun (the Authority and the Guarantors, other than MBC, are collectively referred to herein as the “Grantors”). The Grantors also are required to pledge additional assets as collateral for the Senior Secured Credit Facilities as they and future guarantor subsidiaries acquire them.
The Senior Secured Credit Facilities contain customary covenants applicable to the Authority and its restricted subsidiaries, including covenants governing: incurrence of indebtedness, incurrence of liens, payment of dividends and other distributions, investments, asset sales, affiliate transactions, mergers or consolidations and capital expenditures. Additionally, the Senior Secured Credit Facilities include financial maintenance covenants pertaining to total leverage, secured leverage and minimum fixed charge coverage.
As of December 31, 2014, the Authority and the Tribe were in compliance with all respective covenant requirements under the Senior Secured Credit Facilities.
The Authority continues to monitor revenues and manage expenses and enhance operating efficiencies to ensure continued compliance with its financial covenant requirements under the Senior Secured Credit Facilities. While the Authority anticipates that it will remain in compliance with all covenant requirements under its Senior Secured Credit Facilities for all periods prior to maturity, it may need to increase revenues or offset any future declines in revenues by implementing additional cost saving and other initiatives to ensure compliance with these financial covenant requirements. If the Authority is unable to satisfy its financial covenant requirements, it would need to obtain waivers or consents under the Senior Secured Credit Facilities; however, the Authority can provide no assurance that it would be able to obtain such waivers or consents. If the Authority is unable to obtain such waivers or consents, it would be in default under its Senior Secured Credit Facilities, which may result in cross-defaults under its other outstanding indebtedness and allow its lenders and creditors to exercise their rights and remedies as defined under their respective agreements, including their right to accelerate the repayment of the Authority's outstanding indebtedness. If such acceleration were to occur, the Authority can provide no assurance that it would be able to obtain the financing necessary to repay such accelerated indebtedness.

11

MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

Senior Unsecured Notes
2013 9 3/4% Senior Unsecured Notes
In August 2013, the Authority issued $500.0 million Senior Unsecured Notes with fixed interest payable at a rate of 9.75% per annum (the “2013 Senior Unsecured Notes”). The 2013 Senior Unsecured Notes mature on September 1, 2021. The Authority may redeem the 2013 Senior Unsecured Notes, in whole or in part, at any time prior to September 1, 2016 at a price equal to 100% of the principal amount plus a make-whole premium and accrued interest to the date of redemption. On or after September 1, 2016, the Authority may redeem the 2013 Senior Unsecured Notes, in whole or in part, at specified redemption prices, together with accrued interest to the date of redemption. If the Authority experiences specific kinds of change of control triggering events, the Authority must offer to repurchase the 2013 Senior Unsecured Notes at a price equal to 101% of the principal amount thereof, plus accrued interest to the purchase date. In addition, if the Authority undertakes certain types of asset sales and does not use the related sale proceeds for specified purposes, the Authority may be required to offer to repurchase the 2013 Senior Unsecured Notes at a price equal to 100% of the principal amount, plus accrued interest. Interest on the 2013 Senior Unsecured Notes is payable semi-annually on March 1st and September 1st. On March 11, 2014, the Authority completed an offer to exchange the 2013 Senior Unsecured Notes for a new issue of substantially identical debt securities registered under the Securities Act of 1933, with all outstanding notes being exchanged. As of December 31, 2014 and September 30, 2014, accrued interest on the 2013 Senior Unsecured Notes was $16.3 million and $4.1 million, respectively.
The 2013 Senior Unsecured Notes are uncollateralized general obligations of the Authority and are effectively subordinated to all of the Authority’s and the Guarantors' and future guarantor subsidiaries' senior secured indebtedness, including the Senior Secured Credit Facilities, to the extent of the value of the collateral securing such indebtedness. The 2013 Senior Unsecured Notes also are effectively subordinated to any indebtedness and other liabilities (including trade payables) of the Authority’s subsidiaries that do not guarantee the 2013 Senior Unsecured Notes. The 2013 Senior Unsecured Notes rank equally in right of payment with the Authority’s other unsecured, unsubordinated indebtedness, including trade payables and the senior portion of the Authority’s payment obligations under its Relinquishment Agreement. The 2013 Senior Unsecured Notes are fully and unconditionally guaranteed, jointly and severally, by the Guarantors.
The 2013 Senior Unsecured Notes indenture contains certain covenants that, subject to certain significant exceptions, limit, among other things, the Authority’s and Guarantors’ ability to incur additional debt, pay dividends or distributions, make certain investments, create liens on assets, enter into transactions with affiliates, merge or consolidate with another company or transfer and sell assets. The 2013 Senior Unsecured Notes indenture includes customary events of default, including, but not limited to, failure to make required payments, failure to comply with certain agreements or covenants, failure to pay certain other indebtedness, the occurrence of which is caused by a failure to pay principal, premium or interest or results in the acceleration of such indebtedness, certain events of bankruptcy and insolvency and certain judgment defaults.
Senior Subordinated Notes
2005 6 7/8% Senior Subordinated Notes
In February 2005, the Authority issued $150.0 million Senior Subordinated Notes with fixed interest payable at a rate of 6.875% per annum (the “2005 Senior Subordinated Notes”). The 2005 Senior Subordinated Notes matured on February 15, 2015.
In March 2012, the Authority completed a private exchange offer and consent solicitation for any or all of its outstanding 2005 Senior Subordinated Notes. As part of the exchange offer, the Authority solicited and received consents from tendering holders to certain amendments to the indentures governing the 2005 Senior Subordinated Notes, which eliminated certain covenants under the notes and related indenture. The aggregate principal amount of 2005 Senior Subordinated Notes tendered and exchanged was $140.3 million. An aggregate principal amount of $9.7 million 2005 Senior Subordinated Notes remained outstanding as of December 31, 2014. The Authority repaid the outstanding 2005 Senior Subordinated Notes, including accrued interest, at maturity with cash on hand and drawings under the Revolving Facility. As of December 31, 2014 and September 30, 2014, accrued interest on the 2005 Senior Subordinated Notes was $249,000 and $83,000, respectively.
2012 11% Senior Subordinated Notes
In March 2012, the Authority issued $344.2 million Senior Subordinated Toggle Notes with fixed interest payable at a rate of 11% per annum (the “2012 Senior Subordinated Notes”) in exchange for $203.8 million of the Authority's then outstanding 2004 7 1/8% Senior Subordinated Notes and $140.3 million of 2005 Senior Subordinated Notes. The 2012 Senior Subordinated Notes mature on September 15, 2018. The Authority may redeem the 2012 Senior Subordinated Notes, in whole or in part, at any time, at a price equal to 100% of the principal amount plus accrued interest. If a change of control of the Authority occurs, the Authority must offer to repurchase the 2012 Senior Subordinated Notes at a price equal to 101% of the principal amount, plus accrued interest. In addition, if the Authority undertakes certain types of asset sales or suffers events of loss, and the Authority

12

MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

does not use the related sale or insurance proceeds for specified purposes, the Authority may be required to offer to repurchase the 2012 Senior Subordinated Notes at a price equal to 100% of the principal amount, plus accrued interest. Interest on the 2012 Senior Subordinated Notes is payable semi-annually on March 15th and September 15th. The initial interest payment on the 2012 Senior Subordinated Notes was payable entirely in cash. For any subsequent interest payment period through March 15, 2018, the Authority may, at its option, elect to pay interest on the 2012 Senior Subordinated Notes either entirely in cash or by paying up to 2% in 2012 Senior Subordinated Notes (“PIK Interest”). If the Authority elects to pay PIK Interest, such election will increase the principal amount of the 2012 Senior Subordinated Notes in an amount equal to the amount of PIK Interest for the applicable interest payment period to holders of 2012 Senior Subordinated Notes on the relevant record date.
In August 2013, the Authority repurchased an aggregate principal amount of $69.0 million 2012 Senior Subordinated Notes. An aggregate principal amount of $275.2 million 2012 Senior Subordinated Notes remains outstanding as of December 31, 2014. As of December 31, 2014 and September 30, 2014, accrued interest on the 2012 Senior Subordinated Notes was $8.9 million and $1.3 million, respectively.
The 2012 Senior Subordinated Notes and guarantees have not been and will not be registered under the Securities Act of 1933 or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements.
The Authority's senior subordinated notes are uncollateralized general obligations of the Authority and are subordinated to borrowings under the Senior Secured Credit Facilities and 2013 Senior Unsecured Notes. The senior subordinated notes are fully and unconditionally guaranteed, jointly and severally, by the Guarantors.
The senior and senior subordinated note indentures contain certain non-financial and financial covenant requirements with which the Authority and the Tribe must comply. The non-financial covenant requirements include, among other things, reporting obligations, compliance with laws and regulations, maintenance of licenses and insurances and continued existence of the Authority. The financial covenant requirements include, among other things, subject to certain exceptions, limitations on the Authority's and the Guarantors' ability to incur additional indebtedness, pay dividends or distributions, make certain investments, create liens on assets, enter into transactions with affiliates, merge or consolidate with another company, transfer or sell assets or impair assets constituting collateral.
As of December 31, 2014, the Authority and the Tribe were in compliance with all respective covenant requirements under the senior and senior subordinated note indentures.
The Authority or its affiliates may, from time to time, seek to purchase or otherwise retire outstanding indebtedness for cash in open market purchases, privately negotiated transactions or otherwise. Any such transaction will depend on prevailing market conditions and the Authority's liquidity and covenant requirement restrictions, among other factors.
Line of Credit
In November 2013, the Authority entered into a $16.5 million revolving credit facility with Bank of America, N.A. (the “Line of Credit”). The Line of Credit is coterminous with the Senior Secured Credit Facilities. Pursuant to provisions of the Senior Secured Credit Facilities, under certain circumstances, the Line of Credit may be converted into loans under the Senior Secured Credit Facilities. Under the Line of Credit, each advance accrues interest on the basis of a one-month LIBOR Rate plus an applicable margin based on the Authority's total leverage ratio, as each term is defined under the Line of Credit. As of December 31, 2014, amounts outstanding under the Line of Credit totaled $6.0 million. Borrowings under the Line of Credit are uncollateralized obligations. The Line of Credit contains negative covenants and financial maintenance covenants that are substantially the same as those contained in the Senior Secured Credit Facilities. As of December 31, 2014, the Authority was in compliance with all covenant requirements under the Line of Credit. As of December 31, 2014 and September 30, 2014, accrued interest on the Line of Credit was $22,000 and $23,000, respectively.
2009 Mohegan Tribe Promissory Note
In September 2009, the Tribe made a $10.0 million loan to Salishan-Mohegan (the “2009 Mohegan Tribe Promissory Note”). The 2009 Mohegan Tribe Promissory Note was amended in June 2014 to extend the maturity date to September 30, 2015. The 2009 Mohegan Tribe Promissory Note accrues interest at an annual rate of 10.0%. As amended, accrued interest is payable as follows: (i) $1.2 million per quarter, commencing December 31, 2013 through March 31, 2014 and (ii) $1.3 million on June 30, 2015, with the balance of accrued and unpaid interest due at maturity. As amended, principal outstanding under the 2009 Mohegan Tribe Promissory Note amortizes as follows: (i) $1.625 million per quarter, commencing December 31, 2012 through September 30, 2013, (ii) $875,000 per quarter, commencing December 31, 2013 through March 31, 2014, (iii) $875,000 on June

13

MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

30, 2015 and (iv) $875,000 at maturity. As of December 31, 2014 and September 30, 2014, accrued interest on the Mohegan Tribe Promissory Note was $2.6 million and $2.5 million, respectively.
2012 Mohegan Tribe Minor's Trust Promissory Note
In March 2012, Comerica Bank & Trust, N.A., Trustee f/b/o The Mohegan Tribe of Indians of Connecticut Minor's Trust, made a $20.0 million loan to Salishan-Mohegan (the “2012 Mohegan Tribe Minor's Trust Promissory Note”). The 2012 Mohegan Tribe Minor's Trust Promissory Note was amended in June 2014 to extend the maturity date to March 31, 2017. The 2012 Mohegan Tribe Minor's Trust Promissory Note accrues interest at an annual rate of 10.0%. As amended, accrued interest is payable as follows: (i) quarterly, commencing June 30, 2012 through March 31, 2014, (ii) on July 1, 2014 on the unpaid balance for the period April 1, 2014 through June 30, 2014, (iii) $800,000 per quarter, commencing September 30, 2015 through March 31, 2016 and (iv) quarterly, thereafter on the unpaid balance. As amended, principal outstanding under the 2012 Mohegan Tribe Minor's Trust Promissory Note amortizes as follows: (i) $500,000 per quarter, commencing December 31, 2012 through March 31, 2014, (ii) $500,000 on July 1, 2014 and September 30, 2015, (iii) $1.5 million per quarter, commencing December 31, 2015 through September 30, 2016 and (iv) $10.0 million at maturity. As of December 31, 2014 and September 30, 2014, accrued interest on the 2012 Mohegan Tribe Minor's Trust Promissory Note was $832,000 and $416,000, respectively.
2013 Mohegan Tribe Promissory Note
In March 2013, MG&H purchased and acquired all of the Tribe's membership interest in MG&H in exchange for a promissory note in the principal amount of $7.4 million (the “2013 Mohegan Tribe Promissory Note”). The 2013 Mohegan Tribe Promissory Note matures on December 31, 2018. The 2013 Mohegan Tribe Promissory Note accrues interest at an annual rate of 4.0% payable quarterly. As of December 31, 2014 and September 30, 2014, accrued interest on the 2013 Mohegan Tribe Promissory Note was $1,000.
Downs Lodging Credit Facility
In July 2012, Downs Lodging, a single purpose entity and wholly-owned unrestricted subsidiary of the Authority, entered into a credit agreement providing for a $45.0 million term loan from a third-party lender (the “Downs Lodging Credit Facility”). The proceeds from the Downs Lodging Credit Facility were used by Downs Lodging to fund Project Sunlight, a hotel and convention center expansion project at Mohegan Sun Pocono. The Downs Lodging Credit Facility matures on July 12, 2016 and accrues interest at an annual rate of 13.0%. Under the terms of the Downs Lodging Credit Facility, accrued interest of 10.0% is payable monthly in cash during the term of the loan, with the remaining 3.0% due at maturity. In addition, a 3.0% exit fee is payable upon repayment of the loan principal. The Downs Lodging Credit Facility is a senior secured obligation of Downs Lodging, collateralized by all existing and future assets of Downs Lodging. The Downs Lodging Credit Facility subjects Downs Lodging to certain covenant requirements customarily found in loan agreements for similar transactions. As of December 31, 2014, Downs Lodging was in compliance with all covenant requirements under the Downs Lodging Credit Facility. As of December 31, 2014, accrued interest on the Downs Lodging Credit Facility was $375,000. As of September 30, 2014, there was no accrued interest on the Downs Lodging Credit Facility.

NOTE 4—RELATED PARTY TRANSACTIONS:
Distributions to the Tribe totaled $10.0 million for each of the three months ended December 31, 2014 and 2013, respectively.
The Tribe provides certain governmental and administrative services in connection with the operation of Mohegan Sun. The Authority incurred expenses for such services totaling $7.1 million and $7.0 million for the three months ended December 31, 2014 and 2013, respectively.
The Authority purchases most of its utilities, including electricity, gas, water and waste water services, from an instrumentality of the Tribe, the Mohegan Tribal Utility Authority. The Authority incurred costs for such utilities totaling $4.3 million and $4.5 million for the three months ended December 31, 2014 and 2013, respectively.
The Authority incurred interest expense associated with borrowings from the Mohegan Tribe totaling $535,000 and $616,000 for the three months ended December 31, 2014 and 2013, respectively.







14

MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

NOTE 5—COMMITMENTS AND CONTINGENCIES:
Slot Win and Free Promotional Slot Play Contributions
In May 1994, the Tribe and the State of Connecticut entered into a Memorandum of Understanding (“MOU”), which sets forth certain matters regarding implementation of the Mohegan Compact. The MOU stipulates that a portion of revenues from slot machines must be paid to the State of Connecticut (“Slot Win Contribution”). Slot Win Contribution payments are not required if the State of Connecticut legalizes any other gaming operation with slot machines, video facsimiles of games of chance or other commercial casino games within the State of Connecticut, except those consented to by the Tribe and the Mashantucket Pequot Tribe (the “MPT”). For each 12-month period commencing July 1, 1995, Slot Win Contribution payments shall be the lesser of: (1) 30% of gross revenues from slot machines or (2) the greater of (a) 25% of gross revenues from slot machines or (b) $80.0 million.
In September 2009, the Authority entered into a settlement agreement with the State of Connecticut regarding contribution payments on the Authority's free promotional slot play program. Under the terms of the settlement agreement, effective July 1, 2009, the State of Connecticut agreed that no value shall be attributed to free promotional slot plays utilized by patrons at Mohegan Sun for purposes of calculating monthly contribution payments, provided that the aggregate amount of free promotional slot plays during any month does not exceed a certain threshold of gross revenues from slot machines for such month. In the event free promotional slot plays granted by the Authority exceed such threshold, contribution payments are required on such excess face amount of free promotional slot plays at the same rate as Slot Win Contribution payments, or 25%. The threshold before contribution payments on free promotional slot plays are required is currently 11% of gross revenues from slot machines.
The Authority reflected expenses associated with the combined Slot Win Contribution and free promotional slot play contribution totaling $36.5 million and $36.3 million for the three months ended December 31, 2014 and 2013, respectively. As of December 31, 2014 and September 30, 2014, the combined outstanding Slot Win Contribution and free promotional slot play contribution totaled $12.2 million and $11.6 million, respectively.
Pennsylvania Slot Machine Tax
Downs Racing holds a Category One slot machine license issued by the Pennsylvania Gaming Control Board (the “PGCB”) for the operation of slot machines at Mohegan Sun Pocono. This license permits Downs Racing to install and operate up to 3,000 slot machines at Mohegan Sun Pocono, expandable to up to a total of 5,000 slot machines upon request and approval of the PGCB.
The Pennsylvania Race Horse Development and Gaming Act stipulates that holders of Category One slot machine licenses must pay a portion of revenues from slot machines to the PGCB on a daily basis (“Pennsylvania Slot Machine Tax”), which includes local share assessments to be paid to the cities and municipalities hosting Mohegan Sun Pocono and amounts to be paid to the Pennsylvania Harness Horsemen's Association, Inc. (the “PHHA”). The Pennsylvania Slot Machine Tax is currently 55% of gross revenues from slot machines, 2% of which is subject to a $10.0 million minimum annual threshold to ensure that the host cities and municipalities receive an annual minimum of $10.0 million in local share assessments. Downs Racing maintains a $1.5 million escrow deposit in the name of the Commonwealth of Pennsylvania for Pennsylvania Slot Machine Tax payments, which was included in "Other assets, net" in the accompanying condensed consolidated balance sheets.
    
The Authority reflected expenses associated with the Pennsylvania Slot Machine Tax totaling $29.2 million and $29.7 million for the three months ended December 31, 2014 and 2013, respectively. As of December 31, 2014 and September 30, 2014, outstanding Pennsylvania Slot Machine Tax payments totaled $6.5 million and $4.6 million, respectively.
Pennsylvania Table Game Tax
In January 2010, the Commonwealth of Pennsylvania amended the Pennsylvania Race Horse Development and Gaming Act to allow slot machine operators in the Commonwealth of Pennsylvania to obtain a table game operation certificate and operate certain table games, including poker. Under the amended law, holders of table game operation certificates must pay a portion of revenues from table games to the PGCB on a weekly basis (“Pennsylvania Table Game Tax”). The Pennsylvania Table Game Tax is currently 12%, plus the 2% local share assessments.
The Authority reflected expenses associated with the Pennsylvania Table Game Tax totaling $1.6 million and $1.5 million for the three months ended December 31, 2014 and 2013, respectively. As of December 31, 2014 and September 30, 2014, outstanding Pennsylvania Table Game Tax payments totaled $174,000 and $156,000, respectively.


15

MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

Pennsylvania Regulatory Fee
Slot machine licensees in the Commonwealth of Pennsylvania are required to reimburse state gaming regulatory agencies for various administrative and operating expenses (“Pennsylvania Regulatory Fee”) at a rate of 1.5% of gross revenues from slot machines and table games.
The Authority reflected expenses associated with the Pennsylvania Regulatory Fee totaling $1.1 million for each of the three months ended December 31, 2014 and 2013. As of December 31, 2014 and September 30, 2014, outstanding Pennsylvania Regulatory Fee payments to the PGCB totaled $89,000 and $147,000, respectively.
Pennsylvania Gaming Control Board Loans
The PGCB was initially granted $36.1 million in loans to fund start-up costs for gaming in the Commonwealth of Pennsylvania, which are to be repaid by slot machine licensees (the "Initial Loans"). The PGCB was subsequently granted an additional $63.8 million in loans to fund ongoing gaming oversight costs, which also are to be repaid by slot machine licensees (the "Subsequent Loans"). Repayment of the Initial Loans will commence when all 14 authorized gaming facilities are opened in the Commonwealth of Pennsylvania. Currently, 12 of the 14 authorized gaming facilities have commenced operations. As of December 31, 2014, the Authority has concluded that a repayment contingency for the Initial Loans is probable but not reasonably estimable since the PGCB has not yet established a method of assessment of repayment for the Initial Loans and, as such, the Authority has not recorded a related accrual for such repayment. In June 2011, the PGCB adopted a method of assessment of repayment for the Subsequent Loans pursuant to which repayment commenced on January 1, 2012 and will continue over a 10-year period in accordance with a formula based on a combination of a single fiscal year and cumulative gross revenues from slot machines for each operating slot machine licensee.
The Authority reflected expenses associated with this repayment schedule totaling $157,000 and $160,000 for the three months ended December 31, 2014 and 2013, respectively.
Horsemen’s Agreement
Downs Racing and the PHHA are parties to an agreement that governs all live harness racing and simulcasting and account wagering at the Pennsylvania Facilities through December 31, 2015. As of December 31, 2014 and September 30, 2014, outstanding payments to the PHHA for purses earned by horsemen, but not yet paid, and other fees totaled $6.4 million and $8.1 million, respectively.
Priority Distribution Agreement
In August 2001, the Authority and the Tribe entered into an agreement (the “Priority Distribution Agreement”), which stipulates that the Authority must make monthly payments to the Tribe to the extent of the Authority's Net Cash Flow as defined under the Priority Distribution Agreement. The Priority Distribution Agreement was amended as of December 31, 2014. As amended, the Priority Distribution Agreement, which has a perpetual term, limits the maximum aggregate priority distribution payments in each calendar year to $40.0 million. Payments under the Priority Distribution Agreement: (1) do not reduce the Authority's obligations to reimburse the Tribe for governmental and administrative services provided by the Tribe or to make payments under any other agreements with the Tribe, (2) are limited obligations of the Authority and are payable only to the extent of the Authority's Net Cash Flow as defined under the Priority Distribution Agreement and (3) are not secured by a lien or encumbrance on any of the Authority's assets or properties.

The Authority reflected payments associated with the Priority Distribution Agreement totaling $4.9 million and $4.8 million for the three months ended December 31, 2014 and 2013, respectively.
Litigation
The Authority is a defendant in various litigation matters resulting from its normal course of business. In management's opinion, the aggregate liability, if any, arising from such litigations will not have a material impact on the Authority's financial position, results of operations or cash flows.


NOTE 6—RELINQUISHMENT AGREEMENT:
In February 1998, the Authority and Trading Cove Associates (“TCA”) entered into a relinquishment agreement (the “Relinquishment Agreement”). Effective January 1, 2000 (the “Relinquishment Date”), the Relinquishment Agreement superseded a then-existing management agreement with TCA. The Relinquishment Agreement provides, among other things, that the Authority

16

MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

make certain payments to TCA out of, and determined as a percentage of, Revenues, as defined under the Relinquishment Agreement, generated by Mohegan Sun over a 15-year period commencing on the Relinquishment Date. The payments (“Senior Relinquishment Payments” and “Junior Relinquishment Payments”) have separate schedules and priorities. Senior Relinquishment Payments commenced on April 25, 2000, 25 days following the end of the first three-month period after the Relinquishment Date, and continue at the end of each three-month period thereafter until January 25, 2015. Junior Relinquishment Payments commenced on July 25, 2000, 25 days following the end of the first six-month period after the Relinquishment Date, and continue at the end of each six-month period thereafter until January 25, 2015. Each Senior and Junior Relinquishment Payment is 2.5% of Revenues generated by Mohegan Sun over the immediate preceding three-month or six-month payment period, as the case may be. Revenues are defined under the Relinquishment Agreement as gross gaming revenues, other than Class II Gaming revenues, and all other revenues, as defined, including, without limitation, hotel revenues, room service revenues, food and beverage revenues, ticket revenues, fees or receipts from the convention/events center and all rental revenues or other receipts from lessees and concessionaires, but not the gross receipts of such lessees, licenses and concessionaires, derived directly or indirectly from the facilities, as defined. Revenues under the Relinquishment Agreement exclude revenues generated from certain expansion areas of Mohegan Sun, such as Casino of the Wind, as such areas do not constitute facilities as defined under the Relinquishment Agreement.
In the event of any bankruptcy, liquidation, reorganization or similar proceeding relating to the Authority, the Relinquishment Agreement provides that Senior and Junior Relinquishment Payments then due and owing are subordinated in right of payment to the Authority's senior secured indebtedness and capital lease obligations, and that Junior Relinquishment Payments then due and owing are further subordinated in right of payment to all of the Authority's other senior indebtedness. The Relinquishment Agreement also provides that all relinquishment payments are subordinated in right of payment to minimum priority distribution payments, which are required monthly payments made by the Authority to the Tribe under the Priority Distribution Agreement, to the extent then due. The Authority, in accordance with authoritative guidance issued by the FASB pertaining to the accounting for contingencies, recorded a $549.1 million relinquishment liability at September 30, 1998 based on the estimated present value of its obligations under the Relinquishment Agreement.
As of December 31, 2014 and September 30, 2014, the carrying amount of the relinquishment liability was $18.9 million and $25.2 million, respectively. The decrease in the relinquishment liability during the three months ended December 31, 2014 was due to $6.6 million in relinquishment payments. This reduction in the relinquishment liability was offset by $227,000 representing the accretion of discount to the relinquishment liability and a $56,000 relinquishment liability reassessment charge.
Relinquishment payments consisted of the following (in millions):
 
For the Three Months Ended
 
December 31, 2014
 
December 31, 2013
Principal
$
6.3

 
$
6.0

Accretion of discount
0.3

 
0.6

Total
$
6.6

 
$
6.6

The accretion of discount to the relinquishment liability reflects the accretion of the discount to the present value of the relinquishment liability for the impact of the time value of money. As of December 31, 2014 and September 30, 2014, relinquishment payments earned but unpaid were $18.9 million and $13.2 million, respectively.

NOTE 7—SEGMENT REPORTING:
As of December 31, 2014, the Authority owns and operates, either directly or through wholly-owned subsidiaries, Mohegan Sun, the Connecticut Sun franchise and the Mohegan Sun Golf Club, and has partnered with an unrelated third-party to own and operate the New England Black Wolves franchise (collectively, the “Connecticut Facilities”), and the Pennsylvania Facilities. Substantially all of the Authority's revenues are derived from these operations. The Connecticut Sun franchise, the Mohegan Sun Golf Club and the New England Black Wolves franchise are aggregated with the Mohegan Sun operating segment because these operations all share similar economic characteristics, which is to generate gaming and entertainment revenues by attracting patrons to Mohegan Sun. The Authority's executive officers review and assess the performance and operating results and determine the proper allocation of resources to the Connecticut Facilities and the Pennsylvania Facilities on a separate basis. Accordingly, the Authority has two separate reportable segments: (1) Mohegan Sun, which includes the operations of the Connecticut Facilities and (2) Mohegan Sun Pocono, which includes the operations of the Pennsylvania Facilities. The Authority's operations related to investments in unconsolidated affiliates and certain other Corporate and management operations have not been identified as separate reportable segments; therefore, these operations are included in Corporate and other in the following segment disclosures to reconcile to consolidated results.

17

MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

 
For the Three Months Ended
(in thousands)
December 31, 2014
 
December 31, 2013
Net revenues:
 
 
 
Mohegan Sun
$
245,778

 
$
241,933

Mohegan Sun Pocono
70,396

 
70,683

Corporate and other
1,831

 
739

Inter-segment revenues
(1,273
)
 
(532
)
Total
$
316,732

 
$
312,823

Income (loss) from operations:
 
 
 
Mohegan Sun
$
47,418

 
$
34,643

Mohegan Sun Pocono
8,479

 
7,577

Corporate and other
(6,124
)
 
(8,947
)
Total
49,773

 
33,273

Accretion of discount to the relinquishment liability
(227
)
 
(551
)
Interest income
1,834

 
1,644

Interest expense, net of capitalized interest
(36,255
)
 
(38,969
)
Loss on early extinguishment of debt

 
(62,083
)
Other expense, net
(728
)
 
(704
)
Net income (loss)
14,397

 
(67,390
)
Loss attributable to non-controlling interests
369

 
136

Net income (loss) attributable to Mohegan Tribal Gaming Authority
$
14,766

 
$
(67,254
)

 
For the Three Months Ended
(in thousands)
December 31, 2014
 
December 31, 2013
Capital expenditures incurred:
 
 
 
Mohegan Sun
$
352

 
$
5,039

Mohegan Sun Pocono
613

 
987

Corporate and other
19

 
9,504

Total
$
984

 
$
15,530

 
 
 
 
(in thousands)
December 31, 2014
 
September 30, 2014
Total assets:
 
 
 
Mohegan Sun
$
1,377,698

 
$
1,368,352

Mohegan Sun Pocono
554,080

 
551,655

Corporate and other
135,970

 
135,953

Total
$
2,067,748

 
$
2,055,960



NOTE 8—SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENT INFORMATION:
As of December 31, 2014, substantially all of the Authority's outstanding debt is fully and unconditionally guaranteed, on a joint and several basis, by the following 100% owned subsidiaries of the Authority: the Pocono Subsidiaries, MBC, Mohegan Golf, Mohegan Ventures-NW, MVW, WTG and MTGA Gaming. Separate financial statements and other disclosures concerning the Pocono Subsidiaries, MBC, Mohegan Golf, Mohegan Ventures-NW, MVW, WTG and MTGA Gaming are not presented below because the Authority believes that the summarized financial information provided below and in Note 7 are adequate for investor analysis of these subsidiaries. Condensed consolidating financial statement information for the Authority, its 100% owned guarantor subsidiaries and its non-guarantor subsidiaries and entities as of December 31, 2014 and September 30, 2014 and for the three months ended December 31, 2014 and 2013 is as follows (in thousands):








18

MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

CONDENSED CONSOLIDATING BALANCE SHEETS
 
December 31, 2014
 
Authority
 
Total
Guarantor
Subsidiaries (1)
 
Total  Non-Guarantor
Subsidiaries and Entities (2)
 
Consolidating/
Eliminating
Adjustments
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
53,763

 
$
19,420

 
$
1,004

 
$

 
$
74,187

Restricted cash
58

 
302

 

 

 
360

Receivables, net
28,911

 
2,092

 
1,747

 
(1,036
)
 
31,714

Inventories
14,434

 
1,377

 

 

 
15,811

Other current assets
18,544

 
1,197

 
13

 

 
19,754

Total current assets
115,710

 
24,388

 
2,764

 
(1,036
)
 
141,826

Non-current assets:
 
 
 
 
 
 
 
 
 
Property and equipment, net
1,125,715

 
219,698

 
58,945

 

 
1,404,358

Goodwill

 
39,459

 

 

 
39,459

Other intangible assets, net
120,366

 
284,640

 
2,150

 

 
407,156

Other assets, net
27,259

 
3,979

 
50,104

 
(6,393
)
 
74,949

Inter-company receivables
242,729

 
74,647

 

 
(317,376
)
 

Investment in subsidiaries
319,917

 

 

 
(319,917
)
 

Total assets
$
1,951,696

 
$
646,811

 
$
113,963

 
$
(644,722
)
 
$
2,067,748

LIABILITIES AND CAPITAL
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Current portion of long-term debt
$
32,594

 
$

 
$
625

 
$

 
$
33,219

Current portion of relinquishment liability
18,865

 

 

 

 
18,865

Due to Mohegan Tribe

 

 
3,750

 

 
3,750

Current portion of capital leases
801

 
64

 

 
(64
)
 
801

Trade payables
11,871

 
1,155

 
143

 

 
13,169

Construction payables
582

 
75

 
399

 

 
1,056

Accrued interest payable
25,618

 

 
3,767

 

 
29,385

Other current liabilities
95,429

 
31,508

 
3,960

 
(972
)
 
129,925

Total current liabilities
185,760

 
32,802

 
12,644

 
(1,036
)
 
230,170

Non-current liabilities:
 
 
 
 
 
 
 
 
 
Long-term debt, net of current portion
1,631,459

 

 
45,325

 

 
1,676,784

Due to Mohegan Tribe, net of current portion

 

 
21,920

 

 
21,920

Capital leases, net of current portion
2,142

 
6,195

 

 
(6,195
)
 
2,142

Other long-term liabilities
2,195

 

 
4,238

 

 
6,433

Inter-company payables

 
239,130

 
78,246

 
(317,376
)
 

Accumulated losses in excess of investment in subsidiaries

 
34,843

 

 
(34,843
)
 

Total liabilities
1,821,556

 
312,970

 
162,373

 
(359,450
)
 
1,937,449

Capital:
 
 
 
 
 
 
 
 
 
Retained earnings
130,140

 
333,841

 
(49,234
)
 
(284,923
)
 
129,824

Mohegan Tribal Gaming Authority capital
130,140

 
333,841

 
(49,234
)
 
(284,923
)
 
129,824

Non-controlling interests

 

 
824

 
(349
)
 
475

Total capital
130,140

 
333,841

 
(48,410
)
 
(285,272
)
 
130,299

Total liabilities and capital
$
1,951,696

 
$
646,811

 
$
113,963

 
$
(644,722
)
 
$
2,067,748

___________
(1)   Includes the Pocono Subsidiaries, MBC, Mohegan Golf, Mohegan Ventures-NW, MVW, WTG and MTGA Gaming.
(2)   Includes Mohegan Lacrosse, MGA and subsidiaries, Downs Lodging, Salishan-Mohegan, MG&H and Mohegan Resorts and subsidiaries.

19

MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

 
September 30, 2014
 
Authority
 
Total
Guarantor
Subsidiaries (1)
 
Total  Non-Guarantor
Subsidiaries and Entities (2)
 
Consolidating/
Eliminating
Adjustments
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
33,939

 
$
14,767

 
$
402

 
$

 
$
49,108

Restricted cash
47

 
628

 

 

 
675

Receivables, net
27,537

 
2,637

 
1,287

 
(821
)
 
30,640

Inventories
13,339

 
1,205

 

 

 
14,544

Other current assets
15,559

 
1,182

 
256

 

 
16,997

Total current assets
90,421

 
20,419

 
1,945

 
(821
)
 
111,964

Non-current assets:
 
 
 
 
 
 
 
 
 
Property and equipment, net
1,142,363

 
222,425

 
59,280

 

 
1,424,068

Goodwill

 
39,459

 

 

 
39,459

Other intangible assets, net
120,395

 
284,714

 

 

 
405,109

Other assets, net
28,625

 
3,970

 
49,077

 
(6,312
)
 
75,360

Inter-company receivables
228,122

 
65,981

 

 
(294,103
)
 

Investment in subsidiaries
325,651

 

 

 
(325,651
)
 

Total assets
$
1,935,577

 
$
636,968

 
$
110,302

 
$
(626,887
)
 
$
2,055,960

LIABILITIES AND CAPITAL
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Current portion of long-term debt
$
28,893

 
$

 
$
415

 
$

 
$
29,308

Current portion of relinquishment liability
25,194

 

 

 

 
25,194

Due to Mohegan Tribe

 

 
2,250

 

 
2,250

Current portion of capital leases
793

 
58

 

 
(58
)
 
793

Trade payables
18,893

 
5,181

 
12

 

 
24,086

Construction payables
4,411

 
794

 
627

 

 
5,832

Accrued interest payable
5,725

 

 
2,934

 

 
8,659

Other current liabilities
90,684

 
29,504

 
7,750

 
(763
)
 
127,175

Total current liabilities
174,593

 
35,537

 
13,988

 
(821
)
 
223,297

Non-current liabilities:
 
 
 
 
 
 
 
 
 
Long-term debt, net of current portion
1,630,958

 

 
45,000

 

 
1,675,958

Due to Mohegan Tribe, net of current portion

 

 
23,420

 

 
23,420

Capital leases, net of current portion
2,345

 
6,111

 

 
(6,111
)
 
2,345

Other long-term liabilities
2,307

 

 
3,806

 

 
6,113

Inter-company payables

 
225,269

 
68,834

 
(294,103
)
 

Accumulated losses in excess of investment in subsidiaries

 
31,680

 

 
(31,680
)
 

Total liabilities
1,810,203

 
298,597

 
155,048

 
(332,715
)
 
1,931,133

Capital:
 
 
 
 
 
 
 
 
 
Retained earnings
125,374

 
338,371

 
(44,746
)
 
(293,941
)
 
125,058

Mohegan Tribal Gaming Authority capital
125,374

 
338,371

 
(44,746
)
 
(293,941
)
 
125,058

Non-controlling interests

 

 

 
(231
)
 
(231
)
Total capital
125,374

 
338,371

 
(44,746
)
 
(294,172
)
 
124,827

Total liabilities and capital
$
1,935,577

 
$
636,968

 
$
110,302

 
$
(626,887
)
 
$
2,055,960

___________
(1)   Includes the Pocono Subsidiaries, MBC, Mohegan Golf, Mohegan Ventures-NW, MVW, WTG and MTGA Gaming.
(2)   Includes MGA and subsidiaries, Downs Lodging, Salishan-Mohegan, MG&H and Mohegan Resorts and subsidiaries.



20

MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

CONDENSED CONSOLIDATING STATEMENTS OF INCOME (LOSS)
 
For the Three Months Ended December 31, 2014
 
Authority  
 
Total
Guarantor
Subsidiaries (1)
 
Total  Non-Guarantor
Subsidiaries and Entities (2)
 
Consolidating/
Eliminating
Adjustments
 
Consolidated
Revenues:
 
 
 
 
 
 
 
 
 
Gaming
$
212,543

 
$
65,191

 
$

 
$

 
$
277,734

Food and beverage
15,826

 
6,845

 

 

 
22,671

Hotel
10,989

 
1,237

 

 

 
12,226

Retail, entertainment and other
25,368

 
2,362

 
1,842

 
(1,273
)
 
28,299

Gross revenues
264,726

 
75,635

 
1,842

 
(1,273
)
 
340,930

Less-Promotional allowances
(19,203
)
 
(4,990
)
 
(3
)
 
(2
)
 
(24,198
)
Net revenues
245,523

 
70,645

 
1,839

 
(1,275
)
 
316,732

Operating costs and expenses:
 
 
 
 
 
 
 
 
 
Gaming
118,427

 
47,672

 

 

 
166,099

Food and beverage
8,729

 
2,082

 

 

 
10,811

Hotel
3,418

 
1,298

 

 
(1,213
)
 
3,503

Retail, entertainment and other
10,784

 
960

 
502

 
(2
)
 
12,244

Advertising, general and administrative
38,088

 
7,771

 
4,164

 
(4,208
)
 
45,815

Corporate
3,491

 

 

 
4,148

 
7,639

Depreciation and amortization
16,281

 
3,527

 
245

 

 
20,053

Loss on disposition of assets
737

 
2

 

 

 
739

Relinquishment liability reassessment
56

 

 

 

 
56

Total operating costs and expenses
200,011

 
63,312

 
4,911

 
(1,275
)
 
266,959

Income (loss) from operations
45,512

 
7,333

 
(3,072
)
 

 
49,773

Other income (expense):
 
 
 
 
 
 
 
 
 
Accretion of discount to the relinquishment liability
(227
)
 

 

 

 
(227
)
Interest income
12

 
1,443

 
1,929

 
(1,550
)
 
1,834

Interest expense, net of capitalized interest
(24,026
)
 
(10,106
)
 
(3,673
)
 
1,550

 
(36,255
)
Loss on interests in subsidiaries
(6,472
)
 
(3,163
)
 

 
9,635

 

Other expense, net
(33
)
 

 
(695
)
 

 
(728
)
Total other expense
(30,746
)
 
(11,826
)
 
(2,439
)
 
9,635

 
(35,376
)
Net income (loss)
14,766

 
(4,493
)
 
(5,511
)
 
9,635

 
14,397

Loss attributable to non-controlling interests

 

 
251

 
118

 
369

Net income (loss) attributable to Mohegan Tribal Gaming Authority
$
14,766

 
$
(4,493
)
 
$
(5,260
)
 
$
9,753

 
$
14,766

___________
(1)
Includes the Pocono Subsidiaries, MBC, Mohegan Golf, Mohegan Ventures-NW, MVW, WTG and MTGA Gaming.
(2)
Includes Mohegan Lacrosse, MGA and subsidiaries, Downs Lodging, Salishan-Mohegan, MG&H and Mohegan Resorts and subsidiaries.









21

MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

 
For the Three Months Ended December 31, 2013
 
Authority  
 
Total
Guarantor
Subsidiaries (1)
 
Total  Non-Guarantor
Subsidiaries and Entities (2)
 
Consolidating/
Eliminating
Adjustments
 
Consolidated
Revenues:
 
 
 
 
 
 
 
 
 
Gaming
$
208,474

 
$
66,279

 
$

 
$

 
$
274,753

Food and beverage
15,924

 
6,795

 

 

 
22,719

Hotel
10,251

 
441

 

 

 
10,692

Retail, entertainment and other
27,259

 
2,026

 
752

 
(532
)
 
29,505

Gross revenues
261,908

 
75,541

 
752

 
(532
)
 
337,669

Less-Promotional allowances
(20,267
)
 
(4,575
)
 
(3
)
 
(1
)
 
(24,846
)
Net revenues
241,641

 
70,966

 
749

 
(533
)
 
312,823

Operating costs and expenses:
 
 
 
 
 
 
 
 
 
Gaming
128,116

 
48,186

 

 

 
176,302

Food and beverage
8,004

 
2,095

 

 

 
10,099

Hotel
3,657

 
535

 

 
(472
)
 
3,720

Retail, entertainment and other
11,932

 
845

 

 
(1
)
 
12,776

Advertising, general and administrative
38,503

 
8,458

 
6,045

 
(6,064
)
 
46,942

Corporate
3,428

 

 

 
6,004

 
9,432

Depreciation and amortization
15,532

 
3,421

 
165

 

 
19,118

Gain on disposition of assets
(1
)
 

 

 

 
(1
)
Pre-opening

 
1,162

 

 

 
1,162

Total operating costs and expenses
209,171

 
64,702

 
6,210

 
(533
)
 
279,550

Income (loss) from operations
32,470

 
6,264

 
(5,461
)
 

 
33,273

Other income (expense):
 
 
 
 
 
 
 
 
 
Accretion of discount to the relinquishment liability
(551
)
 

 

 

 
(551
)
Interest income
25

 
984

 
1,649

 
(1,014
)
 
1,644

Interest expense, net of capitalized interest
(25,997
)
 
(11,317
)
 
(2,670
)
 
1,015

 
(38,969
)
Loss on early extinguishment of debt
(62,083
)
 

 

 

 
(62,083
)
Loss on interests in subsidiaries
(11,117
)
 
(5,307
)
 

 
16,424

 

Other expense, net
(2
)
 

 
(702
)
 

 
(704
)
Total other expense
(99,725
)
 
(15,640
)
 
(1,723
)
 
16,425

 
(100,663
)
Net income (loss)
(67,255
)
 
(9,376
)
 
(7,184
)
 
16,425

 
(67,390
)
Loss attributable to non-controlling interests

 

 

 
136

 
136

Net income (loss) attributable to Mohegan Tribal Gaming Authority
$
(67,255
)
 
$
(9,376
)
 
$
(7,184
)
 
$
16,561

 
$
(67,254
)
___________
(1)
Includes the Pocono Subsidiaries, MBC, Mohegan Golf, Mohegan Ventures-NW, MVW, WTG and MTGA Gaming.
(2)
Includes MGA and subsidiaries, Downs Lodging, Salishan-Mohegan, MG&H and Mohegan Resorts and subsidiaries.










22

MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
 
For the Three Months Ended December 31, 2014
 
Authority
 
Total
Guarantor
Subsidiaries (1) 
 
Total  Non-Guarantor
Subsidiaries and Entities (2)
 
Consolidating/
  Eliminating
  Adjustments  
 
Consolidated  
Cash flows provided by (used in) operating activities:
 
 
 
 
 
 
 
 
 
Net income (loss)
$
14,766

 
$
(4,493
)
 
$
(5,511
)
 
$
9,635

 
$
14,397

Adjustments to reconcile net income (loss) to net cash flows provided by (used in) operating activities:
 
 
 
 
 
 
 
 
 
Depreciation and amortization
16,281

 
3,527

 
245

 

 
20,053

Relinquishment liability reassessment
56

 

 

 

 
56

Accretion of discount to the relinquishment liability
227

 

 

 

 
227

Cash paid for accretion of discount to the relinquishment liability
(276