MOHEGAN TRIBAL GAMING AUTHORITY - FORM 10-Q - August 15, 2016

Attached files

file filename
EX-32.2 - EXHIBIT 32.2 - MOHEGAN TRIBAL GAMING AUTHORITYa2016630ex322.htm
EX-32.1 - EXHIBIT 32.1 - MOHEGAN TRIBAL GAMING AUTHORITYa2016630ex321.htm
EX-31.2 - EXHIBIT 31.2 - MOHEGAN TRIBAL GAMING AUTHORITYa2016630ex312.htm
EX-31.1 - EXHIBIT 31.1 - MOHEGAN TRIBAL GAMING AUTHORITYa2016630ex311.htm
EX-10.1 - EXHIBIT 10.1 - MOHEGAN TRIBAL GAMING AUTHORITYa2016630ex101.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 June 30, 2016
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)
 
 
June 30,
2016
 
September 30,
2015
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
188,669

 
$
65,754

Restricted cash
53,052

 
1,762

Receivables, net
39,091

 
53,944

Inventories
16,723

 
15,546

Prepaid expenses
16,194

 
9,033

Other current assets
6,048

 
9,497

Total current assets
319,777

 
155,536

Non-current assets:
 
 
 
Property and equipment, net
1,323,074

 
1,352,055

Goodwill
39,459

 
39,459

Other intangible assets, net
406,303

 
406,718

Other assets, net
80,772

 
66,365

Total assets
$
2,169,385

 
$
2,020,133

LIABILITIES AND CAPITAL
 
 
 
Current liabilities:
 
 
 
Current portion of long-term debt
$
24,300

 
$
49,194

Due to Mohegan Tribe
7,000

 
6,000

Current portion of capital leases
848

 
824

Trade payables
13,282

 
15,016

Construction payables
3,106

 
13,137

Accrued interest payable
22,521

 
12,055

Other current liabilities
147,684

 
141,280

Total current liabilities
218,741

 
237,506

Non-current liabilities:
 
 
 
Long-term debt, net of current portion
1,658,420

 
1,593,730

Due to Mohegan Tribe, net of current portion
7,420

 
17,420

Capital leases, net of current portion
882

 
1,521

Other long-term liabilities
2,353

 
1,915

Total liabilities
1,887,816

 
1,852,092

Commitments and Contingencies


 


Capital:
 
 
 
Retained earnings
223,444

 
169,452

Accumulated other comprehensive income
1,803

 
—

Mohegan Tribal Gaming Authority total capital
225,247

 
169,452

Non-controlling interests
56,322

 
(1,411
)
Total capital
281,569

 
168,041

Total liabilities and capital
$
2,169,385

 
$
2,020,133

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


3

MOHEGAN TRIBAL GAMING AUTHORITY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(in thousands)
(unaudited)
 
 
For the
 
For the
 
For the
 
For the
 
Three Months Ended
 
Three Months Ended
 
Nine Months Ended
 
Nine Months Ended
 
June 30, 2016
 
June 30, 2015
 
June 30, 2016
 
June 30, 2015
Revenues:
 
 
 
 
 
 
 
Gaming
$
276,807

 
$
284,713

 
$
865,889

 
$
837,463

Food and beverage
23,608

 
23,021

 
66,808

 
66,811

Hotel
14,222

 
12,700

 
38,639

 
37,199

Retail, entertainment and other
34,286

 
29,825

 
89,031

 
82,231

Gross revenues
348,923

 
350,259

 
1,060,367

 
1,023,704

Less-Promotional allowances
(25,496
)
 
(25,220
)
 
(71,965
)
 
(71,510
)
Net revenues
323,427

 
325,039

 
988,402

 
952,194

Operating costs and expenses:
 
 
 
 
 
 
 
Gaming
164,302

 
164,229

 
495,060

 
485,994

Food and beverage
10,674

 
10,323

 
30,807

 
31,363

Hotel
4,229

 
3,788

 
11,731

 
10,767

Retail, entertainment and other
12,872

 
12,447

 
30,691

 
34,268

Advertising, general and administrative
47,649

 
46,522

 
148,871

 
140,946

Corporate
7,520

 
7,119

 
26,601

 
23,400

Depreciation and amortization
18,172

 
19,086

 
55,969

 
58,703

Loss on disposition of assets
12

 
26

 
341

 
845

Severance
—

 
—

 
—

 
3,370

Impairment of Project Horizon
—

 
—

 
—

 
2,502

Relinquishment liability reassessment
—

 
—

 
—

 
(243
)
Total operating costs and expenses
265,430

 
263,540

 
800,071

 
791,915

Income from operations
57,997

 
61,499

 
188,331

 
160,279

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

 
—

 
—

 
(227
)
Interest income
2,284

 
1,906

 
6,469

 
5,554

Interest expense
(33,949
)
 
(35,660
)
 
(102,294
)
 
(107,692
)
Loss on modification and early extinguishment of debt
(277
)
 
—

 
(484
)
 
—

Other expense, net
(495
)
 
(50
)
 
(1,355
)
 
(1,260
)
Total other expense
(32,437
)
 
(33,804
)
 
(97,664
)
 
(103,625
)
Net income
25,560

 
27,695

 
90,667

 
56,654

(Income) loss attributable to non-controlling interests
478

 
439

 
(2,225
)
 
1,278

Net income attributable to Mohegan Tribal Gaming Authority
$
26,038

 
$
28,134

 
$
88,442

 
$
57,932

Comprehensive income:
 
 
 
 
 
 
 
Foreign currency translation
(606
)
 
—

 
3,596

 
—

Other comprehensive income (loss)
(606
)
 
—

 
3,596

 
—

Other comprehensive (income) loss attributable to non-controlling interests
384

 
—

 
(1,793
)
 
—

Other comprehensive income (loss) attributable to Mohegan Tribal Gaming Authority
(222
)
 
—

 
1,803

 
—

Comprehensive income attributable to Mohegan Tribal Gaming Authority
$
25,816

 
$
28,134

 
$
90,245

 
$
57,932


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)
 
 
Retained Earnings
 
Accumulated Other Comprehensive Income (Loss)
 
Mohegan Tribal Gaming Authority Total Capital
 
Non-controlling      
Interests
 
Total Capital
Balance, March 31, 2016
$
210,656

 
$
2,025

 
$
212,681

 
$
57,184

 
$
269,865

Net income (loss)
26,038

 
—

 
26,038

 
(478
)
 
25,560

Foreign currency translation adjustment
—

 
(222
)
 
(222
)
 
(384
)
 
(606
)
Distributions to Mohegan Tribe
(13,250
)
 
—

 
(13,250
)
 
—

 
(13,250
)
Balance, June 30, 2016
$
223,444

 
$
1,803

 
$
225,247

 
$
56,322

 
$
281,569

 
 
 
 
 
 
 
 
 
 
Balance, September 30, 2015
$
169,452

 
$
—

 
$
169,452

 
$
(1,411
)
 
$
168,041

Net income
88,442

 
—

 
88,442

 
2,225

 
90,667

Foreign currency translation adjustment
—

 
1,803

 
1,803

 
1,793

 
3,596

Contributions from members
—

 
—

 
—

 
47,568

 
47,568

Share based compensation
—

 
—

 
—

 
6,147

 
6,147

Distributions to Mohegan Tribe
(34,450
)
 
—

 
(34,450
)
 
—

 
(34,450
)
Balance, June 30, 2016
$
223,444

 
$
1,803

 
$
225,247

 
$
56,322

 
$
281,569

 
 
 
 
 
 
 
 
 
 
Balance, March 31, 2015
$
134,856

 
$
—

 
$
134,856

 
$
5

 
$
134,861

Net income (loss)
28,134

 
—

 
28,134

 
(439
)
 
27,695

Distributions to Mohegan Tribe
(12,500
)
 
—

 
(12,500
)
 
—

 
(12,500
)
Balance, June 30, 2015
$
150,490

 
$
—

 
$
150,490

 
$
(434
)
 
$
150,056

 
 
 
 
 
 
 
 
 
 
Balance, September 30, 2014
$
125,058

 
$
—

 
$
125,058

 
$
(231
)
 
$
124,827

Net income (loss)
57,932

 
—

 
57,932

 
(1,278
)
 
56,654

Contributions from members
—

 
—

 
—

 
1,075

 
1,075

Distributions to Mohegan Tribe
(32,500
)
 
—

 
(32,500
)
 
—

 
(32,500
)
Balance, June 30, 2015
$
150,490

 
$
—

 
$
150,490

 
$
(434
)
 
$
150,056


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 Nine Months Ended
 
For the Nine Months Ended
 
June 30, 2016
 
June 30, 2015
Cash flows provided by (used in) operating activities:
 
 
 
Net income
$
90,667

 
$
56,654

Adjustments to reconcile net income to net cash flows provided by operating activities:
 
 
 
Depreciation and amortization
55,969

 
58,703

Relinquishment liability reassessment
—

 
(243
)
Accretion of discount to the relinquishment liability
—

 
227

Cash paid for accretion of discount to the relinquishment liability
—

 
(778
)
Loss on early extinguishment of debt
207

 
—

Payments of discounts
(2,717
)
 
—

Amortization of debt issuance costs, premiums and discounts
7,252

 
5,757

Provision (recovery) for losses on receivables
(5,075
)
 
3,399

Share based compensation
6,147

 
—

Impairment of Project Horizon
—

 
2,502

Loss on disposition of assets
341

 
845

Loss from unconsolidated affiliates
1,338

 
1,302

Changes in operating assets and liabilities:
 
 
 
Increase in receivables
(4,705
)
 
(282
)
Increase in inventories
(1,177
)
 
(972
)
Increase in prepaid and other assets
(11,380
)
 
(6,317
)
Decrease in trade payables
(1,676
)
 
(9,803
)
Increase in accrued interest
10,466

 
20,059

Increase in other liabilities
8,148

 
13,430

Net cash flows provided by operating activities
153,805

 
144,483

Cash flows provided by (used in) investing activities:
 
 
 
Purchases of property and equipment, including decreases in construction payables of $10,031 and $3,302, respectively
(37,726
)
 
(12,081
)
Issuance of third-party loans and advances
(4,229
)
 
(2,201
)
Payments received on third-party loans and advances
13,524

 
117

Increase in restricted cash, net
(47,422
)
 
(782
)
Proceeds from asset sales
161

 
1,577

Investments in unconsolidated affiliates
(100
)
 
—

Investments in the New England Black Wolves
—

 
(500
)
Net cash flows used in investing activities
(75,792
)
 
(13,870
)
Cash flows provided by (used in) financing activities:
 
 
 
Senior Secured Credit Facility borrowings - Revolving
521,000

 
299,000

Senior Secured Credit Facility repayments - Revolving
(523,000
)
 
(328,000
)
Senior Secured Credit Facility repayments - Term Loan A
(10,892
)
 
(5,469
)
Senior Secured Credit Facility repayments - Term Loan B
(28,430
)
 
(3,650
)
Line of Credit borrowings
387,781

 
332,124

Line of Credit repayments
(387,781
)
 
(335,165
)
Proceeds from issuance of Senior Unsecured Notes
100,000

 
—

New Downs Lodging Credit Facility borrowings - Term Loan
25,000

 
—

New Downs Lodging Credit Facility repayments - Term Loan
(1,562
)
 
—

Downs Lodging Credit Facility repayments - Term Loan
(40,516
)
 
—

Borrowings from Mohegan Tribe
22,500

 
—

Repayments to Mohegan Tribe
(25,500
)
 
(875
)
Repayments of other long-term debt
(624
)
 
(9,900
)
Principal portion of relinquishment liability payments
—

 
(24,400
)
Distributions to Mohegan Tribe
(34,450
)
 
(32,500
)
Payments of financing fees
(5,081
)
 
—

Payments on capital lease obligations
(615
)
 
(726
)
Payments to acquire non-controlling interests
(804
)
 
—

Non-controlling interest contributions
47,568

 
—

Net cash flows provided by (used in) financing activities
44,594

 
(109,561
)
Net increase in cash and cash equivalents
122,607

 
21,052

Effect of exchange rate on cash and cash equivalents
308

 
—

Cash and cash equivalents at beginning of period
65,754

 
49,108

Cash and cash equivalents at end of period
$
188,669

 
$
70,160

 
 
 
 
Supplemental disclosures:
 
 
 
Cash paid during the period for interest
$
84,588

 
$
80,600

Non-cash Senior Secured Credit Facility repayments - Term Loan A and Term Loan B
$
5,179

 
$
4,169

Non-cash repayments - Mohegan Tribe
$
6,000

 
$
—

 
 
 
 
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 595-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 an approximately 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 June 30, 2016, 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.
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. (“Downs Racing”), 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 owns and operates Mohegan Sun Pocono, a gaming and entertainment facility situated on an approximately 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 (the “Cowlitz Tribe”) and to be located on the Cowlitz reservation in Clark County, Washington (the “Cowlitz Project”). Salishan-Mohegan holds a 100% membership interest in Salishan-Mohegan Two, LLC, which was 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”). 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.
Downs Lodging was formed to develop, finance and build Project Sunlight, a hotel and convention center located at Mohegan Sun Pocono.
Mohegan Gaming Advisors was formed to pursue gaming opportunities outside the State of Connecticut, including management contracts and consulting agreements for casino and entertainment properties. Mohegan Gaming Advisors holds 100%

7
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

membership interests in MGA Holding NJ, LLC ("MGA Holding NJ") and MGA Gaming NJ, LLC (collectively, the "Mohegan NJ Entities"). The Mohegan NJ Entities were formed to pursue management contracts and consulting agreements in the State of New Jersey. MGA Holding NJ holds a 10% ownership interest in Resorts Casino Hotel in Atlantic City and its associated gaming activities, including on-line gaming in the State of New Jersey.
Mohegan Gaming Advisors 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 ("Mohegan Sun Massachusetts"; Mohegan Sun Massachusetts, MGA Holding MA, MGA Gaming MA and MGA Palmer Partners are referred to collectively as the “Mohegan MA Entities”). The Mohegan MA Entities were formed to pursue potential gaming opportunities in the Commonwealth of Massachusetts.
Mohegan Gaming Advisors currently holds a 50.32% membership interest in Inspire Integrated Resort Co., Ltd ("Inspire Integrated Resort"). Inspire Integrated Resort was formed to pursue potential gaming opportunities in South Korea. In February 2016, Inspire Integrated Resort was awarded a pre-approval for a license to be issued upon the completion of construction of an integrated resort at Incheon International Airport in South Korea. On August 1, 2016, Inspire Integrated Resort entered into an implementation agreement with the Incheon International Airport Authority for the long-term lease and development of land at the project site adjacent to the airport.
Mohegan Gaming Advisors holds a 100% membership interest in MGNV, LLC ("MGNV"). MGNV was formed to pursue potential gaming, hospitality and entertainment opportunities in the State of Nevada.
Mohegan Gaming Advisors holds a 100% membership interest in MGLA, LLC ("MGLA"). MGLA was formed to pursue potential gaming, hospitality and entertainment opportunities in the State of Louisiana. In April 2016, MGLA entered into an agreement with the Tunica-Biloxi Gaming Authority to provide gaming, hospitality and entertainment consulting services to the Paragon Casino Resort in Marksville, Louisiana.
Mohegan Gaming Advisors holds a 100% membership interest in MGBR, LLC ("MGBR"). MGBR was formed to pursue potential gaming, hospitality and entertainment opportunities in South America.
The Authority holds a 50% membership interest in MMCT Venture, LLC, which was formed with the Mashantucket Pequot Tribe (the "MPT") to pursue potential additional gaming opportunities in the State of Connecticut.

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 2015 condensed consolidated financial statements and supplemental condensed consolidating financial statements have been reclassified to conform to the 2016 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 and nine months ended June 30, 2016 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, 2015.
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, the accounts of Inspire Integrated Resort are consolidated into the accounts of Mohegan

8
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

Gaming Advisors and the accounts of NEBW are consolidated into the accounts of Mohegan Lacrosse as Mohegan Ventures-NW, Mohegan Gaming Advisors and Mohegan Lacrosse are deemed to be the primary beneficiaries. In consolidation, all inter-company balances and transactions were eliminated.
Restricted Cash
Restricted cash consists of deposits that are contractually restricted as to their withdrawal or use. Restricted cash primarily includes cash held by Inspire Integrated Resort in connection with its pre-approval for a license to build an integrated resort at Incheon International Airport in South Korea. In February 2016, KCC Corporation and its affiliates contributed approximately $50.0 million to Inspire Integrated Resort for a 49.81% membership interest in Inspire Integrated Resort. In July 2016, an additional $50.0 million of cash, classified as cash and cash equivalents on the June 30, 2016 condensed consolidated balance sheet, was reclassified as restricted cash.
Long-Term Receivables
Long-term receivables consist primarily of receivables from affiliates and others.
Receivables from affiliates, which are included in receivables, net, and other assets, net, in the accompanying condensed consolidated balance sheets, consist of reimbursable costs and expenses advanced by Salishan-Mohegan on behalf of the Cowlitz Tribe for the Cowlitz Project (refer to Note 6) and WTG on behalf of the Menominee Tribe for the Menominee Project.
The Salishan-Mohegan receivables are payable upon: (1) the related property being taken into trust by the United States Department of the Interior and (2) the receipt of necessary financing for the development of the proposed casino. In March 2015, the Cowlitz Project site was taken into trust by the United States Department of the Interior for the benefit of the Cowlitz Tribe. In addition, in December 2015, the Cowlitz Tribal Gaming Authority (the “CTGA”) obtained financing for the Cowlitz Project. The financing provided funding for construction of the Cowlitz Project and a partial repayment of the Salishan-Mohegan receivables. The Authority maintains a reserve for doubtful collection of the remaining Salishan-Mohegan receivables, which is based on the Authority's estimate of the probability that the receivables will be collected. The Authority assesses the reserve for doubtful collection of the Salishan-Mohegan receivables for adequacy on a quarterly basis. In connection with the financing for the Cowlitz Project, the Authority reduced the reserve for doubtful collection of the Salishan-Mohegan receivables. Future developments in the construction and opening of the proposed casino or other matters affecting the Cowlitz Project could affect the collectability of the Salishan-Mohegan receivables and the related reserve. The WTG receivables, which were fully reserved, were written-off following the expiration of a release and reimbursement agreement in December 2015.
Receivables from others, which are primarily included in other assets, net, in the accompanying condensed consolidated balance sheets, consist of funds loaned to a third-party in connection with the Cowlitz Project and a loan to a tenant of Mohegan Sun.













9
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

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, March 31, 2016 (1)
$
81,582

 
$
2,527

 
$
84,109

Additions:
 
 
 
 
 
   Advances and other loans, including interest receivable
2,839

 
496

 
3,335

   Development fees
1,446

 
—

 
1,446

Deductions:
 
 
 
 
 
   Payments
(2,818
)
 
(42
)
 
(2,860
)
Balance, June 30, 2016 (1)
$
83,049

 
$
2,981

 
$
86,030

 
 
 
 
 
 
Balance, September 30, 2015 (1)
$
100,527

 
$
1,811

 
$
102,338

Additions:
 
 
 
 
 
   Advances and other loans, including interest receivable
7,273

 
1,294

 
8,567

   Development fees
7,260

 
—

 
7,260

Deductions:
 
 
 
 
 
   Payments (2)
(22,218
)
 
(124
)
 
(22,342
)
   Adjustments (3)
(9,793
)
 
—

 
(9,793
)
Balance, June 30, 2016 (1)
$
83,049

 
$
2,981

 
$
86,030

__________
(1)
Includes interest receivable of $47.9 million, $45.7 million and $43.4 million as of June 30, 2016, March 31, 2016 and September 30, 2015, respectively.
(2)
Payments of receivables from affiliates primarily represent a partial repayment of the Salishan-Mohegan receivables.
(3)
Adjustments represent the write-off of the WTG receivables.
 
Reserves for Doubtful Collection of Long-Term Receivables
 
Affiliates        
 
Others        
 
Total             
Balance, March 31, 2016
$
15,153

 
$
37

 
$
15,190

Additions:
 
 
 
 
 
   Charges to bad debt expense
568

 
—

 
568

Deductions:
 
 
 
 
 
   Adjustments
—

 
(37
)
 
(37
)
Balance, June 30, 2016
$
15,721

 
$
—

 
$
15,721

 
 
 
 
 
 
Balance, September 30, 2015
$
31,028

 
$
42

 
$
31,070

Additions:
 
 
 
 
 
   Charges to bad debt expense
1,801

 
—

 
1,801

Deductions:
 
 
 
 
 
   Adjustments (1)
(17,108
)
 
(42
)
 
(17,150
)
Balance, June 30, 2016
$
15,721

 
$
—

 
$
15,721

__________.
(1)
Adjustments to reserves for doubtful collection of receivables from affiliates include $7.3 million related to the Salishan-Mohegan receivables and $9.8 million related to the WTG receivables.
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

10
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

•
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):
 
June 30, 2016
 
Carrying Value         
 
Fair Value         
Senior Secured Credit Facility - Revolving
$
19,000

 
$
18,355

Senior Secured Credit Facility - Term Loan A
$
98,288

 
$
97,938

Senior Secured Credit Facility - Term Loan B
$
765,495

 
$
771,754

2013 9 3/4% Senior Unsecured Notes
$
578,273

 
$
623,025

2015 Senior Unsecured Notes
$
97,986

 
$
97,625

2012 11% Senior Subordinated Notes
$
99,217

 
$
100,190

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 June 30, 2016.
Share Based Compensation
The Authority accounts for share based compensation for non-employees in accordance with authoritative guidance pertaining to share based payments. Share based compensation is measured at the measurement date, based on the calculated fair value of the award, and is recognized over the requisite service period. Share based compensation is recognized as an operating expense and totaled $6.1 million for the nine months ended June 30, 2016.
Foreign Currency
The Authority accounts for foreign currency translation in accordance with authoritative guidance pertaining to currency translation. The local currency is the functional currency for Inspire Integrated Resort. For local currency functional locations, assets and liabilities are translated at the end-of-period rates, while revenue and expenses are translated at average rates in effect during the period. Equity is translated at historical rates and the resulting cumulative translation adjustments are included as a component of accumulated other comprehensive income. Translation adjustments resulting from this process are credited or charged to other comprehensive income (loss). Other assets held overseas are remeasured into U.S. dollars at end-of-period exchange rates. Gains or losses from foreign currency remeasurements are included in other income (expense), net.
Accumulated Other Comprehensive Income and Comprehensive Income
As of June 30, 2016, accumulated other comprehensive income consisted solely of foreign currency translation adjustments. Comprehensive income included net income attributable to the Authority and all other non-stockholder changes in equity for the three months and nine months ended June 30, 2016.
Additional Cash Flow Information
On June 30, 2016, the bank that administers the Authority’s debt service payments for its Senior Secured Credit Facilities made a required principal payment on behalf of the Authority totaling $5.2 million, but did not accordingly debit the Authority’s bank account for the payment. As of June 30, 2016, the Authority reflected this transaction as a reduction to current portion of long-term debt and a corresponding increase to other current liabilities. On the following banking day, the bank withdrew the $5.2 million from the Authority’s bank account, resulting in a reduction to the Authority’s cash and cash equivalents and other current liabilities. Accordingly, the Authority classified the payment made by the bank as a non-cash financing outflow and the related amount owed to the bank as a non-cash financing inflow in the accompanying condensed consolidated statement of cash flows for the nine months ended June 30, 2016.
In addition, in connection with the financing for the Cowlitz Project, the Cowlitz Tribe repaid $6.0 million of principal outstanding under the 2012 Mohegan Tribe Minor's Trust Promissory Note on behalf of Salishan-Mohegan. Accordingly, the Authority classified this payment as a non-cash financing outflow and the related reduction to the Salishan-Mohegan receivables

11
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

as a non-cash investing inflow in the accompanying condensed consolidated statement of cash flows for the nine months ended June 30, 2016.
New Accounting Standards
In May 2014, the FASB issued an accounting standards 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 was to be effective for annual reporting periods beginning after December 15, 2016, with early application not being permitted. However, in July 2015, the FASB deferred the effective date by one year. This guidance will now be effective for annual reporting periods beginning after December 15, 2017, and interim reporting periods thereafter. Entities are permitted to adopt the guidance as of the original effective date. The Authority is currently evaluating the impact that this guidance will have on its financial statements.
In August 2014, the FASB issued an accounting standards 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 statements.
In February 2015, the FASB issued an accounting standards update which amends existing requirements applicable to reporting entities that are required to evaluate whether certain legal entities should be consolidated. This guidance will be required to be applied either on a retrospective or modified retrospective basis and will be effective for annual reporting periods beginning after December 15, 2015, and interim reporting periods thereafter, with early application permitted. The Authority is currently evaluating the impact that this guidance will have on its financial statements.
In February 2016, the FASB issued new guidance pertaining to leases based on the principle that entities should recognize assets and liabilities arising from leases. This guidance does not significantly change the lessees’ recognition, measurement and presentation of expenses and cash flows from the previous accounting standards. Leases are classified as operating or financing. The guidance's primary change is the requirement for entities to recognize a right-of-use asset representing the right to use the leased asset and a lease liability for payments during the term of operating lease arrangements. Lessees are permitted to make an accounting policy election to not recognize the asset and liability for leases with a term of twelve months or less. Lessors’ accounting is largely unchanged from the previous accounting standard. In addition, the guidance expands disclosure requirements of lease arrangements. This guidance will be required to be applied on a modified retrospective basis, which includes a number of practical expedients, and will be effective for annual reporting periods beginning after December 15, 2018, and interim reporting periods thereafter, with early application permitted. The Authority is currently evaluating the impact that this guidance will have on its financial statements.


















12
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

NOTE 3—LONG-TERM DEBT:
Long-term debt consisted of the following (in thousands, including current maturities):
 
June 30,
2016
 
September 30,
2015
Senior Secured Credit Facility - Revolving, due June 2018
$
19,000

 
$
21,000

Senior Secured Credit Facility - Term Loan A, due June 2018, net of discount and debt issuance costs of $1,700 and $2,106 as of June 30, 2016 and September 30, 2015, respectively
98,288

 
109,613

Senior Secured Credit Facility - Term Loan B, due June 2018, net of discount and debt issuance costs of $12,679 and $14,918 as of June 30, 2016 and September 30, 2015, respectively
765,495

 
792,078

2013 9 3/4% Senior Unsecured Notes, due September 2021, net of premium and debt issuance costs of $6,727 and $7,333 as of June 30, 2016 and September 30, 2015, respectively
578,273

 
577,667

2015 Senior Unsecured Notes, due December 2017, net of debt issuance costs of $2,014 as of June 30, 2016
97,986

 
—

2012 11 % Senior Subordinated Notes, due September 2018, net of discount and debt issuance costs of $973 and $1,251 as of June 30, 2016 and September 30, 2015, respectively
99,217

 
98,939

Downs Lodging Credit Facility, due July 2016, net of debt issuance costs of $254 as of September 30, 2015
—

 
40,262

New Downs Lodging Credit Facility, due November 2019, net of debt issuance costs of $1,376 as of June 30, 2016
22,062

 
—

2012 Mohegan Tribe Minor's Trust Promissory Note, due March 2017
7,000

 
16,000

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

 
7,420

Other
2,399

 
3,365

Long-term debt, excluding capital leases
1,697,140

 
1,666,344

Less: current portion of long-term debt
(31,300
)
 
(55,194
)
Long-term debt, net of current portion
$
1,665,840

 
$
1,611,150


Maturities of long-term debt are as follows, excluding unamortized debt issuance costs, premiums and discounts (in thousands, including current maturities):
Less than 1 year
$
31,300

1-3 years
1,091,145

3-5 years
14,723

More than 5 years
585,441

Total
$
1,722,609

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).
In August 2015, the Authority entered into an increase joinder and amendment agreement among the Authority, the Tribe, the Guarantors as defined below, Citizens Bank, N.A., as Administrative Agent, and the lenders party thereto, amending the Senior Secured Credit Facilities. Pursuant to the amendment, the Authority borrowed $90.0 million of increase term B loans on the same terms as the existing term B loans under the Term Loan B Facility. The net proceeds from this transaction were used to redeem outstanding 2012 Senior Subordinated Notes (further discussed below).

On May 26, 2016, the Authority entered into a second amendment agreement among the Authority, the Tribe, the Guarantors as defined below, Citizens Bank, N.A., as Administrative Agent, and the lenders party thereto, amending the Senior Secured Credit Facilities to, among other things, permit the Authority to make additional investments relating to its joint venture arrangement to build an integrated resort at Incheon International Airport in South Korea.

13
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

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 the first full fiscal quarter after the closing date.
As of June 30, 2016, amounts outstanding under the Revolving Facility, Term Loan A Facility and Term Loan B Facility totaled $19.0 million, $100.0 million and $778.2 million, respectively. As of June 30, 2016, letters of credit issued under the Revolving Facility totaled $2.5 million, of which no amount was drawn. Inclusive of letters of credit, which reduce borrowing availability under the Revolving Facility, the Authority had approximately $78.5 million of borrowing capacity under its Revolving Facility and Line of Credit as of June 30, 2016.
Borrowings under the Senior Secured Credit Facilities accrue interest as follows: (i) for base rate loans under the Revolving Facility and Term Loan A Facility, at 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, at 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, at 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, at the applicable LIBOR rate (subject to a 1.0% floor) plus 450 basis points. The Authority is also 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 June 30, 2016, interest on the $19.0 million outstanding under the Revolving Facility was based on a base rate of 3.50% plus 300 basis points. The commitment fee was 0.50% as of June 30, 2016. As of June 30, 2016, interest on the $100.0 million outstanding under the Term Loan A Facility was based on a Eurodollar rate of 0.46% plus 400 basis points. As of June 30, 2016, interest on the $778.2 million outstanding under the Term Loan B Facility was based on the Eurodollar rate floor of 1.0% plus 450 basis points. As of June 30, 2016 and September 30, 2015, accrued interest, including commitment fees, on the Senior Secured Credit Facilities was $162,000 and $195,000, 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 are also 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 June 30, 2016, 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 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

14
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

to occur, the Authority can provide no assurance that it would be able to obtain the financing necessary to repay such accelerated indebtedness.
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 “Initial 2013 Senior Unsecured Notes”). In August 2015, the Authority issued an additional $85.0 million of senior unsecured notes under the Initial 2013 Senior Unsecured Notes indenture (the “Additional 2013 Senior Unsecured Notes” and, together with the Initial 2013 Senior Unsecured Notes, the “2013 Senior Unsecured Notes”). Subsequent to this transaction, an aggregate principal amount of $585.0 million 2013 Senior Unsecured Notes is outstanding. The net proceeds from the Additional 2013 Senior Unsecured Notes were used to redeem outstanding 2012 Senior Subordinated Notes (further discussed below).
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 (and additional interest in the case of the Additional 2013 Senior Unsecured Notes, if any, pursuant to the registration rights agreement described below) 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 (and additional interest in the case of the Additional 2013 Senior Unsecured Notes, if any) 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 (and additional interest in the case of the Additional 2013 Senior Unsecured Notes, if any) 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 (and additional interest in the case of the Additional 2013 Senior Unsecured Notes, if any). Interest on the 2013 Senior Unsecured Notes is payable semi-annually on March 1st and September 1st.
In March 2014, the Authority completed an offer to exchange the Initial 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. Additionally, in March 2016, the Authority completed an offer to exchange the Additional 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 June 30, 2016 and September 30, 2015, accrued interest on the 2013 Senior Unsecured Notes was $19.0 million and $4.8 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 are also 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. 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 also 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.
Facility Agreement for Senior Unsecured Notes
In November 2015, the Authority entered into an agreement (the “Facility Agreement”) by and among the Authority, the Tribe and UBS AG, London Branch (“UBS”). Pursuant to the Facility Agreement, the Authority may issue, from time to time, to UBS or its designee, senior unsecured notes in an aggregate principal amount of up to $200.0 million, in varying amounts and with varying borrowing dates, maturities and interest rates, as agreed with UBS or its designee.

15
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

In November 2015, pursuant to the Facility Agreement, the Authority entered into a note purchase agreement (the “Note Purchase Agreement”) by and among the Authority, the Tribe and the purchaser named therein (the “Purchaser”). In accordance with the Note Purchase Agreement, the Authority issued floating rate senior notes in an aggregate principal amount of $100.0 million (the “2015 Senior Unsecured Notes”) to the Purchaser in a private offering that closed on November 20, 2015. The net proceeds from the 2015 Senior Unsecured Notes were used to pursue new development opportunities and for general corporate purposes. The 2015 Senior Unsecured Notes are senior unsecured obligations. Pursuant to a guarantee agreement dated November 20, 2015, certain of the Authority's subsidiaries, which are the same Guarantors that guarantee the Authority's Senior Secured Credit Facilities and other senior unsecured and senior subordinated notes, have guaranteed the 2015 Senior Unsecured Notes. The 2015 Senior Unsecured Notes mature on December 15, 2017. The 2015 Senior Unsecured Notes accrue interest at an annual rate equal to the LIBOR rate plus 4.45%, payable quarterly. As of June 30, 2016, interest on the 2015 Senior Unsecured Notes was based on a LIBOR rate of 0.65% plus 4.45%. As of June 30, 2016, prepaid interest on the 2015 Senior Unsecured Notes was $1.1 million.
The Authority may redeem the 2015 Senior Unsecured Notes at any time, in whole or in part, at a price equal to 100% of the principal amount redeemed plus accrued interest to the date of redemption, customary breakage costs, a “make-whole amount,” and, if redeemed within one year of the date of issuance, a premium of 0.25%. If the Authority experiences specific kinds of change of control events, undertakes certain types of asset sales or experiences certain swap-related credit determinations, it will be required to make an offer to purchase the 2015 Senior Unsecured Notes at purchase prices set forth in the Note Purchase Agreement. In addition, if any gaming regulatory authority requires a holder of the 2015 Senior Unsecured Notes to be licensed, qualified or found suitable under applicable gaming laws, and such holder does not obtain such license, qualification or finding of suitability within a specified time, the Authority can call for redemption of the 2015 Senior Unsecured Notes held by such holder.
The 2015 Senior Unsecured 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 2015 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 2015 Senior Unsecured Notes are also effectively subordinated to any indebtedness and other liabilities (including trade payables) of the Authority’s subsidiaries that do not guarantee the 2015 Senior Unsecured Notes. The 2015 Senior Unsecured Notes rank equally in right of payment with the Authority’s other unsecured, unsubordinated indebtedness, including trade payables. The 2015 Senior Unsecured Notes are fully and unconditionally guaranteed, jointly and severally, by the Guarantors.
The Note Purchase Agreement contains certain covenants that, subject to certain significant exceptions, limit, among other things, the Authority’s and the 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 Note Purchase Agreement also includes customary events of default, including, but not limited to, failure to make required payments, failure to comply with certain agreements or covenants, certain cross-defaults, certain events of bankruptcy and insolvency and certain judgment defaults.
Senior Subordinated Notes
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”). 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 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

16
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

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. In September 2015, the Authority redeemed an additional aggregate principal amount of $175.0 million of 2012 Senior Subordinated Notes. An aggregate principal amount of approximately $100.2 million 2012 Senior Subordinated Notes remains outstanding as of June 30, 2016. As of June 30, 2016 and September 30, 2015, accrued interest on the 2012 Senior Subordinated Notes was $3.2 million and $490,000, 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 2012 Senior Subordinated Notes are uncollateralized general obligations of the Authority and are subordinated to borrowings under the Senior Secured Credit Facilities and the 2013 and 2015 Senior Unsecured Notes. The 2012 Senior Subordinated Notes are fully and unconditionally guaranteed, jointly and severally, by the Guarantors.
The 2012 Senior Subordinated Notes indenture contains 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 June 30, 2016, the Authority and the Tribe were in compliance with all respective covenant requirements under the senior and senior subordinated note indentures and other debt agreements.
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 June 30, 2016, no amount was drawn on the Line of Credit. Borrowings under the Line of Credit are uncollateralized general obligations of the Authority. 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 June 30, 2016, the Authority was in compliance with all covenant requirements under the Line of Credit. As of June 30, 2016 and September 30, 2015, accrued interest on the Line of Credit was $20,000 and $23,000, respectively.
Downs Lodging Credit Facility
In July 2012, Downs Lodging, a single purpose entity and wholly-owned 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 accrued interest at an annual rate of 13.0%.

In July 2015, Downs Lodging prepaid approximately $4.5 million of the Downs Lodging Credit Facility, plus accrued interest and fees. In November 2015, Downs Lodging repaid the remaining $40.5 million outstanding under the Downs Lodging Credit Facility, plus accrued interest and fees, with proceeds from a new credit agreement providing for a $25.0 million term loan from a third-party lender (the “New Downs Lodging Credit Facility”) and a cash payment of the remaining amount, and terminated the prior Downs Lodging Credit Facility.

17
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

The New Downs Lodging Credit Facility matures in November 2019, subject to earlier maturity in the event that 5.0% or more of the Authority’s total funded indebtedness matures prior to that date, in which case the New Downs Lodging Credit Facility matures six months prior to such date. Principal outstanding under the New Downs Lodging Credit Facility amortizes in equal monthly amounts of approximately $260,000 commencing January 1, 2016, with the remaining balance due at maturity. The New Downs Lodging Credit Facility accrues interest as follows: (i) for base rate loans, at a base rate equal to the greater of (a) the prime rate and (b) the federal funds rate plus 50 basis points (the greater of (a) and (b), the “base rate”), plus 250 basis points and (ii) for Eurodollar rate loans, at the applicable LIBOR rate plus 350 basis points. Interest on base rate loans is payable monthly. Interest on Eurodollar rate loans is payable at the end of each applicable interest period.
As of June 30, 2016, amounts outstanding under the New Downs Lodging Credit Facility totaled $23.4 million and interest was based on a Eurodollar rate of 0.50% plus 350 basis points. As of June 30, 2016, accrued interest on the New Downs Lodging Credit Facility was $78,000. As of September 30, 2015, accrued interest, including deferred interest and exit fee, on the prior Downs Lodging Credit Facility was $5.3 million.
The New Downs Lodging Credit Facility is a senior secured obligation of Downs Lodging, collateralized by all existing and future assets of Downs Lodging. The New Downs Lodging Credit Facility subjects Downs Lodging to certain covenant requirements customarily found in loan agreements for similar transactions. Additionally, the New Downs Lodging Credit Facility includes a financial maintenance covenant pertaining to minimum debt service coverage. As of June 30, 2016, Downs Lodging was in compliance with all covenant requirements under the New Downs Lodging Credit Facility.
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 accrued interest at an annual rate of 10.0%, 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. In addition, principal outstanding under the 2012 Mohegan Tribe Minor's Trust Promissory Note amortized 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.
In December 2015, the Cowlitz Tribe repaid $6.0 million of principal outstanding under the 2012 Mohegan Tribe Minor's Trust Promissory Note on behalf of Salishan-Mohegan.
The 2012 Mohegan Tribe Minor’s Trust Promissory Note was further amended in December 2015, pursuant to which the interest rate was adjusted to an annual rate of 12.5% and accrued interest was adjusted to be payable quarterly, commencing March 31, 2016. In addition, as amended, principal outstanding under the 2012 Mohegan Tribe Minor's Trust Promissory Note amortizes in equal quarterly amounts of $1.5 million, commencing March 31, 2016 through December 31, 2016, with the remaining principal amount due at maturity. An aggregate principal amount of $7.0 million of the 2012 Mohegan Tribe Minor’s Trust Promissory Note remains outstanding as of June 30, 2016. As of June 30, 2016 and September 30, 2015, accrued interest on the 2012 Mohegan Tribe Minor's Trust Promissory Note was $2,000 and $1.3 million, 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 $7.4 million promissory note (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 June 30, 2016 and September 30, 2015, accrued interest on the 2013 Mohegan Tribe Promissory Note was $1,000.
2015 Mohegan Tribe Promissory Note
In November 2015, the Tribe made a $22.5 million loan to Mohegan Gaming Advisors (the “2015 Mohegan Tribe Promissory Note”). The 2015 Mohegan Tribe Promissory Note accrued interest at an annual rate of 5.0% and matured on April 15, 2016. A required principal payment of $8.5 million, plus accrued interest, was paid on January 15, 2016 with cash on hand. The remaining outstanding principal amount, plus accrued interest, was paid at maturity with cash on hand.



18
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

NOTE 4—RELATED PARTY TRANSACTIONS:
Distributions to the Tribe totaled $13.3 million and $12.5 million for the three months ended June 30, 2016 and 2015, respectively, and $34.5 million and $32.5 million for the nine months ended June 30, 2016 and 2015, 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 $7.0 million and $7.2 million for the three months ended June 30, 2016 and 2015, respectively, and $21.8 million and $21.4 million for the nine months ended June 30, 2016 and 2015, respectively. As of June 30, 2016, prepaid governmental and administrative services totaled $7.1 million. As of September 30, 2015, there were no prepaid governmental and administrative services.
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 $4.2 million and $3.9 million for the three months ended June 30, 2016 and 2015, respectively, and $12.0 million and $13.3 million for the nine months ended June 30, 2016 and 2015, respectively.
The Authority incurred interest expense associated with borrowings from the Mohegan Tribe totaling $364,000 and $529,000 for the three months ended June 30, 2016 and 2015, respectively, and $1.5 million and $1.6 million for the nine months ended June 30, 2016 and 2015, respectively.
The Authority leases the land on which Mohegan Sun is located from the Tribe under a long-term lease agreement. In February 2015, the Authority entered into a fourth amendment to the land lease pursuant to which it released from the land lease an approximately 1.2-acre site to be used by the Tribe to finance, develop and own, through the Mohegan Tribal Finance Authority ("MTFA"), a 400-room hotel and related improvements. In connection with this transaction, the Authority entered into a sublease agreement with MTFA to sublease the site and the completed hotel and related improvements for the purpose of operating the hotel on a triple net basis for a term of 28 years and 4 months, commencing upon the completion of the project. Rental payments under the sublease agreement will also commence upon the completion of the project. Completion and opening of the project is anticipated to occur in the fall of 2016. The Authority classified the sublease as an operating lease for financial reporting purposes in accordance with authoritative guidance issued by the FASB pertaining to the accounting for leases.

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 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 $37.0 million for each of the three months ended June 30, 2016 and 2015 and $109.6 million and $107.8 million for the nine months ended June 30, 2016 and 2015, respectively. As of June 30, 2016 and September 30, 2015, the combined outstanding Slot Win Contribution and free promotional slot play contribution totaled $11.4 million and $11.9 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.

19
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

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 $31.1 million for each of the three months ended June 30, 2016 and 2015 and $91.8 million and $88.7 million for the nine months ended June 30, 2016 and 2015, respectively. As of June 30, 2016 and September 30, 2015, outstanding Pennsylvania Slot Machine Tax payments totaled $3.4 million and $4.7 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 was 12%, plus 2% in local share assessments. Effective August 1, 2016, the Pennsylvania Table Game Tax was increased to 14%, plus the 2% local share assessments.
The Authority reflected expenses associated with the Pennsylvania Table Game Tax totaling $1.6 million and $1.8 million for the three months ended June 30, 2016 and 2015, respectively, and $4.7 million and $5.2 million for the nine months ended June 30, 2016 and 2015, respectively. As of June 30, 2016 and September 30, 2015, outstanding Pennsylvania Table Game Tax payments totaled $157,000 and $148,000, respectively.
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”). As of June 30, 2016, the Pennsylvania Regulatory Fee was 1.5% of gross revenues from slot machines and table games. Effective August 1, 2016, the Pennsylvania Regulatory Fee was increased to 1.7% of gross revenues from slot machines and table games.
The Authority reflected expenses associated with the Pennsylvania Regulatory Fee totaling $1.2 million for each of the three months ended June 30, 2016 and 2015 and $3.5 million and $3.4 million for the nine months ended June 30, 2016 and 2015, respectively. As of June 30, 2016 and September 30, 2015, outstanding Pennsylvania Regulatory Fee payments to the PGCB totaled $94,000 and $70,000, 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 are also 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 June 30, 2016, 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 $156,000 and $155,000 for the three months ended June 30, 2016 and 2015, respectively, and $469,000 and $468,000 for the nine months ended June 30, 2016 and 2015, respectively.


20
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

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, 2016. As of June 30, 2016 and September 30, 2015, outstanding payments to the PHHA for purses earned by horsemen, but not yet paid, and other fees totaled $6.4 million and $7.4 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 minimum 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 $10.0 million for each of the three months ended June 30, 2016 and 2015 and $30.0 million and $21.5 million for the nine months ended June 30, 2016 and 2015, 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—COWLITZ PROJECT:
In September 2004, Salishan-Mohegan entered into development and management agreements with the Cowlitz Tribe in connection with the Cowlitz Project, which agreements have been amended from time to time.
Under the terms of the development agreement, Salishan-Mohegan assists in securing financing, as well as administration and oversight of the planning, designing, development, construction and furnishing of the proposed casino. The development agreement provides for development fees of 3% of total project costs, as defined under the development agreement. Under the terms of Salishan-Mohegan's operating agreement, development fees earned by Salishan-Mohegan are distributed to Mohegan Ventures-NW. In 2006, pursuant to the development agreement, Salishan-Mohegan purchased an approximately 152-acre site for the proposed casino.
In addition, certain receivables contributed to Salishan-Mohegan and amounts advanced by Salishan-Mohegan on behalf of the Cowlitz Tribe are reimbursable to Salishan-Mohegan by the Cowlitz Tribe, subject to appropriate approvals defined under the development agreement.
Under the terms of the management agreement, Salishan-Mohegan will manage, operate and maintain the proposed casino for a period of seven years following its opening. The management agreement provides for management fees of 24% of net revenues, as defined under the management agreement, which approximates net income earned from the Cowlitz Project. Under the terms of Salishan-Mohegan’s operating agreement, management fees will be allocated to the members of Salishan-Mohegan based on their respective membership interests. The management agreement is subject to approval by the National Indian Gaming Commission. The Cowlitz Tribe’s Class III Tribal-State gaming compact with the State of Washington became effective in August 2014 and was amended in April 2015. As amended, the compact authorizes the operation of up to 3,000 total gaming machines and 75 table games in a single facility, through the Cowlitz Tribe’s direct allocation of 1,075 gaming machines and 60 table games and the ability to lease additional units from other tribes. The compact is in effect until terminated by written agreement of both parties.
In March 2013, litigation commenced challenging the decision of the Assistant Secretary—Indian Affairs of the Department of the Interior to take the Cowlitz Project site into trust. In December 2014, the U.S. District Court for the District of Columbia granted summary judgment in favor of the federal government and Cowlitz Tribe, upholding the Record of Decision to take the site into trust. The plaintiffs appealed to the U.S. Court of Appeals for the District of Columbia Circuit. On July 29,

21
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

2016, the Circuit Court of Appeals affirmed the judgment of the District Court in its entirety. The Authority can provide no assurance as to whether the appellants will seek further review by the U.S. Supreme Court or the outcome of such a petition or other legal action.
In March 2015, the Cowlitz Project site was taken into trust by the United States Department of the Interior for the benefit of the Cowlitz Tribe. In connection with this event, the Cowlitz Tribe leased a substantial portion of the Cowlitz Project site back to Salishan-Mohegan for a nominal rental fee. The carrying value of the land totaling approximately $20.0 million was transferred to the Cowlitz Tribe at the time the site was taken into trust. This transfer resulted in additional receivables due from the Cowlitz Tribe. In April 2016, the remaining land totaling approximately $686,000 was transferred to CTGA. In connection with this transfer, Salishan-Mohegan assigned the outstanding balance of the promissory note that funded the acquisition of this portion of the land totaling approximately $342,000 to CTGA. The remaining $344,000 was recorded as an additional receivable due from the Cowlitz Tribe.
Construction of the Cowlitz Project commenced in September 2015 and is anticipated to be completed in late spring of 2017. The Authority can provide no assurance that remaining permits or approvals related to construction and opening or other remaining steps and conditions for the Cowlitz Project site to be approved for gaming will be satisfied.
In December 2015, the CTGA obtained financing for the Cowlitz Project. The financing provided funding for construction of the Cowlitz Project and a partial repayment of the Salishan-Mohegan receivables. In connection with this transaction, Salishan-Mohegan was repaid $19.4 million of the Salishan-Mohegan receivables, a portion of which was used to repay certain outstanding debt of Salishan-Mohegan. Under the terms of the development agreement, the remaining outstanding Salishan-Mohegan receivables are to be repaid in equal monthly installments over a seven-year period commencing the first month following the opening of the Cowlitz Project. The remaining outstanding Salishan-Mohegan receivables accrue interest at an annual rate equal to 1.0% above the Cowlitz Project financing rate, or 12.5%. Pursuant to the development agreement, repayment of the remaining outstanding Salishan-Mohegan receivables may accelerate depending on the level of available cash at the end of each fiscal year, subject to certain conditions as set forth in the development agreement, including conditions of the Cowlitz financing. Also in connection with the Cowlitz financing, Salishan-Mohegan assigned the lease for the Cowlitz Project site to CTGA.
The Authority maintains a reserve for doubtful collection of the Salishan-Mohegan receivables, which is based on the Authority's estimate of the probability that the receivables will be collected. The Authority assesses the reserve for doubtful collection of the Salishan-Mohegan receivables for adequacy on a quarterly basis. Following the Cowlitz financing, the Authority reduced the reserve for doubtful collection of the Salishan-Mohegan receivables. Future developments in the construction and opening of the proposed casino or other matters affecting the Cowlitz Project could affect the collectability of the Salishan-Mohegan receivables and the related reserve. As of June 30, 2016 and September 30, 2015, the Salishan-Mohegan receivables, including accrued interest, totaled $78.6 million and $90.7 million, respectively. As of June 30, 2016 and September 30, 2015, related reserves for doubtful collection totaled $15.7 million and $21.2 million, respectively. The Salishan-Mohegan receivables were included in receivables, net, and other assets, net, in the accompanying condensed consolidated balance sheets.
The Authority earned $1.5 million and $7.3 million in development fees, including accrued interest, for the three months and nine months ended June 30, 2016, respectively.

NOTE 7—SEGMENT REPORTING:
As of June 30, 2016, 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 development 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.

22
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

 
For the Three Months Ended
 
For the Nine Months Ended
(in thousands)
June 30, 2016
 
June 30, 2015
 
June 30, 2016
 
June 30, 2015
Net revenues:
 
 
 
 
 
 
 
Mohegan Sun
$
244,123

 
$
246,840

 
$
755,392

 
$
732,903

Mohegan Sun Pocono
76,450

 
77,932

 
223,160

 
218,456

Corporate and other
4,127

 
1,540

 
13,669

 
4,654

Inter-segment revenues
(1,273
)
 
(1,273
)
 
(3,819
)
 
(3,819
)
Total
$
323,427

 
$
325,039

 
$
988,402

 
$
952,194

Income (loss) from operations:
 
 
 
 
 
 
 
Mohegan Sun
$
50,520

 
$
54,557

 
$
171,251

 
$
148,573

Mohegan Sun Pocono
11,172

 
12,842

 
30,910

 
31,423

Corporate and other
(3,695
)
 
(5,900
)
 
(13,830
)
 
(19,717
)
Total
57,997

 
61,499

 
188,331

 
160,279

Accretion of discount to the relinquishment liability
—

 
—

 
—

 
(227
)
Interest income
2,284

 
1,906

 
6,469

 
5,554

Interest expense
(33,949
)
 
(35,660
)
 
(102,294
)
 
(107,692
)
Loss on modification and early extinguishment of debt
(277
)
 
—

 
(484
)
 
—

Other expense, net
(495
)
 
(50
)
 
(1,355
)
 
(1,260
)
Net income
25,560

 
27,695

 
90,667

 
56,654

(Income) loss attributable to non-controlling interests
478

 
439

 
(2,225
)
 
1,278

Net income attributable to Mohegan Tribal Gaming Authority
$
26,038

 
$
28,134

 
$
88,442

 
$
57,932

Comprehensive income:
 
 
 
 
 
 
 
Foreign currency translation
(606
)
 
—

 
3,596

 
—

Other comprehensive income (loss)
(606
)
 
—

 
3,596

 
—

Other comprehensive (income) loss attributable to non-controlling interests
384

 
—

 
(1,793
)
 
—

Other comprehensive income (loss) attributable to Mohegan Tribal Gaming Authority
(222
)
 
—

 
1,803

 
—

Comprehensive income attributable to Mohegan Tribal Gaming Authority
$
25,816

 
$
28,134

 
$
90,245

 
$
57,932


 
For the Nine Months Ended
(in thousands)
June 30, 2016
 
June 30, 2015
Capital expenditures incurred:
 
 
 
Mohegan Sun
$
23,666

 
$
6,899

Mohegan Sun Pocono
3,914

 
2,087

Corporate and other
115

 
52

Total
$
27,695

 
$
9,038

 
 
 
 
(in thousands)
June 30, 2016
 
September 30, 2015
Total assets:
 
 
 
Mohegan Sun
$
1,342,583

 
$
1,332,458

Mohegan Sun Pocono
547,306

 
555,449

Corporate and other
279,496

 
132,226

Total
$
2,169,385

 
$
2,020,133







23
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

NOTE 8—SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENT INFORMATION:
As of June 30, 2016, 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 June 30, 2016 and September 30, 2015 and for the three months and nine months ended June 30, 2016 and 2015 is as follows (in thousands):




































24
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

CONDENSED CONSOLIDATING BALANCE SHEETS
 
June 30, 2016
 
Authority
 
Total
Guarantor
Subsidiaries (1)
 
Total  Non-Guarantor
Subsidiaries and Entities (2)
 
Consolidating/
Eliminating
Adjustments
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
116,162

 
$
19,921

 
$
52,586

 
$
—

 
$
188,669

Restricted cash
15

 
2,321

 
50,716

 
—

 
53,052

Receivables, net
28,218

 
3,987

 
9,162

 
(2,276
)
 
39,091

Inventories
15,502

 
1,221

 
—

 
—

 
16,723

Prepaid expenses
14,965

 
1,187

 
42

 
—

 
16,194

Other current assets
5,925

 
123

 
—

 
—

 
6,048

Total current assets
180,787

 
28,760

 
112,506

 
(2,276
)
 
319,777

Non-current assets:
 
 
 
 
 
 
 
 
 
Property and equipment, net
1,076,762

 
209,055

 
37,257

 
—

 
1,323,074

Goodwill
—

 
39,459

 
—

 
—

 
39,459

Other intangible assets, net
120,196

 
284,196

 
1,911

 
—

 
406,303

Other assets, net
10,292

 
30,260

 
70,418

 
(30,198
)
 
80,772

Inter-company receivables
269,105

 
102,006

 
—

 
(371,111
)
 
—

Investment in subsidiaries
381,864

 
—

 
—

 
(381,864
)
 
—

Total assets
$
2,039,006

 
$
693,736

 
$
222,092

 
$
(785,449
)
 
$
2,169,385

LIABILITIES AND CAPITAL
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Current portion of long-term debt
$
21,075

 
$
—

 
$
3,225

 
$
—

 
$
24,300

Due to Mohegan Tribe
—

 
—

 
7,000

 
—

 
7,000

Current portion of capital leases
848

 
52

 
—

 
(52
)
 
848

Trade payables
11,720

 
1,520

 
42

 
—

 
13,282

Construction payables
2,901

 
205

 
—

 
—

 
3,106

Accrued interest payable
22,440

 
—

 
81

 
—

 
22,521

Other current liabilities
112,554

 
34,857

 
2,497

 
(2,224
)
 
147,684

Total current liabilities
171,538

 
36,634

 
12,845

 
(2,276
)
 
218,741

Non-current liabilities:
 
 
 
 
 
 
 
 
 
Long-term debt, net of current portion
1,639,258

 
—

 
19,162

 
—

 
1,658,420

Due to Mohegan Tribe, net of current portion
—

 
—

 
7,420

 
—

 
7,420

Capital leases, net of current portion
882

 
5,731

 
—

 
(5,731
)
 
882

Other long-term liabilities
1,765

 
588

 
24,285

 
(24,285
)
 
2,353

Inter-company payables
—

 
255,554

 
115,557

 
(371,111
)
 
—

Accumulated losses in excess of investment in subsidiaries
—

 
41,571

 
—

 
(41,571
)
 
—

Total liabilities
1,813,443

 
340,078

 
179,269

 
(444,974
)
 
1,887,816

Capital:
 
 
 
 
 
 
 
 
 
Retained earnings
223,760

 
353,658

 
(13,763
)
 
(340,211
)
 
223,444

Accumulated other comprehensive income
1,803

 
—

 
1,803

 
(1,803
)
 
1,803

Mohegan Tribal Gaming Authority total capital
225,563

 
353,658

 
(11,960
)
 
(342,014
)
 
225,247

Non-controlling interests
—

 
—

 
54,783

 
1,539

 
56,322

Total capital
225,563

 
353,658

 
42,823

 
(340,475
)
 
281,569

Total liabilities and capital
$
2,039,006

 
$
693,736

 
$
222,092

 
$
(785,449
)
 
$
2,169,385

___________
(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.

25
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

 
September 30, 2015
 
Authority
 
Total
Guarantor
Subsidiaries (1)
 
Total  Non-Guarantor
Subsidiaries and Entities (2)
 
Consolidating/
Eliminating
Adjustments
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
42,093

 
$
22,167

 
$
1,494

 
$
—

 
$
65,754

Restricted cash
62

 
1,661

 
39

 
—

 
1,762

Receivables, net
29,134

 
3,585

 
22,871

 
(1,646
)
 
53,944

Inventories
14,401

 
1,145

 
—

 
—

 
15,546

Prepaid expenses
6,123

 
2,877

 
33

 
—

 
9,033

Other current assets
9,446

 
51

 
—

 
—

 
9,497

Total current assets
101,259

 
31,486

 
24,437

 
(1,646
)
 
155,536

Non-current assets:
 
 
 
 
 
 
 
 
 
Property and equipment, net
1,098,588

 
214,778

 
38,689

 
—

 
1,352,055

Goodwill
—

 
39,459

 
—

 
—

 
39,459

Other intangible assets, net
120,281

 
284,418

 
2,019

 
—

 
406,718

Other assets, net
10,711

 
4,017

 
57,597

 
(5,960
)
 
66,365

Inter-company receivables
254,348

 
94,033

 
—

 
(348,381
)
 
—

Investment in subsidiaries
328,462

 
—

 
—

 
(328,462
)
 
—

Total assets
$
1,913,649

 
$
668,191

 
$
122,742

 
$
(684,449
)
 
$
2,020,133

LIABILITIES AND CAPITAL
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Current portion of long-term debt
$
46,248

 
$
—

 
$
2,946

 
$
—

 
$
49,194

Due to Mohegan Tribe
—

 
—

 
6,000

 
—

 
6,000

Current portion of capital leases
824

 
48

 
—

 
(48
)
 
824

Trade payables
12,365

 
2,564

 
87

 
—

 
15,016

Construction payables
11,149

 
1,888

 
100

 
—

 
13,137

Accrued interest payable
5,461

 
—

 
6,594

 
—

 
12,055

Other current liabilities
108,911

 
29,699

 
4,268

 
(1,598
)
 
141,280

Total current liabilities
184,958

 
34,199

 
19,995

 
(1,646
)
 
237,506

Non-current liabilities:
 
 
 
 
 
 
 
 
 
Long-term debt, net of current portion
1,555,487

 
—

 
38,243

 
—

 
1,593,730

Due to Mohegan Tribe, net of current portion
—

 
—

 
17,420

 
—

 
17,420

Capital leases, net of current portion
1,521

 
5,770

 
—

 
(5,770
)
 
1,521

Other long-term liabilities
1,915

 
—

 
—

 
—

 
1,915

Inter-company payables
—

 
246,380

 
102,001

 
(348,381
)
 
—

Accumulated losses in excess of investment in subsidiaries
—

 
40,873

 
—

 
(40,873
)
 
—

Total liabilities
1,743,881

 
327,222

 
177,659

 
(396,670
)
 
1,852,092

Capital:
 
 
 
 
 
 
 
 
 
Retained earnings
169,768

 
340,969

 
(55,157
)
 
(286,128
)
 
169,452

Mohegan Tribal Gaming Authority total capital
169,768

 
340,969

 
(55,157
)
 
(286,128
)
 
169,452

Non-controlling interests
—

 
—

 
240

 
(1,651
)
 
(1,411
)
Total capital
169,768

 
340,969

 
(54,917
)
 
(287,779
)
 
168,041

Total liabilities and capital
$
1,913,649

 
$
668,191

 
$
122,742

 
$
(684,449
)
 
$
2,020,133

___________
(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.


26
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

CONDENSED CONSOLIDATING STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
 
For the Three Months Ended June 30, 2016
 
Authority  
 
Total
Guarantor
Subsidiaries (1)
 
Total  Non-Guarantor
Subsidiaries and Entities (2)
 
Consolidating/
Eliminating
Adjustments
 
Consolidated
Revenues:
 
 
 
 
 
 
 
 
 
Gaming
$
206,707

 
$
70,100

 
$
—

 
$
—

 
$
276,807

Food and beverage
15,501

 
8,033

 
74

 
—

 
23,608

Hotel
12,654

 
1,568

 
—

 
—

 
14,222

Retail, entertainment and other
25,542

 
6,855

 
4,549

 
(2,660
)
 
34,286

Gross revenues
260,404

 
86,556

 
4,623

 
(2,660
)
 
348,923

Less-Promotional allowances
(18,864
)
 
(5,469
)
 
(2
)
 
(1,161
)
 
(25,496
)
Net revenues
241,540

 
81,087

 
4,621

 
(3,821
)
 
323,427

Operating costs and expenses:
 
 
 
 
 
 
 
 
 
Gaming
113,875

 
50,427

 
—

 
—

 
164,302

Food and beverage
8,416

 
2,258

 
—

 
—

 
10,674

Hotel
3,926

 
1,544

 
—

 
(1,241
)
 
4,229

Retail, entertainment and other
11,285

 
1,760

 
975

 
(1,148
)
 
12,872

Advertising, general and administrative
38,700

 
9,257

 
5,001

 
(5,309
)
 
47,649

Corporate
3,643

 
—

 
—

 
3,877

 
7,520

Depreciation and amortization
14,646

 
3,241

 
285

 
—

 
18,172

Loss on disposition of assets
9

 
3

 
—

 
—

 
12

Total operating costs and expenses
194,500

 
68,490

 
6,261

 
(3,821
)
 
265,430

Income (loss) from operations
47,040

 
12,597

 
(1,640
)
 
—

 
57,997

Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
16

 
2,461

 
2,269

 
(2,462
)
 
2,284

Interest expense
(23,429
)
 
(9,677
)
 
(3,305
)
 
2,462

 
(33,949
)
Loss on modification of debt
(277
)
 
—

 
—

 
—

 
(277
)
Income (loss) on interests in subsidiaries
3,299

 
(1,430
)
 
—

 
(1,869
)
 
—

Other income (expense), net
(611
)
 
475

 
(359
)
 
—

 
(495
)
Total other expense
(21,002
)
 
(8,171
)
 
(1,395
)
 
(1,869
)
 
(32,437
)
Net income (loss)
26,038

 
4,426

 
(3,035
)
 
(1,869
)
 
25,560

Loss attributable to non-controlling interests
—

 
—

 
311

 
167

 
478

Net income (loss) attributable to Mohegan Tribal Gaming Authority
$
26,038

 
$
4,426

 
$
(2,724
)
 
$
(1,702
)
 
$
26,038

Comprehensive income (loss):
 
 
 
 
 
 
 
 
 
Foreign currency translation
(222
)
 
—

 
(606
)
 
222

 
(606
)
Other comprehensive loss
(222
)
 
—

 
(606
)
 
222

 
(606
)
Other comprehensive loss attributable to non-controlling interests

—

 
—

 
384

 
—

 
384

Other comprehensive loss attributable to Mohegan Tribal Gaming Authority

(222
)
 
—

 
(222
)
 
222

 
(222
)
Comprehensive income (loss) attributable to Mohegan Tribal Gaming Authority

$
25,816

 
$
4,426

 
$
(2,946
)
 
$
(1,480
)
 
$
25,816

___________
(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.



27
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

 
For the Three Months Ended June 30, 2015
 
Authority  
 
Total
Guarantor
Subsidiaries (1)
 
Total  Non-Guarantor
Subsidiaries and Entities (2)
 
Consolidating/
Eliminating
Adjustments
 
Consolidated
Revenues:
 
 
 
 
 
 
 
 
 
Gaming
$
213,199

 
$
71,514

 
$
—

 
$
—

 
$
284,713

Food and beverage
15,378

 
7,615

 
28

 
—

 
23,021

Hotel
11,222

 
1,478

 
—

 
—

 
12,700

Retail, entertainment and other
24,556

 
4,716

 
1,826

 
(1,273
)
 
29,825

Gross revenues
264,355

 
85,323

 
1,854

 
(1,273
)
 
350,259

Less-Promotional allowances
(19,386
)
 
(5,095
)
 
(6
)
 
(733
)
 
(25,220
)
Net revenues
244,969

 
80,228

 
1,848

 
(2,006
)
 
325,039

Operating costs and expenses:
 
 
 
 
 
 
 
 
 
Gaming
113,712

 
50,517

 
—

 
—

 
164,229

Food and beverage
7,981

 
2,342

 
—

 
—

 
10,323

Hotel
3,517

 
1,484

 
—

 
(1,213
)
 
3,788

Retail, entertainment and other
10,475

 
2,027

 
678

 
(733
)
 
12,447

Advertising, general and administrative
37,970

 
8,809

 
3,653

 
(3,910
)
 
46,522

Corporate
3,269

 
—

 
—

 
3,850

 
7,119

Depreciation and amortization
15,496

 
3,306

 
284

 
—

 
19,086

Loss on disposition of assets
26

 
—

 
—

 
—

 
26

Total operating costs and expenses
192,446

 
68,485

 
4,615

 
(2,006
)
 
263,540

Income (loss) from operations
52,523

 
11,743

 
(2,767
)
 
—

 
61,499

Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
10

 
1,663

 
1,961

 
(1,728
)
 
1,906

Interest expense
(23,563
)
 
(9,956
)
 
(3,869
)
 
1,728

 
(35,660
)
Loss on interests in subsidiaries
(832
)
 
(1,819
)
 
—

 
2,651

 
—

Other expense, net
(4
)
 
—

 
(46
)
 
—

 
(50
)
Total other expense
(24,389
)
 
(10,112
)
 
(1,954
)
 
2,651

 
(33,804
)
Net income (loss)
28,134

 
1,631

 
(4,721
)
 
2,651

 
27,695

Loss attributable to non-controlling interests
—

 
—

 
217

 
222

 
439

Net income (loss) attributable to Mohegan Tribal Gaming Authority
$
28,134

 
$
1,631

 
$
(4,504
)
 
$
2,873

 
$
28,134

___________
(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.


















28
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

 
For the Nine Months Ended June 30, 2016
 
Authority  
 
Total
Guarantor
Subsidiaries (1)
 
Total  Non-Guarantor
Subsidiaries and Entities (2)
 
Consolidating/
Eliminating
Adjustments
 
Consolidated
Revenues:
 
 
 
 
 
 
 
 
 
Gaming
$
659,396

 
$
206,493

 
$
—

 
$
—

 
$
865,889

Food and beverage
44,454

 
22,209

 
145

 
—

 
66,808

Hotel
34,327

 
4,312

 
—

 
—

 
38,639

Retail, entertainment and other
68,762

 
17,171

 
14,120

 
(11,022
)
 
89,031

Gross revenues
806,939

 
250,185

 
14,265

 
(11,022
)
 
1,060,367

Less-Promotional allowances
(54,231
)
 
(16,280
)
 
(8
)
 
(1,446
)
 
(71,965
)
Net revenues
752,708

 
233,905

 
14,257

 
(12,468
)
 
988,402

Operating costs and expenses:
 
 
 
 
 
 
 
 
 
Gaming
346,653

 
148,407

 
—

 
—

 
495,060

Food and beverage
24,997

 
5,810

 
—

 
—

 
30,807

Hotel
11,098

 
4,357

 
—

 
(3,724
)
 
11,731

Retail, entertainment and other
26,388

 
3,148

 
2,607

 
(1,452
)
 
30,691

Advertising, general and administrative
122,771

 
27,036

 
18,203

 
(19,139
)
 
148,871

Corporate
14,754

 
—

 
—

 
11,847

 
26,601

Depreciation and amortization
45,188

 
9,923

 
858

 
—

 
55,969

Loss on disposition of assets
327

 
14

 
—

 
—

 
341

Total operating costs and expenses
592,176

 
198,695

 
21,668

 
(12,468
)
 
800,071

Income (loss) from operations
160,532

 
35,210

 
(7,411
)
 
—

 
188,331

Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
49

 
6,855

 
6,622

 
(7,057
)
 
6,469

Interest expense
(69,323
)
 
(29,678
)
 
(10,350
)
 
7,057

 
(102,294
)
Loss on modification and early extinguishment of debt
(277
)
 
—

 
(207
)
 
—

 
(484
)
Loss on interests in subsidiaries
(1,947
)
 
(698
)
 
—

 
2,645

 
—

Other income (expense), net
(592
)
 
1,128

 
(1,891
)
 
—

 
(1,355
)
Total other expense
(72,090
)
 
(22,393
)
 
(5,826
)
 
2,645

 
(97,664
)
Net income (loss)
88,442

 
12,817

 
(13,237
)
 
2,645

 
90,667

(Income) loss attributable to non-controlling interests
—

 
—

 
965

 
(3,190
)
 
(2,225
)
Net income (loss) attributable to Mohegan Tribal Gaming Authority
$
88,442

 
$
12,817

 
$
(12,272
)
 
$
(545
)
 
$
88,442

Comprehensive income (loss):
 
 
 
 
 
 
 
 
 
Foreign currency translation
1,803

 
—

 
3,596

 
(1,803
)
 
3,596

Other comprehensive income
1,803

 
—

 
3,596

 
(1,803
)
 
3,596

Other comprehensive income attributable to non-controlling interests

—

 
—

 
(1,793
)
 
—

 
(1,793
)
Other comprehensive income attributable to Mohegan Tribal Gaming Authority

1,803

 
—

 
1,803

 
(1,803
)
 
1,803

Comprehensive income (loss) attributable to Mohegan Tribal Gaming Authority

$
90,245

 
$
12,817

 
$
(10,469
)
 
$
(2,348
)
 
$
90,245

___________
(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.













29
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

 
For the Nine Months Ended June 30, 2015
 
Authority  
 
Total
Guarantor
Subsidiaries (1)
 
Total  Non-Guarantor
Subsidiaries and Entities (2)
 
Consolidating/
Eliminating
Adjustments
 
Consolidated
Revenues:
 
 
 
 
 
 
 
 
 
Gaming
$
635,777

 
$
201,686

 
$
—

 
$
—

 
$
837,463

Food and beverage
45,708

 
20,983

 
120

 
—

 
66,811

Hotel
33,141

 
4,058

 
—

 
—

 
37,199

Retail, entertainment and other
71,169

 
9,167

 
5,714

 
(3,819
)
 
82,231

Gross revenues
785,795

 
235,894

 
5,834

 
(3,819
)
 
1,023,704

Less-Promotional allowances
(55,536
)
 
(14,892
)
 
(9
)
 
(1,073
)
 
(71,510
)
Net revenues
730,259

 
221,002

 
5,825

 
(4,892
)
 
952,194

Operating costs and expenses:
 
 
 
 
 
 
 
 
 
Gaming
341,772

 
144,222

 
—

 
—

 
485,994

Food and beverage
25,191

 
6,172

 
—

 
—

 
31,363

Hotel
10,248

 
4,158

 
—

 
(3,639
)
 
10,767

Retail, entertainment and other
29,322

 
3,653

 
2,366

 
(1,073
)
 
34,268

Advertising, general and administrative
116,711

 
24,698

 
10,646

 
(11,109
)
 
140,946

Corporate
12,471

 
—

 
—

 
10,929

 
23,400

Depreciation and amortization
47,739

 
10,113

 
851

 
—

 
58,703

Loss on disposition of assets
843

 
2

 
—

 
—

 
845

Severance
3,244

 
126

 
—

 
—

 
3,370

Impairment of Project Horizon
2,502

 
—

 
—

 
—

 
2,502

Relinquishment liability reassessment
(243
)
 
—

 
—

 
—

 
(243
)
Total operating costs and expenses
589,800

 
193,144

 
13,863

 
(4,892
)
 
791,915

Income (loss) from operations
140,459

 
27,858

 
(8,038
)
 
—

 
160,279

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

 
—

 
—

 
(227
)
Interest income
32

 
4,636

 
5,813

 
(4,927
)
 
5,554

Interest expense
(71,260
)
 
(30,055
)
 
(11,304
)
 
4,927

 
(107,692
)
Loss on interests in subsidiaries
(11,079
)
 
(6,760
)
 
—

 
17,839

 
—

Other income (expense), net
7

 
—

 
(1,267
)
 
—

 
(1,260
)
Total other expense
(82,527
)
 
(32,179
)
 
(6,758
)
 
17,839

 
(103,625
)
Net income (loss)
57,932

 
(4,321
)
 
(14,796
)
 
17,839

 
56,654

Loss attributable to non-controlling interests
—

 
—

 
677

 
601

 
1,278

Net income (loss) attributable to Mohegan Tribal Gaming Authority
$
57,932

 
$
(4,321
)
 
$
(14,119
)
 
$
18,440

 
$
57,932

___________
(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.











30
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
 
For the Nine Months Ended June 30, 2016
 
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)
$
88,442

 
$
12,817

 
$
(13,237
)
 
$
2,645

 
$
90,667

Adjustments to reconcile net income (loss) to net cash flows provided by operating activities:
 
 
 
 
 
 
 
 
 
Depreciation and amortization
45,188

 
9,923

 
858

 
—

 
55,969

Loss on early extinguishment of debt
—

 
—

 
207

 
—

 
207

Payments of discounts

(2,717
)
 
—

 
—

 
—

 
(2,717
)
Amortization of debt issuance costs, premiums and discounts
6,904

 
—

 
348

 
—

 
7,252

Provision (recovery) for losses on receivables
570

 
(133
)
 
(5,512
)
 
—

 
(5,075
)
Share based compensation
—

 
—

 
6,147

 
—

 
6,147

Loss on disposition of assets
327

 
14

 
—

 
—

 
341

Loss from unconsolidated affiliates
583

 
—

 
755

 
—

 
1,338

Inter-company transactions
(27,981
)
 
23,312

 
7,306

 
(2,637
)
 
—

Changes in operating assets and liabilities:
 
 
 
 
 
 
 
 
 
(Increase) decrease in receivables
625

 
(269
)
 
(5,687
)
 
626

 
(4,705
)
Increase in inventories
(1,101
)
 
(76
)
 
—

 
—

 
(1,177
)
Increase in other assets
(6,001
)
 
(23,510
)
 
(6,146
)
 
24,277

 
(11,380
)
Increase (decrease) in trade payables
(645
)
 
(1,044
)
 
13

 
—

 
(1,676
)
Increase (decrease) in accrued interest
16,979

 
—

 
(6,513
)
 
—

 
10,466

Increase in other liabilities
3,219

 
4,807

 
25,033

 
(24,911
)
 
8,148

Net cash flows provided by operating activities
124,392

 
25,841

 
3,572

 
—

 
153,805

Cash flows provided by (used in) investing activities:
 
 
 
 
 
 
 
 
 
Purchases of property and equipment, including change in construction payables
(31,957
)
 
(5,665
)
 
(104
)
 
—

 
(37,726
)
Issuance of third-party loans and advances
—

 
(1,125
)
 
(3,104
)
 
—

 
(4,229
)
Payments received on third-party loans and advances
124

 
—

 
13,400

 
—

 
13,524

(Increase) decrease in restricted cash, net
(21
)
 
279

 
(47,680
)
 
—

 
(47,422
)
Proceeds from asset sales
161

 
—

 
—

 
—

 
161

Investments in unconsolidated affiliates
(100
)
 
—

 
—

 
—

 
(100
)
Inter-company transactions
(38,375
)
 
(1,291
)
 
35

 
39,631

 
—

Net cash flows used in investing activities
(70,168
)
 
(7,802
)
 
(37,453
)
 
39,631

 
(75,792
)
Cash flows provided by (used in) financing activities:
 
 
 
 
 
 
 
 
 
Senior Secured Credit Facility borrowings - Revolving
521,000

 
—

 
—

 
—

 
521,000

Senior Secured Credit Facility repayments - Revolving
(523,000
)
 
—

 
—

 
—

 
(523,000
)
Senior Secured Credit Facility repayments - Term Loan A
(10,892
)
 
—

 
—

 
—

 
(10,892
)
Senior Secured Credit Facility repayments - Term Loan B
(28,430
)
 
—

 
—

 
—

 
(28,430
)
Line of Credit borrowings
387,781

 
—

 
—

 
—

 
387,781

Line of Credit repayments
(387,781
)
 
—

 
—

 
—

 
(387,781
)
Proceeds from issuance of Senior Unsecured Notes
100,000

 
—

 
—

 
—

 
100,000

New Downs Lodging Credit Facility borrowings - Term Loan
—

 
—

 
25,000

 
—

 
25,000

New Downs Lodging Credit Facility repayments - Term Loan
—

 
—

 
(1,562
)
 
—

 
(1,562
)
Downs Lodging Credit Facility repayments - Term Loan
—

 
—

 
(40,516
)
 
—

 
(40,516
)
Borrowings from Mohegan Tribe
—

 
—

 
22,500

 
—

 
22,500

Repayments to Mohegan Tribe
—

 
—

 
(25,500
)
 
—

 
(25,500
)
Repayments of other long-term debt
(365
)
 
—

 
(259
)
 
—

 
(624
)
Distributions to Mohegan Tribe
(34,450
)
 
—

 
—

 
—

 
(34,450
)

31
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

Payments of financing fees
(3,403
)
 
—

 
(1,678
)
 
—

 
(5,081
)
Payments on capital lease obligations
(615
)
 
(35
)
 
—

 
35

 
(615
)
Payments to acquire non-controlling interests
—

 
—

 
(804
)
 
—

 
(804
)
Non-controlling interest contributions
—

 
—

 
47,568

 
—

 
47,568

Inter-company transactions
—

 
(20,250
)
 
59,916

 
(39,666
)
 
—

Net cash flows provided by (used in) financing activities
19,845

 
(20,285
)
 
84,665

 
(39,631
)
 
44,594

Net increase (decrease) in cash and cash equivalents
74,069

 
(2,246
)
 
50,784

 
—

 
122,607

Effect of exchange rate on cash and cash equivalents
—

 
—

 
308

 
—

 
308

Cash and cash equivalents at beginning of period
42,093

 
22,167

 
1,494

 
—

 
65,754

Cash and cash equivalents at end of period
$
116,162

 
$
19,921

 
$
52,586

 
$
—

 
$
188,669

___________
(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.


32
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

 
For the Nine Months Ended June 30, 2015
 
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)
$
57,932

 
$
(4,321
)
 
$
(14,796
)
 
$
17,839

 
$
56,654

Adjustments to reconcile net income (loss) to net cash flows provided by (used in) operating activities:
 
 
 
 
 
 
 
 
 
Depreciation and amortization
47,739

 
10,113

 
851

 
—

 
58,703

Relinquishment liability reassessment
(243
)
 
—

 
—

 
—

 
(243
)
Accretion of discount to the relinquishment liability
227

 
—

 
—

 
—

 
227

Cash paid for accretion of discount to the relinquishment liability
(778
)
 
—

 
—

 
—

 
(778
)
Amortization of debt issuance costs and discounts
5,518

 
—

 
239

 
—

 
5,757

Provision for losses on receivables
447

 
270

 
2,682

 
—

 
3,399

Impairment of Project Horizon
2,502

 
—

 
—

 
—

 
2,502

Loss on disposition of assets
843

 
2

 
—

 
—

 
845

Loss from unconsolidated affiliates
38

 
—

 
1,264

 
—

 
1,302

Inter-company transactions
(18,858
)
 
31,889

 
4,800

 
(17,831
)
 
—

Changes in operating assets and liabilities:
 
 
 
 
 
 
 
 
 
(Increase) decrease in receivables
1,856

 
(1,980
)
 
(810
)
 
652

 
(282
)
Increase in inventories
(808
)
 
(164
)
 
—

 
—

 
(972
)
Increase in other assets
(876
)
 
(237
)
 
(5,170
)
 
(34
)
 
(6,317
)
Increase (decrease) in trade payables
(6,448
)
 
(3,394
)
 
39

 
—

 
(9,803
)
Increase in accrued interest
19,622

 
—

 
437

 
—

 
20,059

Increase (decrease) in other liabilities
13,501

 
5,399

 
(4,844
)
 
(626
)
 
13,430

Net cash flows provided by (used in) operating activities
122,214

 
37,577

 
(15,308
)
 
—

 
144,483

Cash flows provided by (used in) investing activities:
 
 
 
 
 
 
 
 
 
Purchases of property and equipment, including change in construction payables
(8,799
)
 
(2,698
)
 
(584
)
 
—

 
(12,081
)
Issuance of third-party loans and advances
—

 
—

 
(2,201
)
 
—

 
(2,201
)
Payments received on third-party loans
117

 
—

 
—

 
—

 
117

Increase in restricted cash, net
(27
)
 
(716
)
 
(39
)
 
—

 
(782
)
Proceeds from asset sales
1,577

 
—

 
—

 
—

 
1,577

Investments in the New England Black Wolves
—

 
—

 
(500
)
 
—

 
(500
)
Inter-company transactions
8,558

 
(14,915
)
 
37

 
6,320

 
—

Net cash flows provided by (used in) investing activities
1,426

 
(18,329
)
 
(3,287
)
 
6,320

 
(13,870
)
Cash flows provided by (used in) financing activities:
 
 
 
 
 
 
 
 
 
Senior Secured Credit Facility borrowings - Revolving
299,000

 
—

 
—

 
—

 
299,000

Senior Secured Credit Facility repayments - Revolving
(328,000
)
 
—

 
—

 
—

 
(328,000
)
Senior Secured Credit Facility repayments - Term Loan A
(5,469
)
 
—

 
—

 
—

 
(5,469
)
Senior Secured Credit Facility repayments - Term Loan B
(3,650
)
 
—

 
—

 
—

 
(3,650
)
Line of Credit borrowings
332,124

 
—

 
—

 
—

 
332,124

Line of Credit repayments
(335,165
)
 
—

 
—

 
—

 
(335,165
)
Repayments to Mohegan Tribe
—

 
—

 
(875
)
 
—

 
(875
)
Repayments of other long-term debt
(9,844
)
 
—

 
(56
)
 
—

 
(9,900
)
Principal portion of relinquishment liability payments
(24,400
)
 
—

 
—

 
—

 
(24,400
)
Distributions to Mohegan Tribe
(32,500
)
 
—

 
—

 
—

 
(32,500
)
Payments on capital lease obligations
(726
)
 
(37
)
 
—

 
37

 
(726
)
Inter-company transactions
—

 
(13,855
)
 
20,212

 
(6,357
)
 
—

Net cash flows provided by (used in) financing activities
(108,630
)
 
(13,892
)
 
19,281

 
(6,320
)
 
(109,561
)
Net increase in cash and cash equivalents
15,010

 
5,356

 
686

 
—

 
21,052

Cash and cash equivalents at beginning of period
33,939

 
14,767

 
402

 
—

 
49,108

Cash and cash equivalents at end of period
$
48,949

 
$
20,123

 
$
1,088

 
$
—

 
$
70,160

___________

33
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)

(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.

34


Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
Some information included in this Quarterly Report on Form 10-Q and other materials filed by us with the Securities and Exchange Commission, or the SEC, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, or the Exchange Act. Such statements include information relating to business development activities, as well as capital spending, financing sources and the effects of regulation, including gaming and tax regulation, and increased competition. These statements can sometimes be identified by our use of forward-looking words such as “may,” “will,” “anticipate,” “estimate,” “expect” or “intend” and similar expressions. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated future results, and accordingly, such results may differ materially from those expressed in any forward-looking statements made by us or on our behalf. These risks and uncertainties include, but are not limited to, those relating to the following:
•
the financial performance of Mohegan Sun and Mohegan Sun Pocono and our Pennsylvania off-track wagering facilities;
•
the local, regional, national or global economic climate, including the lingering effects of the most recent economic recession, which negatively affected our revenues and earnings;
•
increased competition, including the expansion of gaming in New England, New York, New Jersey or Pennsylvania;
•
our leverage and ability to meet our debt service obligations and maintain compliance with financial debt covenants;
•
the continued availability of financing;
•
our dependence on existing management;
•
our ability to integrate new amenities from expansions to our facilities into our current operations and manage the expanded facilities;
•
changes in federal or state tax laws or the administration of such laws;
•
changes in gaming laws or regulations, including the limitation, denial or suspension of licenses required under gaming laws and regulations;
•
changes in applicable laws pertaining to the service of alcohol, smoking or other amenities offered at our facilities;
•
our ability to successfully implement our diversification strategy;
•
an act of terrorism on the United States;
•
our customers' access to inexpensive transportation to our facilities and changes in oil, fuel or other transportation-related expenses; and
•
unfavorable weather conditions.
Additional information concerning potential factors that could affect our financial results is included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2015, as well as our other reports and filings with the SEC. The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date of this report. We do not undertake any obligation to update or supplement any forward-looking statements to reflect subsequent events or circumstances, except as required by law. We cannot assure you that projected results or events will be achieved or will occur.
The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and the related notes beginning on page 3 of this Quarterly Report on Form 10-Q.









35

Overview
The Tribe and the Authority
The Mohegan Tribe of Indians of Connecticut, or the Mohegan Tribe or the Tribe, is a federally-recognized Indian tribe with an approximately 595-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. We were established as an instrumentality of the Tribe, 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. Our gaming operation at Mohegan Sun is one of only two legally authorized gaming operations in southern New England offering traditional slot machines and table games. Through our subsidiary, Downs Racing, L.P., or Downs Racing, we also own and operate Mohegan Sun Pocono, a gaming and entertainment facility located in Plains Township, Pennsylvania, and several off-track wagering facilities, or OTW facilities, located elsewhere in Pennsylvania, collectively the Pennsylvania facilities. We are 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 our Management Board.
Mohegan Sun
In October 1996, we opened a gaming and entertainment complex known as Mohegan Sun. Mohegan Sun is located on an approximately 185-acre site on the Tribe's reservation overlooking the Thames River with direct access from Interstate 395 and Connecticut Route 2A. Mohegan Sun is approximately 125 miles from New York City, New York, and approximately 100 miles from Boston, Massachusetts. In 2002, we completed a major expansion of Mohegan Sun known as Project Sunburst, which included increased gaming, restaurant and retail space, an entertainment arena, an approximately 1,200-room luxury Sky Hotel Tower and approximately 100,000 square feet of convention space. In 2007, we opened Sunrise Square, and, in 2008, we opened Casino of the Wind, both components of Mohegan Sun's Project Horizon expansion.
Mohegan Sun currently operates in an approximately 3.1 million square-foot facility, which includes the following:
Casino of the Earth
As of June 30, 2016, Casino of the Earth offered:
•
approximately 180,000 square feet of gaming space;
•
approximately 2,550 slot machines and 145 traditional and electronic table games;
•
Sunrise Square, a 9,800-square-foot Asian-themed gaming area;
•
an approximately 9,000-square-foot simulcasting Racebook facility;
•
food and beverage amenities, including: Seasons Buffet, a 784-seat multi-station buffet with live cooking stations, Bobby Flay's Bobby's Burger Palace, Bow & Arrow Sports Bar and multiple service bars, all operated by us, as well as Ballo Italian Restaurant & Social Club, Jumbo Oriental, a full-service Asian restaurant and food court, Frank Pepe Pizzeria Napoletana, Hash House a Go Go, Fidelia's Market, an approximately 290-seat multi-station food court, and Carlo's Bakery operated by third-parties, for a total restaurant seating of approximately 2,160;
•
four Mohegan Sun-owned retail shops, offering products ranging from Mohegan Sun logo souvenirs to cigars;
•
COMIX, an approximately 415-seat comedy club and craft beer bar operated by a third-party; and
•
the Wolf Den, an approximately 10,000-square-foot, 275-seat lounge featuring live entertainment seven days a week.
Casino of the Sky
As of June 30, 2016, Casino of the Sky offered:
•
approximately 119,000 square feet of gaming space;
•
approximately 2,020 slot machines and 110 traditional and electronic table games;
•
food and beverage amenities, including: Todd English's Tuscany, Bobby Flay's Bar Americain, a 24-hour coffee shop and three lounges and bars, all operated by us, as well as four additional full-service restaurants, four quick-service restaurants and a multi-station food court operated by third-parties, for a total restaurant seating of approximately 1,990;
•
The Shops at Mohegan Sun containing 29 retail shops, five of which we own;
•
the Mohegan Sun Arena with seating for up to 10,000;
•
a 350-seat Cabaret theatre;
•
an approximately 1,200-room luxury Sky Hotel Tower, including a private high-limit table games suite;
•
Lansdowne Irish Pub and Music House with restaurant seating of approximately 205, Avalon Nightclub and Vista Lounge, all operated by a third-party;
•
an approximately 20,000-square-foot spa operated by a third-party;

36

•
approximately 100,000 square feet of convention space; and
•
a child care facility and an arcade-style entertainment area operated by a third-party.
Casino of the Wind
As of June 30, 2016, Casino of the Wind offered:
•
approximately 45,000 square feet of gaming space;
•
approximately 530 slot machines, 25 traditional table games and a 42-table themed poker room;
•
food and beverage amenities, including: a two-level, 16,000-square-foot Jimmy Buffett's Margaritaville Restaurant and a casual dining restaurant operated by third-parties, for a total restaurant seating of approximately 475;
•
Mist, a nightlife entertainment venue operated by us; and
•
a retail shop operated by a third-party.
Mohegan Sun offers parking for approximately 13,000 patrons and 3,600 employees. We also operate an approximately 3,600-square-foot, 20-pump gasoline and convenience center for patrons, as well as a 10-pump gasoline center for employees, both located adjacent to Mohegan Sun.
Connecticut Sun
Through Mohegan Basketball Club, LLC, or MBC, we own and operate the Connecticut Sun franchise, a professional basketball team in the Women's National Basketball Association. The team plays its home games in the Mohegan Sun Arena.
New England Black Wolves
Through Mohegan Lacrosse, LLC, we have partnered with an unrelated third-party to own and operate the New England Black Wolves franchise, a professional lacrosse team in the National Lacrosse League. The team plays its home games in the Mohegan Sun Arena.
Mohegan Sun Golf Club
Through Mohegan Golf, LLC, or Mohegan Golf, we own and operate the Mohegan Sun Golf Club, a private 18-hole championship golf course, restaurant and bar located in Sprague and Franklin, Connecticut.
Mohegan Sun Pocono
Through Downs Racing, we own and operate a gaming and entertainment facility known as Mohegan Sun Pocono located on an approximately 400-acre site in Plains Township, Pennsylvania, and OTW facilities located in Carbondale, East Stroudsburg and Lehigh Valley, Pennsylvania. In November 2006, Mohegan Sun Pocono became the first location to offer slot machine gaming in the Commonwealth of Pennsylvania when Phase I of its gaming and entertainment facility opened. In July 2008, we completed a major expansion of Mohegan Sun Pocono known as Project Sunrise, which included increased gaming, restaurant and retail space, and, in July 2010, we opened our table game and poker operations, including additional non-smoking sections and a high-limit gaming area. In November 2013, we completed Project Sunlight, a hotel and convention center expansion located adjacent to the Mohegan Sun Pocono casino.
Mohegan Sun Pocono currently operates in an approximately 400,000-square-foot facility, which includes the following as of June 30, 2016:
•
approximately 90,000 square feet of gaming space;
•
approximately 2,330 slot machines, 75 table games, including blackjack, roulette and craps, and an 18-table poker room;
•
live harness racing and simulcast and off-track wagering;
•
a 238-room hotel, including a spa and fitness center;
•
approximately 20,000 square feet of convention space;
•
food and beverage amenities, including: Ruth's Chris Steakhouse, Rustic Kitchen Bistro and Bar, which features dining and a live cooking show, Bar Louie, a casual bar and restaurant, Elixir Bistro Bar, Timbers Buffet, a 300-seat Mohegan Indian cultural heritage themed multi-station buffet, and a food court, including: Johnny Rockets, Wok 8, Puck Express by Wolfgang Puck and Ben & Jerry's Ice Cream, for a total seating of approximately 2,100;
•
five retail shops, one of which we own, offering products ranging from Mohegan Sun Pocono logo souvenirs to fine apparel; and
•
three bars/lounges: Sunburst Bar, featured in the center of the gaming floor, Breakers Night Club and Pearl Sushi Bar.


37

Market and Competition from Other Gaming Operations
Our gaming operation at Mohegan Sun is one of only two current gaming operations in southern New England offering traditional slot machines and table games, with the other operation being our sole gaming competitor in the State of Connecticut, Foxwoods Resort Casino, or Foxwoods, owned by the Mashantucket Pequot Tribe and located approximately 10 miles from Mohegan Sun. We also face competition from gaming facilities in the states of Rhode Island, Massachusetts, New York and New Jersey. In addition, we face competition in and from the Northeastern Pennsylvania gaming market. Please refer to “Part I. Item 1. Business-Market and Competition from Other Gaming Operations” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2015 and our other reports and filings with the SEC for further details regarding current and potential competition from other gaming operations.
Explanation of Key Financial Statement Captions
There has been no material change from the explanation of key financial statement captions previously disclosed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2015.

Results of Operations
Summary Operating Results
As of June 30, 2016, we own and operate, either directly or through wholly-owned subsidiaries, Mohegan Sun, the Connecticut Sun franchise and the Mohegan Sun Golf Club, and have partnered with an unrelated third-party to own and operate the New England Black Wolves franchise, or collectively, the Connecticut facilities, and the Pennsylvania facilities. Substantially all of our 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. Our 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, we have 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. Our operations related to investments in unconsolidated affiliates and certain other Corporate development 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.
The following table summarizes our results on a property basis (in thousands, except where noted):
 
For the Three Months Ended June 30,
 
For the Nine Months Ended June 30,
 
2016
 
2015
 
Variance    
 
Percentage
Variance    
 
2016
 
2015
 
Variance    
 
Percentage
Variance    
Net revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mohegan Sun
$
244,123

 
$
246,840

 
$
(2,717
)
 
(1.1
)%
 
$
755,392

 
$
732,903

 
$
22,489

 
3.1
 %
Mohegan Sun Pocono
76,450

 
77,932

 
(1,482
)
 
(1.9
)%
 
223,160

 
218,456

 
4,704

 
2.2
 %
Corporate and other
4,127

 
1,540

 
2,587

 
168.0
 %
 
13,669

 
4,654

 
9,015

 
193.7
 %
Inter-segment revenues
(1,273
)
 
(1,273
)
 
—

 
—

 
(3,819
)
 
(3,819
)
 
—

 
—

Total
$
323,427

 
$
325,039

 
$
(1,612
)
 
(0.5
)%
 
$
988,402

 
$
952,194

 
$
36,208

 
3.8
 %
Income (loss) from operations:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mohegan Sun
$
50,520

 
$
54,557

 
$
(4,037
)
 
(7.4
)%
 
$
171,251

 
$
148,573

 
$
22,678

 
15.3
 %
Mohegan Sun Pocono
11,172

 
12,842

 
(1,670
)
 
(13.0
)%
 
30,910

 
31,423

 
(513
)
 
(1.6
)%
Corporate and other
(3,695
)
 
(5,900
)
 
2,205

 
37.4
 %
 
(13,830
)
 
(19,717
)
 
5,887

 
29.9
 %
Total
$
57,997

 
$
61,499

 
$
(3,502
)
 
(5.7
)%
 
$
188,331

 
$
160,279

 
$
28,052

 
17.5
 %
Net income attributable to Mohegan Tribal Gaming Authority
$
26,038

 
$
28,134

 
$
(2,096
)
 
(7.5
)%
 
$
88,442

 
$
57,932

 
$
30,510

 
52.7
 %
Operating margin:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mohegan Sun
20.7
%
 
22.1
%
 
(1.4
)%
 
(6.3
)%
 
22.7
%
 
20.3
%
 
2.4
 %
 
11.8
 %
Mohegan Sun Pocono
14.6
%
 
16.5
%
 
(1.9
)%
 
(11.5
)%
 
13.9
%
 
14.4
%
 
(0.5
)%
 
(3.5
)%
Total
17.9
%
 
18.9
%
 
(1.0
)%
 
(5.3
)%
 
19.1
%
 
16.8
%
 
2.3
 %
 
13.7
 %

The most significant factors and trends that we believe impacted our operating and financial performance were as follows:
•
strong overall business volumes;
•
higher gaming revenues in the nine months ended June 30, 2016;
•
lower gaming revenues driven by lower table game hold percentage in the three months ended June 30, 2016;

38

•
higher Corporate revenues;
•
various strategic operational and marketing and promotional changes designed to lower operating costs and expenses, enhance operating efficiency and improve profitability;
•
competitive gaming markets;
•
lower interest expense; and
•
non-cash share based compensation in the nine months ended June 30, 2016 totaling $6.1 million to a non-employee for services rendered in connection with our successful pursuit of a casino license in South Korea.
Net revenues for the three months ended June 30, 2016 compared to the same period in the prior year decreased primarily as a result of lower gaming revenues at both Mohegan Sun and Mohegan Sun Pocono. Net revenues for the nine months ended June 30, 2016 compared to the same period in the prior year increased primarily due to higher gaming revenues at both Mohegan Sun and Mohegan Sun Pocono. Net revenues for the three months and nine months ended June 30, 2016 reflect increased Corporate revenues.
Income from operations for the three months ended June 30, 2016 compared to the same period in the prior year declined primarily as a result of higher overall operating costs and expenses, combined with the decrease in net revenues. Income from operations for the nine months ended June 30, 2016 compared to the same period in the prior year increased primarily due to the growth in net revenues.
Net income attributable to the Authority for the three months ended June 30, 2016 compared to the same period in the prior year decreased primarily due to the reduction in income from operations. Net income attributable to the Authority for the nine months ended June 30, 2016 compared to the same period in the prior year increased primarily as a result of the growth in income from operations. Net income attributable to the Authority for the three months and nine months ended June 30, 2016 reflect lower interest expense.
Mohegan Sun
Revenues
Revenues consisted of the following (in thousands):
 
For the Three Months Ended June 30,
 
For the Nine Months Ended June 30,
 
2016
 
2015
 
Variance    
 
Percentage
Variance    
 
2016
 
2015
 
Variance    
 
Percentage
Variance    
Gaming
$
206,707

 
$
213,199

 
$
(6,492
)
 
(3.0
)%
 
$
659,396

 
$
635,777

 
$
23,619

 
3.7
 %
Food and beverage
15,906

 
15,653

 
253

 
1.6
 %
 
45,021

 
46,139

 
(1,118
)
 
(2.4
)%
Hotel
12,654

 
11,222

 
1,432

 
12.8
 %
 
34,327

 
33,141

 
1,186

 
3.6
 %
Retail, entertainment and other
28,844

 
26,876

 
1,968

 
7.3
 %
 
72,250

 
74,424

 
(2,174
)
 
(2.9
)%
Gross revenues
264,111

 
266,950

 
(2,839
)
 
(1.1
)%
 
810,994

 
789,481

 
21,513

 
2.7
 %
Less-Promotional allowances
19,988

 
20,110

 
(122
)
 
(0.6
)%
 
55,602

 
56,578

 
(976
)
 
(1.7
)%
Net revenues
$
244,123

 
$
246,840

 
$
(2,717
)
 
(1.1
)%
 
$
755,392

 
$
732,903

 
$
22,489

 
3.1
 %
The following table summarizes the percentage of gross revenues from each of the four revenue sources:
 
For the Three Months Ended June 30,
 
For the Nine Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Gaming
78.3
%
 
79.9
%
 
81.3
%
 
80.5
%
Food and beverage
6.0
%
 
5.8
%
 
5.6
%
 
5.9
%
Hotel
4.8
%
 
4.2
%
 
4.2
%
 
4.2
%
Retail, entertainment and other
10.9
%
 
10.1
%
 
8.9
%
 
9.4
%
Total
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%










39

Promotional Allowances
The retail value of providing promotional allowances was included in gross revenues as follows (in thousands):
 
For the Three Months Ended June 30,
 
For the Nine Months Ended June 30,
 
2016
 
2015
 
Variance    
 
Percentage
Variance    
 
2016
 
2015
 
Variance    
 
Percentage
Variance    
Food and beverage
$
6,251

 
$
6,895

 
$
(644
)
 
(9.3
)%
 
$
17,811

 
$
19,461

 
$
(1,650
)
 
(8.5
)%
Hotel
3,404

 
3,266

 
138

 
4.2
 %
 
10,263

 
10,126

 
137

 
1.4
 %
Retail, entertainment and other
10,333

 
9,949

 
384

 
3.9
 %
 
27,528

 
26,991

 
537

 
2.0
 %
Total
$
19,988

 
$
20,110

 
$
(122
)
 
(0.6
)%
 
$
55,602

 
$
56,578

 
$
(976
)
 
(1.7
)%
The estimated cost of providing promotional allowances was included in gaming costs and expenses as follows (in thousands):
 
For the Three Months Ended June 30,
 
For the Nine Months Ended June 30,
 
2016
 
2015
 
Variance    
 
Percentage
Variance    
 
2016
 
2015
 
Variance    
 
Percentage
Variance    
Food and beverage
$
5,493

 
$
6,362

 
$
(869
)
 
(13.7
)%
 
$
16,331

 
$
18,391

 
$
(2,060
)
 
(11.2
)%
Hotel
1,403

 
1,421

 
(18
)
 
(1.3
)%
 
4,683

 
4,447

 
236

 
5.3
 %
Retail, entertainment and other
8,272

 
8,866

 
(594
)
 
(6.7
)%
 
24,470

 
24,788

 
(318
)
 
(1.3
)%
Total
$
15,168

 
$
16,649

 
$
(1,481
)
 
(8.9
)%
 
$
45,484

 
$
47,626

 
$
(2,142
)
 
(4.5
)%
The following table presents data related to gaming operations (in thousands, except where noted):
 
For the Three Months Ended June 30,
 
For the Nine Months Ended June 30,
 
2016
 
2015
 
Variance    
 
Percentage
Variance    
 
2016
 
2015
 
Variance    
 
Percentage
Variance    
Slots:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Handle
$
1,813,310

 
$
1,786,356

 
$
26,954

 
1.5
 %
 
$
5,391,883

 
$
5,200,649

 
$
191,234

 
3.7
 %
Gross revenues
$
147,929

 
$
147,906

 
$
23

 
0.0
 %
 
$
438,275

 
$
431,188

 
$
7,087

 
1.6
 %
Net revenues
$
142,009

 
$
142,178

 
$
(169
)
 
(0.1
)%
 
$
421,935

 
$
414,478

 
$
7,457

 
1.8
 %
Free promotional slot plays (1)
$
14,634

 
$
14,463

 
$
171

 
1.2
 %
 
$
44,682

 
$
41,705

 
$
2,977

 
7.1
 %
Weighted average number of machines (in units)
5,111

 
5,249

 
(138
)
 
(2.6
)%
 
5,133

 
5,313

 
(180
)
 
(3.4
)%
Hold percentage (gross)
8.2
%
 
8.3
%
 
(0.1
)%
 
(1.2
)%
 
8.1
%
 
8.3
%
 
(0.2
)%
 
(2.4
)%
Win per unit per day (gross) (in dollars)
$
318

 
$
310

 
$
8

 
2.6
 %
 
$
312

 
$
297

 
$
15

 
5.1
 %
Table games:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Drop
$
458,731

 
$
432,156

 
$
26,575

 
6.1
 %
 
$
1,382,504

 
$
1,312,299

 
$
70,205

 
5.3
 %
Revenues
$
61,683

 
$
67,520

 
$
(5,837
)
 
(8.6
)%
 
$
227,523

 
$
210,710

 
$
16,813

 
8.0
 %
Weighted average number of games (in units)
273

 
283

 
(10
)
 
(3.5
)%
 
271

 
283

 
(12
)
 
(4.2
)%
Hold percentage (2)
13.4
%
 
15.6
%
 
(2.2
)%
 
(14.1
)%
 
16.5
%
 
16.1
%
 
0.4
 %
 
2.5
 %
Win per unit per day (in dollars)
$
2,478

 
$
2,625

 
$
(147
)
 
(5.6
)%
 
$
3,061

 
$
2,724

 
$
337

 
12.4
 %
Poker:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
2,032

 
$
2,336

 
$
(304
)
 
(13.0
)%
 
$
7,117

 
$
7,504

 
$
(387
)
 
(5.2
)%
Weighted average number of tables (in units)
42

 
42

 
—

 
—

 
42

 
42

 
—

 
—

Revenue per unit per day (in dollars)
$
532

 
$
611

 
$
(79
)
 
(12.9
)%
 
$
618

 
$
654

 
$
(36
)
 
(5.5
)%
_________
(1)
Free promotional slot plays are included in slot handle, but not reflected in slot revenues.
(2)
Table game hold percentage is relatively predictable over longer periods of time, but can significantly fluctuate over shorter periods.

Gaming revenues for the three months ended June 30, 2016 compared to the same period in the prior year declined primarily due to a reduction in table game revenues driven by lower hold percentage. Gaming revenues for the nine months ended June 30, 2016 compared to the same period in the prior year increased primarily as a result of higher table game and slot revenues. Gaming revenues for the three months and nine months ended June 30, 2016 benefited from higher table game and slot volumes.



40

The following table presents data related to food and beverage operations (in thousands, except where noted):
 
For the Three Months Ended June 30,
 
For the Nine Months Ended June 30,
 
2016
 
2015
 
Variance    
 
Percentage
Variance    
 
2016
 
2015
 
Variance    
 
Percentage
Variance    
Meals served
726

 
743

 
(17
)
 
(2.3
)%
 
2,008

 
2,154

 
(146
)
 
(6.8
)%
Average price per meal served (in dollars)
$
15.62

 
$
15.95

 
$
(0.33
)
 
(2.1
)%
 
$
16.13

 
$
15.94

 
$
0.19

 
1.2
 %

Food and beverage revenues for the three months ended June 30, 2016 compared to the same period in the prior year increased primarily as a result of higher beverage revenues driven, in part, by the Barrett-Jackson inaugural Northeast auction held at Mohegan Sun, a three-day car auction. Food and beverage revenues for the nine months ended June 30, 2016 compared to the same period in the prior year declined primarily due to the decrease in meals served. The decreases in meals served primarily reflected the replacement of a Mohegan Sun-owned food and beverage outlet with a third-party operator.
The following table presents data related to hotel operations (in thousands, except where noted): 
 
For the Three Months Ended June 30,
 
For the Nine Months Ended June 30,
 
2016
 
2015
 
Variance    
 
Percentage
Variance    
 
2016
 
2015
 
Variance    
 
Percentage
Variance    
Rooms occupied
105

 
105

 
—

 
—

 
317

 
314

 
3

 
1.0
%
Occupancy rate
98.9
%
 
97.8
%
 
1.1
%
 
1.1
%
 
98.6
%
 
97.8
%
 
0.8
%
 
0.8
%
Average daily room rate (in dollars)
$
113

 
$
101

 
$
12

 
11.9
%
 
$
101

 
$
99

 
$
2

 
2.0
%
Revenue per available room (in dollars)
$
112

 
$
98

 
$
14

 
14.3
%
 
$
100

 
$
97

 
$
3

 
3.1
%

Hotel revenues for the three months and nine months ended June 30, 2016 compared to the same periods in the prior year increased primarily as a result of the growth in average daily room rate. The growth in average daily room rate reflected a shift in hotel occupancy from casino patrons to higher paying transient and group guests driven, in part, by the Barrett-Jackson inaugural Northeast auction held at Mohegan Sun.
The following table presents data related to entertainment operations (in thousands, except where noted):
 
For the Three Months Ended June 30,
 
For the Nine Months Ended June 30,
 
2016
 
2015
 
Variance    
 
Percentage
Variance    
 
2016
 
2015
 
Variance    
 
Percentage
Variance    
Arena events (in events)
35

 
31

 
4

 
12.9
 %
 
85

 
85

 
—

 
—

Arena tickets
186

 
173

 
13

 
7.5
 %
 
472

 
492

 
(20
)
 
(4.1
)%
Average price per arena ticket (in dollars)
$
58.49

 
$
58.68

 
$
(0.19
)
 
(0.3
)%
 
$
49.68

 
$
53.61

 
$
(3.93
)
 
(7.3
)%

Retail, entertainment and other revenues for the three months ended June 30, 2016 compared to the same period in the prior year increased primarily as a result of higher entertainment revenues reflecting the increase in the number of shows held at the Mohegan Sun Arena. Retail, entertainment and other revenues for the nine months ended June 30, 2016 compared to the same period in the prior year declined primarily due to lower entertainment revenues resulting from a reduction in the number of headliner shows held at the Mohegan Sun Arena. Retail, entertainment and other revenues for the three months and nine months ended June 30, 2016 reflect lower gasoline revenues driven by a decline in the average price per gallon of gasoline.














41

Operating Costs and Expenses
Operating costs and expenses consisted of the following (in thousands):
 
For the Three Months Ended June 30,
 
For the Nine Months Ended June 30,
 
2016
 
2015
 
Variance    
 
Percentage
Variance    
 
2016
 
2015
 
Variance    
 
Percentage
Variance    
Gaming
$
113,875

 
$
113,712

 
$
163

 
0.1
 %
 
$
346,653

 
$
341,772

 
$
4,881

 
1.4
 %
Food and beverage
8,566

 
8,134

 
432

 
5.3
 %
 
25,231

 
25,412

 
(181
)
 
(0.7
)%
Hotel
3,926

 
3,517

 
409

 
11.6
 %
 
11,098

 
10,248

 
850

 
8.3
 %
Retail, entertainment and other
12,567

 
11,899

 
668

 
5.6
 %
 
29,729

 
32,904

 
(3,175
)
 
(9.6
)%
Advertising, general and administrative
39,659

 
39,138

 
521

 
1.3
 %
 
124,831

 
118,825

 
6,006

 
5.1
 %
Depreciation and amortization
15,001

 
15,857

 
(856
)
 
(5.4
)%
 
46,272

 
48,823

 
(2,551
)
 
(5.2
)%
Loss on disposition of assets
9

 
26

 
(17
)
 
(65.4
)%
 
327

 
843

 
(516
)
 
(61.2
)%
Severance
—

 
—

 
—

 
—

 
—

 
3,244

 
(3,244
)
 
(100.0
)%
Impairment of Project Horizon
—

 
—

 
—

 
—

 
—

 
2,502

 
(2,502
)
 
(100.0
)%
Relinquishment liability reassessment
—

 
—

 
—

 
—

 
—

 
(243
)
 
243

 
100.0
 %
Total
$
193,603

 
$
192,283

 
$
1,320

 
0.7
 %
 
$
584,141

 
$
584,330

 
$
(189
)
 
—
 %

Gaming costs and expenses for the three months ended June 30, 2016 compared to the same period in the prior year were relatively flat. Gaming costs and expenses for the nine months ended June 30, 2016 compared to the same period in the prior year increased primarily as a result of higher promotional expenses related to the high-end table game segment and increased costs related to coupon redemptions at third-party outlets. The increase in gaming costs and expenses for the nine months ended June 30, 2016 also resulted from higher combined slot win and free promotional slot play contribution expenses commensurate with the increase in slot revenues. Gaming costs and expenses for the nine months ended June 30, 2016 reflect reduced payroll costs and lower costs related to Momentum Dollar redemptions at Mohegan Sun-owned outlets. Expenses associated with the combined slot win and free promotional slot play contributions totaled $37.0 million and $109.6 million for the three months and nine months ended June 30, 2016, respectively, and $37.0 million and $107.8 million for the three months and nine months ended June 30, 2015, respectively. Gaming costs and expenses as a percentage of gaming revenues were 55.1% and 52.6% for the three months and nine months ended June 30, 2016, respectively, and 53.3% and 53.8% for the three months and nine months ended June 30, 2015, respectively.
Food and beverage costs and expenses for the three months ended June 30, 2016 compared to the same period in the prior year increased primarily due to lower amounts of food and beverage complimentaries related costs being allocated to gaming costs and expenses, partially offset by lower payroll costs and food cost of goods sold. These results were driven by the replacement of a Mohegan Sun-owned food and beverage outlet with a third-party operator. Food and beverage costs and expenses for the three months ended June 30, 2016 also reflect increased beverage cost of goods sold commensurate with the increase in beverage revenues. Food and beverage costs and expenses for the nine months ended June 30, 2016 compared to the same period in the prior year were relatively flat.
Hotel costs and expenses for the three months and nine months ended June 30, 2016 compared to the same periods in the prior year increased primarily as a result of higher payroll and other operating costs driven, in part, by new initiatives directed at our group business.
Retail, entertainment and other costs and expenses for the three months ended June 30, 2016 compared to the same period in the prior year increased primarily as a result of lower amounts of retail, entertainment and other complimentaries related costs being allocated to gaming costs and expenses. Retail, entertainment and other costs and expenses for the nine months ended June 30, 2016 compared to the same period in the prior year declined primarily due to lower direct entertainment costs resulting from the reduction in the number of headliner shows held at the Mohegan Sun Arena. Retail, entertainment and other costs and expenses for the three months and nine months ended June 30, 2016 reflect lower gasoline cost of goods sold commensurate with the declines in gasoline revenues.
Advertising, general and administrative costs and expenses for the three months ended June 30, 2016 compared to the same period in the prior year increased primarily due to higher insurance and utility costs. Advertising, general and administrative costs and expenses for the nine months ended June 30, 2016 compared to the same period in the prior year increased primarily as a result of increased payroll and insurance costs, partially offset by an overall reduction in utility costs. Advertising, general and administrative costs and expenses for the three months and nine months ended June 30, 2016 reflect lower advertising costs.


42

Mohegan Sun Pocono
Revenues
Revenues consisted of the following (in thousands):
 
For the Three Months Ended June 30,
 
For the Nine Months Ended June 30,
 
2016
 
2015
 
Variance    
 
Percentage
Variance    
 
2016
 
2015
 
Variance    
 
Percentage
Variance    
Gaming
$
70,100

 
$
71,514

 
$
(1,414
)
 
(2.0
)%
 
$
206,493

 
$
201,686

 
$
4,807

 
2.4
 %
Food and beverage
7,702

 
7,368

 
334

 
4.5
 %
 
21,787

 
20,672

 
1,115

 
5.4
 %
Hotel
1,568

 
1,478

 
90

 
6.1
 %
 
4,312

 
4,058

 
254

 
6.3
 %
Retail, entertainment and other
2,547

 
2,662

 
(115
)
 
(4.3
)%
 
6,845

 
6,922

 
(77
)
 
(1.1
)%
Gross revenues
81,917

 
83,022

 
(1,105
)
 
(1.3
)%
 
239,437

 
233,338

 
6,099

 
2.6
 %
Less-Promotional allowances
5,467

 
5,090

 
377

 
7.4
 %
 
16,277

 
14,882

 
1,395

 
9.4
 %
Net revenues
$
76,450

 
$
77,932

 
$
(1,482
)
 
(1.9
)%
 
$
223,160

 
$
218,456

 
$
4,704

 
2.2
 %
The following table summarizes the percentage of gross revenues from each of the four revenue sources:
 
For the Three Months Ended June 30,
 
For the Nine Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Gaming
85.6
%
 
86.1
%
 
86.2
%
 
86.4
%
Food and beverage
9.4
%
 
8.9
%
 
9.1
%
 
8.9
%
Hotel
1.9
%
 
1.8
%
 
1.8
%
 
1.7
%
Retail, entertainment and other
3.1
%
 
3.2
%
 
2.9
%
 
3.0
%
Total
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
Promotional Allowances
The retail value of providing promotional allowances was included in gross revenues as follows (in thousands):
 
For the Three Months Ended June 30,
 
For the Nine Months Ended June 30,
 
2016
 
2015
 
Variance    
 
Percentage
Variance    
 
2016
 
2015
 
Variance    
 
Percentage
Variance    
Food and beverage
$
4,474

 
$
4,109

 
$
365

 
8.9
%
 
$
13,253

 
$
11,890

 
$
1,363

 
11.5
 %
Hotel
428

 
419

 
9

 
2.1
%
 
1,334

 
1,290

 
44

 
3.4
 %
Retail, entertainment and other
565

 
562

 
3

 
0.5
%
 
1,690

 
1,702

 
(12
)
 
(0.7
)%
Total
$
5,467

 
$
5,090

 
$
377

 
7.4
%
 
$
16,277

 
$
14,882

 
$
1,395

 
9.4
 %

The estimated cost of providing promotional allowances was included in gaming costs and expenses as follows (in thousands):
 
For the Three Months Ended June 30,
 
For the Nine Months Ended June 30,
 
2016
 
2015
 
Variance    
 
Percentage
Variance    
 
2016
 
2015
 
Variance    
 
Percentage
Variance    
Food and beverage
$
2,910

 
$
2,746

 
$
164

 
6
 %
 
$
8,612

 
$
8,016

 
$
596

 
7.4
 %
Hotel
558

 
570

 
(12
)
 
(2.1
)%
 
1,936

 
1,925

 
11

 
0.6
 %
Retail, entertainment and other
566

 
599

 
(33
)
 
(5.5
)%
 
1,680

 
1,752

 
(72
)
 
(4.1
)%
Total
$
4,034

 
$
3,915

 
$
119

 
3
 %
 
$
12,228

 
$
11,693

 
$
535

 
4.6
 %








43

The following table presents data related to gaming operations (in thousands, except where noted):
 
For the Three Months Ended June 30,
 
For the Nine Months Ended June 30,
 
2016
 
2015
 
Variance    
 
Percentage
Variance    
 
2016
 
2015
 
Variance    
 
Percentage
Variance    
Slots:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Handle
$
690,911

 
$
673,523

 
$
17,388

 
2.6
 %
 
$
2,044,281

 
$
1,910,296

 
$
133,985

 
7.0
 %
Gross revenues
$
55,878

 
$
55,781

 
$
97

 
0.2
 %
 
$
165,992

 
$
158,058

 
$
7,934

 
5.0
 %
Net revenues
$
55,814

 
$
55,728

 
$
86

 
0.2
 %
 
$
165,746

 
$
157,696

 
$
8,050

 
5.1
 %
Free promotional slot plays (1)
$
11,846

 
$
11,909

 
$
(63
)
 
(0.5
)%
 
$
34,664

 
$
33,801

 
$
863

 
2.6
 %
Weighted average number of machines (in units)
2,331

 
2,330

 
1

 
0.0
 %
 
2,330

 
2,331

 
(1
)
 
0.0
 %
Hold percentage (gross)
8.1
%
 
8.3
%
 
(0.2
)%
 
(2.4
)%
 
8.1
%
 
8.3
%
 
(0.2
)%
 
(2.4
)%
Win per unit per day (gross) (in dollars)
$
263

 
$
263

 
$
—

 
—

 
$
260

 
$
248

 
$
12

 
4.8
 %
Table games:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Drop
$
53,741

 
$
56,668

 
$
(2,927
)
 
(5.2
)%
 
$
163,847

 
$
172,078

 
$
(8,231
)
 
(4.8
)%
Revenues
$
10,367

 
$
11,758

 
$
(1,391
)
 
(11.8
)%
 
$
31,275

 
$
34,503

 
$
(3,228
)
 
(9.4
)%
Weighted average number of games (in units)
73

 
73

 
—

 
—

 
73

 
73

 
—

 
—

Hold percentage (2)
19.3
%
 
20.7
%
 
(1.4
)%
 
(6.8
)%
 
19.1
%
 
20.1
%
 
(1.0
)%
 
(5.0
)%
Win per unit per day (in dollars)
$
1,563

 
$
1,768

 
$
(205
)
 
(11.6
)%
 
$
1,565

 
$
1,738

 
$
(173
)
 
(10.0
)%
Poker:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
761

 
$
738

 
$
23

 
3.1
 %
 
$
2,332

 
$
2,329

 
$
3

 
0.1
 %
Weighted average number of tables (in units)
18

 
18

 
—

 
—

 
18

 
18

 
—

 
—

Revenue per unit per day (in dollars)
$
464

 
$
451

 
$
13

 
2.9
 %
 
$
473

 
$
474

 
$
(1
)
 
(0.2
)%
_________
(1)
Free promotional slot plays are included in slot handle, but not reflected in slot revenues.
(2)
Table games hold percentage is relatively predictable over longer periods of time, but can significantly fluctuate over shorter periods.

Gaming revenues for the three months ended June 30, 2016 compared to the same period in the prior year decreased primarily as a result of lower table game revenues driven by the declines in both hold percentage and volumes. Gaming revenues for the nine months ended June 30, 2016 compared to the same period in the prior year increased primarily due to higher slot revenues which benefited from increased volumes, partially offset by lower table game revenues resulting from the declines in both hold percentage and volumes.
The following table presents data related to food and beverage operations (in thousands, except where noted):
 
For the Three Months Ended June 30,
 
For the Nine Months Ended June 30,
 
2016
 
2015
 
Variance    
 
Percentage
Variance    
 
2016
 
2015
 
Variance    
 
Percentage
Variance    
Meals served
183

 
192

 
(9
)
 
(4.7
)%
 
499

 
509

 
(10
)
 
(2.0
)%
Average price per meal served (in dollars)
$
19.14

 
$
17.27

 
$
1.87

 
10.8
 %
 
$
19.60

 
$
18.13

 
$
1.47

 
8.1
 %
Food and beverage revenues for the three months and nine months ended June 30, 2016 compared to the same periods in the prior year increased primarily due to higher complimentary food and beverage revenues driven by changes in our promotional offers.
The following table presents data related to hotel operations (in thousands, except where noted): 
 
For the Three Months Ended June 30,
 
For the Nine Months Ended June 30,
 
2016
 
2015
 
Variance    
 
Percentage
Variance    
 
2016
 
2015
 
Variance    
 
Percentage
Variance    
Rooms occupied
21

 
21

 
—

 
—

 
62

 
61

 
1

 
1.6
%
Occupancy rate
96.6
%
 
96.1
%
 
0.5
%
 
0.5
%
 
96.1
%
 
94.0
%
 
2.1
%
 
2.2
%
Average daily room rate (in dollars)
$
69

 
$
66

 
$
3

 
4.5
%
 
$
64

 
$
62

 
$
2

 
3.2
%
Revenue per available room (in dollars)
$
67

 
$
63

 
$
4

 
6.3
%
 
$
61

 
$
58

 
$
3

 
5.2
%


44

Hotel revenues for the three months and nine months ended June 30, 2016 compared to the same periods in the prior year increased primarily as a result of higher hotel occupancy by casino patrons. Hotel revenues for the three months ended June 30, 2016 also benefited from strong group business.
Retail, entertainment and other revenues for the three months and nine months ended June 30, 2016 compared to the same periods in the prior year declined primarily due to lower entertainment revenues driven by reductions in the number of shows held at our 1,500-seat entertainment venue.
Operating Costs and Expenses
Operating costs and expenses consisted of the following (in thousands):
 
For the Three Months Ended June 30,
 
For the Nine Months Ended June 30,
 
2016
 
2015
 
Variance    
 
Percentage
Variance    
 
2016
 
2015
 
Variance    
 
Percentage
Variance    
Gaming
$
50,427

 
$
50,517

 
$
(90
)
 
(0.2
)%
 
$
148,407

 
$
144,222

 
$
4,185

 
2.9
 %
Food and beverage
2,108

 
2,189

 
(81
)
 
(3.7
)%
 
5,576

 
5,951

 
(375
)
 
(6.3
)%
Hotel
1,544

 
1,484

 
60

 
4.0
 %
 
4,357

 
4,158

 
199

 
4.8
 %
Retail, entertainment and other
305

 
548

 
(243
)
 
(44.3
)%
 
962

 
1,364

 
(402
)
 
(29.5
)%
Advertising, general and administrative
7,990

 
7,384

 
606

 
8.2
 %
 
24,040

 
22,121

 
1,919

 
8.7
 %
Depreciation and amortization
2,901

 
2,968

 
(67
)
 
(2.3
)%
 
8,894

 
9,089

 
(195
)
 
(2.1
)%
Loss on disposition of assets
3

 
—

 
3

 
100.0
 %
 
14

 
2

 
12

 
N.M.

Severance
—

 
—

 
—

 
—

 
—

 
126

 
(126
)
 
(100.0
)%
Total
$
65,278

 
$
65,090

 
$
188

 
0.3
 %
 
$
192,250

 
$
187,033

 
$
5,217

 
2.8
 %
_________
N.M. - Not meaningful.
Gaming costs and expenses for the three months ended June 30, 2016 compared to the same period in the prior year were relatively flat. Gaming costs and expenses for the nine months ended June 30, 2016 compared to the same period in the prior year increased primarily as a result of higher Pennsylvania slot machine tax expenses commensurate with the increase in slot revenues. Gaming costs and expenses for the nine months ended June 30, 2016 also reflect increased promotional expenses and higher costs related to Momentum Dollar redemptions at both Mohegan Sun Pocono-owned and third-party outlets. These results were partially offset by lower Pennsylvania table game tax expenses commensurate with the decline in table game revenues and reduced payroll costs and bad debt expenses. Expenses associated with the Pennsylvania slot machine tax totaled $31.1 million and $91.8 million for the three months and nine months ended June 30, 2016, respectively, and $31.1 million and $88.7 million for the three months and nine months ended June 30, 2015, respectively. Expenses associated with the Pennsylvania table game tax totaled $1.6 million and $4.7 million for the three months and nine months ended June 30, 2016, respectively, and $1.8 million and $5.2 million for the three months and nine months ended June 30, 2015, respectively. Gaming costs and expenses as a percentage of gaming revenues were 71.9% for each of the three months and nine months ended June 30, 2016 and 70.6% and 71.5% for the three months and nine months ended June 30, 2015, respectively.
Food and beverage costs and expenses for the three months and nine months ended June 30, 2016 compared to the same periods in the prior year decreased primarily due to higher amounts of food and beverage complimentaries related costs being allocated to gaming costs and expenses.
Hotel costs and expenses for the three months and nine months ended June 30, 2016 compared to the same periods in the prior year increased primarily as a result of higher payroll costs and lease expenses.
Retail, entertainment and other costs and expenses for the three months and nine months ended June 30, 2016 compared to the same periods in the prior year declined primarily due to lower entertainment costs driven by reductions in the number of shows held at our 1,500-seat entertainment venue.
Advertising, general and administrative costs and expenses for the three months and nine months ended June 30, 2016 compared to the same periods in the prior year increased primarily as a result of higher payroll and other professional consulting costs, combined with the effect of a non-recurring sales tax credit recorded in the three months and nine months ended June 30, 2015. These results were partially offset by lower insurance and utility costs.



45

Corporate and Other
Corporate and other consisted of the following (in thousands):
 
For the Three Months Ended June 30,
 
For the Nine Months Ended June 30,
 
2016
 
2015
 
Variance    
 
Percentage
Variance    
 
2016
 
2015
 
Variance    
 
Percentage
Variance    
Gross revenues
$
4,168

  
$
1,560

 
$
2,608

 
167.2
%
 
$
13,755

  
$
4,704

 
$
9,051

 
192.4
%
Less-Promotional allowances
41

 
20

 
21

 
105.0
%
 
86

 
50

 
36

 
72.0
%
Net revenues
$
4,127

 
$
1,540

 
$
2,587

 
168.0
%
 
$
13,669

 
$
4,654

 
$
9,015

 
193.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses
$
7,552

  
$
7,179

 
$
373

 
5.2
%
 
$
26,696

  
$
23,580

 
$
3,116

 
13.2
%
Depreciation and amortization
270

  
261

 
9

 
3.4
%
 
803

  
791

 
12

 
1.5
%
Total expenses
$
7,822

  
$
7,440

  
$
382

 
5.1
%
 
$
27,499

  
$
24,371

  
$
3,128

 
12.8
%

Corporate and other revenues for the three months and nine months ended June 30, 2016 compared to the same periods in the prior year increased primarily as a result of development, management and consulting fees earned in connection with our development arrangement for the Cowlitz Project, management arrangement with Resorts Casino Hotel and consulting arrangement with Paragon Casino Resort.
Corporate and other expenses for the three months ended June 30, 2016 compared to the same period in the prior year increased primarily due to higher payroll costs. Corporate and other expenses for the nine months ended June 30, 2016 compared to the same period in the prior year increased primarily as a result of additional costs and expenses related to our successful pursuit of a casino license in South Korea, including non-cash share based compensation totaling $6.1 million to a non-employee. Corporate and other expenses for the three months and nine months ended June 30, 2016 reflect lower bad debt expenses primarily driven by a reduction in the reserve rate against reimbursable costs and expenses advanced by us to the Cowlitz Project following the Cowlitz Tribe’s closing of its financing for the Cowlitz Project in December 2015.
Other Income (Expense)
Other income (expense) consisted of the following (in thousands):
 
For the Three Months Ended June 30,
 
For the Nine Months Ended June 30,
 
2016
 
2015
 
Variance    
 
Percentage
Variance    
 
2016
 
2015
 
Variance    
 
Percentage
Variance    
Accretion of discount to the relinquishment liability (1)
$
—

 
$
—

 
$
—

 
—

 
$
—

 
$
(227
)
 
$
227

 
100.0
 %
Interest income (2)
2,284

 
1,906

 
378

 
19.8
 %
 
6,469

 
5,554

 
915

 
16.5
 %
Interest expense
(33,949
)
 
(35,660
)
 
1,711

 
4.8
 %
 
(102,294
)
 
(107,692
)
 
5,398

 
5.0
 %
Loss on modification and early extinguishment of debt (3)
(277
)
 
—

 
(277
)
 
(100.0
)%
 
(484
)
 
—

 
(484
)
 
(100.0
)%
Other expense, net (4)
(495
)
 
(50
)
 
(445
)
 
N.M.

 
(1,355
)
 
(1,260
)
 
(95
)
 
(7.5
)%
Total other expense
$
(32,437
)
 
$
(33,804
)
 
$
1,367

 
4.0
 %
 
$
(97,664
)
 
$
(103,625
)
 
$
5,961

 
5.8
 %
_________
(1)
Represented accretion of the discount to the present value of the relinquishment liability for the impact of the time value of money.
(2)
Primarily represented interest earned on long-term receivables.
(3)
Represented financing fees expensed in connection with the modification or refinancing of debt.
(4)
Primarily represented loss from unconsolidated affiliates.
N.M. - Not meaningful.
Interest expense for the three months and nine months ended June 30, 2016 compared to the same periods in the prior year declined as a result of lower weighted average interest rate. Weighted average interest rate was 7.8% for each of the three months and nine months ended June 30, 2016 compared to 8.3% for each of the three months and nine months ended June 30, 2015. Weighted average outstanding debt was $1.74 billion and $1.76 billion for the three months and nine months ended June 30, 2016, respectively, compared to $1.72 billion and $1.74 billion for the three months and nine months ended June 30, 2015, respectively.
Seasonality
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, our operating results for the

46

three months and nine months ended June 30, 2016 are not necessarily indicative of operating results for other interim periods or an entire fiscal year.

Liquidity and Capital Resources
Our cash flows consisted of the following (in thousands):
 
For the Nine Months Ended June 30,
 
2016
 
2015
 
Variance    
 
Percentage
    Variance    
Net cash provided by operating activities
$
153,805

 
$
144,483

 
$
9,322

 
6.5
%
Net cash used in investing activities
(75,792
)
 
(13,870
)
 
(61,922
)
 
N.M.

Net cash provided by (used in) financing activities
44,594

 
(109,561
)
 
154,155

 
N.M.

Net increase in cash and cash equivalents
$
122,607

 
$
21,052

 
$
101,555

 
N.M.

_________
N.M. - Not meaningful.
As of June 30, 2016 and September 30, 2015, we held cash and cash equivalents of $188.7 million and $65.8 million, respectively. As a result of the cash-based nature of our business, operating cash flow levels tend to follow trends in our operating income, excluding the effects of non-cash charges, such as depreciation and amortization, amortization of debt issuance costs, premiums and discounts and provisions and recoveries for losses on receivables.
The increase in cash provided by operating activities for the nine months ended June 30, 2016 compared to the same period in the prior year primarily resulted from increased net income after factoring in non-cash items, partially offset by higher working capital requirements.
Operating activities are a significant source of our cash flows. We utilize cash flows from operations for scheduled interest payments, debt reduction, distributions to the Tribe, capital expenditures and projected working capital needs, as well as to make investments, from time to time. There are numerous factors which may cause a substantial reduction in the amount of such cash flows, including, but not limited to, the following:
•
reduced discretionary spending by patrons on activities such as gaming, leisure and hospitality;
•
increased competition, including the legalization or expansion of gaming in New England, New York, New Jersey, Pennsylvania or other states in the mid-Atlantic region, or the expansion of on-line gaming in the United States;
•
unfavorable weather conditions;
•
changes in applicable laws or policies regarding smoking or alcohol service at Mohegan Sun or Mohegan Sun Pocono;
•
an infrastructure or transportation disruption, such as the closure of a major highway near Mohegan Sun or Mohegan Sun Pocono, for an extended period of time; and
•
an act of terrorism on the United States.
The increase in cash used in investing activities for the nine months ended June 30, 2016 compared to the same period in the prior year was primarily driven by restricted cash held by Inspire Integrated Resort Co., Ltd, or Inspire Integrated Resort, in connection with its joint venture arrangement to build an integrated resort at Incheon International Airport in South Korea. The increase in cash used in investing activities for the nine months ended June 30, 2016 also resulted from increased capital expenditures. These results were partially offset by a partial repayment of reimbursable costs and expenses advanced by us to the Cowlitz Project following the Cowlitz Tribe’s closing of its financing for the Cowlitz Project in December 2015.
The increase in cash provided by financing activities for the nine months ended June 30, 2016 compared to the same period in the prior year was primarily driven by increased borrowings to pursue new development opportunities and for general corporate purposes. The increase in cash provided by financing activities for the nine months ended June 30, 2016 also reflected contributions from members related to Inspire Integrated Resort's joint venture arrangement to build an integrated resort at Incheon International Airport in South Korea.
External Sources of Liquidity
Senior Secured Credit Facilities
In November 2013, we entered into a loan agreement among us, 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, or the senior secured credit facilities, comprised of a $100.0 million senior secured revolving credit facility, or the revolving facility, a $125.0 million senior secured term loan A facility,

47

or the term loan A facility, and a $730.0 million senior secured term loan B facility, or 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).
In August 2015, we entered into an increase joinder and amendment agreement among us, the Tribe, the guarantors as defined below, Citizens Bank, N.A., as administrative agent, and the lenders party thereto, amending the senior secured credit facilities. Pursuant to the amendment, we borrowed $90.0 million of increase term B loans on the same terms as the existing term B loans under the term loan B facility. The net proceeds from this transaction were used to redeem outstanding 2012 senior subordinated notes (further discussed below).

On May 26, 2016, we entered into a second amendment agreement among us, the Tribe, the guarantors as defined below, Citizens Bank, N.A., as administrative agent, and the lenders party thereto, amending the senior secured credit facilities to among other things, permit us to make additional investments relating to our joint venture arrangement to build an integrated resort at Incheon International Airport in South Korea.
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 the first full fiscal quarter after the closing date.
As of June 30, 2016, amounts outstanding under the revolving facility, term loan A facility and term loan B facility totaled $19.0 million, $100.0 million and $778.2 million, respectively. As of June 30, 2016, letters of credit issued under the revolving facility totaled $2.5 million, of which no amount was drawn. Inclusive of letters of credit, which reduce borrowing availability under the revolving facility, we had approximately $78.5 million of borrowing capacity under the revolving facility and line of credit as of June 30, 2016.
Borrowings under the senior secured credit facilities accrue interest as follows: (i) for base rate loans under the revolving facility and term loan A facility, at 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, at 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, at 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, at the applicable LIBOR rate (subject to a 1.0% floor) plus 450 basis points. We are also 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 June 30, 2016, interest on the $19.0 million outstanding under the revolving facility was based on a base rate of 3.50% plus 300 basis points. The commitment fee was 0.50% as of June 30, 2016. As of June 30, 2016, interest on the $100.0 million outstanding under the term loan A facility was based on a Eurodollar rate of 0.46% plus 400 basis points. As of June 30, 2016, interest on the $778.2 million outstanding under the term loan B facility was based on the Eurodollar rate floor of 1.0% plus 450 basis points.
Our obligations under the senior secured credit facilities are fully and unconditionally guaranteed, jointly and severally, by Mohegan Commercial Ventures-PA, LLC, Downs Racing, L.P., Backside, L.P., Mill Creek Land, L.P., Northeast Concessions, L.P., Mohegan Basketball Club, LLC, Mohegan Golf, LLC, Mohegan Ventures-NW, LLC, Mohegan Ventures Wisconsin, LLC, Wisconsin Tribal Gaming, LLC and MTGA Gaming, LLC, or collectively, the guarantors. The senior secured credit facilities are collateralized by a first priority lien on substantially all of our 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 (we and the guarantors, other than MBC, are collectively referred to herein as the grantors). The grantors are also 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 us and our 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.

48



Maximum total leverage ratio covenant, or ratio of total debt to annualized EBITDA, as such terms are defined under the senior secured credit facilities:
Fiscal Quarters Ending:
 
June 30, 2016 and thereafter
6.00:1.00
Maximum secured leverage ratio covenant, or ratio of secured debt to annualized EBITDA, as such terms are defined under the senior secured credit facilities:
Fiscal Quarters Ending:
 
June 30, 2016
3.25:1.00
September 30, 2016 and thereafter
3.00:1.00
Minimum fixed charge coverage ratio covenant, as defined under the senior secured credit facilities:
Fiscal Quarters Ending:
 
June 30, 2016 and thereafter
1.05:1.00
As of June 30, 2016, we and the Tribe were in compliance with all respective covenant requirements under the senior secured credit facilities.
We continue to monitor revenues and manage expenses and enhance operating efficiencies to ensure continued compliance with our financial covenant requirements under the senior secured credit facilities. While we anticipate that we will remain in compliance with all covenant requirements under the senior secured credit facilities for all periods prior to maturity, we may need to increase revenues or offset any future declines in revenues by implementing cost saving and other initiatives to ensure compliance with these financial covenant requirements. If we are unable to satisfy our financial covenant requirements, we would need to obtain waivers or consents under the senior secured credit facilities; however, we can provide no assurance that we would be able to obtain such waivers or consents. If we are unable to obtain such waivers or consents, we would be in default under the senior secured credit facilities, which may result in cross-defaults under our other outstanding indebtedness and allow our lenders and creditors to exercise their rights and remedies as defined under their respective agreements, including their right to accelerate the repayment of our outstanding indebtedness. If such acceleration were to occur, we can provide no assurance that we would be able to obtain the financing necessary to repay such accelerated indebtedness.
Senior Unsecured Notes
2013 9 3/4% Senior Unsecured Notes
In August 2013, we issued $500.0 million senior unsecured notes with fixed interest payable at a rate of 9.75% per annum, or the initial 2013 senior unsecured notes. In August 2015, we issued an additional $85.0 million of senior unsecured notes under the initial 2013 senior unsecured notes indenture, or the additional 2013 senior unsecured notes, and, together with the initial 2013 senior unsecured notes, the 2013 senior unsecured notes. Subsequent to this transaction, an aggregate principal amount of $585.0 million 2013 senior unsecured notes is outstanding. The net proceeds from the additional 2013 senior unsecured notes were used to redeem outstanding 2012 senior subordinated notes (further discussed below).
The 2013 senior unsecured notes mature on September 1, 2021. We 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 (and additional interest in the case of the additional 2013 senior unsecured notes, if any, pursuant to the registration rights agreement described below) to the date of redemption. On or after September 1, 2016, we may redeem the 2013 senior unsecured notes, in whole or in part, at specified redemption prices, together with accrued interest (and additional interest in the case of the additional 2013 senior unsecured notes, if any) to the date of redemption. If we experience specific kinds of change of control triggering events, we must offer to repurchase the 2013 senior unsecured notes at a price equal to 101% of the principal amount thereof, plus accrued interest (and additional interest in the case of the additional 2013 senior unsecured notes, if any) to the purchase date. In addition, if we undertake certain types of asset sales and do not use the related sale proceeds for specified purposes, we 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 (and additional interest in the case of the additional 2013 senior unsecured notes, if any). Interest on the 2013 senior unsecured notes is payable semi-annually on March 1st and September 1st.

In March 2014, we completed an offer to exchange the initial 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. Additionally, in

49

March 2016, we completed an offer to exchange the additional 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.
The 2013 senior unsecured notes are uncollateralized general obligations and are effectively subordinated to all of our 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 are also effectively subordinated to any indebtedness and other liabilities (including trade payables) of our subsidiaries that do not guarantee the 2013 senior unsecured notes. The 2013 senior unsecured notes rank equally in right of payment with our other unsecured, unsubordinated indebtedness, including trade payables. 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, our and the 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 also 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.
Facility Agreement for Senior Unsecured Notes
In November 2015, we entered into an agreement, or the facility agreement, by and among us, the Tribe and UBS AG, London Branch, or UBS. Pursuant to the facility agreement, we may issue, from time to time, to UBS or its designee, senior unsecured notes in an aggregate principal amount of up to $200.0 million, in varying amounts and with varying borrowing dates, maturities and interest rates, as agreed with UBS or its designee.
In November 2015, pursuant to the facility agreement, we entered into a note purchase agreement, or the note purchase agreement, by and among us, the Tribe and the purchaser named therein, or the purchaser. In accordance with the note purchase agreement, we issued floating rate senior notes in an aggregate principal amount of $100.0 million, or the 2015 senior unsecured notes, to the purchaser in a private offering that closed on November 20, 2015. The net proceeds from the 2015 senior unsecured notes were used to pursue new development opportunities and for general corporate purposes. The 2015 senior unsecured notes are senior unsecured obligations. Pursuant to a guarantee agreement dated November 20, 2015, certain of our subsidiaries, which are the same guarantors that guarantee our senior secured credit facilities and other senior unsecured and senior subordinated notes, have guaranteed the 2015 senior unsecured notes. The 2015 senior unsecured notes mature on December 15, 2017. The 2015 senior unsecured notes accrue interest at an annual rate equal to the LIBOR rate plus 4.45%, payable quarterly. As of June 30, 2016, interest on the 2015 senior unsecured notes was based on a LIBOR rate of 0.65% plus 4.45%.
We may redeem the 2015 senior unsecured notes at any time, in whole or in part, at a price equal to 100% of the principal amount redeemed plus accrued interest to the date of redemption, customary breakage costs, a “make-whole amount,” and, if redeemed within one year of the date of issuance, a premium of 0.25%. If we experience specific kinds of change of control events, undertake certain types of asset sales or experience certain swap-related credit determinations, we will be required to make an offer to purchase the 2015 senior unsecured notes at purchase prices set forth in the note purchase agreement. In addition, if any gaming regulatory authority requires a holder of the 2015 senior unsecured notes to be licensed, qualified or found suitable under applicable gaming laws, and such holder does not obtain such license, qualification or finding of suitability within a specified time, we can call for redemption of the 2015 senior unsecured notes held by such holder.
    
The 2015 senior unsecured 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 2015 senior unsecured notes are uncollateralized general obligations and are effectively subordinated to all of our 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 2015 senior unsecured notes are also effectively subordinated to any indebtedness and other liabilities (including trade payables) of our subsidiaries that do not guarantee the 2015 senior unsecured notes. The 2015 senior unsecured notes rank equally in right of payment with our other unsecured, unsubordinated indebtedness, including trade payables. The 2015 senior unsecured notes are fully and unconditionally guaranteed, jointly and severally, by the guarantors.
The note purchase agreement contains certain covenants that, subject to certain significant exceptions, limit, among other things, our and the 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

50

note purchase agreement also includes customary events of default, including, but not limited to, failure to make required payments, failure to comply with certain agreements or covenants, certain cross-defaults, certain events of bankruptcy and insolvency and certain judgment defaults.
Senior Subordinated Notes
2012 11% Senior Subordinated Notes
In March 2012, we issued $344.2 million senior subordinated toggle notes with fixed interest payable at a rate of 11% per annum, or the 2012 senior subordinated notes. The 2012 senior subordinated notes mature on September 15, 2018. We 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 occurs, we 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 we undertake certain types of asset sales or suffer events of loss, and we do not use the related sale or insurance proceeds for specified purposes, we 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, we may, at our 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, or PIK interest. If we elect 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, we repurchased an aggregate principal amount of $69.0 million 2012 senior subordinated notes. In September 2015, we redeemed an additional aggregate principal amount of $175.0 million of 2012 senior subordinated notes. An aggregate principal amount of approximately $100.2 million 2012 senior subordinated notes remains outstanding as of June 30, 2016.
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 2012 senior subordinated notes are uncollateralized general obligations and are subordinated to borrowings under the senior secured credit facilities and the 2013 and 2015 senior unsecured notes. The 2012 senior subordinated notes are fully and unconditionally guaranteed, jointly and severally, by the guarantors.
The 2012 senior subordinated notes indenture contains certain non-financial and financial covenant requirements with which we 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 our continued existence. The financial covenant requirements include, among other things, subject to certain exceptions, limitations on our 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 June 30, 2016, we and the Tribe were in compliance with all respective covenant requirements under the senior and senior subordinated note indentures and other debt agreements.
We or our 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 our liquidity and covenant requirement restrictions, among other factors.
Line of Credit
In November 2013, we entered into a $16.5 million revolving credit facility with Bank of America, N.A., or 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 our total leverage ratio, as each term is defined under the line of credit. As of June 30, 2016, no amount was drawn on the line of credit. Borrowings under the line of credit are uncollateralized general 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 June 30, 2016, we were in compliance with all covenant requirements under the line of credit.



51

Downs Lodging Credit Facility
In July 2012, Downs Lodging, LLC, or Downs Lodging, a single purpose entity and wholly-owned subsidiary, entered into a credit agreement providing for a $45.0 million term loan from a third-party lender, or 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 accrued interest at an annual rate of 13.0%.
In July 2015, Downs Lodging prepaid approximately $4.5 million of the Downs Lodging credit facility, plus accrued interest and fees. In November 2015, Downs Lodging repaid the remaining $40.5 million outstanding under the Downs Lodging credit facility, plus accrued interest and fees, with proceeds from a new credit agreement providing for a $25.0 million term loan from a third-party lender, or the new Downs Lodging credit facility, and a cash payment of the remaining amount, and terminated the prior Downs Lodging credit facility.
The new Downs Lodging credit facility matures in November 2019, subject to earlier maturity in the event that 5.0% or more of our total funded indebtedness matures prior to that date, in which case the new Downs Lodging credit facility matures six months prior to such date. Principal outstanding under the new Downs Lodging credit facility amortizes in equal monthly amounts of approximately $260,000 commencing January 1, 2016, with the remaining balance due at maturity. The new Downs Lodging credit facility accrues interest as follows: (i) for base rate loans, at a base rate equal to the greater of (a) the prime rate and (b) the federal funds rate plus 50 basis points (the greater of (a) and (b), the “base rate”), plus 250 basis points and (ii) for Eurodollar rate loans, at the applicable LIBOR rate plus 350 basis points. Interest on base rate loans is payable monthly. Interest on Eurodollar rate loans is payable at the end of each applicable interest period.
As of June 30, 2016, amounts outstanding under the new Downs Lodging credit facility totaled $23.4 million and interest was based on a Eurodollar rate of 0.50% plus 350 basis points.
The new Downs Lodging credit facility is a senior secured obligation of Downs Lodging, collateralized by all existing and future assets of Downs Lodging. The new Downs Lodging credit facility subjects Downs Lodging to certain covenant requirements customarily found in loan agreements for similar transactions. Additionally, the new Downs Lodging credit facility includes a financial maintenance covenant pertaining to minimum debt service coverage. As of June 30, 2016, Downs Lodging was in compliance with all covenant requirements under the new Downs Lodging credit facility.
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, LLC, or Salishan-Mohegan, referred to herein as 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 accrued interest at an annual rate of 10.0%, 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. In addition, principal outstanding under the 2012 Mohegan Tribe Minor's Trust promissory note amortized 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.
In December 2015, the Cowlitz Tribe repaid $6.0 million of principal outstanding under the 2012 Mohegan Tribe Minor's Trust promissory note on behalf of Salishan-Mohegan.
The 2012 Mohegan Tribe Minor’s Trust promissory note was further amended in December 2015, pursuant to which the interest rate was adjusted to an annual rate of 12.5% and accrued interest was adjusted to be payable quarterly, commencing March 31, 2016. In addition, as amended, principal outstanding under the 2012 Mohegan Tribe Minor's Trust promissory note amortizes in equal quarterly amounts of $1.5 million, commencing March 31, 2016 through December 31, 2016, with the remaining principal amount due at maturity. An aggregate principal amount of $7.0 million of the 2012 Mohegan Tribe Minor’s Trust promissory note remains outstanding as of June 30, 2016.
2013 Mohegan Tribe Promissory Note
In March 2013, Mohegan Gaming & Hospitality, LLC, or MG&H, purchased and acquired all of the Tribe's membership interest in MG&H in exchange for a $7.4 million promissory note, or 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.

52

2015 Mohegan Tribe Promissory Note
In November 2015, the Tribe made a $22.5 million loan to Mohegan Gaming Advisors, LLC, or the 2015 Mohegan Tribe promissory note. The 2015 Mohegan Tribe promissory note accrued interest at an annual rate of 5.0% and matured on April 15, 2016. A required principal payment of $8.5 million, plus accrued interest, was paid on January 15, 2016 with cash on hand. The remaining outstanding principal amount, plus accrued interest, was paid at maturity with cash on hand.
Capital Expenditures
The following table presents data related to capital expenditures (in millions):
 
Capital Expenditures
 
Nine Months Ended
 
Remaining Forecasted
 
Total Forecasted
 
June 30, 2016
 
Fiscal Year 2016
 
Fiscal Year 2016
Mohegan Sun:
 
 
 
 
 
Maintenance
$
17.0

 
$
9.0

 
$
26.0

Development
6.6

 
12.2

 
18.8

Subtotal
23.6

 
21.2

 
44.8

Mohegan Sun Pocono:
 
 
 
 
 
Maintenance
3.0

 
2.0

 
5.0

Development
1.0

 
0.9

 
1.9

Subtotal
4.0

 
2.9

 
6.9

Corporate:
 
 
 
 
 
Maintenance
0.1

 
0.2

 
0.3

Subtotal
0.1

 
0.2

 
0.3

Total
$
27.7

 
$
24.3

 
$
52.0

We primarily rely on cash flows provided by operating activities to fund maintenance capital expenditures at Mohegan Sun and Mohegan Sun Pocono. We plan to fund any development or expansion capital expenditures at Mohegan Sun and Mohegan Sun Pocono through a combination of existing cash, cash flows provided by operating activities and draws under our revolving facility.
Interest Expense
The following table presents our interest expense (in thousands):
 
For the Three Months Ended June 30,
 
For the Nine Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Senior secured credit facility - revolving
$
395

 
$
451

 
$
1,340

 
$
1,591

Senior secured credit facility - term loan A
1,377

 
1,548

 
4,227

 
4,827

Senior secured credit facility - term loan B
12,254

 
11,098

 
37,077

 
33,332

2013 9 3/4% senior unsecured notes
14,505

 
12,396

 
43,490

 
37,172

2015 senior unsecured notes
1,611

 
—

 
3,917

 
—

2005 6 7/8% senior subordinated notes
—

 
—

 
—

 
255

2012 11% senior subordinated notes
2,851

 
7,802

 
8,544

 
23,386

Line of credit
58

 
50

 
157

 
174

Downs Lodging credit facility
—

 
1,637

 
625

 
4,910

New Downs Lodging credit facility
362

 
—

 
882

 
—

2009 Mohegan Tribe promissory note
—

 
44

 
—

 
131

2012 Mohegan Tribe Minor's Trust promissory note
264

 
411

 
957

 
1,234

2013 Mohegan Tribe promissory note
73

 
73

 
221

 
221

2015 Mohegan Tribe promissory note
27

 
—

 
359

 
—

Capital leases
18

 
25

 
60

 
83

Amortization of debt issuance costs on revolving credit facilities
154

 
125

 
438

 
376

Total interest expense
$
33,949

 
$
35,660

 
$
102,294

 
$
107,692



53

Contractual Obligations
The following table presents estimated future payment obligations related to our debt and the timing of those payments as of June 30, 2016 (in thousands):
 
 
 
Payments due by period
Contractual Obligations
Total
 
Less than
1 year (1)
 
1-3 years
 
3-5 years
 
More than
5 years
Long-term debt, including current portions (excludes unamortized debt issuance costs, premiums and discounts)
$
1,722,609

 
$
31,300

 
$
1,091,145

 
$
14,723

 
$
585,441

Interest payments on long-term debt and capital leases
446,765

 
123,852

 
179,998

 
114,396

 
28,519

Total
$
2,169,374

 
$
155,152

 
$
1,271,143

 
$
129,119

 
$
613,960

 ________________________
(1)
Represents payment obligations from July 1, 2016 to June 30, 2017.
There has been no material change to the other contractual obligations previously disclosed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2015.
Sufficiency of Resources
We believe that existing cash balances, financing arrangements and operating cash flows will provide us with sufficient resources to meet our existing debt obligations, distributions to the Tribe and foreseeable capital expenditures for at least the next twelve months; however, we can provide no assurance in this regard. Please refer to “Part I. Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2015 for further details regarding risks relating to our sufficiency of resources. Inclusive of letters of credit, which reduce borrowing availability under the revolving facility, we had approximately $78.5 million of borrowing capacity under the revolving facility and line of credit as of June 30, 2016. Distributions to the Tribe are anticipated to total approximately $53.0 million for fiscal 2016.
Critical Accounting Policies and Estimates
There has been no material change from the critical accounting policies and estimates previously disclosed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2015.
Impact of Inflation
Absent changes in competitive and economic conditions or in specific prices affecting the hospitality and gaming industry, we do not expect that inflation will have a significant impact on our operations. Changes in specific prices, such as fuel and transportation prices, relative to the general rate of inflation may have a material adverse effect on the hospitality and gaming industry in general.

54

Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. As of June 30, 2016, our primary exposure to market risk was interest rate risk associated with our senior secured credit facilities, 2015 senior unsecured notes and new Downs Lodging credit facility, all of which accrued interest on the basis of a base rate formula or a Eurodollar rate formula, plus applicable rates, as defined under the respective facility.
We attempt to manage our interest rate risk through a controlled combination of long-term fixed rate borrowings and variable rate borrowings in accordance with established policies and procedures. We do not hold or issue financial instruments for speculative or trading purposes.
The following table presents information about our debt obligations as of June 30, 2016 that were sensitive to changes in interest rates. The table presents principal payments and related weighted average interest rates by expected maturity dates. Weighted average variable interest rates were based on implied forward rates in respective yield curves, which should not be considered to be precise indicators of actual future interest rates. Fair values for our debt obligations were based on quoted market prices or prices of similar instruments as of June 30, 2016.
 
Expected Maturity Date
 
Total
 
Fair Value
 
2016
 
2017
 
2018
 
2019
 
2020
 
Thereafter
 
Liabilities (in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt and capital lease obligations, including current portions (1):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed rate
$
1,832

 
$
6,774

 
$
101,272

 
$
7,838

 
$
343

 
$
585,680

 
$
703,739

 
$
741,764

Average interest rate
10.7
%
 
10.6
%
 
10.9
%
 
3.8
%
 
—

 
9.7
%
 
9.8
%
 
 
Variable rate
$
5,960

 
$
23,839

 
$
974,395

 
$
3,125

 
$
13,281

 
—

 
$
1,020,600

 
$
1,009,110

Average interest rate (2)
4.8
%
 
4.9
%
 
5.4
%
 
4.7
%
 
4.8
%
 
—

 
5.4
%
 
 
_________
(1)
Excludes unamortized debt issuance costs, premiums and discounts.
(2)
A 100 basis point change in average interest rate would impact annual interest expense by approximately $10.2 million.

Item 4.
Controls and Procedures
Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2016. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosures. Management recognizes that controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on an evaluation of our disclosure controls and procedures as of June 30, 2016, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the three months ended June 30, 2016, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

55

PART II. OTHER INFORMATION

Item 1.
Legal Proceedings
We are subject to various claims and legal actions resulting from our normal course of business. Some of these matters relate to personal injuries to patrons and damages to patrons' personal assets. We estimate guest claims expense and accrue for such liabilities based upon historical experience.

Item 1A.
Risk Factors
There has been no material change from the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2015.

Item 6.
Exhibits
The exhibits to this Quarterly Report on Form 10-Q are listed on the Exhibit Index, which appears elsewhere herein and is incorporated herein by reference.



56

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Mohegan Tribal Gaming Authority has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.

 
 
MOHEGAN TRIBAL GAMING AUTHORITY
 
 
 
 
Date:
August 15, 2016
By:
/S/    KEVIN P. BROWN         
 
 
 
Kevin P. Brown
Chairman and Member, Management Board
 
 
 
 
Date:
August 15, 2016
By:
      /S/  ROBERT J. SOPER        
 
 
 
Robert J. Soper
President and Chief Executive Officer,
Mohegan Tribal Gaming Authority
(Principal Executive Officer)
 
 
 
 
Date:
August 15, 2016
By:
 /S/    MARIO C. KONTOMERKOS        
 
 
 
Mario C. Kontomerkos
Chief Financial Officer,
Mohegan Tribal Gaming Authority
(Principal Financial and Accounting Officer)


57

EXHIBIT INDEX


Exhibit No.
  
Description
3.1
  
Constitution of the Mohegan Tribe of Indians of Connecticut, as amended (filed as Exhibit 3.1 to the Authority’s Registration Statement on Form S-4, filed with the SEC on January 27, 2014 (the “2014 Form S-4”) and incorporated by reference herein).
 
 
 
3.2
  
Ordinance No. 95-2 of the Tribe for Gaming on Tribal Lands, enacted on July 15, 1995 (filed as Exhibit 3.2 to the Authority’s Amendment No. 1 to its Registration Statement on Form S-1, filed with the SEC on February 29, 1996 and incorporated by reference herein).
 
 
 
3.3
  
Articles of Organization of Mohegan Basketball Club, LLC, dated as of January 27, 2003 (filed as Exhibit 3.3 to the Authority’s Registration Statement on Form S-4, filed with the SEC on September 23, 2003 (the “2003 Form S-4”) and incorporated by reference herein).
 
 
 
3.4
  
Operating Agreement of Mohegan Basketball Club, LLC, a Mohegan Tribe of Indians of Connecticut limited liability company, dated as of January 24, 2003 (filed as Exhibit 3.4 to the 2003 Form S-4 and incorporated by reference herein).
 
 
 
3.5
  
Certificate of Organization of Mohegan Commercial Ventures PA, LLC, dated as of January 5, 2005, as amended (filed as Exhibit 3.5 to the Authority’s Registration Statement on Form S-4, filed with the SEC on June 7, 2005 (the “2005 Form S-4”) and incorporated by reference herein).
 
 
 
3.6
  
Operating Agreement of Mohegan Commercial Ventures PA, LLC, a Commonwealth of Pennsylvania limited liability company, dated as of December 15, 2004 (filed as Exhibit 3.6 to the 2005 Form S-4 and incorporated by reference herein).
 
 
 
3.7
  
Certificate of Limited Partnership of Downs Racing, L.P., dated as of January 5, 2005, as amended (filed as Exhibit 3.7 to the 2005 Form S-4 and incorporated by reference herein).
 
 
 
3.8
  
Amended and Restated Limited Partnership Agreement of Downs Racing, L.P., dated as of January 25, 2005 (filed as Exhibit 3.8 to the 2005 Form S-4 and incorporated by reference herein).
 
 
 
3.9
  
Certificate of Limited Partnership of Backside, L.P., dated as of January 5, 2005, as amended (filed as Exhibit 3.9 to the 2005 Form S-4 and incorporated by reference herein).
 
 
 
3.10
  
Amended and Restated Limited Partnership Agreement of Backside, L.P., dated as of January 25, 2005 (filed as Exhibit 3.10 to the 2005 Form S-4 and incorporated by reference herein).
 
 
 
3.11
  
Certificate of Limited Partnership of Mill Creek Land, L.P., dated as of January 5, 2005, as amended (filed as Exhibit 3.11 to the 2005 Form S-4 and incorporated by reference herein).
 
 
 
3.12
  
Amended and Restated Limited Partnership Agreement of Mill Creek Land, L.P., dated as of January 25, 2005 (filed as Exhibit 3.12 to the 2005 Form S-4 and incorporated by reference herein).
 
 
 
3.13
  
Certificate of Limited Partnership of Northeast Concessions, L.P., dated as of January 5, 2005, as amended (filed as Exhibit 3.13 to the 2005 Form S-4 and incorporated by reference herein).
 
 
 
3.14
  
Amended and Restated Limited Partnership Agreement of Northeast Concessions, L.P., dated as of January 25, 2005 (filed as Exhibit 3.14 to the 2005 Form S-4 and incorporated by reference herein).
 
 
 
3.15
  
Articles of Organization of Mohegan Ventures-Northwest, LLC, dated as of July 23, 2004 (filed as Exhibit 3.15 to the Authority’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2006, filed with the SEC on August 10, 2006 (the “June 2006 Form 10-Q”) and incorporated by reference herein).
 
 
 
3.16
  
Operating Agreement of Mohegan Ventures-Northwest, LLC, a Mohegan Tribe of Indians of Connecticut limited liability company, dated as of July 23, 2004 (filed as Exhibit 3.16 to the June 2006 Form 10-Q and incorporated by reference herein).
 
 
 
3.17
 
Articles of Organization of Mohegan Golf, LLC, dated as of November 20, 2006 (filed as Exhibit 3.17 to the Authority’s Annual Report on Form 10-K for the fiscal year ended September 30, 2006, filed with the SEC on December 21, 2006 and incorporated by reference herein).
 
 
 
3.18
 
Certificate of Formation of Wisconsin Tribal Gaming, LLC, dated as of February 27, 2007 (filed as Exhibit 3.18 to the Authority’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2007, filed with the SEC on May 15, 2007 (the “March 2007 Form 10-Q”) and incorporated by reference herein).



58

Exhibit No.
  
Description
3.19
  
Articles of Organization of Mohegan Ventures Wisconsin, LLC, dated as of March 1, 2007 (filed as Exhibit 3.19 to the March 2007 Form 10-Q and incorporated by reference herein).
 
 
 
3.20
  
Certificate of Formation of MTGA Gaming, LLC, dated as of July 27, 2007 (filed as Exhibit 3.20 to the Authority’s Annual Report on Form 10-K for the fiscal year ended September 30, 2007, filed with the SEC on December 21, 2007 and incorporated by reference herein).
 
 
 
3.21
  
Articles of Amendment of Mohegan Golf, LLC, dated as of April 8, 2008 (filed as Exhibit 3.18 to the Authority’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2008, filed with the SEC on May 15, 2008 and incorporated by reference herein).
 
 
 
3.22
 
Operating Agreement of Mohegan Golf, LLC, dated as of April 8, 2008 (filed as Exhibit 3.22 to the 2014 Form S-4 and incorporated by reference herein).
 
 
 
3.23
 
Operating Agreement of Mohegan Ventures Wisconsin, LLC, dated as of March 1, 2007 (filed as Exhibit 3.23 to the 2014 Form S-4 and incorporated by reference herein).
 
 
 
3.24
 
Certificate of Amendment to Certificate of Formation of Wisconsin Tribal Gaming, LLC, dated as of May 20, 2009 (filed as Exhibit 3.24 to the 2014 Form S-4 and incorporated by reference herein).
 
 
 
3.25
 
Operating Agreement of Wisconsin Tribal Gaming, LLC, dated as of March 1, 2007 (filed as Exhibit 3.25 to the 2014 Form S-4 and incorporated by reference herein).
 
 
 
3.26
 
Certificate of Amendment to Certificate of Formation of MTGA Gaming, LLC, dated as of May 20, 2009 (filed as Exhibit 3.26 to the 2014 Form S-4 and incorporated by reference herein).
 
 
 
3.27
 
Operating Agreement of MTGA Gaming, LLC, dated as of August 1, 2007 (filed as Exhibit 3.27 to the 2014 Form S-4 and incorporated by reference herein).
 
 
 
4.1
 
Indenture, dated as of March 6, 2012, between the Mohegan Tribal Gaming Authority, The Mohegan Tribe of Indians of Connecticut, the Guarantors (as defined under the Indenture) and U.S. Bank National Association, as Trustee, relating to the 11% Senior Subordinated Notes Due 2018 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.42 to the Authority’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2012, filed with the SEC on May 14, 2012 (the “March 2012 Form 10-Q”) and incorporated by reference herein).
 
 
 
4.2
 
Form of Global 11% Senior Subordinated Notes Due 2018 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.43 to the March 2012 Form 10-Q and incorporated by reference herein).
 
 
 
4.3
 
Indenture, dated as of August 15, 2013, between the Mohegan Tribal Gaming Authority, The Mohegan Tribe of Indians of Connecticut, the Guarantors (as defined under the Indenture) and U.S. Bank National Association, as Trustee, relating to the 9 3/4% Senior Notes Due 2021 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.29 to the Authority’s Annual Report on Form 10-K for the fiscal year ended September 30, 2013, filed with the SEC on December 27, 2013 (the “2013 Form 10-K”) and incorporated by reference herein).
 
 
 
4.4
 
Form of Global 9 3/4% Senior Notes Due 2021 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.30 to the 2013 Form 10-K and incorporated by reference herein).
 
 
 
4.5
 
Registration Rights Agreement, dated August 11, 2015, between the Mohegan Tribal Gaming Authority, the subsidiary guarantors party thereto, Merrill Lynch, Pierce, Fenner & Smith Incorporated and RBS Securities Inc., as representatives of the several initial purchasers, relating to the $85,000,000 Principal Amount of 9 3/4% Senior Notes Due 2021 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.13 to the Authority’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2015, filed with the SEC on August 14, 2015 and incorporated by reference herein).
 
 
 
10.1
 
Second Amendment Agreement, dated as of May 26, 2016, among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut, Citizens Bank, N.A., as administrative agent, and the lenders party thereto (filed herewith).

 
 
 


59

Exhibit No.
  
Description
31.1
  
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer (filed herewith).
 
 
 
31.2
  
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer (filed herewith).
 
 
 
32.1
  
Section 1350 Certification of Chief Executive Officer (filed herewith).
 
 
 
32.2
  
Section 1350 Certification of Chief Financial Officer (filed herewith).
 
 
 
101.INS*
 
XBRL Instance Document (filed herewith).
 
 
 
101.SCH*
 
XBRL Taxonomy Extension Schema (filed herewith).
 
 
 
101.CAL*
 
XBRL Taxonomy Calculation Linkbase (filed herewith).
 
 
 
101.DEF*
 
XBRL Taxonomy Extension Definition Linkbase (filed herewith).
 
 
 
101.LAB*
 
XBRL Taxonomy Extension Label Linkbase (filed herewith).
 
 
 
101.PRE*
 
XBRL Taxonomy Extension Presentation Linkbase (filed herewith).
 
 
 
 _____________
*
Pursuant to Rule 406T of Regulation S-T, the XBRL related information in Exhibits 101 to this Quarterly Report on Form 10-Q shall not be deemed to be "filed" for purposes of Section 18 of the Exchange Act of 1934, as amended, or otherwise subject to liability under that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.

 

60

MOHEGAN TRIBAL GAMING AUTHORITY Reports

Also read