2012.6.30-10Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
_________________________________
FORM 10-Q
_____________________________________
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| |
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2012
OR
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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)
__________________________________________
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| | |
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):
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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
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| | Page Number |
PART I. | | |
Item 1. | | |
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Item 2. | | |
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Item 3. | | |
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Item 4. | | |
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PART II. | | |
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Item 1. | | |
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Item 1A. | | |
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Item 6. | | |
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Signatures. | | |
PART I. FINANCIAL INFORMATION
| |
Item 1. | Financial Statements |
MOHEGAN TRIBAL GAMING AUTHORITY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
|
| | | | | | | |
| June 30, 2012 | | September 30, 2011 |
ASSETS | | | |
Current assets: | | | |
Cash and cash equivalents | $ | 120,530 |
| | $ | 112,174 |
|
Restricted cash | 2,665 |
| | 2,002 |
|
Receivables, net | 26,269 |
| | 20,471 |
|
Inventories | 15,052 |
| | 14,028 |
|
Other current assets | 27,103 |
| | 27,227 |
|
Total current assets | 191,619 |
| | 175,902 |
|
Non-current assets: | | | |
Property and equipment, net | 1,501,616 |
| | 1,529,595 |
|
Goodwill | 39,459 |
| | 39,459 |
|
Other intangible assets, net | 406,030 |
| | 406,338 |
|
Other assets, net | 87,999 |
| | 51,902 |
|
Total assets | $ | 2,226,723 |
| | $ | 2,203,196 |
|
LIABILITIES AND CAPITAL | | | |
Current liabilities: | | | |
Current portion of long-term debt | $ | 19,795 |
| | $ | 800,250 |
|
Current portion of relinquishment liability | 74,083 |
| | 67,911 |
|
Due to Mohegan Tribe | 7,462 |
| | 10,850 |
|
Current portion of capital leases | 2,376 |
| | 707 |
|
Trade payables | 12,127 |
| | 17,452 |
|
Construction payables | 2,385 |
| | 8,892 |
|
Accrued interest payable | 46,614 |
| | 28,580 |
|
Other current liabilities | 143,040 |
| | 132,949 |
|
Total current liabilities | 307,882 |
| | 1,067,591 |
|
Non-current liabilities: | | | |
Long-term debt, net of current portion | 1,602,161 |
| | 819,316 |
|
Relinquishment liability, net of current portion | 75,671 |
| | 110,348 |
|
Due to Mohegan Tribe, net of current portion | 23,988 |
| | — |
|
Capital leases, net of current portion | 6,486 |
| | 4,635 |
|
Other long-term liabilities | 2,704 |
| | 2,582 |
|
Total liabilities | 2,018,892 |
| | 2,004,472 |
|
Commitments and Contingencies |
|
| |
|
|
Capital: | | | |
Retained earnings | 206,376 |
| | 196,403 |
|
Mohegan Tribal Gaming Authority capital | 206,376 |
| | 196,403 |
|
Non-controlling interests | 1,455 |
| | 2,321 |
|
Total capital | 207,831 |
| | 198,724 |
|
Total liabilities and capital | $ | 2,226,723 |
| | $ | 2,203,196 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
MOHEGAN TRIBAL GAMING AUTHORITY
CONDENSED CONSOLIDATED STATEMENTS OF 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, 2012 | | June 30, 2011 | | June 30, 2012 | | June 30, 2011 |
Revenues: | | | | | | | |
Gaming | $ | 307,093 |
| | $ | 328,317 |
| | $ | 940,753 |
| | $ | 952,418 |
|
Food and beverage | 22,700 |
| | 22,446 |
| | 68,627 |
| | 65,669 |
|
Hotel | 10,152 |
| | 9,134 |
| | 29,524 |
| | 26,788 |
|
Retail, entertainment and other | 29,946 |
| | 29,123 |
| | 82,458 |
| | 77,947 |
|
Gross revenues | 369,891 |
| | 389,020 |
| | 1,121,362 |
| | 1,122,822 |
|
Less-Promotional allowances | (25,455 | ) | | (27,641 | ) | | (73,896 | ) | | (77,894 | ) |
Net revenues | 344,436 |
| | 361,379 |
| | 1,047,466 |
| | 1,044,928 |
|
Operating costs and expenses: | | | | | | | |
Gaming | 193,019 |
| | 198,923 |
| | 582,017 |
| | 587,247 |
|
Food and beverage | 11,240 |
| | 10,421 |
| | 33,355 |
| | 30,861 |
|
Hotel | 3,658 |
| | 3,413 |
| | 10,703 |
| | 9,906 |
|
Retail, entertainment and other | 10,578 |
| | 9,081 |
| | 29,819 |
| | 23,247 |
|
Advertising, general and administrative | 48,730 |
| | 52,978 |
| | 147,186 |
| | 151,400 |
|
Corporate | 4,651 |
| | 3,856 |
| | 12,653 |
| | 12,163 |
|
Depreciation and amortization | 21,693 |
| | 22,621 |
| | 64,077 |
| | 68,451 |
|
Loss on disposition of assets | 31 |
| | — |
| | 320 |
| | — |
|
Severance | — |
| | (11 | ) | | — |
| | 244 |
|
Total operating costs and expenses | 293,600 |
| | 301,282 |
| | 880,130 |
| | 883,519 |
|
Income from operations | 50,836 |
| | 60,097 |
| | 167,336 |
| | 161,409 |
|
Other income (expense): | | | | | | | |
Accretion of discount to the relinquishment liability | (2,062 | ) | | (2,842 | ) | | (6,186 | ) | | (8,525 | ) |
Interest income | 1,842 |
| | 665 |
| | 3,559 |
| | 2,063 |
|
Interest expense | (41,581 | ) | | (29,378 | ) | | (103,047 | ) | | (88,837 | ) |
Loss on early exchange of debt | (17 | ) | | — |
| | (14,323 | ) | | — |
|
Other income (expense), net | 7 |
| | 118 |
| | (31 | ) | | (226 | ) |
Total other expense | (41,811 | ) | | (31,437 | ) | | (120,028 | ) | | (95,525 | ) |
Net income | 9,025 |
| | 28,660 |
| | 47,308 |
| | 65,884 |
|
Loss attributable to non-controlling interests | 336 |
| | 486 |
| | 1,147 |
| | 1,400 |
|
Net income attributable to Mohegan Tribal Gaming Authority | $ | 9,361 |
| | $ | 29,146 |
| | $ | 48,455 |
| | $ | 67,284 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
MOHEGAN TRIBAL GAMING AUTHORITY
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL
(in thousands)
(unaudited)
|
| | | | | | | | | | | |
| Total | | Mohegan Tribal Gaming Authority | | Non-controlling Interests |
Balance, March 31, 2012 | $ | 211,306 |
| | $ | 209,515 |
| | $ | 1,791 |
|
Contributions from members | — |
| | — |
| | — |
|
Net income (loss) | 9,025 |
| | 9,361 |
| | (336 | ) |
Distributions to Mohegan Tribe | (12,500 | ) | | (12,500 | ) | | — |
|
Balance, June 30, 2012 | $ | 207,831 |
| | $ | 206,376 |
| | $ | 1,455 |
|
| | | | | |
Balance, September 30, 2011 | $ | 198,724 |
| | $ | 196,403 |
| | $ | 2,321 |
|
Cumulative-effect of adoption of amendments to ASC 924 regarding jackpot liabilities | 1,968 |
| | 1,968 |
| | — |
|
Contributions from members | 281 |
| | — |
| | 281 |
|
Net income (loss) | 47,308 |
| | 48,455 |
| | (1,147 | ) |
Distributions to Mohegan Tribe | (40,450 | ) | | (40,450 | ) | | — |
|
Balance, June 30, 2012 | $ | 207,831 |
| | $ | 206,376 |
| | $ | 1,455 |
|
| | | | | |
Balance, March 31, 2011 | $ | 161,659 |
| | $ | 158,526 |
| | $ | 3,133 |
|
Contributions from members | 306 |
| | — |
| | 306 |
|
Net income (loss) | 28,660 |
| | 29,146 |
| | (486 | ) |
Distributions to Mohegan Tribe | (14,581 | ) | | (14,581 | ) | | — |
|
Balance, June 30, 2011 | $ | 176,044 |
| | $ | 173,091 |
| | $ | 2,953 |
|
| | | | | |
Balance, September 30, 2010 | $ | 132,044 |
| | $ | 129,476 |
| | $ | 2,568 |
|
Contributions from members | 1,785 |
| | — |
| | 1,785 |
|
Net income (loss) | 65,884 |
| | 67,284 |
| | (1,400 | ) |
Distributions to Mohegan Tribe | (23,669 | ) | | (23,669 | ) | | — |
|
Balance, June 30, 2011 | $ | 176,044 |
| | $ | 173,091 |
| | $ | 2,953 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
MOHEGAN TRIBAL GAMING AUTHORITY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
|
| | | | | | | |
| For the | | For the |
| Nine Months Ended | | Nine Months Ended |
| June 30, 2012 | | June 30, 2011 |
Cash flows provided by (used in) operating activities: | | | |
Net income | $ | 47,308 |
| | $ | 65,884 |
|
Adjustments to reconcile net income to net cash flows provided by operating activities: | | | |
Depreciation and amortization | 64,077 |
| | 68,451 |
|
Accretion of discount to the relinquishment liability | 6,186 |
| | 8,525 |
|
Cash paid for accretion of discount to the relinquishment liability | (5,935 | ) | | (8,119 | ) |
Loss on early exchange of debt | 14,323 |
| | — |
|
Amortization of debt issuance costs | 6,300 |
| | 5,365 |
|
Accretion of bond discount | 825 |
| | 488 |
|
Amortization of net deferred gain on settlement of derivative instruments | (231 | ) | | (351 | ) |
Provision for losses on receivables | 1,835 |
| | 2,602 |
|
Loss on disposition of assets | 320 |
| | 249 |
|
Changes in operating assets and liabilities: | | | |
Increase in receivables | (6,500 | ) | | (1,578 | ) |
Increase in inventories | (1,024 | ) | | (445 | ) |
Increase in other assets | (3,214 | ) | | (5,759 | ) |
(Decrease) increase in trade payables | (5,325 | ) | | 1,560 |
|
Increase in other liabilities | 25,346 |
| | 2,219 |
|
Net cash flows provided by operating activities | 144,291 |
| | 139,091 |
|
Cash flows provided by (used in) investing activities: | | | |
Purchases of property and equipment, net of decrease in construction payables of $6,507 and $5,688, respectively | (40,638 | ) | | (39,701 | ) |
Proceeds from Commonwealth of Pennsylvania’s facility improvement grant | 2,000 |
| | — |
|
Issuance of third-party loans and advances | (570 | ) | | (595 | ) |
Payments received on third-party loans | 113 |
| | 186 |
|
Decrease in restricted cash, net | 261 |
| | 163 |
|
Proceeds from asset sales | 134 |
| | 281 |
|
Net cash flows used in investing activities | (38,700 | ) | | (39,666 | ) |
Cash flows provided by (used in) financing activities: | | | |
Bank Credit Facility borrowings - revolving loan | 154,000 |
| | 270,000 |
|
Bank Credit Facility repayments - revolving loan | (289,000 | ) | | (318,000 | ) |
Bank Credit Facility repayments - term loan | (2,000 | ) | | — |
|
Term Loan Facility borrowings, net of discount | 220,500 |
| | — |
|
Salishan-Mohegan Bank Credit Facility borrowings - revolving loan | — |
| | 250 |
|
Salishan-Mohegan Bank Credit Facility repayments - revolving loan | (15,250 | ) | | — |
|
Line of Credit borrowings | 225,215 |
| | 412,909 |
|
Line of Credit repayments | (225,215 | ) | | (411,442 | ) |
Borrowings from Mohegan Tribe | 20,600 |
| | 600 |
|
Payments on long-term debt | (66,454 | ) | | (1,000 | ) |
Principal portion of relinquishment liability payments | (28,756 | ) | | (26,354 | ) |
Distributions to Mohegan Tribe | (40,450 | ) | | (23,669 | ) |
Payments of financing fees | (50,178 | ) | | (2,161 | ) |
Payments on capital lease obligations | (528 | ) | | (515 | ) |
Non-controlling interest contributions | 281 |
| | 1,785 |
|
Net cash flows used in financing activities | (97,235 | ) | | (97,597 | ) |
Net increase in cash and cash equivalents | 8,356 |
| | 1,828 |
|
Cash and cash equivalents at beginning of period | 112,174 |
| | 63,897 |
|
Cash and cash equivalents at end of period | $ | 120,530 |
| | $ | 65,725 |
|
Supplemental disclosures: | | | |
Cash paid during the period for interest | $ | 78,119 |
| | $ | 82,377 |
|
Capital lease | $ | 4,048 |
| | $ | — |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 1—ORGANIZATION:
The Mohegan Tribe of Indians of Connecticut (the “Mohegan Tribe” or the “Tribe”) established the Mohegan Tribal Gaming Authority (the “Authority”) in July 1995 with the exclusive authority to conduct and regulate gaming activities for the Tribe on Tribal lands and the non-exclusive authority to conduct such activities elsewhere. The Tribe is a federally-recognized Indian tribe with an approximately 544-acre reservation situated in Southeastern Connecticut, adjacent to Uncasville, Connecticut. Under the Indian Gaming Regulatory Act of 1988 (“IGRA”), federally-recognized Indian tribes are permitted to conduct full-scale casino gaming operations on tribal land, subject to, among other things, the negotiation of a compact with the affected state. The Tribe and the State of Connecticut entered into a compact (the “Mohegan Compact”), which was approved by the United States Secretary of the Interior. The Authority is primarily engaged in the ownership, operation and development of gaming facilities. In October 1996, the Authority opened Mohegan Sun, a gaming and entertainment complex situated on a 185-acre site on the Tribe's reservation. The Authority is governed by a nine-member Management Board, whose members also comprise the Mohegan Tribal Council, the governing body of the Tribe. Any change in the composition of the Mohegan Tribal Council results in a corresponding change in the Authority's Management Board.
As of June 30, 2012, the following subsidiaries were wholly-owned by the Authority: Mohegan Basketball Club, LLC (“MBC”), Mohegan Golf, LLC (“Mohegan Golf”), Mohegan Commercial Ventures-PA, LLC (“MCV-PA”), Mohegan Ventures-Northwest, LLC (“Mohegan Ventures-NW”), Mohegan Ventures Wisconsin, LLC (“MVW”), MTGA Gaming, LLC (“MTGA Gaming”) and Downs Lodging, LLC ("Downs Lodging"). 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 Country Club at Pautipaug golf course in Southeastern Connecticut (“Mohegan Sun Country Club”). Downs Lodging, an unrestricted subsidiary of the Authority, was formed to develop, finance and build Project Sunlight, a hotel and convention center to be located at Mohegan Sun at Pocono Downs. Refer to Note 9 for more information on Downs Lodging and Project Sunlight.
MCV-PA holds a 0.01% general partnership interest in each of Downs Racing, L.P., Backside, L.P., Mill Creek Land, L.P. and Northeast Concessions, L.P., while the Authority holds the remaining 99.99% limited partnership interest in each entity. Downs Racing, L.P. (“Downs Racing”) owns and operates Mohegan Sun at Pocono Downs, a gaming and entertainment facility situated on a 400-acre site in Plains Township, Pennsylvania, and several off-track wagering facilities located elsewhere in Pennsylvania (collectively, the “Pennsylvania Entities”). The Authority views Mohegan Sun and the Pennsylvania Entities as two separate operating segments.
Mohegan Ventures-NW and the Tribe hold 49.15% and 7.85% membership interests in Salishan-Mohegan, LLC (“Salishan-Mohegan”), respectively, which was formed with an unrelated third-party to participate in the development and management of a proposed casino to be owned by the federally-recognized Cowlitz Indian Tribe of Washington (the “Cowlitz Tribe”) and to be located in Clark County, Washington (the “Cowlitz Project”).
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 and the Tribe hold 49% and 51% membership interests in Mohegan Gaming & Hospitality, LLC (“MG&H”), respectively. MG&H holds a 100% membership interest in Mohegan Resorts, LLC (“Mohegan Resorts”). Mohegan Resorts holds a 100% membership interest in Mohegan Resorts Mass, LLC, which was formed to pursue potential gaming opportunities in the Commonwealth of Massachusetts. Mohegan Resorts also holds 100% membership interests in Mohegan Resorts New York, LLC and Mohegan Gaming New York, LLC (collectively, the “Mohegan New York Entities”). The Mohegan New York Entities were formed to pursue potential gaming opportunities in the state of New York.
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
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)
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. The Authority's operating results for the three months and nine months ended June 30, 2012 are not necessarily indicative of results for the fiscal year ending September 30, 2012.
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, 2011.
The Authority's operating results for the three months and nine months ended June 30, 2012 reflect adjustments to increase interest income by $1.1 million and reserves for doubtful collection of long-term receivables by $326,000 relating to unrecorded interest income and the related receivables and reserves in connection with reimbursable costs and expenses advanced by Salishan-Mohegan on behalf of the Cowlitz Tribe for the Cowlitz Project that were not recorded during fiscal 2007, 2008, 2009, 2010, 2011 and 2012, and interim periods within those fiscal years. Because amounts involved were not material to the Authority’s financial statements in any individual prior period, and the cumulative amount is not material to estimated operating results for the fiscal year ending September 30, 2012, the Authority recorded the cumulative effect of correcting these items during the three months ended June 30, 2012.
During the three months ended June 30, 2011, the Authority recorded an adjustment of $3.7 million to reduce cash and cash equivalents and slot revenues that were incorrectly recorded during fiscal 2005, 2006 and 2007, and interim periods within those fiscal years. Because amounts involved were not material to the Authority’s financial statements in any individual prior period, and the cumulative amount was not material to operating results for the fiscal year ending September 30, 2011, the Authority recorded the cumulative effect of correcting these items during the three months ended June 30, 2011.
Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of the Authority and its majority and wholly-owned subsidiaries and entities. In accordance with authoritative guidance issued by the Financial Accounting Standards Board (the “FASB”) pertaining to consolidation of variable interest entities, the accounts of Salishan-Mohegan are consolidated into the accounts of Mohegan Ventures-NW, and the accounts of MG&H, Mohegan Resorts and its subsidiaries are consolidated into the accounts of MTGA Gaming, as Mohegan Ventures-NW and MTGA Gaming are deemed to be the primary beneficiaries. In consolidation, all intercompany balances and transactions were eliminated.
Fair Value of Financial Instruments
The fair value amounts presented below are reported to satisfy disclosure requirements pursuant to authoritative guidance issued by the FASB pertaining to disclosures about fair values of financial instruments and are not necessarily indicative of amounts that the Authority could realize in a current market transaction.
The Authority applies the following fair value hierarchy, which prioritizes the inputs utilized to measure fair value into three levels:
| |
• | Level 1-Quoted prices for identical assets or liabilities in active markets; |
| |
• | Level 2-Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets or valuations based on models where the significant inputs are observable or can be corroborated by observable market data; and |
| |
• | Level 3-Valuations based on models where the significant inputs are unobservable. The unobservable inputs reflect the Authority's estimates or assumptions that market participants would utilize in pricing such assets or liabilities. |
The Authority's assessment of the significance of a particular input requires judgment and may affect the valuation of financial assets and liabilities and their placement within the fair value hierarchy.
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)
The carrying amount of cash and cash equivalents, receivables, trade payables and promissory notes approximates fair value. The estimated fair value of the Authority's financing facilities and notes were as follows (in thousands):
|
| | | | | | | |
| June 30, 2012 |
| Carrying Value | | Fair Value |
Bank Credit Facility | $ | 398,000 |
| | $ | 376,110 |
|
Term Loan Facility | $ | 220,782 |
| | $ | 225,563 |
|
2009 11 1/2% Second Lien Senior Secured Notes | $ | 194 |
| | $ | 206 |
|
2012 11 1/2% Second Lien Senior Secured Notes | $ | 194,024 |
| | $ | 205,794 |
|
2012 10 1/2% Third Lien Senior Secured Notes | $ | 417,771 |
| | $ | 363,461 |
|
2005 6 1/8% Senior Unsecured Notes | $ | 15,775 |
| | $ | 14,750 |
|
2004 7 1/8% Senior Subordinated Notes | $ | 21,156 |
| | $ | 16,396 |
|
2005 6 7/8% Senior Subordinated Notes | $ | 9,654 |
| | $ | 7,144 |
|
2012 11 % Senior Subordinated Notes | $ | 344,190 |
| | $ | 228,026 |
|
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, 2012.
Long-Term Receivables
Long-term receivables consist primarily of receivables from affiliates and tenants. The following table presents a reconciliation of long-term receivables and the related reserves for doubtful collection of these long-term receivables (in thousands):
|
| | | | | | | | | | | |
| Long-Term Receivables |
| Affiliates (1) | | Tenants | | Total |
Balance, March 31, 2012 | $ | 48,551 |
| | $ | 1,207 |
| | $ | 49,758 |
|
Additions: | | | | | |
Issuance of affiliate advances and tenant loans (2) | 2,132 |
| | — |
| | 2,132 |
|
Deductions: | | | | | |
Payments received | — |
| | (35 | ) | | (35 | ) |
Balance, June 30, 2012 | $ | 50,683 |
| | $ | 1,172 |
| | $ | 51,855 |
|
| | | | | |
Balance, September 30, 2011 | $ | 46,561 |
| | $ | 1,285 |
| | $ | 47,846 |
|
Additions: | | | | | |
Issuance of affiliate advances and tenant loans (2) | 4,122 |
| | — |
| | 4,122 |
|
Deductions: | | | | | |
Payments received | — |
| | (113 | ) | | (113 | ) |
Balance, June 30, 2012 | $ | 50,683 |
| | $ | 1,172 |
| | $ | 51,855 |
|
__________ | |
(1) | Includes interest receivable of $20.1 million, $22.0 million and $18.4 million as of March 31, 2012, June 30, 2012 and September 30, 2011, respectively. The WTG receivables no longer accrue interest pursuant to a release and reimbursement agreement entered into in September 2010. |
| |
(2) | Includes adjustment to increase long-term receivables by $1.1 million, which related to prior periods. |
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)
|
| | | | | | | | | | | |
| Reserves for Doubtful Collection of Long-Term Receivables |
| Affiliates | | Tenants | | Total |
Balance, March 31, 2012 | $ | 20,714 |
| | $ | 73 |
| | $ | 20,787 |
|
Additions: | | | | | |
Charges to bad debt expense (1) | 627 |
| | — |
| | 627 |
|
Deductions: | | | | | |
Adjustments | — |
| | (2 | ) | | (2 | ) |
Balance, June 30, 2012 | $ | 21,341 |
| | $ | 71 |
| | $ | 21,412 |
|
| | | | | |
Balance, September 30, 2011 | $ | 20,201 |
| | $ | 78 |
| | $ | 20,279 |
|
Additions: | | | | | |
Charges to bad debt expense (1) | 1,140 |
| | — |
| | 1,140 |
|
Deductions: | | | | | |
Adjustments | — |
| | (7 | ) | | (7 | ) |
Balance, June 30, 2012 | $ | 21,341 |
| | $ | 71 |
| | $ | 21,412 |
|
__________
| |
(1) | Includes adjustment to increase reserves for doubtful collection of long-term receivables by $326,000, which related to prior periods. |
New Accounting Standards
In July 2012, the FASB issued revised guidance pertaining to the accounting standard for indefinite-lived intangible assets. The revised guidance allows an entity the option to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired before performing the two-step indefinite-lived intangible asset impairment test. The revised guidance is effective for interim and annual periods beginning after September 15, 2012; however, early adoption is permitted. The Authority does not expect its adoption to impact its financial position, results of operations or cash flows.
In September 2011, the FASB issued revised guidance pertaining to the accounting standard for goodwill impairment tests. The revised guidance allows an entity the option to assess qualitative factors to determine whether the fair value of a reporting unit is less than its carrying value before performing the two-step goodwill impairment test. The revised guidance is effective for interim and annual periods beginning after December 15, 2011.The Authority adopted this guidance in its second quarter of fiscal 2012, and its adoption did not impact its financial position, results of operations or cash flows.
In May 2011, the FASB issued amended guidance seeking to improve the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and International Financial Reporting Standards (“IFRS”). While consistent with existing fair value measurement principles under GAAP, the amended guidance expands existing disclosure requirements for fair value measurements and eliminates unnecessary differences between GAAP and IFRS. The amended guidance is effective for interim and annual periods beginning after December 15, 2011. The Authority adopted this guidance in its second quarter of fiscal 2012, and its adoption did not impact its financial position, results of operations or cash flows.
In April 2010, the FASB issued guidance pertaining to accruals for casino jackpot liabilities. The new guidance clarifies that an entity should not accrue jackpot liabilities (or portions thereof) before a jackpot is won if the entity can avoid paying such jackpot. The new guidance specifies that jackpots should be accrued and charged to revenue when the entity has the obligation to pay such jackpot and applies to both base and progressive jackpots and requires a cumulative-effect adjustment to opening retained earnings in the period of adoption. The new guidance was effective for annual periods, and interim periods within those annual periods, beginning on or after December 15, 2010. The Authority adopted this guidance in its first quarter of fiscal 2012, and as such, recorded a cumulative-effect adjustment, which decreased other current liabilities and increased retained earnings by $2.0 million.
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, 2012 | | September 30, 2011 |
Bank Credit Facility, due March 2015 | $ | 398,000 |
| | $ | 535,000 |
|
Term Loan Facility, due March 2016, net of discount of $4,218 | 220,782 |
| | — |
|
2009 11 1/2% Second Lien Senior Secured Notes, due November 2017, net of discount of $6 and $6,325, respectively | 194 |
| | 193,675 |
|
2012 11 1/2% Second Lien Senior Secured Notes, due November 2017, net of discount of $5,776 | 194,024 |
| | — |
|
2012 10 1/2% Third Lien Senior Secured Notes, due December 2016 | 417,771 |
| | — |
|
2005 6 1/8% Senior Unsecured Notes, due February 2013 | 15,775 |
| | 250,000 |
|
2002 8% Senior Subordinated Notes, due April 2012 | — |
| | 250,000 |
|
2004 7 1/8% Senior Subordinated Notes, due August 2014 | 21,156 |
| | 225,000 |
|
2005 6 7/8% Senior Subordinated Notes, due February 2015 | 9,654 |
| | 150,000 |
|
2012 11 % Senior Subordinated Notes, due September 2018 | 344,190 |
| | — |
|
2009 Mohegan Tribe Promissory Note, due September 2014 | 10,000 |
| | 10,000 |
|
2012 Mohegan Tribe Minor's Trust Promissory Note, due March 2016 | 20,000 |
| | — |
|
Mohegan Tribe Credit Facility, due September 2013 | 1,450 |
| | 850 |
|
Salishan-Mohegan Bank Credit Facility, due March 2012 | — |
| | 15,250 |
|
Subtotal | 1,652,996 |
| | 1,629,775 |
|
Plus: net deferred gain on derivative instruments sold | 410 |
| | 641 |
|
Long-term debt, excluding capital leases | 1,653,406 |
| | 1,630,416 |
|
Less: current portion of long-term debt | (27,257 | ) | | (811,100 | ) |
Long-term debt, net of current portion | $ | 1,626,149 |
| | $ | 819,316 |
|
On March 6, 2012, the Authority completed a comprehensive refinancing of its outstanding indebtedness, including the consummation of private exchange offers and consent solicitations with respect to its outstanding notes, an amendment and restatement of its bank credit facility and the execution and funding of a term loan facility (all further discussed below). Consummation of the exchange offers resulted in the issuance of approximately $961.8 million in aggregate principal amount of new notes in exchange for an equivalent principal amount of tendered and accepted old notes. The Authority incurred approximately $58.3 million in costs in connection with these refinancing transactions, consisting primarily of consulting, legal and consent fees. In accordance with authoritative guidance issued by the FASB pertaining to debt refinancing, these refinancing transactions were each considered a debt modification and approximately $14.3 million in transaction costs were written-off and recorded as a loss on early exchange of debt in the related accompanying condensed consolidated statements of income. The remaining $44.0 million in transaction costs were capitalized and included in other assets, net, in the related accompanying condensed consolidated balance sheet and will be amortized over the terms of the related debt.
Bank Credit Facilities
First Lien, First Out Credit Facility
On March 6, 2012, the Authority entered into a Fourth Amended and Restated Bank Credit Facility providing for a $400.0 million term loan and a revolving loan with letter of credit and borrowing capacity of up to $75.0 million from a syndicate of financial institutions and commercial banks, with Bank of America, N.A. serving as Administrative Agent (the "Bank Credit Facility"). Principal outstanding on the term loan under the Bank Credit Facility is to be repaid at a rate of $1.0 million per quarter. The Bank Credit Facility matures on March 31, 2015, upon which date all outstanding balances are payable in full. As of June 30, 2012, there were $398.0 million in term loans and no revolving loans outstanding under the Bank Credit Facility. As of June 30, 2012, letters of credit issued under the Bank Credit Facility totaled $2.3 million, of which no amount was drawn. Inclusive of letters of credit, which reduce borrowing availability under the Bank Credit Facility, and after taking into account restrictive financial covenant requirements, the Authority had approximately $72.7 million of borrowing capacity under the Bank Credit Facility as of June 30, 2012.
Borrowings under the Bank Credit Facility incur interest as follows: (i) for base rate revolving loans, base rate plus an applicable margin based on a leverage-based pricing grid between 2.25% and 3.25%; (ii) for Eurodollar rate revolving loans, the
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)
applicable LIBOR rate plus an applicable margin based on a leverage-based pricing grid between 3.50% and 4.50%; (iii) for base rate term loans, base rate plus an applicable margin equal to 3.25%; and (iv) for Eurodollar rate term loans, the applicable LIBOR rate plus 4.50%. For Eurodollar rate term loans, LIBOR is subject to a 1.0% floor. There also is a fee of between 0.25% and 0.50%, based on a leverage-based pricing grid, charged on unused revolving commitments. Interest on Eurodollar rate loans is payable at the end of each applicable interest period for periods of three months or less and for loans of more than three months, each March, June, September or December that occurs after the beginning of such interest period. Interest on base rate advances is payable quarterly in arrears. As of June 30, 2012, the $398.0 million term loan outstanding was based on the Eurodollar rate floor of 1.0% plus an applicable margin of 4.50%. The applicable margin for commitment fees was 0.50% as of June 30, 2012. As of June 30, 2012 and September 30, 2011, accrued interest, including commitment fees, on the Bank Credit Facility was $7.0 million and $1.0 million, respectively.
The Authority's obligations under the Bank Credit Facility are fully and unconditionally guaranteed, jointly and severally, by the Pennsylvania Entities, MBC, Mohegan Golf, MCV-PA, Mohegan Ventures-NW, MVW, WTG and MTGA Gaming (the “Guarantors”). The Bank Credit Facility is 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 at Pocono Downs 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 Bank Credit Facility as they and future guarantor subsidiaries acquire them. The liens and security interests granted by the Grantors as security for the Authority's obligations under the Bank Credit Facility are senior in priority to the liens on the same collateral securing the Term Loan Facility (as defined below) and the 2009 Second Lien Notes, 2012 Second Lien Notes and 2012 Third Lien Notes (each as defined below and, collectively, the “Secured Notes”). The collateral securing the Bank Credit Facility constitutes substantially all of the Grantors' property and assets that secure the Term Loan Facility and the Secured Notes, but excludes certain excluded assets as defined in the Bank Credit Facility.
The Bank Credit Facility contains negative covenants applicable to the Authority and the Guarantors, including negative 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 Bank Credit Facility includes financial maintenance covenants pertaining to total leverage, senior leverage and minimum fixed charge coverage.
As of June 30, 2012, the Authority and the Tribe were in compliance with all respective covenant requirements under the Bank Credit Facility.
First Lien, Second Out Term Loan Facility
On March 6, 2012, the Authority entered into a loan agreement providing for a $225.0 million first lien, second out term loan with Wells Fargo Gaming Capital, LLC serving as Administrative Agent (the "Term Loan Facility"). The Term Loan Facility was issued at a price of 98.0% of par, for an initial yield of approximately 9.6% per annum. The Term Loan Facility has no mandatory amortization and is payable in full on March 31, 2016. The net proceeds from the Term Loan Facility were used to refinance the Authority's existing indebtedness, permanently reduce commitments under the Bank Credit Facility and pay accrued interest, fees and expenses in connection with the Authority's refinancing transactions consummated on March 6, 2012.
Loans under the Term Loan Facility incur interest as follows: (i) for base rate loans, base rate plus 6.50% per annum and (ii) for Eurodollar rate loans, LIBOR plus 7.50% per annum. In all cases, LIBOR is subject to a 1.50% floor. Interest on Eurodollar rate loans is payable at the end of each applicable interest period or every quarter in arrears, if an interest period exceeds three months. Interest on base rate loans is payable quarterly in arrears. As of June 30, 2012, the Authority had a $225.0 million Eurodollar rate loan outstanding, which was based on the Eurodollar rate floor of 1.50% plus an applicable margin of 7.50%. As of June 30, 2012, accrued interest on the Term Loan Facility was $1.1 million.
The Term Loan Facility is fully and unconditionally guaranteed, jointly and severally, by each of the Guarantors. The liens and security interests granted by the Grantors as security for the Authority's obligations under the Term Loan Facility are senior in priority to the liens on the same collateral securing any of the Secured Notes. The collateral securing the Term Loan Facility constitutes substantially all of the Grantors' property and assets that secure the Bank Credit Facility and the Secured Notes, but excludes certain excluded assets as defined in the Term Loan Facility.
The Term Loan Facility contains negative covenants that are substantially the same as the negative covenants contained in the Bank Credit Facility. The Term Loan Facility also contains financial maintenance covenants that are substantially the same as those in the Bank Credit Facility and also includes a separate first lien leverage ratio covenant.
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)
As of June 30, 2012, the Authority and the Tribe were in compliance with all respective covenant requirements under the Term Loan Facility.
Senior Secured Notes
2009 11 1/2% Second Lien Senior Secured Notes
In October 2009, the Authority issued $200.0 million Second Lien Senior Secured Notes with fixed interest payable at a rate of 11.50% per annum (the “2009 Second Lien Notes”). The 2009 Second Lien Notes were issued at a price of 96.234% of par, to yield an effective interest rate of 12.25% per annum. The 2009 Second Lien Notes mature on November 1, 2017. The first call date for the 2009 Second Lien Notes is November 1, 2013. Interest on the 2009 Second Lien Notes is payable semi-annually on May 1st and November 1st.
On March 6, 2012, the Authority completed a private exchange offer and consent solicitation for any or all of its outstanding 2009 Second Lien Notes. As part of the exchange offer, the Authority solicited and received consents from tendering holders to certain amendments to the indentures governing the 2009 Second Lien Notes, which eliminated certain restrictive covenants under the notes and related indenture. The aggregate principal amount of 2009 Second Lien Notes tendered and exchanged was $199.8 million. An aggregate principal amount of $200,000 of 2009 Second Lien Notes remains outstanding as of June 30, 2012. As of June 30, 2012 and September 30, 2011, accrued interest on the 2009 Second Lien Notes was $4,000 and $9.6 million, respectively.
The 2009 Second Lien Notes are collateralized by a second priority lien on substantially all of the Grantors' and future guarantor subsidiaries' properties and assets, and are effectively subordinated to all of the Authority's and its existing and future guarantor subsidiaries' first priority lien secured indebtedness, including borrowings under the Bank Credit Facility and Term Loan Facility, to the extent of the value of the collateral securing such indebtedness. The 2009 Second Lien Notes are fully and unconditionally guaranteed, jointly and severally, by the Guarantors.
The 2009 Second Lien 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.
2012 11 ½% Second Lien Senior Secured Notes
On March 6, 2012, the Authority issued $199.8 million Second Lien Senior Secured Notes with fixed interest payable at a rate of 11.50% per annum (the “2012 Second Lien Notes”) in exchange for an equal amount of 2009 Second Lien Notes. The 2012 Second Lien Notes mature on November 1, 2017. The Authority may redeem the 2012 Second Lien Notes, in whole or in part, at any time prior to November 1, 2014, at a price equal to 100% of the principal amount plus a make-whole premium and accrued interest. On or after November 1, 2014, the Authority may redeem the 2012 Second Lien Notes, in whole or in part, at a premium decreasing ratably to zero, plus accrued interest. If a change of control of the Authority occurs, the Authority must offer to repurchase the 2012 Second Lien 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 Second Lien Notes at a price equal to 100% of the principal amount, plus accrued interest. Interest on the 2012 Second Lien Notes is payable semi-annually on May 1st and November 1st, commencing November 1, 2012. As of June 30, 2012, accrued interest on the 2012 Second Lien Notes was $7.3 million.
The 2012 Second Lien Notes and the related guarantees are secured by second lien security interests in substantially all of the Grantors property and assets. These liens are junior in priority to the liens on the same collateral securing the Authority's Bank Credit Facility and Term Loan Facility (and permitted replacements thereof) and to all other permitted prior liens, including liens securing certain hedging obligations. The collateral securing the 2012 Second Lien Notes constitutes substantially all of the Grantors' property and assets that secure the Bank Credit Facility and Term Loan Facility, the 2009 Second Lien Notes and 2012 Third Lien Notes, but excludes certain excluded assets as defined in the 2012 Second Lien Notes indenture. The 2012 Second Lien Notes are fully and unconditionally guaranteed, jointly and severally, by the Guarantors.
The 2012 Second Lien 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.
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)
2012 10 ½% Third Lien Senior Secured Notes
On March 6, 2012, the Authority issued approximately $417.7 million Third Lien Senior Secured Notes with fixed interest payable at a rate of 10.50% per annum (the “2012 Third Lien Notes”) in exchange for $234.2 million of 2005 Senior Unsecured Notes and $183.5 million of 2002 Senior Subordinated Notes. The 2012 Third Lien Notes mature on December 15, 2016. The Authority may redeem the 2012 Third Lien 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 Third Lien 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 Third Lien Notes at a price equal to 100% of the principal amount, plus accrued interest. Interest on the 2012 Third Lien Notes is payable semi-annually on June 15th and December 15th, commencing December 15, 2012. As of June 30, 2012, accrued interest on the 2012 Third Lien Notes was $14.0 million.
The 2012 Third Lien Notes and the related guarantees are secured by third lien security interests in substantially all of the Grantors' property and assets. These liens are junior in priority to the liens on the same collateral securing the Authority's Bank Credit Facility and Term Loan Facility, the 2009 Second Lien Notes and 2012 Second Lien Notes (and permitted replacements of each of the foregoing) and to all other permitted prior liens, including liens securing certain hedging obligations. The collateral securing the 2012 Third Lien Notes constitutes substantially all of the Grantors' property and assets that secure the Bank Credit Facility and Term Loan Facility, the 2009 Second Lien Notes and 2012 Second Lien Notes, but excludes certain excluded assets as defined in the 2012 Third Lien Notes indenture. The 2012 Third Lien Notes are fully and unconditionally guaranteed, jointly and severally, by the Guarantors.
The 2012 Third Lien 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.
Senior Unsecured Notes
2005 6 1/8% Senior Unsecured Notes
In February 2005, the Authority issued $250.0 million Senior Unsecured Notes with fixed interest payable at a rate of 6.125% per annum (the “2005 Senior Unsecured Notes”). The 2005 Senior Unsecured Notes mature on February 15, 2013. The 2005 Senior Unsecured Notes are callable at the Authority's option at par. Interest on the 2005 Senior Unsecured Notes is payable semi-annually on February 15th and August 15th.
On March 6, 2012, the Authority completed a private exchange offer and consent solicitation for any or all of its outstanding 2005 Senior Unsecured Notes. As part of the exchange offer, the Authority solicited and received consents from tendering holders to certain amendments to the indentures governing the 2005 Senior Unsecured Notes, which eliminated certain restrictive covenants under the notes and related indenture. The aggregate principal amount of 2005 Senior Unsecured Notes tendered and exchanged was $234.2 million. An aggregate principal amount of $15.8 million of the 2005 Senior Unsecured Notes remains outstanding as of June 30, 2012. As of June 30, 2012 and September 30, 2011, accrued interest on the 2005 Senior Unsecured Notes was $322,000 and $1.9 million, respectively.
The 2005 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 Bank Credit Facility, Term Loan Facility, 2009 Second Lien Notes, 2012 Second Lien Notes and 2012 Third Lien Notes, to the extent of the value of the collateral securing such indebtedness. The 2005 Senior Unsecured Notes are fully and unconditionally guaranteed, jointly and severally, by the Guarantors. Refer to Note 8 for condensed consolidating financial information of the Authority and its Guarantor and non-guarantor entities.
Senior Subordinated Notes
2002 8% Senior Subordinated Notes
In February 2002, the Authority issued $250.0 million Senior Subordinated Notes with fixed interest payable at a rate of 8.000% per annum (the “2002 Senior Subordinated Notes”). The 2002 Senior Subordinated Notes matured on April 1, 2012. Subsequent to the March 6, 2012 private exchange offer, $66.5 million 2002 Senior Subordinated Notes remained outstanding, which amount, including accrued interest, was repaid at maturity with cash on hand. As of September 30, 2011, accrued interest on the 2002 Senior Subordinated Notes was $10.0 million.
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)
2004 7 1/8% Senior Subordinated Notes
In August 2004, the Authority issued $225.0 million Senior Subordinated Notes with fixed interest payable at a rate of 7.125% per annum (the “2004 Senior Subordinated Notes”). The 2004 Senior Subordinated Notes mature on August 15, 2014. The 2004 Senior Subordinated Notes are callable at the Authority's option at par. Interest on the 2004 Senior Subordinated Notes is payable semi-annually on February 15th and August 15th.
On March 6, 2012, the Authority completed a private exchange offer and consent solicitation for any or all of its outstanding 2004 Senior Subordinated Notes. As part of the exchange offer, the Authority solicited and received consents from tendering holders to certain amendments to the indentures governing the 2004 Senior Subordinated Notes, which eliminated certain restrictive covenants under the notes and related indenture. The aggregate principal amount of 2004 Senior Subordinated Notes tendered and exchanged was $203.8 million. An aggregate principal amount of $21.2 million of the 2004 Senior Subordinated Notes remains outstanding as of June 30, 2012. As of June 30, 2012 and September 30, 2011, accrued interest on the 2004 Senior Subordinated Notes was $525,000 and $2.0 million, respectively.
2005 6 7/8% Senior Subordinated Notes
In February 2005, the Authority issued $150.0 million Senior Subordinated Notes with fixed interest payable at a rate of 6.875% per annum (the “2005 Senior Subordinated Notes”). The 2005 Senior Subordinated Notes mature on February 15, 2015. The 2005 Senior Subordinated Notes are callable at the Authority's option at par. Interest on the 2005 Senior Subordinated Notes is payable semi-annually on February 15th and August 15th.
On March 6, 2012, the Authority completed a private exchange offer and consent solicitation for any or all of its outstanding 2005 Senior Subordinated Notes. As part of the exchange offer, the Authority solicited and received consents from tendering holders to certain amendments to the indentures governing the 2005 Senior Subordinated Notes, which eliminated certain covenants under the notes and related indenture. The aggregate principal amount of 2005 Senior Subordinated Notes tendered and exchanged was $140.3 million. An aggregate principal amount of $9.7 million of the 2005 Senior Subordinated Notes remains outstanding as of June 30, 2012. As of June 30, 2012 and September 30, 2011, accrued interest on the 2005 Senior Subordinated Notes was $222,000 and $1.3 million, respectively.
2012 11% Senior Subordinated Notes
On March 6, 2012, the Authority issued $344.2 million Senior Subordinated Toggle Notes with fixed interest payable at a rate of 11% per annum (the “2012 Senior Subordinated Notes”) in exchange for $203.8 million of 2004 Senior Subordinated Notes and $140.3 million of 2005 Senior Subordinated Notes. The 2012 Senior Subordinated Notes mature on September 15, 2018. The Authority may redeem the 2012 Senior Subordinated Notes, in whole or in part, at any time, at a price equal to 100% of the principal amount plus accrued interest. If a change of control of the Authority occurs, the Authority must offer to repurchase the 2012 Senior Subordinated Notes at a price equal to 101% of the principal amount, plus accrued interest. In addition, if the Authority undertakes certain types of asset sales or suffers events of loss, and the Authority 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, commencing September 15, 2012. The initial interest payment on the 2012 Senior Subordinated Notes is payable entirely in cash. For any subsequent interest payment period through March 15, 2018, the Authority may, at its option, elect to pay interest on the 2012 Senior Subordinated Notes either entirely in cash or by paying up to 2% in 2012 Senior Subordinated Notes (“PIK Interest”). If the Authority elects to pay PIK Interest, such election will increase the principal amount of the 2012 Senior Subordinated Notes in an amount equal to the amount of PIK Interest for the applicable interest payment period to holders of 2012 Senior Subordinated Notes on the relevant record date. As of June 30, 2012, accrued interest on the 2012 Senior Subordinated Notes was $12.1 million.
The 2012 Senior Subordinated Notes and guarantees have not been and will not be registered under the Securities Act of 1933 or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements.
The Authority's senior subordinated notes are uncollateralized general obligations of the Authority, and are subordinated to borrowings under the Bank Credit Facility, Term Loan Facility, 2009 Second Lien Notes, 2012 Second Lien Notes, 2012 Third Lien Notes and 2005 Senior Unsecured Notes. The senior subordinated notes are fully and unconditionally guaranteed, jointly and severally, by the Guarantors. Refer to Note 8 for condensed consolidating financial information of the Authority and its
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)
Guarantor and non-guarantor entities.
The senior and senior subordinated note indentures contain certain non-financial and financial covenant requirements with which the Authority and the Tribe must comply. The non-financial covenant requirements include, among other things, reporting obligations, compliance with laws and regulations, maintenance of licenses and insurances and continued existence of the Authority. The financial covenant requirements include, among other things, subject to certain exceptions, limitations on the Authority's and the Guarantors' ability to incur additional indebtedness, pay dividends or distributions, make certain investments, create liens on assets, enter into transactions with affiliates, merge or consolidate with another company, transfer or sell assets or impair assets constituting collateral.
As of June 30, 2012, the Authority and the Tribe were in compliance with all respective covenant requirements under the senior and senior subordinated note indentures.
The Authority or its affiliates may, from time to time, seek to purchase or otherwise retire outstanding indebtedness for cash in open market purchases, privately negotiated transactions or otherwise. Any such transaction will depend on prevailing market conditions and the Authority's liquidity and covenant requirement restrictions, among other factors.
Line of Credit
As of June 30, 2012, the Authority had a $16.5 million revolving credit facility with Bank of America, N.A. (the “Line of Credit”). The Line of Credit was amended in March 2012 to, among other things, extend the maturity date to March 31, 2015. Pursuant to the provisions of the Bank Credit Facility, the Line of Credit may be replaced by an Autoborrow Loan governed by the terms of an Autoborrow Agreement described in the Bank Credit Facility. Under the Line of Credit, as amended, 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. Borrowings under the Line of Credit are uncollateralized obligations. As of June 30, 2012, no amount was drawn on the Line of Credit. The Line of Credit contains negative covenants and financial maintenance covenants that are substantially the same as the corresponding covenants contained in the Bank Credit Facility. As of June 30, 2012, the Authority was in compliance with all covenant requirements under the Line of Credit and had $16.5 million of borrowing capacity thereunder. As of June 30, 2012, there was no accrued interest on the Line of Credit. As of September 30, 2011, accrued interest on the Line of Credit was $7,000.
2009 Mohegan Tribe Promissory Note
In September 2009, the Tribe made a $10.0 million loan to Salishan-Mohegan (the “2009 Mohegan Tribe Promissory Note”). The 2009 Mohegan Tribe Promissory Note was amended in March 2012 to extend the maturity date to September 30, 2014. As amended, the 2009 Mohegan Tribe Promissory Note accrues interest at an annual rate of 10.0%. Accrued interest is payable quarterly in the amount of $1.2 million, commencing December 31, 2013 and continuing through June 31, 2014, with the balance of accrued and unpaid interest due at maturity. Principal outstanding under the 2009 Mohegan Tribe Promissory Note amortizes as follows: (i) $1.625 million per quarter, commencing December 31, 2012 and continuing through September 30, 2013 and (ii) $875,000 per quarter, commencing December 31, 2013. As of June 30, 2012 and September 30, 2011, accrued interest on the Mohegan Tribe Promissory Note was $3.7 million and $2.7 million, respectively.
2012 Mohegan Tribe Minor's Trust Promissory Note
In March 2012, Comerica Bank & Trust, N.A., Trustee f/b/o The Mohegan Tribe of Indians of Connecticut Minor's Trust, made a $20.0 million loan to Salishan-Mohegan (the “2012 Mohegan Tribe Minor's Trust Promissory Note”), the proceeds of which were used to repay, among other things, the Salishan-Mohegan Bank Credit Facility. The 2012 Mohegan Tribe Minor's Trust Promissory Note matures on March 31, 2016. The 2012 Mohegan Tribe Minor's Trust Promissory Note accrues interest at an annual rate of 10.0%. Accrued interest is payable quarterly, commencing June 30, 2012. Principal outstanding under the 2012 Mohegan Tribe Minor's Trust Promissory Note amortizes as follows: (i) $500,000 per quarter, commencing December 31, 2012 and continuing through September 30, 2014 and (ii) $1.5 million per quarter, commencing December 31, 2014 and continuing to maturity. As of June 30, 2012, accrued interest on the 2012 Mohegan Tribe Minor's Trust Promissory Note was $11,000.
Mohegan Tribe Credit Facility
In 2011, the Tribe provided Salishan-Mohegan with a $1.75 million revolving credit facility (the “Mohegan Tribe Credit Facility”). The Mohegan Tribe Credit Facility was amended in March 2012 to extend the maturity date to September 30, 2013
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)
and reduce the borrowing capacity to $1.45 million. The Mohegan Tribe Credit Facility accrues interest at an annual rate of 15.0% payable at maturity. As amended, principal outstanding under the Mohegan Tribe Credit Facility amortizes at a rate of $362,500 per quarter, commencing December 31, 2012. As of June 30, 2012, the Mohegan Tribe Credit Facility was fully drawn. As of June 30, 2012 and September 30, 2011, accrued interest on the Mohegan Tribe Credit Facility was $194,000 and $47,000, respectively.
Salishan-Mohegan Bank Credit Facility
Salishan-Mohegan previously had a $15.25 million revolving credit facility with Bank of America, N.A. (the “Salishan-Mohegan Bank Credit Facility”). The Salishan-Mohegan Bank Credit Facility, including accrued interest, matured in March 2012, at which time it was repaid with proceeds from the 2012 Mohegan Tribe Minor's Trust Promissory Note. As of September 30, 2011, accrued interest on the Salishan-Mohegan Bank Credit Facility was $19,000.
NOTE 4—RELATED PARTY TRANSACTIONS:
Distributions to the Tribe totaled $12.5 million and $14.6 million for the three months ended June 30, 2012 and 2011, respectively, and $40.5 million and $23.7 million for the nine months ended June 30, 2012 and 2011, 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 $6.8 million and $6.9 million for the three months ended June 30, 2012 and 2011, respectively, and $20.3 million and $20.6 million for the nine months ended June 30, 2012 and 2011, respectively.
The Authority purchases most of its utilities, including electricity, gas, water and waste water services, from an instrumentality of the Tribe, the Mohegan Tribal Utility Authority. The Authority incurred costs for such utilities totaling $4.2 million and $5.3 million for the three months ended June 30, 2012 and 2011, respectively, and $14.2 million and $16.3 million for the nine months ended June 30, 2012 and 2011, respectively.
The Authority incurred interest expense associated with the 2009 Mohegan Tribe Promissory Note totaling $281,000 and $374,000 for the three months ended June 30, 2012 and 2011, respectively, and $997,000 and $1.1 million for the nine months ended June 30, 2012 and 2011, respectively.
The Authority incurred interest expense associated with the 2012 Mohegan Tribe Minor's Trust Promissory Note totaling $497,000 and $508,000 for the three months and nine months ended June 30, 2012, respectively.
The Authority incurred interest expense associated with the Mohegan Tribe Credit Facility totaling $54,000 and $15,000 for the three months ended June 30, 2012 and 2011, respectively, and $147,000 and $18,000 for the nine months ended June 30, 2012 and 2011, respectively.
NOTE 5—COMMITMENTS AND CONTINGENCIES:
Slot Win and Free Promotional Slot Play Contributions
In May 1994, the Tribe and the State of Connecticut entered into a Memorandum of Understanding (“MOU”), which sets forth certain matters regarding implementation of the Mohegan Compact. The MOU stipulates that a portion of revenues from slot machines must be paid to the State of Connecticut (“Slot Win Contribution”). Slot Win Contribution payments are not required if the State of Connecticut legalizes any other gaming operation with slot machines, video facsimiles of games of chance or other commercial casino games within the State of Connecticut, except those consented to by the Tribe and the Mashantucket Pequot Tribe (the “MPT”). For each 12-month period commencing July 1, 1995, Slot Win Contribution payments shall be the lesser of: (1) 30% of gross revenues from slot machines, or (2) the greater of (a) 25% of gross revenues from slot machines or (b) $80.0 million.
In September 2009, the Authority entered into a settlement agreement with the State of Connecticut regarding contribution payments on the Authority's free promotional slot play program. Under the terms of the settlement agreement, effective July 1, 2009, the State of Connecticut agreed that no value shall be attributed to free promotional slot plays utilized by patrons at Mohegan Sun for purposes of calculating monthly contribution payments, provided that the aggregate amount of free promotional slot plays during any month does not exceed 5.5% of gross revenues from slot machines for such month. In the event free promotional slot plays granted by the Authority exceed 5.5% of monthly gross revenues from slot machines, 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%. Effective July 1, 2012, the threshold before contribution payments on free promotional slot plays are required was increased from 5.5% of gross revenues from slot machines to 11%.
The Authority reflected expenses associated with the combined Slot Win Contribution and free promotional slot play contribution totaling $43.6 million and $46.8 million for the three months ended June 30, 2012 and 2011, respectively, and $130.4
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)
million and $135.4 million for the nine months ended June 30, 2012 and 2011, respectively. As of June 30, 2012 and September 30, 2011, the combined outstanding Slot Win Contribution and free promotional slot play contribution totaled $14.6 million and $15.3 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 at Pocono Downs. This license permits Downs Racing to install and operate up to 3,000 slot machines at Mohegan Sun at Pocono Downs, expandable to up to a total of 5,000 slot machines upon request and approval of the PGCB.
The Pennsylvania Race Horse Development and Gaming Act stipulates that holders of Category One slot machine licenses must pay a portion of revenues from slot machines to the PGCB on a daily basis (“Pennsylvania Slot Machine Tax”), which includes local share assessments to be paid to the cities and municipalities hosting Mohegan Sun at Pocono Downs 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 $33.5 million and $32.4 million for the three months ended June 30, 2012 and 2011, respectively, and $100.8 million and $95.5 million for the nine months ended June 30, 2012 and 2011, respectively. As of June 30, 2012 and September 30, 2011, outstanding Pennsylvania Slot Machine Tax payments totaled $3.9 million and $4.8 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. On July 13, 2010, Downs Racing opened its table game and poker operations at Mohegan Sun at Pocono Downs. 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”). During the initial two years of operation, the Pennsylvania Table Game Tax is 14%, plus 2% in local share assessments. Following the initial two years of operation, the Pennsylvania Table Game Tax will be reduced to 12%, plus the 2% local share assessments. Downs Racing concluded its initial two years of table game and poker operations on July 13, 2012.
The Authority reflected expenses associated with the Pennsylvania Table Game Tax totaling $1.6 million and $1.7 million for the three months ended June 30, 2012 and 2011, respectively, and $5.2 million and $4.9 million for the nine months ended June 30, 2012 and 2011, respectively. As of June 30, 2012 and September 30, 2011, outstanding Pennsylvania Table Game Tax payments totaled $117,000 and $87,000, 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”) at a rate of 1.5% of gross revenues from slot machines and table games.
The Authority reflected expenses associated with the Pennsylvania Regulatory Fee totaling $1.2 million and $1.3 million for the three months ended June 30, 2012 and 2011, respectively, and $3.8 million and $3.7 million for the nine months ended June 30, 2012 and 2011, respectively. As of June 30, 2012 and September 30, 2011, outstanding Pennsylvania Regulatory Fee payments to the PGCB totaled $125,000 and $106,000, respectively.
Pennsylvania Gaming Control Board Loans
The PGCB was initially granted $36.1 million in loans to fund start-up costs for gaming in the Commonwealth of Pennsylvania, which are to be repaid by slot machine licensees (the "Initial Loans"). The PGCB was subsequently granted an additional $63.8 million in loans to fund ongoing gaming oversight costs, which also are to be repaid by slot machine licensees (the "Subsequent Loans"). Repayment of the Initial Loans will commence when all 14 authorized gaming facilities are opened in
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)
the Commonwealth of Pennsylvania. Currently, 11 of the 14 authorized gaming facilities have commenced operations. As of June 30, 2012, 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 $166,000 and $676,000 for the three months ended June 30, 2012 and 2011, respectively, and $504,000 and $676,000 for the nine months ended June 30, 2012 and 2011, respectively.
Horsemen’s Agreement
Downs Racing and the PHHA are parties to an agreement that governs all live harness racing and simulcasting and account wagering at the Pennsylvania Entities through December 31, 2014. As of June 30, 2012 and September 30, 2011, outstanding payments to the PHHA for purses earned by horsemen, but not yet paid, and other fees totaled $9.5 million and $9.2 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, which has a perpetual term, limits the maximum aggregate priority distribution payments in each calendar year to $14.0 million, as adjusted annually in accordance with a formula specified in the Priority Distribution Agreement to reflect the effects of inflation. Payments under the Priority Distribution Agreement: (1) do not reduce the Authority's obligations to reimburse the Tribe for governmental and administrative services provided by the Tribe or to make payments under any other agreements with the Tribe; (2) are limited obligations of the Authority and are payable only to the extent of the Authority's Net Cash Flow, as defined under the Priority Distribution Agreement; and (3) are not secured by a lien or encumbrance on any of the Authority's assets or properties.
The Authority reflected payments associated with the Priority Distribution Agreement totaling $4.7 million and $4.6 million for the three months ended June 30, 2012 and 2011, respectively, and $14.0 million and $13.7 million for the nine months ended June 30, 2012 and 2011, respectively.
Litigation
The Authority is a defendant in various litigation matters resulting from its normal course of business. In management's opinion, the aggregate liability, if any, arising from such litigations will not have a material impact on the Authority's financial position, results of operations or cash flows.
NOTE 6—RELINQUISHMENT AGREEMENT:
In February 1998, the Authority and Trading Cove Associates (“TCA”) entered into a relinquishment agreement (the “Relinquishment Agreement”). Effective January 1, 2000 (the “Relinquishment Date”), the Relinquishment Agreement superseded a then-existing management agreement with TCA. The Relinquishment Agreement provides, among other things, that the Authority make certain payments to TCA out of, and determined as a percentage of, Revenues, as defined under the Relinquishment Agreement, generated by Mohegan Sun over a 15-year period commencing on the Relinquishment Date. The payments (“Senior Relinquishment Payments” and “Junior Relinquishment Payments”) have separate schedules and priorities. Senior Relinquishment Payments commenced on April 25, 2000, 25 days following the end of the first three-month period after the Relinquishment Date, and continue at the end of each three-month period thereafter until January 25, 2015. Junior Relinquishment Payments commenced on July 25, 2000, 25 days following the end of the first six-month period after the Relinquishment Date, and continue at the end of each six-month period thereafter until January 25, 2015. Each Senior and Junior Relinquishment Payment is 2.5% of Revenues generated by Mohegan Sun over the immediate preceding three-month or six-month payment period, as the case may be. Revenues are defined under the Relinquishment Agreement as gross gaming revenues, other than Class II Gaming revenues, and all other revenues, as defined, including, without limitation, hotel revenues, room service revenues, food and beverage revenues, ticket revenues, fees or receipts from the convention/events center and all rental revenues or other receipts from lessees and concessionaires, but not the gross receipts of such lessees, licenses and concessionaires, derived directly or indirectly from the facilities, as defined. Revenues under the Relinquishment Agreement exclude revenues generated from certain expansion areas
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)
of Mohegan Sun, such as Casino of the Wind, as such areas do not constitute facilities as defined under the Relinquishment Agreement.
In the event of any bankruptcy, liquidation, reorganization or similar proceeding relating to the Authority, the Relinquishment Agreement provides that Senior and Junior Relinquishment Payments then due and owing are subordinated in right of payment to the Authority's senior secured indebtedness and capital lease obligations, and that Junior Relinquishment Payments then due and owing are further subordinated in right of payment to all of the Authority's other senior indebtedness. The Relinquishment Agreement also provides that all relinquishment payments are subordinated in right of payment to minimum priority distribution payments, which are required monthly payments made by the Authority to the Tribe under the Priority Distribution Agreement, to the extent then due. The Authority, in accordance with authoritative guidance issued by the FASB pertaining to the accounting for contingencies, recorded a $549.1 million relinquishment liability at September 30, 1998 based on the estimated present value of its obligations under the Relinquishment Agreement.
As of June 30, 2012 and September 30, 2011, the carrying amount of the relinquishment liability was $149.8 million and $178.3 million, respectively. The decrease in the relinquishment liability during the nine months ended June 30, 2012 was due to $34.7 million in relinquishment payments. This reduction in the liability was offset by $6.2 million representing the accretion of discount to the relinquishment liability.
Relinquishment payments consisted of the following (in millions):
|
| | | | | | | |
| For the Nine Months Ended |
| June 30, 2012 | | June 30, 2011 |
Principal | $ | 28.8 |
| | $ | 26.3 |
|
Accretion of discount | 5.9 |
| | 8.1 |
|
Total | $ | 34.7 |
| | $ | 34.4 |
|
The accretion of discount to the relinquishment liability reflects the accretion of the discount to the present value of the relinquishment liability for the impact of the time value of money. As of June 30, 2012 and September 30, 2011, relinquishment payments earned but unpaid were $19.6 million and $14.7 million, respectively.
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)
NOTE 7—SEGMENT REPORTING:
As of June 30, 2012, the Authority owns and operates, either directly or through wholly-owned subsidiaries, Mohegan Sun, the Connecticut Sun WNBA franchise, and the Mohegan Sun Country Club (collectively, the “Connecticut Entities”), and the Pennsylvania Entities. All of the Authority's revenues are derived from these operations. The Connecticut Sun WNBA franchise and the Mohegan Sun Country Club 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 Entities and the Pennsylvania Entities on a separate basis. The Authority, therefore, believes that it has two separate reportable segments: (1) Mohegan Sun, which includes the operations of the Connecticut Entities, and (2) Mohegan Sun at Pocono Downs, which includes the operations of the Pennsylvania Entities. The following tables provide financial information related to each segment (in thousands):
|
| | | | | | | | | | | | | | | |
| For the Three Months Ended | | For the Nine Months Ended |
| June 30, 2012 | | June 30, 2011 | | June 30, 2012 | | June 30, 2011 |
Net revenues: | | | | | | | |
Mohegan Sun | $ | 264,876 |
| | $ | 284,289 |
| | $ | 811,838 |
| | $ | 822,284 |
|
Mohegan Sun at Pocono Downs | 79,560 |
| | 77,090 |
| | 235,628 |
| | 222,644 |
|
Total | 344,436 |
| | 361,379 |
| | 1,047,466 |
| | 1,044,928 |
|
Income (loss) from operations: | | | | | | | |
Mohegan Sun | 44,801 |
| | 56,316 |
| | 148,424 |
| | 152,107 |
|
Mohegan Sun at Pocono Downs | 10,716 |
| | 7,677 |
| | 31,660 |
| | 21,590 |
|
Corporate | (4,681 | ) | | (3,896 | ) | | (12,748 | ) | | (12,288 | ) |
Total | 50,836 |
| | 60,097 |
| | 167,336 |
| | 161,409 |
|
Accretion of discount to the relinquishment liability | (2,062 | ) | | (2,842 | ) | | (6,186 | ) | | (8,525 | ) |
Interest income | 1,842 |
| | 665 |
| | 3,559 |
| | 2,063 |
|
Interest expense | (41,581 | ) | | (29,378 | ) | | (103,047 | ) | | (88,837 | ) |
Loss on early exchange of debt | (17 | ) | | — |
| | (14,323 | ) | | — |
|
Other income (expense), net | 7 |
| | 118 |
| | (31 | ) | | (226 | ) |
Net income | 9,025 |
| | 28,660 |
| | 47,308 |
| | 65,884 |
|
Loss attributable to non-controlling interests | 336 |
| | 486 |
| | 1,147 |
| | 1,400 |
|
Net income attributable to Mohegan Tribal Gaming Authority | $ | 9,361 |
| | $ | 29,146 |
| | $ | 48,455 |
| | $ | 67,284 |
|
|
| | | | | | | |
| For the Nine Months Ended |
| June 30, 2012 | | June 30, 2011 |
Capital expenditures incurred: | | | |
Mohegan Sun | $ | 29,967 |
| | $ | 29,889 |
|
Mohegan Sun at Pocono Downs | 3,558 |
| | 4,124 |
|
Corporate | 606 |
| | — |
|
Total | $ | 34,131 |
| | $ | 34,013 |
|
| | | |
| June 30, 2012 | | September 30, 2011 |
Total assets: | | | |
Mohegan Sun | $ | 1,504,708 |
| | $ | 1,505,210 |
|
Mohegan Sun at Pocono Downs | 576,612 |
| | 584,267 |
|
Corporate | 145,403 |
| | 113,719 |
|
Total | $ | 2,226,723 |
| | $ | 2,203,196 |
|
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)
NOTE 8—SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENT INFORMATION:
As of June 30, 2012, 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 Pennsylvania Entities, MBC, Mohegan Golf, MCV-PA, Mohegan Ventures-NW, MVW, WTG and MTGA Gaming. The Authority's 2001 83/8% Senior Subordinated Notes, which were repaid at maturity on July 1, 2011, were fully and unconditionally guaranteed by MBC. Separate financial statements and other disclosures concerning the Pennsylvania Entities, MBC, Mohegan Golf, MCV-PA, 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 entities as of June 30, 2012 and September 30, 2011 and for the three months and nine months ended June 30, 2012 and 2011 is as follows (in thousands):
CONDENSED CONSOLIDATING BALANCE SHEETS
|
| | | | | | | | | | | | | | | | | | | |
| June 30, 2012 |
| Authority | | Total Guarantor Subsidiaries (1) | | Total Non Guarantor Entities (2) | | Consolidating/ Eliminating Adjustments | | Consolidated |
ASSETS | | | | | | | | | |
Property and equipment, net | $ | 1,244,915 |
| | $ | 236,750 |
| | $ | 19,951 |
| | $ | — |
| | $ | 1,501,616 |
|
Intercompany receivables | 518,639 |
| | 10,541 |
| | — |
| | (529,180 | ) | | — |
|
Investment in subsidiaries | 56,512 |
| | 1,400 |
| | — |
| | (57,912 | ) | | — |
|
Other intangible assets, net | 120,650 |
| | 285,380 |
| | — |
| | — |
| | 406,030 |
|
Other assets, net | 215,053 |
| | 74,869 |
| | 29,155 |
| | — |
| | 319,077 |
|
Total assets | $ | 2,155,769 |
| | $ | 608,940 |
| | $ | 49,106 |
| | $ | (587,092 | ) | | $ | 2,226,723 |
|
LIABILITIES AND CAPITAL | | | | | | | | | |
Current liabilities | $ | 262,055 |
| | $ | 34,103 |
| | $ | 4,262 |
| | $ | — |
| | $ | 300,420 |
|
Due to Mohegan Tribe | — |
| | — |
| | 31,450 |
| | — |
| | 31,450 |
|
Long-term debt and capital leases, net of current portions | 1,608,647 |
| | — |
| | — |
| | — |
| | 1,608,647 |
|
Relinquishment liability, net of current portion | 75,671 |
| | — |
| | — |
| | — |
| | 75,671 |
|
Intercompany payables | — |
| | 518,639 |
| | 10,541 |
| | (529,180 | ) | | — |
|
Other long-term liabilities | 2,704 |
| | — |
| | — |
| | — |
| | 2,704 |
|
Total liabilities | 1,949,077 |
| | 552,742 |
| | 46,253 |
| | (529,180 | ) | | 2,018,892 |
|
Mohegan Tribal Gaming Authority capital | 206,692 |
| | 56,198 |
| | 2,853 |
| | (59,367 | ) | | 206,376 |
|
Non-controlling interests | — |
| | — |
| | — |
| | 1,455 |
| | 1,455 |
|
Total liabilities and capital | $ | 2,155,769 |
| | $ | 608,940 |
| | $ | 49,106 |
| | $ | (587,092 | ) | | $ | 2,226,723 |
|
___________(1) Includes the Pennsylvania Entities, MBC, Mohegan Golf, MCV-PA, Mohegan Ventures-NW, MVW, WTG and MTGA Gaming.
(2) Includes Salishan-Mohegan, MG&H and Mohegan Resorts and subsidiaries.
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)
|
| | | | | | | | | | | | | | | | | | | |
| September 30, 2011 |
| Authority | | Total Guarantor Subsidiaries (1) | | Total Non Guarantor Entities (2) | | Consolidating/ Eliminating Adjustments | | Consolidated |
ASSETS | | | | | | | | | |
Property and equipment, net | $ | 1,263,876 |
| | $ | 245,768 |
| | $ | 19,951 |
| | $ | — |
| | $ | 1,529,595 |
|
Intercompany receivables | 509,799 |
| | 12,909 |
| | — |
| | (522,708 | ) | | — |
|
Investment in subsidiaries | 77,028 |
| | 2,233 |
| | — |
| | (79,261 | ) | | — |
|
Other intangible assets, net | 120,737 |
| | 285,601 |
| | — |
| | — |
| | 406,338 |
|
Other assets, net | 168,178 |
| | 71,951 |
| | 27,134 |
| | — |
| | 267,263 |
|
Total assets | $ | 2,139,618 |
| | $ | 618,462 |
| | $ | 47,085 |
| | $ | (601,969 | ) | | $ | 2,203,196 |
|
LIABILITIES AND CAPITAL | | | | | | | | | |
Current liabilities | $ | 1,006,018 |
| | $ | 31,950 |
| | $ | 18,773 |
| | $ | — |
| | $ | 1,056,741 |
|
Due to Mohegan Tribe | — |
| | — |
| | 10,850 |
| | — |
| | 10,850 |
|
Long-term debt and capital leases, net of current portions | 823,951 |
| | — |
| | — |
| | — |
| | 823,951 |
|
Relinquishment liability, net of current portion | 110,348 |
| | — |
| | — |
| | — |
| | 110,348 |
|
Intercompany payables | — |
| | 509,799 |
| | 12,909 |
| | (522,708 | ) | | — |
|
Other long-term liabilities | 2,582 |
| | — |
| | — |
| | — |
| | 2,582 |
|
Total liabilities | 1,942,899 |
| | 541,749 |
| | 42,532 |
| | (522,708 | ) | | 2,004,472 |
|
Mohegan Tribal Gaming Authority capital | 196,719 |
| | 76,713 |
| | 4,553 |
| | (81,582 | ) | | 196,403 |
|
Non-controlling interests | — |
| | — |
| | — |
| | 2,321 |
| | 2,321 |
|
Total liabilities and capital | $ | 2,139,618 |
| | $ | 618,462 |
| | $ | 47,085 |
| | $ | (601,969 | ) | | $ | 2,203,196 |
|
___________ | |
(1) | Includes the Pennsylvania Entities, MBC, Mohegan Golf, MCV-PA, Mohegan Ventures-NW, MVW, WTG and MTGA Gaming. |
| |
(2) | Includes Salishan-Mohegan, MG&H and Mohegan Resorts and subsidiaries. |
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
|
| | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended June 30, 2012 |
| Authority | | Total Guarantor Subsidiaries (1) | | Total Non Guarantor Entities (2) | | Consolidating/ Eliminating Adjustments | | Consolidated |
Net revenues | $ | 263,090 |
| | $ | 82,271 |
| | $ | — |
| | $ | (925 | ) | | $ | 344,436 |
|
Operating costs and expenses: | | | | |
| |
| |
|
Gaming and other operations | 160,866 |
| | 58,554 |
| | — |
| | (925 | ) | | 218,495 |
|
Advertising, general and administrative | 43,189 |
| | 8,823 |
| | 1,369 |
| | — |
| | 53,381 |
|
Depreciation and amortization | 17,384 |
| | 4,309 |
| | — |
| | — |
| | 21,693 |
|
Loss on disposition of assets | 18 |
| | 13 |
| | — |
| | — |
| | 31 |
|
Total operating costs and expenses | 221,457 |
| | 71,699 |
| | 1,369 |
| | (925 | ) | | 293,600 |
|
Income (loss) from operations | 41,633 |
| | 10,572 |
| | (1,369 | ) | | — |
| | 50,836 |
|
Accretion of discount to the relinquishment liability | (2,062 | ) | | — |
| | — |
| | — |
| | (2,062 | ) |
Interest expense | (20,775 | ) | | (19,974 | ) | | (977 | ) | | 145 |
| | (41,581 | ) |
Loss on early exchange of debt | (17 | ) | | — |
| | — |
| | — |
| | (17 | ) |
Loss on interests in subsidiaries | (9,451 | ) | | (226 | ) | | — |
| | 9,677 |
| | — |
|
Other income, net | 33 |
| | 177 |
| | 1,784 |
| | (145 | ) | | 1,849 |
|
Net income (loss) | 9,361 |
| | (9,451 | ) | | (562 | ) | | 9,677 |
| | 9,025 |
|
Loss attributable to non-controlling interests | — |
| | — |
| | — |
| | 336 |
| | 336 |
|
Net income (loss) attributable to Mohegan Tribal Gaming Authority | $ | 9,361 |
| | $ | (9,451 | ) | | $ | (562 | ) | | $ | 10,013 |
| | $ | 9,361 |
|
___________ | |
(1) | Includes the Pennsylvania Entities, MBC, Mohegan Golf, MCV-PA, Mohegan Ventures-NW, MVW, WTG and MTGA Gaming. |
| |
(2) | Includes Salishan-Mohegan, MG&H and Mohegan Resorts and subsidiaries. |
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended June 30, 2011 |
| Authority | | MBC 100% Owned Guarantor Subsidiary | | Other 100% Owned Guarantor Subsidiaries (1) | | Total Guarantor Subsidiaries | | Total Non Guarantor Entities (2) | | Consolidating/ Eliminating Adjustments | | Consolidated |
Net revenues | $ | 283,576 |
| | $ | 1,263 |
| | $ | 77,090 |
| | $ | 78,353 |
| | $ | — |
| | $ | (550 | ) | | $ | 361,379 |
|
Operating costs and expenses: | | |
| |
| | | |
| |
| |
|
Gaming and other operations | 164,553 |
| | 895 |
| | 56,940 |
| | 57,835 |
| | — |
| | (550 | ) | | 221,838 |
|
Advertising, general and administrative | 47,996 |
| | 552 |
| | 7,444 |
| | 7,996 |
| | 842 |
| | — |
| | 56,834 |
|
Depreciation and amortization | 17,264 |
| | 47 |
| | 5,310 |
| | 5,357 |
| | — |
| | — |
| | 22,621 |
|
Severance | (11 | ) | | — |
| | — |
| | — |
| | — |
| | — |
| | (11 | ) |
Total operating costs and expenses | 229,802 |
| | 1,494 |
| | 69,694 |
| | 71,188 |
| | 842 |
| | (550 | ) | | 301,282 |
|
Income (loss) from operations | 53,774 |
| | (231 | ) | | 7,396 |
| | 7,165 |
| | (842 | ) | | — |
| | 60,097 |
|
Accretion of discount to the relinquishment liability | (2,842 | ) | | — |
| | — |
| | — |
| | — |
| | — |
| | (2,842 | ) |
Interest expense | (15,017 | ) | | — |
| | (13,805 | ) | | (13,805 | ) | | (722 | ) | | 166 |
| | (29,378 | ) |
Loss on interests in subsidiaries | (6,896 | ) | | — |
| | (462 | ) | | (462 | ) | | — |
| | 7,358 |
| | — |
|
Other income, net | 127 |
| | — |
| | 206 |
| | 206 |
| | 616 |
| | (166 | ) | | 783 |
|
Net income (loss) | 29,146 |
| | (231 | ) | | (6,665 | ) | | (6,896 | ) | | (948 | ) | | 7,358 |
| | 28,660 |
|
Loss attributable to non-controlling interests | — |
| | — |
| | — |
| | — |
| | — |
| | 486 |
| | 486 |
|
Net income (loss) attributable to Mohegan Tribal Gaming Authority | $ | 29,146 |
| | $ | (231 | ) | | $ | (6,665 | ) | | $ | (6,896 | ) | | $ | (948 | ) | | $ | 7,844 |
| | $ | 29,146 |
|
___________ | |
(1) | Includes the Pennsylvania Entities, Mohegan Golf, MCV-PA, Mohegan Ventures-NW, MVW, WTG and MTGA Gaming. |
| |
(2) | Includes Salishan-Mohegan, MG&H and Mohegan Resorts and subsidiaries. |
|
| | | | | | | | | | | | | | | | | | | |
| For the Nine Months Ended June 30, 2012 |
| Authority | | Total Guarantor Subsidiaries (1) | | Total Non Guarantor Entities (2) | | Consolidating/ Eliminating Adjustments | | Consolidated |
Net revenues | $ | 809,936 |
| | $ | 238,457 |
| | $ | — |
| | $ | (927 | ) | | $ | 1,047,466 |
|
Operating costs and expenses: | | | | |
| |
| |
|
Gaming and other operations | 485,354 |
| | 171,467 |
| | — |
| | (927 | ) | | 655,894 |
|
Advertising, general and administrative | 132,123 |
| | 24,761 |
| | 2,955 |
| | — |
| | 159,839 |
|
Depreciation and amortization | 51,335 |
| | 12,742 |
| | — |
| | — |
| | 64,077 |
|
Loss on disposition of assets | 36 |
| | 284 |
| | — |
| | — |
| | 320 |
|
Total operating costs and expenses | 668,848 |
| | 209,254 |
| | 2,955 |
| | (927 | ) | | 880,130 |
|
Income (loss) from operations | 141,088 |
| | 29,203 |
| | (2,955 | ) | | — |
| | 167,336 |
|
Accretion of discount to the relinquishment liability | (6,186 | ) | | — |
| | — |
| | — |
| | (6,186 | ) |
Interest expense | (51,767 | ) | | (49,379 | ) | | (2,480 | ) | | 579 |
| | (103,047 | ) |
Loss on early exchange of debt | (14,323 | ) | | — |
| | — |
| | — |
| | (14,323 | ) |
Loss on interests in subsidiaries | (20,640 | ) | | (1,103 | ) | | — |
| | 21,743 |
| | — |
|
Other income, net | 283 |
| | 639 |
| | 3,185 |
| | (579 | ) | | 3,528 |
|
Net income (loss) | 48,455 |
| | (20,640 | ) | | (2,250 | ) | | 21,743 |
| | 47,308 |
|
Loss attributable to non-controlling interests | — |
| | — |
| | — |
| | 1,147 |
| | 1,147 |
|
Net income (loss) attributable to Mohegan Tribal Gaming Authority | $ | 48,455 |
| | $ | (20,640 | ) | | $ | (2,250 | ) | | $ | 22,890 |
| | $ | 48,455 |
|
___________ | |
(1) | Includes the Pennsylvania Entities, MBC, Mohegan Golf, MCV-PA, Mohegan Ventures-NW, MVW, WTG and MTGA Gaming. |
| |
(2) | Includes Salishan-Mohegan, MG&H and Mohegan Resorts and subsidiaries. |
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Nine Months Ended June 30, 2011 |
| Authority | | MBC 100% Owned Guarantor Subsidiary | | Other 100% Owned Guarantor Subsidiaries(1) | | Total Guarantor Subsidiaries | | Total Non Guarantor Entities (2) | | Consolidating/ Eliminating Adjustments | | Consolidated |
Net revenues | $ | 821,562 |
| | $ | 1,275 |
| | $ | 222,644 |
| | $ | 223,919 |
| | $ | — |
| | $ | (553 | ) | | $ | 1,044,928 |
|
Operating costs and expenses: | | |
| |
| | | |
| |
| |
|
Gaming and other operations | 487,172 |
| | 1,616 |
| | 163,026 |
| | 164,642 |
| | — |
| | (553 | ) | | 651,261 |
|
Advertising, general and administrative | 137,387 |
| | 950 |
| | 22,639 |
| | 23,589 |
| | 2,587 |
| | — |
| | 163,563 |
|
Depreciation and amortization | 52,243 |
| | 142 |
| | 16,066 |
| | 16,208 |
| | — |
| | — |
| | 68,451 |
|
Severance | 244 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 244 |
|
Total operating costs and expenses | 677,046 |
| | 2,708 |
| | 201,731 |
| | 204,439 |
| | 2,587 |
| | (553 | ) | | 883,519 |
|
Income (loss) from operations | 144,516 |
| | (1,433 | ) | | 20,913 |
| | 19,480 |
| | (2,587 | ) | | — |
| | 161,409 |
|
Accretion of discount to the relinquishment liability | (8,525 | ) | | — |
| | — |
| | — |
| | — |
| | — |
| | (8,525 | ) |
Interest expense | (46,196 | ) | | (6 | ) | | (41,030 | ) | | (41,036 | ) | | (2,096 | ) | | 491 |
| | (88,837 | ) |
Loss on interests in subsidiaries | (22,358 | ) | | — |
| | (1,348 | ) | | (1,348 | ) | | — |
| | 23,706 |
| | — |
|
Other income (expense), net | (153 | ) | | — |
| | 546 |
| | 546 |
| | 1,935 |
| | (491 | ) | | 1,837 |
|
Net income (loss) | 67,284 |
| | (1,439 | ) | | (20,919 | ) | | (22,358 | ) | | (2,748 | ) | | 23,706 |
| | 65,884 |
|
Loss attributable to non-controlling interests | — |
| | — |
| | — |
| | — |
| | — |
| | 1,400 |
| | 1,400 |
|
Net income (loss) attributable to Mohegan Tribal Gaming Authority | $ | 67,284 |
| | $ | (1,439 | ) | | $ | (20,919 | ) | | $ | (22,358 | ) | | $ | (2,748 | ) | | $ | 25,106 |
| | $ | 67,284 |
|
___________ | |
(1) | Includes the Pennsylvania Entities, Mohegan Golf, MCV-PA, Mohegan Ventures-NW, MVW, WTG and MTGA Gaming. |
| |
(2) | Includes Salishan-Mohegan, MG&H and Mohegan Resorts and subsidiaries. |
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, 2012 |
| Authority | | Total Guarantor Subsidiaries (1) | | Total Non Guarantor Entities (2) | | Consolidating/ Eliminating Adjustments | | Consolidated |
Net cash flows provided by (used in) operating activities | $ | 103,561 |
| | $ | 43,100 |
| | $ | (2,370 | ) | | $ | — |
| | $ | 144,291 |
|
Cash flows provided by (used in) investing activities: | | | | | | | | | |
Purchases of property and equipment | (34,536 | ) | | (6,102 | ) | | — |
| | — |
| | (40,638 | ) |
Other cash flows provided by (used in) investing activities | 34,702 |
| | 5,182 |
| | (562 | ) | | (37,384 | ) | | 1,938 |
|
Net cash flows provided by (used in) investing activities | 166 |
| | (920 | ) | | (562 | ) | | (37,384 | ) | | (38,700 | ) |
Cash flows provided by (used in) financing activities: | | | | | | | | | |
Bank Credit Facility borrowings—revolving loan | 154,000 |
| | — |
| | — |
| | — |
| | 154,000 |
|
Bank Credit Facility repayments—revolving loan | (289,000 | ) | | — |
| | — |
| | — |
| | (289,000 | ) |
Bank Credit Facility repayments—term loan | (2,000 | ) | | — |
| | — |
| | — |
| | (2,000 | ) |
Term Loan Facility borrowings, net of discount | 220,500 |
| | — |
| | — |
| | — |
| | 220,500 |
|
Salishan-Mohegan Bank Credit Facility repayments—revolving loan | — |
| | — |
| | (15,250 | ) | | — |
| | (15,250 | ) |
Line of Credit borrowings | 225,215 |
| | — |
| | — |
| | — |
| | 225,215 |
|
Line of Credit repayments | (225,215 | ) | | — |
| | — |
| | — |
| | (225,215 | ) |
Borrowings from Mohegan Tribe | — |
| | — |
| | 20,600 |
| | — |
| | 20,600 |
|
Payments on long-term debt | (66,454 | ) | | — |
| | — |
| | — |
| | (66,454 | ) |
Principal portion of relinquishment liability payments | (28,756 | ) | | — |
| | — |
| | — |
| | (28,756 | ) |
Distributions to Mohegan Tribe | (40,450 | ) | | — |
| | — |
| | — |
| | (40,450 | ) |
Payments of financing fees | (50,178 | ) | | — |
| | — |
| | — |
| | (50,178 | ) |
Other cash flows provided by (used in) financing activities | 5,495 |
| | (40,754 | ) | | (2,372 | ) | | 37,384 |
| | (247 | ) |
Net cash flows provided by (used in) financing activities | (96,843 | ) | | (40,754 | ) | | 2,978 |
| | 37,384 |
| | (97,235 | ) |
Net increase in cash and cash equivalents | 6,884 |
| | 1,426 |
| | 46 |
| | — |
| | 8,356 |
|
Cash and cash equivalents at beginning of period | 89,018 |
| | 22,931 |
| | 225 |
| | — |
| | 112,174 |
|
Cash and cash equivalents at end of period | $ | 95,902 |
| | $ | 24,357 |
| | $ | 271 |
| | $ | — |
| | $ | 120,530 |
|
___________ | |
(1) | Includes the Pennsylvania Entities, MBC, Mohegan Golf, MCV-PA, Mohegan Ventures-NW, MVW, WTG and MTGA Gaming. |
| |
(2) | Includes Salishan-Mohegan, MG&H and Mohegan Resorts and subsidiaries. |
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Nine Months Ended June 30, 2011 |
| Authority | | MBC 100% Owned Guarantor Subsidiary | | Other 100% Owned Guarantor Subsidiaries (1) | | Total Guarantor Subsidiaries | | Total Non Guarantor Entities (2) | | Consolidating/Eliminating Adjustments | | Consolidated |
Net cash flows provided by (used in) operating activities | $ | 106,396 |
| | $ | (15 | ) | | $ | 36,562 |
| | $ | 36,547 |
| | $ | (3,852 | ) | | $ | — |
| | $ | 139,091 |
|
Cash flows provided by (used in) investing activities: | | | | | | | | | | | | | |
Purchases of property and equipment | (27,586 | ) | | (19 | ) | | (12,096 | ) | | (12,115 | ) | | — |
| | — |
| | (39,701 | ) |
Other cash flows provided by (used in) investing activities | 22,306 |
| | — |
| | 70 |
| | 70 |
| | (519 | ) | | (21,822 | ) | | 35 |
|
Net cash flows used in investing activities | (5,280 | ) | | (19 | ) | | (12,026 | ) | | (12,045 | ) | | (519 | ) | | (21,822 | ) | | (39,666 | ) |
Cash flows provided by (used in) financing activities: | | | | | | | | | | | | | |
Bank Credit Facility borrowings - revolving loan | 270,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 270,000 |
|
Bank Credit Facility repayments - revolving loan | (318,000 | ) | | — |
| | — |
| | — |
| | — |
| | — |
| | (318,000 | ) |
Line of Credit borrowings | 412,909 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 412,909 |
|
Line of Credit repayments | (411,442 | ) | | — |
| | — |
| | — |
| | — |
| | — |
| | (411,442 | ) |
Principal portion of relinquishment liability payments | (26,354 | ) | | — |
| | — |
| | — |
| | — |
| | — |
| | (26,354 | ) |
Distributions to Mohegan Tribe | (23,669 | ) | | — |
| | — |
| | — |
| | — |
| | — |
| | (23,669 | ) |
Other cash flows provided by (used in) financing activities | (4,419 | ) | | 41 |
| | (22,845 | ) | | (22,804 | ) | | 4,360 |
| | 21,822 |
| | (1,041 | ) |
Net cash flows provided by (used in) financing activities | (100,975 | ) | | 41 |
| | (22,845 | ) | | (22,804 | ) | | 4,360 |
| | 21,822 |
| | (97,597 | ) |
Net increase (decrease) in cash and cash equivalents | 141 |
| | 7 |
| | 1,691 |
| | 1,698 |
| | (11 | ) | | — |
| | 1,828 |
|
Cash and cash equivalents at beginning of period | 39,146 |
| | (49 | ) | | 24,366 |
| | 24,317 |
| | 434 |
| | — |
| | 63,897 |
|
Cash and cash equivalents at end of period | $ | 39,287 |
| | $ | (42 | ) | | $ | 26,057 |
| | $ | 26,015 |
| | $ | 423 |
| | $ | — |
| | $ | 65,725 |
|
___________ | |
(1) | Includes the Pennsylvania Entities, Mohegan Golf, MCV-PA, Mohegan Ventures-NW, MVW, WTG and MTGA Gaming. |
| |
(2) | Includes Salishan-Mohegan, MG&H and Mohegan Resorts and subsidiaries. |
MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(unaudited)
NOTE 9—SUBSEQUENT EVENTS:
Project Sunlight, an estimated $50 million hotel expansion project at Mohegan Sun at Pocono Downs, is planned for development and construction on land adjacent to the existing casino facility. When completed, Project Sunlight is anticipated to include a 238-room hotel with a fitness center, an indoor pool, a bistro and a 20,000-square-foot convention center. Project Sunlight is being developed and built by Downs Lodging, a wholly-owned unrestricted subsidiary of the Authority, on land leased from Downs Racing. The anticipated costs for Project Sunlight will be funded through a combination of non-recourse third-party financing obtained by Downs Lodging of approximately $45 million and a $5 million investment by the Authority. Construction of Project Sunlight commenced in July 2012 and is expected to be completed by the end of 2013. Once completed, the hotel and convention center will be operated by Downs Racing under a triple net lease from Downs Lodging.
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 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 at Pocono Downs and the Pennsylvania off-track wagering facilities; |
| |
• | our leverage and ability to meet our debt obligations and maintain compliance with financial covenant requirements; |
| |
• | the availability of financing; |
| |
• | the local, regional, national or global economic climate, including the lingering effects of the economic recession; |
| |
• | increased competition, including the expansion of gaming in New England, New York, New Jersey or Pennsylvania; |
| |
• | 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 Mohegan Sun and Mohegan Sun at Pocono Downs; |
| |
• | 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 increases 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, 2011, 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.
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 544-acre reservation situated in Southeastern Connecticut, adjacent to Uncasville, Connecticut. Under the Indian Gaming Regulatory Act of 1988, or IGRA, federally-recognized Indian tribes are permitted to conduct full-scale casino gaming operations on tribal land, 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 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 at Pocono Downs, 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 entities. 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 a 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.
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, 2012, Casino of the Earth offered:
| |
• | approximately 188,000 square feet of gaming space; |
| |
• | approximately 3,070 slot machines and 180 table games, including blackjack, roulette and craps; |
| |
• | 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, Birches Bar & Grill, a Hong Kong-style food outlet offering authentic Southeast Asian cuisine, Bobby Flay's Bobby's Burger Palace and multiple service bars, all operated by us, as well as Ballo Italian Restaurant & Social Club, Frank Pepe Pizzeria Napoletana and Fidelia's Market, an approximately 290-seat multi-station food court, operated by third-parties, for a total seating of approximately 1,700; |
| |
• | four Mohegan Sun-owned retail shops, offering products ranging from Mohegan Sun logo souvenirs to cigars; and |
| |
• | the Wolf Den, an approximately 10,000-square-foot, 400-seat lounge featuring live entertainment seven days a week. |
Casino of the Sky
As of June 30, 2012, Casino of the Sky offered:
| |
• | approximately 119,000 square feet of gaming space; |
| |
• | approximately 2,120 slot machines and 105 table games, including blackjack, roulette and craps; |
| |
• | 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 five full-service restaurants, three quick-service restaurants and a multi-station food court operated by third-parties, for a total seating of approximately 2,350; |
| |
• | The Shops at Mohegan Sun containing 31 retail shops, seven of which we own; |
| |
• | the Mohegan Sun Arena with seating for up to 10,000; |
| |
• | an approximately 1,200-room luxury Sky Hotel Tower, including a private high-limit table games suite; |
| |
• | Mohegan After Dark, consisting of Ultra 88, a nightclub, Lucky's Lounge and Dubliner, an Irish pub, all operated by a third-party; |
| |
• | an approximately 20,000-square-foot spa operated by a third-party; |
| |
• | 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, 2012, Casino of the Wind offered:
| |
• | approximately 45,000 square feet of gaming space; |
| |
• | approximately 725 slot machines, 30 table games, including blackjack, roulette and craps, 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, and a bar operated by us, for a total seating of approximately 475; and |
| |
• | a retail shop operated by a third-party. |
Mohegan Sun offers parking for approximately 13,000 patrons and 3,900 employees. In addition, we operate a gasoline and convenience center, an approximately 3,600-square-foot, 20-pump facility located adjacent to Mohegan Sun.
Mohegan Basketball Club
We formed Mohegan Basketball Club, LLC, or MBC, to own and operate a professional basketball team in the Women's National Basketball Association, or the WNBA. In January 2003, MBC entered into a membership agreement with the WNBA permitting it to operate the Connecticut Sun basketball team. The team plays its home games in the Mohegan Sun Arena.
Mohegan Golf
We formed Mohegan Golf, LLC, or Mohegan Golf, to purchase and operate a golf course in Southeastern Connecticut. In May 2007, Mohegan Golf acquired substantially all of the assets of Pautipaug Country Club, Inc., which included a golf course in Sprague and Franklin, Connecticut. The golf course was renamed Mohegan Sun Country Club at Pautipaug and reopened under the ownership of Mohegan Golf in June 2007.
Mohegan Sun at Pocono Downs
Through Downs Racing, we own and operate a gaming and entertainment facility known as Mohegan Sun at Pocono Downs located on a 400-acre site in Plains Township, Pennsylvania, and OTW facilities located in Carbondale, East Stroudsburg and Lehigh Valley, Pennsylvania. In November 2006, Mohegan Sun at Pocono Downs 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 at Pocono Downs known as Project Sunrise, which included increased gaming, restaurant and retail space. In July 2010, Mohegan Sun at Pocono Downs opened its table game and poker operations, including additional non-smoking sections and a high-limit gaming area.
Mohegan Sun at Pocono Downs currently operates in an approximately 400,000-square-foot facility, which includes the following as of June 30, 2012:
| |
• | approximately 82,000 square feet of gaming space; |
| |
• | approximately 2,330 slot machines, 66 table games, including blackjack, roulette and craps, and an 18-table poker room; |
| |
• | live harness racing and simulcast and off-track wagering; |
| |
• | 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, Timbers Buffet, a 300-seat Mohegan Indian cultural heritage themed multi-station buffet, and a food court, including: Johnny Rockets, Hot Dog Hall of Fame, Puck Express by Wolfgang Puck and Ben & Jerry's Ice Cream, for a total seating of approximately 1,800; |
| |
• | five retail shops, one of which we own, offering products ranging from Mohegan Sun at Pocono Downs 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. |
Market and Competition from Other Gaming Operations
Our gaming operation at Mohegan Sun is one of only two current gaming operations in New England offering traditional slot machines and table games, with the other operation being our sole gaming competitor in 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 racino and video lottery terminal facilities in the states of Rhode Island and New York and gaming facilities in the states of New York and New Jersey. In addition, we face competition in and from the Northeastern Pennsylvania gaming market, both in the immediate market for Mohegan Sun at Pocono Downs, and for Mohegan Sun, in marketing and attracting patrons from the New York City metropolitan region. 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, 2011 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, 2011.
Results of Operations
Summary Operating Results
As of June 30, 2012, we own and operate, either directly or through wholly-owned subsidiaries, Mohegan Sun, the Connecticut Sun WNBA franchise, and the Mohegan Sun Country Club, or collectively, the Connecticut entities, and the Pennsylvania entities. All of our revenues are derived from these operations. The Connecticut Sun WNBA franchise and the Mohegan Sun Country Club 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 entities and the Pennsylvania entities on a separate basis. We, therefore, believe that we have two separate reportable segments: (1) Mohegan Sun, which includes the operations of the Connecticut entities, and (2) Mohegan Sun at Pocono Downs, which includes the operations of the Pennsylvania entities.
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, |
| 2012 | | 2011 (1) | | Variance | | Percentage Variance | | 2012 | | 2011 (1) | | Variance | | Percentage Variance |
Net revenues: | | | | | | | | | | | | | | | |
Mohegan Sun | $ | 264,876 |
| | $ | 284,289 |
| | $ | (19,413 | ) | | (6.8 | )% | | $ | 811,838 |
| | $ | 822,284 |
| | $ | (10,446 | ) | | (1.3 | )% |
Mohegan Sun at Pocono Downs | 79,560 |
| | 77,090 |
| | 2,470 |
| | 3.2 | % | | 235,628 |
| | 222,644 |
| | 12,984 |
| | 5.8 | % |
Total | $ | 344,436 |
| | $ | 361,379 |
| | $ | (16,943 | ) | | (4.7 | )% | | $ | 1,047,466 |
| | $ | 1,044,928 |
| | $ | 2,538 |
| | 0.2 | % |
Income (loss) from operations: | | | | | | | | | | | | | | | |
Mohegan Sun | $ | 44,801 |
| | $ | 56,316 |
| | $ | (11,515 | ) | | (20.4 | )% | | $ | 148,424 |
| | $ | 152,107 |
| | $ | (3,683 | ) | | (2.4 | )% |
Mohegan Sun at Pocono Downs | 10,716 |
| | 7,677 |
| | 3,039 |
| | 39.6 | % | | 31,660 |
| | 21,590 |
| | 10,070 |
| | 46.6 | % |
Corporate | (4,681 | ) | | (3,896 | ) | | (785 | ) | | 20.1 | % | | (12,748 | ) | | (12,288 | ) | | (460 | ) | | 3.7 | % |
Total | $ | 50,836 |
| | $ | 60,097 |
| | $ | (9,261 | ) | | (15.4 | )% | | $ | 167,336 |
| | $ | 161,409 |
| | $ | 5,927 |
| | 3.7 | % |
Net income attributable to Mohegan Tribal Gaming Authority | $ | 9,361 |
| | $ | 29,146 |
| | $ | (19,785 | ) | | (67.9 | )% | | $ | 48,455 |
| | $ | 67,284 |
| | $ | (18,829 | ) | | (28.0 | )% |
Operating margin: | | | | | | | | | | | | | | | |
Mohegan Sun | 16.9 | % | | 19.8 | % | | (2.9 | )% | | (14.6 | )% | | 18.3 | % | | 18.5 | % | | (0.2 | )% | | (1.1 | )% |
Mohegan Sun at Pocono Downs | 13.5 | % | | 10.0 | % | | 3.5 | % | | 35.0 | % | | 13.4 | % | | 9.7 | % | | 3.7 | % | | 38.1 | % |
Total | 14.8 | % | | 16.6 | % | | (1.8 | )% | | (10.8 | )% | | 16.0 | % | | 15.4 | % | | 0.6 | % | | 3.9 | % |
__________
| |
(1) | Includes adjustment to reduce Mohegan Sun's slot revenues by $3.7 million, which related to prior periods. |
The most significant factors and trends that we believe impacted our financial performance were as follows:
| |
• | lower table games hold percentage at Mohegan Sun; |
| |
• | additional gaming capacity in the Northeast gaming market and aggressive promotional programs from competitors; |
| |
• | changes in operations designed to improve profitability; |
| |
• | persisting economic concerns; |
| |
• | strong patron response to promotional offers at Mohegan Sun at Pocono Downs; |
| |
• | improved non-gaming results; |
| |
• | continued focus on managing expenses and enhancing operating efficiencies; and |
| |
• | a $14.3 million non-operating loss on early exchange of debt in connection with our refinancing transactions. |
Net revenues for the three months and nine months ended June 30, 2012 compared to the same periods in the prior year reflect lower gaming revenues at Mohegan Sun. These results were partially offset by higher gaming and non-gaming revenues at Mohegan Sun at Pocono Downs.
Income from operations for the three months and nine months ended June 30, 2012 compared to the same periods in the prior year reflects the reductions in gaming revenues at Mohegan Sun, partially offset by the growth in gaming and non-gaming revenues at Mohegan Sun at Pocono Downs. Income from operations for the three months and nine months ended June 30, 2012 also reflects changes in our operations designed to improve profitability and our continued focus on managing expenses, as well as lower depreciation expense.
Net income attributable to the Authority for the three months ended June 30, 2012 compared to the same period in the
prior year declined primarily as a result of higher interest expense, combined with the reduction in income from operations. Net income attributable to the Authority for the nine months ended June 30, 2012 compared to the same period in the prior year declined primarily due to the loss on early exchange of debt and higher interest expense, combined with the reduction in income from operations.
Mohegan Sun
Gross Revenues
Gross revenues consisted of the following (in thousands):
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended June 30, | | For the Nine Months Ended June 30, |
| 2012 | | 2011 (1) | | Variance | | Percentage Variance | | 2012 | | 2011 (1) | | Variance | | Percentage Variance |
Gaming | $ | 232,346 |
| | $ | 255,916 |
| | $ | (23,570 | ) | | (9.2 | )% | | $ | 718,109 |
| | $ | 742,082 |
| | $ | (23,973 | ) | | (3.2 | )% |
Food and beverage | 16,163 |
| | 15,897 |
| | 266 |
| | 1.7 | % | | 49,827 |
| | 47,790 |
| | 2,037 |
| | 4.3 | % |
Hotel | 10,152 |
| | 9,134 |
| | 1,018 |
| | 11.1 | % | | 29,524 |
| | 26,788 |
| | 2,736 |
| | 10.2 | % |
Retail, entertainment and other | 27,620 |
| | 26,914 |
| | 706 |
| | 2.6 | % | | 76,265 |
| | 72,518 |
| | 3,747 |
| | 5.2 | % |
Total | $ | 286,281 |
| | $ | 307,861 |
| | $ | (21,580 | ) | | (7.0 | )% | | $ | 873,725 |
| | $ | 889,178 |
| | $ | (15,453 | ) | | (1.7 | )% |
__________
| |
(1) | Includes adjustment to reduce slot revenues by $3.7 million, which related to prior periods. |
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, |
| 2012 | | 2011 (1) | | 2012 | | 2011 (1) |
Gaming | 81.2 | % | | 83.1 | % | | 82.2 | % | | 83.5 | % |
Food and beverage | 5.6 | % | | 5.2 | % | | 5.7 | % | | 5.4 | % |
Hotel | 3.5 | % | | 3.0 | % | | 3.4 | % | | 3.0 | % |
Retail, entertainment and other | 9.7 | % | | 8.7 | % | | 8.7 | % | | 8.1 | % |
Total | 100.0 | % | | 100.0 | % | | 100.0 | % | | 100.0 | % |
__________
| |
(1) | Includes adjustment to reduce slot revenues by $3.7 million, which related to prior periods. |
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, |
| 2012 | | 2011 (1) | | Variance | | Percentage Variance | | 2012 | | 2011 (1) | | Variance | | Percentage Variance |
Slots: | | | | | | | | | | | | | | | |
Handle | $ | 2,010,037 |
| | $ | 2,226,569 |
| | $ | (216,532 | ) | | (9.7 | )% | | $ | 6,086,090 |
| | $ | 6,529,577 |
| | $ | (443,487 | ) | | (6.8 | )% |
Gross revenues | $ | 165,224 |
| | $ | 179,576 |
| | $ | (14,352 | ) | | (8.0 | )% | | $ | 504,095 |
| | $ | 524,242 |
| | $ | (20,147 | ) | | (3.8 | )% |
Net revenues | $ | 158,761 |
| | $ | 172,743 |
| | $ | (13,982 | ) | | (8.1 | )% | | $ | 484,002 |
| | $ | 504,266 |
| | $ | (20,264 | ) | | (4.0 | )% |
Free promotional slot plays (2) | $ | 18,236 |
| | $ | 17,412 |
| | $ | 824 |
| | 4.7 | % | | $ | 46,476 |
| | $ | 46,084 |
| | $ | 392 |
| | 0.9 | % |
Weighted average number of machines (in units) | 5,953 |
| | 6,358 |
| | (405 | ) | | (6.4 | )% | | 6,085 |
| | 6,377 |
| | (292 | ) | | (4.6 | )% |
Hold percentage (gross) | 8.2 | % | | 8.1 | % | | 0.1 | % | | 1.2 | % | | 8.3 | % | | 8.0 | % | | 0.3 | % | | 3.8 | % |
Win per unit per day (gross) (in dollars) | $ | 305 |
| | $ | 310 |
| | $ | (5 | ) | | (1.6 | )% | | $ | 302 |
| | $ | 301 |
| | $ | 1 |
| | 0.3 | % |
Table games: | | | | | | | | | | | | | | | |
Drop | $ | 469,276 |
| | $ | 491,104 |
| | $ | (21,828 | ) | | (4.4 | )% | | $ | 1,448,202 |
| | $ | 1,483,947 |
| | $ | (35,745 | ) | | (2.4 | )% |
Revenues | $ | 69,150 |
| | $ | 81,749 |
| | $ | (12,599 | ) | | (15.4 | )% | | $ | 220,047 |
| | $ | 226,567 |
| | $ | (6,520 | ) | | (2.9 | )% |
Weighted average number of games (in units) | 314 |
| | 324 |
| | (10 | ) | | (3.1 | )% | | 314 |
| | 329 |
| | (15 | ) | | (4.6 | )% |
Hold percentage (3) | 14.7 | % | | 16.7 | % | | (2.0 | )% | | (12.0 | )% | | 15.2 | % | | 15.3 | % | | (0.1 | )% | | (0.7 | )% |
Win per unit per day (in dollars) | $ | 2,421 |
| | $ | 2,775 |
| | $ | (354 | ) | | (12.8 | )% | | $ | 2,560 |
| | $ | 2,525 |
| | $ | 35 |
| | 1.4 | % |
Poker: | | | | | | | | | | | | | | | |
Revenues | $ | 2,627 |
| | $ | 2,891 |
| | $ | (264 | ) | | (9.1 | )% | | $ | 8,705 |
| | $ | 8,732 |
| | $ | (27 | ) | | (0.3 | )% |
Weighted average number of tables (in units) | 42 |
| | 42 |
| | — |
| | — |
| | 42 |
| | 42 |
| | — |
| | — |
|
Revenue per unit per day (in dollars) | $ | 687 |
| | $ | 756 |
| | $ | (69 | ) | | (9.1 | )% | | $ | 756 |
| | $ | 762 |
| | $ | (6 | ) | | (0.8 | )% |
__________
| |
(1) | Includes adjustment to reduce slot revenues by $3.7 million, which related to prior periods. |
| |
(2) | Free promotional slot plays are included in slot handle, but not reflected in slot revenues. |
| |
(3) | 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 and nine months ended June 30, 2012 compared to the same periods in the prior year declined primarily as a result of lower slot and table game revenues. The reductions in slot revenues and handle reflect additional gaming capacity in the Northeast gaming market and aggressive promotional programs from competitors, changes in our operations designed to improve profitability, including changes in the slot mix on our gaming floor, and a shift in hotel occupancy from casino patrons to transient guests. The declines in table game revenues primarily resulted from lower table game hold percentage, combined with the impact of additional gaming capacity in the Northeast gaming market. Gaming revenues for the three months and nine months ended June 30, 2012 also were negatively impacted by the sluggish overall economic environment.
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, |
| 2012 | | 2011 | | Variance | | Percentage Variance | | 2012 | | 2011 | | Variance | | Percentage Variance |
Meals served | 804 |
| | 802 |
| | 2 |
| | 0.2 | % | | 2,408 |
| | 2,433 |
| | (25 | ) | | (1.0 | )% |
Average price per meal served (in dollars) | $ | 16.17 |
| | $ | 15.71 |
| | $ | 0.46 |
| | 2.9 | % | | $ | 16.40 |
| | $ | 15.50 |
| | $ | 0.90 |
| | 5.8 | % |
Food and beverage revenues for the three months and nine months ended June 30, 2012 compared to the same periods in the prior year increased due to the increases in the average price per meal served resulting, in part, from the July 2011 re-opening of the renovated Season's Buffet featuring expanded offerings.
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, |
| 2012 | | 2011 | | Variance | | Percentage Variance | | 2012 | | 2011 | | Variance | | Percentage Variance |
Rooms occupied | 103 |
| | 105 |
| | (2 | ) | | (1.9 | )% | | 308 |
| | 310 |
| | (2 | ) | | (0.6 | )% |
Occupancy rate | 96.3 | % | | 97.5 | % | | (1.2 | )% | | (1.2 | )% | | 95.8 | % | | 96.5 | % | | (0.7 | )% | | (0.7 | )% |
Average daily room rate (in dollars) | $ | 93 |
| | $ | 84 |
| | $ | 9 |
| | 10.7 | % | | $ | 91 |
| | $ | 83 |
| | $ | 8 |
| | 9.6 | % |
Revenue per available room (in dollars) | $ | 89 |
| | $ | 82 |
| | $ | 7 |
| | 8.5 | % | | $ | 87 |
| | $ | 80 |
| | $ | 7 |
| | 8.8 | % |
Hotel revenues for the three months and nine months ended June 30, 2012 compared to the same periods in the prior year increased as a result of the increases in average daily room rate, reflecting a shift in hotel occupancy to higher paying transient guests.
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, |
| 2012 | | 2011 | | Variance | | Percentage Variance | | 2012 | | 2011 | | Variance | | Percentage Variance |
Arena events (in events) | 38 |
| | 30 |
| | 8 |
| | 26.7 | % | | 91 |
| | 79 |
| | 12 |
| | 15.2 | % |
Arena tickets | 229 |
| | 182 |
| | 47 |
| | 25.8 | % | | 529 |
| | 449 |
| | 80 |
| | 17.8 | % |
Average price per Arena ticket (in dollars) | $ | 42.23 |
| | $ | 57.18 |
| | $ | (14.95 | ) | | (26.1 | )% | | $ | 45.12 |
| | $ | 54.04 |
| | $ | (8.92 | ) | | (16.5 | )% |
Retail, entertainment and other revenues for the three months and nine months ended June 30, 2012 compared to the same periods in the prior year increased primarily as a result of additional gasoline revenues from the September 2011 opening of our employee gas station. The declines in average price per Arena ticket were attributable to reductions in the number of headliner shows held at the Mohegan Sun Arena.
Promotional Allowances
The retail value of providing promotional allowances was included in revenues as follows (in thousands):
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended June 30, | | For the Nine Months Ended June 30, |
| 2012 | | 2011 | | Variance | | Percentage Variance | | 2012 | | 2011 | | Variance | | Percentage Variance |
Food and beverage | $ | 6,498 |
| | $ | 6,956 |
| | $ | (458 | ) | | (6.6 | )% | | $ | 19,988 |
| | $ | 20,974 |
| | $ | (986 | ) | | (4.7 | )% |
Hotel | 3,411 |
| | 3,491 |
| | (80 | ) | | (2.3 | )% | | 10,434 |
| | 10,804 |
| | (370 | ) | | (3.4 | )% |
Retail, entertainment and other | 11,496 |
| | 13,125 |
| | (1,629 | ) | | (12.4 | )% | | 31,465 |
| | 35,116 |
| | (3,651 | ) | | (10.4 | )% |
Total | $ | 21,405 |
| | $ | 23,572 |
| | $ | (2,167 | ) | | (9.2 | )% | | $ | 61,887 |
| | $ | 66,894 |
| | $ | (5,007 | ) | | (7.5 | )% |
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, |
| 2012 | | 2011 | | Variance | | Percentage Variance | | 2012 | | 2011 | | Variance | | Percentage Variance |
Food and beverage | $ | 6,350 |
| | $ | 6,995 |
| | $ | (645 | ) | | (9.2 | )% | | $ | 19,679 |
| | $ | 21,351 |
| | $ | (1,672 | ) | | (7.8 | )% |
Hotel | 1,811 |
| | 2,027 |
| | (216 | ) | | (10.7 | )% | | 5,716 |
| | 6,471 |
| | (755 | ) | | (11.7 | )% |
Retail, entertainment and other | 10,267 |
| | 11,146 |
| | (879 | ) | | (7.9 | )% | | 28,844 |
| | 29,544 |
| | (700 | ) | | (2.4 | )% |
Total | $ | 18,428 |
| | $ | 20,168 |
| | $ | (1,740 | ) | | (8.6 | )% | | $ | 54,239 |
| | $ | 57,366 |
| | $ | (3,127 | ) | | (5.5 | )% |
Promotional allowances for the three months and nine months ended June 30, 2012 compared to the same periods in the prior year declined primarily due to changes in our operations designed to improve profitability, combined with lower redemptions under the Player's Club program.
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, |
| 2012 | | 2011 | | Variance | | Percentage Variance | | 2012 | | 2011 | | Variance | | Percentage Variance |
Gaming | $ | 138,387 |
| | $ | 144,520 |
| | $ | (6,133 | ) | | (4.2 | )% | | $ | 419,690 |
| | $ | 431,254 |
| | $ | (11,564 | ) | | (2.7 | )% |
Food and beverage | 8,970 |
| | 8,219 |
| | 751 |
| | 9.1 | % | | 27,139 |
| | 24,768 |
| | 2,371 |
| | 9.6 | % |
Hotel | 3,658 |
| | 3,413 |
| | 245 |
| | 7.2 | % | | 10,703 |
| | 9,906 |
| | 797 |
| | 8.0 | % |
Retail, entertainment and other | 10,291 |
| | 8,749 |
| | 1,542 |
| | 17.6 | % | | 28,957 |
| | 22,334 |
| | 6,623 |
| | 29.7 | % |
Advertising, general and administrative | 41,045 |
| | 45,706 |
| | (4,661 | ) | | (10.2 | )% | | 124,623 |
| | 129,104 |
| | (4,481 | ) | | (3.5 | )% |
Depreciation and amortization | 17,706 |
| | 17,377 |
| | 329 |
| | 1.9 | % | | 52,266 |
| | 52,569 |
| | (303 | ) | | (0.6 | )% |
Loss on disposition of assets | 18 |
| | — |
| | 18 |
| | 100.0 | % | | 36 |
| | — |
| | 36 |
| | 100.0 | % |
Severance | — |
| | (11 | ) | | 11 |
| | (100.0 | )% | | — |
| | 242 |
| | (242 | ) | | (100.0 | )% |
Total | $ | 220,075 |
| | $ | 227,973 |
| | $ | (7,898 | ) | | (3.5 | )% | | $ | 663,414 |
| | $ | 670,177 |
| | $ | (6,763 | ) | | (1.0 | )% |
Gaming costs and expenses for the three months and nine months ended June 30, 2012 compared to the same periods in the prior year decreased primarily as a result of changes in our operations designed to improve profitability, including lower costs related to Player's Club point redemptions at third-party outlets and Mohegan Sun-owned facilities. The reductions in gaming costs and expenses also reflect lower Slot Win Contribution expenses commensurate with the declines in slot revenues and reduced labor costs. These results were partially offset by higher casino marketing and promotional expenses in response to the competitive promotional environment. Expenses associated with the combined Slot Win Contribution and free promotional slot play contribution totaled $43.6 million and $130.4 million for the three months and nine months ended June 30, 2012, respectively, and $46.8 million and $135.4 million for the three months and nine months ended June 30, 2011, respectively. Gaming costs and expenses as a percentage of gaming revenues were 59.6% and 58.4% for the three months and nine months ended June 30, 2012, respectively, compared to 56.5% and 58.1% for the three months and nine months ended June 30, 2011, respectively.
Food and beverage costs and expenses for the three months and nine months ended June 30, 2012 compared to the same periods in the prior year increased primarily due to reduced use of food and beverage complimentaries, resulting in lower amounts of food and beverage costs being allocated to gaming costs and expenses. The increases in food and beverage costs and expenses also the reflect higher cost of food and beverage sold commensurate with the growth in food and beverage revenues.
Hotel costs and expenses for the three months and nine months ended June 30, 2012 compared to the same periods in the prior year increased primarily as a result of reduced use of hotel complimentaries, resulting in lower amounts of hotel costs
being allocated to gaming costs and expenses.
Retail, entertainment and other costs and expenses for the three months and nine months ended June 30, 2012 compared to the same periods in the prior year increased primarily as a result of the higher cost of gasoline sold commensurate with the growth in gasoline revenues and reduced use of retail, entertainment and other complimentaries, resulting in lower amounts of retail, entertainment and other costs and expenses being allocated to gaming costs and expenses.
Advertising, general and administrative costs and expenses for the three months and nine months ended June 30, 2012 compared to the same periods in the prior year declined primarily as a result of reductions in insurance and utility costs, as well as expenses associated with services provided by the State of Connecticut. Advertising, general and administrative costs and expenses for the three months ended June 30, 2012 also reflect lower advertising expenditures.
Mohegan Sun at Pocono Downs
Gross Revenues
Gross revenues consisted of the following (in thousands):
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended June 30, | | For the Nine Months Ended June 30, |
| 2012 | | 2011 | | Variance | | Percentage Variance | | 2012 | | 2011 | | Variance | | Percentage Variance |
Gaming | $ | 74,747 |
| | $ | 72,401 |
| | $ | 2,346 |
| | 3.2 | % | | $ | 222,644 |
| | $ | 210,336 |
| | $ | 12,308 |
| | 5.9 | % |
Food and beverage | 6,537 |
| | 6,549 |
| | (12 | ) | | (0.2 | )% | | 18,800 |
| | 17,879 |
| | 921 |
| | 5.2 | % |
Retail, entertainment and other | 2,326 |
| | 2,209 |
| | 117 |
| | 5.3 | % | | 6,193 |
| | 5,429 |
| | 764 |
| | 14.1 | % |
Total | $ | 83,610 |
| | $ | 81,159 |
| | $ | 2,451 |
| | 3.0 | % | | $ | 247,637 |
| | $ | 233,644 |
| | $ | 13,993 |
| | 6.0 | % |
The following table summarizes the percentage of gross revenues from each of the three revenue sources:
|
| | | | | | | | | | | |
| For the Three Months Ended June 30, | | For the Nine Months Ended June 30, |
| 2012 | | 2011 | | 2012 | | 2011 |
Gaming | 89.4 | % | | 89.2 | % | | 89.9 | % | | 90.0 | % |
Food and beverage | 7.8 | % | | 8.1 | % | | 7.6 | % | | 7.7 | % |
Retail, entertainment and other | 2.8 | % | | 2.7 | % | | 2.5 | % | | 2.3 | % |
Total | 100.0 | % | | 100.0 | % | | 100.0 | % | | 100.0 | % |
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, |
| 2012 | | 2011 | | Variance | | Percentage Variance | | 2012 | | 2011 | | Variance | | Percentage Variance |
Slots: | | | | | | | | | | | | | | | |
Handle | $ | 743,645 |
| | $ | 753,434 |
| | $ | (9,789 | ) | | (1.3 | )% | | $ | 2,235,962 |
| | $ | 2,143,426 |
| | $ | 92,536 |
| | 4.3 | % |
Gross revenues | $ | 59,696 |
| | $ | 57,047 |
| | $ | 2,649 |
| | 4.6 | % | | $ | 178,653 |
| | $ | 167,232 |
| | $ | 11,421 |
| | 6.8 | % |
Net revenues | $ | 59,667 |
| | $ | 57,034 |
| | $ | 2,633 |
| | 4.6 | % | | $ | 178,618 |
| | $ | 167,178 |
| | $ | 11,440 |
| | 6.8 | % |
Free promotional slot plays (1) | $ | 15,324 |
| | $ | 18,386 |
| | $ | (3,062 | ) | | (16.7 | )% | | $ | 46,508 |
| | $ | 48,226 |
| | $ | (1,718 | ) | | (3.6 | )% |
Weighted average number of machines (in units) | 2,332 |
| | 2,332 |
| | — |
| | — |
| | 2,332 |
| | 2,409 |
| | (77 | ) | | (3.2 | )% |
Hold percentage (gross) | 8.0 | % | | 7.6 | % | | 0.4 | % | | 5.3 | % | | 8.0 | % | | 7.8 | % | | 0.2 | % | | 2.6 | % |
Win per unit per day (gross) (in dollars) | $ | 281 |
| | $ | 269 |
| | $ | 12 |
| | 4.5 | % | | $ | 280 |
| | $ | 254 |
| | $ | 26 |
| | 10.2 | % |
Table games: | | | | | | | | | | | | | | | |
Drop | $ | 50,927 |
| | $ | 53,524 |
| | $ | (2,597 | ) | | (4.9 | )% | | $ | 161,480 |
| | $ | 149,525 |
| | $ | 11,955 |
| | 8.0 | % |
Revenues | $ | 9,246 |
| | $ | 9,171 |
| | $ | 75 |
| | 0.8 | % | | $ | 29,216 |
| | $ | 27,144 |
| | $ | 2,072 |
| | 7.6 | % |
Weighted average number of games (in units) | 66 |
| | 66 |
| | — |
| | — |
| | 66 |
| | 66 |
| | — |
| | — |
|
Hold percentage (2) | 18.2 | % | | 17.1 | % | | 1.1 | % | | 6.4 | % | | 18.1 | % | | 18.2 | % | | (0.1 | )% | | (0.5 | )% |
Win per unit per day (in dollars) | $ | 1,540 |
| | $ | 1,527 |
| | $ | 13 |
| | 0.9 | % | | $ | 1,615 |
| | $ | 1,506 |
| | $ | 109 |
| | 7.2 | % |
Poker: | | | | | | | | | | | | | | | |
Revenues | $ | 871 |
| | $ | 1,074 |
| | $ | (203 | ) | | (18.9 | )% | | $ | 2,891 |
| | $ | 3,222 |
| | $ | (331 | ) | | (10.3 | )% |
Weighted average number of tables (in units) | 18 |
| | 18 |
| | — |
| | — |
| | 18 |
| | 18 |
| | — |
| | — |
|
Revenue per unit per day (in dollars) | $ | 531 |
| | $ | 656 |
| | $ | (125 | ) | | (19.1 | )% | | $ | 586 |
| | $ | 656 |
| | $ | (70 | ) | | (10.7 | )% |
___________
| |
(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 and nine months ended June 30, 2012 compared to the same periods in the prior year increased primarily as a result of higher slot revenues. The growth in slot revenues reflects strong patron response to our promotional offers and changes in our operations designed to improve profitability.
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, |
| 2012 | | 2011 | | Variance | | Percentage Variance | | 2012 | | 2011 | | Variance | | Percentage Variance |
Meals served | 186 |
| | 219 |
| | (33 | ) | | (15.1 | )% | | 546 |
| | 578 |
| | (32 | ) | | (5.5 | )% |
Average price per meal served (in dollars) | $ | 15.98 |
| | $ | 15.16 |
| | $ | 0.82 |
| | 5.4 | % | | $ | 15.67 |
| | $ | 15.00 |
| | $ | 0.67 |
| | 4.5 | % |
Food and beverage revenues for the three months ended June 30, 2012 compared to the same period in the prior year were flat. Food and beverage revenues for the nine months ended June 30, 2012 compared to the same period in the prior year increased due to changes in promotional beverage offers. The reductions in meals served, as well as the growth in average price per meal served primarily resulted from changes in our operations designed to improve profitability.
Retail, entertainment and other revenues for the three months and nine months ended June 30, 2012 compared to the same periods in the prior year increased primarily as a result of higher ATM commissions and changes in promotional tobacco offers.
Promotional Allowances
The retail value of providing promotional allowances was included in revenues as follows (in thousands):
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended June 30, | | For the Nine Months Ended June 30, |
| 2012 | | 2011 | | Variance | | Percentage Variance | | 2012 | | 2011 | | Variance | | Percentage Variance |
Food and beverage | $ | 3,608 |
| | $ | 3,640 |
| | $ | (32 | ) | | (0.9 | )% | | $ | 10,729 |
| | $ | 9,942 |
| | $ | 787 |
| | 7.9 | % |
Retail and entertainment | 442 |
| | 429 |
| | 13 |
| | 3.0 | % | | 1,280 |
| | 1,058 |
| | 222 |
| | 21.0 | % |
Total | $ | 4,050 |
| | $ | 4,069 |
| | $ | (19 | ) | | (0.5 | )% | | $ | 12,009 |
| | $ | 11,000 |
| | $ | 1,009 |
| | 9.2 | % |
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, |
| 2012 | | 2011 | | Variance | | Percentage Variance | | 2012 | | 2011 | | Variance | | Percentage Variance |
Food and beverage | $ | 2,786 |
| | $ | 2,861 |
| | $ | (75 | ) | | (2.6 | )% | | $ | 8,165 |
| | $ | 7,896 |
| | $ | 269 |
| | 3.4 | % |
Retail and entertainment | 533 |
| | 523 |
| | 10 |
| | 1.9 | % | | 1,492 |
| | 1,338 |
| | 154 |
| | 11.5 | % |
Total | $ | 3,319 |
| | $ | 3,384 |
| | $ | (65 | ) | | (1.9 | )% | | $ | 9,657 |
| | $ | 9,234 |
| | $ | 423 |
| | 4.6 | % |
Promotional allowances for the three months ended June 30, 2012 compared to the same period in the prior year were flat. Promotional allowances for the nine months ended June 30, 2012 compared to the same period in the prior year increased due to higher redemptions under the Player's Club program and changes in certain promotional offers.
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, |
| 2012 | | 2011 | | Variance | | Percentage Variance | | 2012 | | 2011 | | Variance | | Percentage Variance |
Gaming | $ | 54,632 |
| | $ | 54,403 |
| | $ | 229 |
| | 0.4 | % | | $ | 162,327 |
| | $ | 155,993 |
| | $ | 6,334 |
| | 4.1 | % |
Food and beverage | 2,270 |
| | 2,202 |
| | 68 |
| | 3.1 | % | | 6,216 |
| | 6,093 |
| | 123 |
| | 2.0 | % |
Retail, entertainment and other | 287 |
| | 332 |
| | (45 | ) | | (13.6 | )% | | 862 |
| | 913 |
| | (51 | ) | | (5.6 | )% |
Advertising, general and administrative | 7,685 |
| | 7,272 |
| | 413 |
| | 5.7 | % | | 22,563 |
| | 22,296 |
| | 267 |
| | 1.2 | % |
Depreciation and amortization | 3,957 |
| | 5,204 |
| | (1,247 | ) | | (24.0 | )% | | 11,716 |
| | 15,759 |
| | (4,043 | ) | | (25.7 | )% |
(Gain) loss on disposition of assets | 13 |
| | — |
| | 13 |
| | (100.0 | )% | | 284 |
| | — |
| | 284 |
| | 100.0 | % |
Total | $ | 68,844 |
| | $ | 69,413 |
| | $ | (569 | ) | | (0.8 | )% | | $ | 203,968 |
| | $ | 201,054 |
| | $ | 2,914 |
| | 1.4 | % |
Gaming costs and expenses for the three months and nine months ended June 30, 2012 compared to the same periods in the prior year increased primarily as a result of higher Pennsylvania Slot Machine Tax commensurate with the growth in slot revenues. Gaming costs and expenses for the nine months ended June 30, 2012 also reflect higher payroll costs and advertising and promotional expenditures. These results were partially offset by a $676,000 charge associated with scheduled repayments to be made by Mohegan Sun at Pocono Downs (along with other slot machine licensees in the Commonwealth of Pennsylvania) for its proportional share of gaming oversight costs previously incurred by the Pennsylvania Gaming Control Board, or the PGCB, pursuant to a repayment schedule adopted by the PGCB in June 2011. Expenses associated with the Pennsylvania Slot Machine Tax totaled $33.5 million and $100.8 million for the three months and nine months ended June 30, 2012, respectively, and $32.4 million and $95.5 million for the three months and nine months ended June 30, 2011, respectively. Expenses associated with the Pennsylvania Table Game Tax totaled $1.6 million and $5.2 million for the three months and nine months ended June 30, 2012, respectively, and $1.7 million and $4.9 million for the three months and nine months ended June 30, 2011, respectively. Gaming costs and expenses as a percentage of gaming revenues were 73.1% and 72.9% for the three months and nine months ended June 30, 2012, respectively, compared to 75.1% and 74.2% for the three months and nine months ended June 30, 2011, respectively.
Food and beverage costs and expenses for the three months ended June 30, 2012 compared to the same period in the prior year increased primarily due to reduced use of food and beverage complimentaries, resulting in lower amounts of food and beverage costs being allocated to gaming costs and expenses. Food and beverage costs and expenses for the nine months ended June 30, 2012 compared to the same period in the prior year increased primarily as a result of higher cost of goods sold commensurate with the growth in food and beverage revenues, partially offset by increased use of food and beverage complimentaries, resulting in higher amounts of food and beverage costs being allocated to gaming costs and expenses.
Retail, entertainment and other costs and expenses for the three months ended June 30, 2012 compared to the same period in the prior year declined primarily due to non-recurring entertainment costs resulting from the discontinuation of concerts on the infield of the harness racing track. Retail, entertainment and other costs and expenses for the nine months ended June 30, 2012 compared to the same period in the prior year decreased primarily as a result of increased use of retail, entertainment and other complimentaries, resulting in higher amounts of retail, entertainment and other costs and expenses being allocated to gaming costs and expenses.
Advertising, general and administrative costs and expenses for the three months and nine months ended June 30, 2012 compared to the same periods in the prior year increased primarily as a result of higher insurance and payroll costs and regulatory expenses.
Depreciation and amortization expenses for the three months and nine months ended June 30, 2012 compared to the same periods in the prior year decreased primarily as a result of fully depreciated assets related to the Phase II facility.
Corporate Expenses and Other Income (Expense)
Corporate expenses and other income (expense) consisted of the following (in thousands):
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended June 30, | | For the Nine Months Ended June 30, |
| 2012 | | 2011 | | Variance | | Percentage Variance | | 2012 | | 2011 | | Variance | | Percentage Variance |
Corporate expenses: | | | | | | | | | | | | | | | |
Corporate | $ | 4,651 |
| | $ | 3,856 |
| | $ | 795 |
| | 20.6 | % | | $ | 12,653 |
| | $ | 12,163 |
| | $ | 490 |
| | 4.0 | % |
Depreciation and amortization | 30 |
| | 40 |
| | (10 | ) | | (25.0 | )% | | 95 |
| | 123 |
| | (28 | ) | | (22.8 | )% |
Severance (1) | — |
| | — |
| | — |
| | — |
| | — |
| | 2 |
| | (2 | ) | | (100.0 | )% |
Total Corporate expenses | $ | 4,681 |
| | $ | 3,896 |
| | $ | 785 |
| | 20.1 | % | | $ | 12,748 |
| | $ | 12,288 |
| | $ | 460 |
| | 3.7 | % |
Other income (expense): | | | | | | | | | | | | | | | |
Accretion of discount to the relinquishment liability (2) | $ | (2,062 | ) | | $ | (2,842 | ) | | $ | 780 |
| | (27.4 | )% | | $ | (6,186 | ) | | $ | (8,525 | ) | | $ | 2,339 |
| | (27.4 | )% |
Interest income (3) | 1,842 |
| | 665 |
| | 1,177 |
| | 177.0 | % | | 3,559 |
| | 2,063 |
| | 1,496 |
| | 72.5 | % |
Interest expense | (41,581 | ) | | (29,378 | ) | | (12,203 | ) | | 41.5 | % | | (103,047 | ) | | (88,837 | ) | | (14,210 | ) | | 16.0 | % |
Loss on early exchange of debt | (17 | ) | | — |
| | (17 | ) | | 100.0 | % | | (14,323 | ) | | — |
| | (14,323 | ) | | 100.0 | % |
Other income (expense), net | 7 |
| | 118 |
| | (111 | ) | | (94.1 | )% | | (31 | ) | | (226 | ) | | 195 |
| | (86.3 | )% |
Total other expense | $ | (41,811 | ) | | $ | (31,437 | ) | | $ | (10,374 | ) | | 33.0 | % | | $ | (120,028 | ) | | $ | (95,525 | ) | | $ | (24,503 | ) | | 25.7 | % |
___________ | |
(1) | Non-recurring workforce reduction related. |
| |
(2) | Reflects accretion of the discount to the present value of the relinquishment liability for the impact of the time value of money. |
| |
(3) | Primarily represents interest earned on long-term receivables. Interest income for the three months and nine months ended June 30, 2012, includes adjustment of $1.1 million, which related to prior periods. |
Total Corporate costs and expenses for the three months and nine months ended June 30, 2012 compared to the same periods in the prior year increased primarily as a result of higher development related expenditures and severance costs.
Interest expense for the three months and nine months ended June 30, 2012 compared to the same periods in the prior year increased as a result of higher weighted average interest rate. Weighted average interest rate was 9.9% and 8.4% for the three months and nine months ended June 30, 2012, respectively, compared to 7.2% and 7.1% for the three months and nine months ended June 30, 2011, respectively. The increases in weighted average interest rate were driven by our March 6, 2012 refinancing transactions. Weighted average outstanding debt was $1.67 billion and $1.65 billion for the three months and nine months ended June 30, 2012, respectively, compared to $1.63 billion and $1.66 billion for the three months and nine months ended June 30, 2011, respectively.
Loss on early exchange of debt for the three months and nine months ended June 30, 2012 represents financing fees written-off in connection with our March 6, 2012 refinancing transactions. We incurred approximately $58.3 million in transaction costs in connection with our refinancing, of which $14.3 million was written-off and $44.0 million was capitalized and will be amortized over the terms of the related debt.
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 at Pocono Downs during the months of May through August. Accordingly, our results of operations for the three months and nine months ended June 30, 2012 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, |
| 2012 | | 2011 | | Variance | | Percentage Variance |
Net cash provided by operating activities | $ | 144,291 |
| | $ | 139,091 |
| | $ | 5,200 |
| | 3.7 | % |
Net cash used in investing activities | (38,700 | ) | | (39,666 | ) | | 966 |
| | (2.4 | )% |
Net cash used in financing activities | (97,235 | ) | | (97,597 | ) | | 362 |
| | (0.4 | )% |
Net increase in cash and cash equivalents | $ | 8,356 |
| | $ | 1,828 |
| | $ | 6,528 |
| | 357.1 | % |
As of June 30, 2012 and September 30, 2011, we held cash and cash equivalents of $120.5 million and $112.2 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, accretion of discounts, relinquishment liability reassessments and loss on early exchange of debt. The increase in cash provided by operating activities for the nine months ended June 30, 2012 compared to the same period in the prior year was attributable to lower working capital requirements, partially offset by reduced operating income after adjustments for non-cash items.
Operating activities are a significant source of our cash flows. We utilize cash flows from operations for scheduled interest payments, relinquishment payments, planned capital expenditures, distributions to the Tribe, projected working capital needs and debt reduction, as well as make investments, from time to time. There are numerous potential factors which may cause a substantial reduction in the amount of such cash flows, including, but not limited to, the following:
| |
• | reduced discretionary spending 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 and Mohegan Sun at Pocono Downs; |
| |
• | an infrastructure or transportation disruption, such as the closure of a major highway near Mohegan Sun or Mohegan Sun at Pocono Downs, for an extended period of time; and |
| |
• | an act of terrorism on the United States. |
The decrease in cash used in investing activities for the nine months ended June 30, 2012 compared to the same period in the prior year primarily reflects proceeds from the Commonwealth of Pennsylvania's facility improvement grant, partially offset by higher capital expenditures. The slight decrease in cash used in financing activities for the nine months ended June 30, 2012 compared to the same period in the prior year primarily reflects increased borrowings, partially offset by higher payments of financing fees and distributions to the Tribe.
External Sources of Liquidity
On March 6, 2012, the Authority completed a comprehensive refinancing of its outstanding indebtedness, including the consummation of private exchange offers and consent solicitations with respect to its outstanding notes, an amendment and restatement of its bank credit facility and the execution and funding of a term loan facility (all further discussed below).
Bank Credit Facilities
First Lien, First Out Credit Facility
On March 6, 2012, the Authority entered into a Fourth Amended and Restated Bank Credit Facility providing for a $400.0 million term loan and a revolving loan with letter of credit and borrowing capacity of up to $75.0 million from a syndicate of financial institutions and commercial banks, with Bank of America, N.A. serving as Administrative Agent (the "Bank Credit Facility"). Principal outstanding on the term loan under the Bank Credit Facility is to be repaid at a rate of $1.0 million per quarter. The Bank Credit Facility matures on March 31, 2015, upon which date all outstanding balances are payable in full. As of June 30, 2012, there were $398.0 million in term loans and no revolving loans outstanding under the Bank Credit Facility. As of June 30, 2012, letters of credit issued under the Bank Credit Facility totaled $2.3 million, of which no amount was drawn. Inclusive of letters of credit, which reduce borrowing availability under the Bank Credit Facility, and after taking into account restrictive financial covenant requirements, the Authority had approximately $72.7 million of borrowing capacity under the Bank Credit Facility as of June 30, 2012.
Borrowings under the Bank Credit Facility incur interest as follows: (i) for base rate revolving loans, base rate plus an applicable margin based on a leverage-based pricing grid between 2.25% and 3.25%; (ii) for Eurodollar rate revolving loans, the applicable LIBOR rate plus an applicable margin based on a leverage-based pricing grid between 3.50% and 4.50%; (iii) for base rate term loans, base rate plus an applicable margin equal to 3.25%; and (iv) for Eurodollar rate term loans, the applicable LIBOR rate plus 4.50%. For Eurodollar rate term loans, LIBOR is subject to a 1.0% floor. There also is a fee of between 0.25% and 0.50%, based on a leverage-based pricing grid, charged on unused revolving commitments. Interest on Eurodollar rate loans is payable at the end of each applicable interest period for periods of three months or less and for loans of more than three months, each March, June, September or December that occurs after the beginning of such interest period. Interest on base rate advances is
payable quarterly in arrears. As of June 30, 2012, the $398.0 million term loan outstanding was based on the Eurodollar rate floor of 1.0% plus an applicable margin of 4.50%. The applicable margin for commitment fees was 0.50% as of June 30, 2012.
The Authority's obligations under the Bank Credit Facility are fully and unconditionally guaranteed, jointly and severally, by the Pennsylvania Entities, MBC, Mohegan Golf, MCV-PA, Mohegan Ventures-NW, MVW, WTG and MTGA Gaming (the “Guarantors”). The Bank Credit Facility is 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 at Pocono Downs 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 Bank Credit Facility as they and future guarantor subsidiaries acquire them. The liens and security interests granted by the Grantors as security for the Authority's obligations under the Bank Credit Facility are senior in priority to the liens on the same collateral securing the Term Loan Facility (as defined below) and the 2009 Second Lien Notes, 2012 Second Lien Notes and 2012 Third Lien Notes (each as defined below and, collectively, the “Secured Notes”). The collateral securing the Bank Credit Facility constitutes substantially all of the Grantors' property and assets that secure the Term Loan Facility and the Secured Notes, but excludes certain excluded assets as defined in the Bank Credit Facility.
The Bank Credit Facility contains negative covenants applicable to the Authority and the Guarantors, including negative 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 Bank Credit Facility includes financial maintenance covenants pertaining to total leverage, senior leverage and minimum fixed charge coverage. The levels of these covenants as of June 30, 2012 through the remaining term of the Bank Credit Facility are as follows:
Minimum fixed charge coverage ratio covenant, as defined under the Bank Credit Facility:
|
| |
Fiscal Quarters Ending: | |
June 30, 2012 and thereafter | 1.05:1.00 |
Maximum total leverage ratio covenant, or ratio of total debt to annualized EBITDA, as such terms are defined under the Bank Credit Facility:
|
| |
Fiscal Quarters Ending: | |
June 30, 2012 through September 30, 2012 | 7.25:1.00 |
December 31, 2012 through March 31, 2013 | 7.00:1.00 |
June 30, 2013 through December 31, 2013 | 6.75:1.00 |
March 31, 2014 through June 30, 2014 | 6.50:1.00 |
September 30, 2014 and thereafter | 6.25:1.00 |
Maximum senior leverage ratio covenant, or ratio of total debt outstanding under the Bank Credit Facility to annualized EBITDA, as such terms are defined under the Bank Credit Facility:
|
| |
Fiscal Quarters Ending: | |
June 30, 2012 and thereafter | 1.75:1.00 |
As of June 30, 2012, the Authority and the Tribe were in compliance with all respective covenant requirements under the Bank Credit Facility.
First Lien, Second Out Term Loan Facility
On March 6, 2012, the Authority entered into a loan agreement providing for a $225.0 million first lien, second out term loan with Wells Fargo Gaming Capital, LLC serving as Administrative Agent (the "Term Loan Facility"). The Term Loan Facility was issued at a price of 98.0% of par, for an initial yield of approximately 9.6% per annum. The Term Loan Facility has no mandatory amortization and is payable in full on March 31, 2016. The net proceeds from the Term Loan Facility were used to refinance the Authority's existing indebtedness, permanently reduce commitments under the Bank Credit Facility and pay accrued interest, fees and expenses in connection with the Authority's refinancing transactions consummated on March 6, 2012.
Loans under the Term Loan Facility incur interest as follows: (i) for base rate loans, base rate plus 6.50% per annum and (ii) for Eurodollar rate loans, LIBOR plus 7.50% per annum. In all cases, LIBOR is subject to a 1.50% floor. Interest on Eurodollar rate loans is payable at the end of each applicable interest period or every quarter in arrears, if an interest period exceeds three months. Interest on base rate loans is payable quarterly in arrears. As of June 30, 2012, the Authority had a $225.0 million Eurodollar
rate loan outstanding, which was based on the Eurodollar rate floor of 1.50% plus an applicable margin of 7.50%.
The Term Loan Facility is fully and unconditionally guaranteed, jointly and severally, by each of the Guarantors. The liens and security interests granted by the Grantors as security for the Authority's obligations under the Term Loan Facility are senior in priority to the liens on the same collateral securing any of the Secured Notes. The collateral securing the Term Loan Facility constitutes substantially all of the Grantors' property and assets that secure the Bank Credit Facility and the Secured Notes, but excludes certain excluded assets as defined in the Term Loan Facility.
The Term Loan Facility contains negative covenants that are substantially the same as the negative covenants contained in the Bank Credit Facility. The Term Loan Facility also contains financial maintenance covenants that are substantially the same as those in the Bank Credit Facility and also includes a separate first lien leverage ratio covenant.
As of June 30, 2012, through the remaining term of the Bank Credit Facility, the level of the first lien leverage ratio covenant, or ratio of total debt outstanding under the Bank Credit Facility and Term Loan Facility to annualized EBITDA, as such terms are defined under the Term Loan Facility, is 2.75 to 1.00.
As of June 30, 2012, the Authority and the Tribe were in compliance with all respective covenant requirements under the Term Loan Facility.
Senior Secured Notes
2009 11 1/2% Second Lien Senior Secured Notes
In October 2009, the Authority issued $200.0 million Second Lien Senior Secured Notes with fixed interest payable at a rate of 11.50% per annum (the “2009 Second Lien Notes”). The 2009 Second Lien Notes were issued at a price of 96.234% of par, to yield an effective interest rate of 12.25% per annum. The 2009 Second Lien Notes mature on November 1, 2017. The first call date for the 2009 Second Lien Notes is November 1, 2013. Interest on the 2009 Second Lien Notes is payable semi-annually on May 1st and November 1st.
On March 6, 2012, the Authority completed a private exchange offer and consent solicitation for any or all of its outstanding 2009 Second Lien Notes. As part of the exchange offer, the Authority solicited and received consents from tendering holders to certain amendments to the indentures governing the 2009 Second Lien Notes, which eliminated certain restrictive covenants under the notes and related indenture. The aggregate principal amount of 2009 Second Lien Notes tendered and exchanged was $199.8 million. An aggregate principal amount of $200,000 of 2009 Second Lien Notes remains outstanding as of June 30, 2012.
The 2009 Second Lien Notes are collateralized by a second priority lien on substantially all of the Grantors' and future guarantor subsidiaries' properties and assets, and are effectively subordinated to all of the Authority's and its existing and future guarantor subsidiaries' first priority lien secured indebtedness, including borrowings under the Bank Credit Facility and Term Loan Facility, to the extent of the value of the collateral securing such indebtedness. The 2009 Second Lien Notes are fully and unconditionally guaranteed, jointly and severally, by the Guarantors.
The 2009 Second Lien 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.
2012 11 ½% Second Lien Senior Secured Notes
On March 6, 2012, the Authority issued $199.8 million Second Lien Senior Secured Notes with fixed interest payable at a rate of 11.50% per annum (the “2012 Second Lien Notes”) in exchange for an equal amount of 2009 Second Lien Notes. The 2012 Second Lien Notes mature on November 1, 2017. The Authority may redeem the 2012 Second Lien Notes, in whole or in part, at any time prior to November 1, 2014, at a price equal to 100% of the principal amount plus a make-whole premium and accrued interest. On or after November 1, 2014, the Authority may redeem the 2012 Second Lien Notes, in whole or in part, at a premium decreasing ratably to zero, plus accrued interest. If a change of control of the Authority occurs, the Authority must offer to repurchase the 2012 Second Lien 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 Second Lien Notes at a price equal to 100% of the principal amount, plus accrued interest. Interest on the 2012 Second Lien Notes is payable semi-annually on May 1st and November 1st, commencing November 1, 2012.
The 2012 Second Lien Notes and the related guarantees are secured by second lien security interests in substantially all
of the Grantors property and assets. These liens are junior in priority to the liens on the same collateral securing the Authority's Bank Credit Facility and Term Loan Facility (and permitted replacements thereof) and to all other permitted prior liens, including liens securing certain hedging obligations. The collateral securing the 2012 Second Lien Notes constitutes substantially all of the Grantors' property and assets that secure the Bank Credit Facility and Term Loan Facility, the 2009 Second Lien Notes and 2012 Third Lien Notes, but excludes certain excluded assets as defined in the 2012 Second Lien Notes indenture. The 2012 Second Lien Notes are fully and unconditionally guaranteed, jointly and severally, by the Guarantors.
The 2012 Second Lien 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.
2012 10 ½% Third Lien Senior Secured Notes
On March 6, 2012, the Authority issued approximately $417.7 million Third Lien Senior Secured Notes with fixed interest payable at a rate of 10.50% per annum (the “2012 Third Lien Notes”) in exchange for $234.2 million of 2005 Senior Unsecured Notes and $183.5 million of 2002 Senior Subordinated Notes. The 2012 Third Lien Notes mature on December 15, 2016. The Authority may redeem the 2012 Third Lien 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 Third Lien 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 Third Lien Notes at a price equal to 100% of the principal amount, plus accrued interest. Interest on the 2012 Third Lien Notes is payable semi-annually on June 15th and December 15th, commencing December 15, 2012.
The 2012 Third Lien Notes and the related guarantees are secured by third lien security interests in substantially all of the Grantors' property and assets. These liens are junior in priority to the liens on the same collateral securing the Authority's Bank Credit Facility and Term Loan Facility, the 2009 Second Lien Notes and 2012 Second Lien Notes (and permitted replacements of each of the foregoing) and to all other permitted prior liens, including liens securing certain hedging obligations. The collateral securing the 2012 Third Lien Notes constitutes substantially all of the Grantors' property and assets that secure the Bank Credit Facility and Term Loan Facility, the 2009 Second Lien Notes and 2012 Second Lien Notes, but excludes certain excluded assets as defined in the 2012 Third Lien Notes indenture. The 2012 Third Lien Notes are fully and unconditionally guaranteed, jointly and severally, by the Guarantors.
The 2012 Third Lien 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.
Senior Unsecured Notes
2005 6 1/8% Senior Unsecured Notes
In February 2005, the Authority issued $250.0 million Senior Unsecured Notes with fixed interest payable at a rate of 6.125% per annum (the “2005 Senior Unsecured Notes”). The 2005 Senior Unsecured Notes mature on February 15, 2013. The 2005 Senior Unsecured Notes are callable at the Authority's option at par. Interest on the 2005 Senior Unsecured Notes is payable semi-annually on February 15th and August 15th.
On March 6, 2012, the Authority completed a private exchange offer and consent solicitation for any or all of its outstanding 2005 Senior Unsecured Notes. As part of the exchange offer, the Authority solicited and received consents from tendering holders to certain amendments to the indentures governing the 2005 Senior Unsecured Notes, which eliminated certain restrictive covenants under the notes and related indenture. The aggregate principal amount of 2005 Senior Unsecured Notes tendered and exchanged was $234.2 million. An aggregate principal amount of $15.8 million of the 2005 Senior Unsecured Notes remains outstanding as of June 30, 2012.
The 2005 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 Bank Credit Facility, Term Loan Facility, 2009 Second Lien Notes, 2012 Second Lien Notes and 2012 Third Lien Notes, to the extent of the value of the collateral securing such indebtedness. The 2005 Senior Unsecured Notes are fully and unconditionally guaranteed, jointly and severally, by the Guarantors.
Senior Subordinated Notes
2002 8% Senior Subordinated Notes
In February 2002, the Authority issued $250.0 million Senior Subordinated Notes with fixed interest payable at a rate of 8.000% per annum (the “2002 Senior Subordinated Notes”). The 2002 Senior Subordinated Notes matured on April 1, 2012. Subsequent to the March 6, 2012 private exchange offer, $66.5 million 2002 Senior Subordinated Notes remained outstanding, which amount, including accrued interest, was repaid at maturity with cash on hand.
2004 7 1/8% Senior Subordinated Notes
In August 2004, the Authority issued $225.0 million Senior Subordinated Notes with fixed interest payable at a rate of 7.125% per annum (the “2004 Senior Subordinated Notes”). The 2004 Senior Subordinated Notes mature on August 15, 2014. The 2004 Senior Subordinated Notes are callable at the Authority's option at par. Interest on the 2004 Senior Subordinated Notes is payable semi-annually on February 15th and August 15th.
On March 6, 2012, the Authority completed a private exchange offer and consent solicitation for any or all of its outstanding 2004 Senior Subordinated Notes. As part of the exchange offer, the Authority solicited and received consents from tendering holders to certain amendments to the indentures governing the 2004 Senior Subordinated Notes, which eliminated certain restrictive covenants under the notes and related indenture. The aggregate principal amount of 2004 Senior Subordinated Notes tendered and exchanged was $203.8 million. An aggregate principal amount of $21.2 million of the 2004 Senior Subordinated Notes remains outstanding as of June 30, 2012.
2005 6 7/8% Senior Subordinated Notes
In February 2005, the Authority issued $150.0 million Senior Subordinated Notes with fixed interest payable at a rate of 6.875% per annum (the “2005 Senior Subordinated Notes”). The 2005 Senior Subordinated Notes mature on February 15, 2015. The 2005 Senior Subordinated Notes are callable at the Authority's option at par. Interest on the 2005 Senior Subordinated Notes is payable semi-annually on February 15th and August 15th.
On March 6, 2012, the Authority completed a private exchange offer and consent solicitation for any or all of its outstanding 2005 Senior Subordinated Notes. As part of the exchange offer, the Authority solicited and received consents from tendering holders to certain amendments to the indentures governing the 2005 Senior Subordinated Notes, which eliminated certain restrictive covenants under the notes and related indenture. The aggregate principal amount of 2005 Senior Subordinated Notes tendered and exchanged was $140.3 million. An aggregate principal amount of $9.7 million of the 2005 Senior Subordinated Notes remains outstanding as of June 30, 2012.
2012 11% Senior Subordinated Notes
On March 6, 2012, the Authority issued $344.2 million Senior Subordinated Toggle Notes with fixed interest payable at a rate of 11% per annum (the “2012 Senior Subordinated Notes”) in exchange for $203.8 million of 2004 Senior Subordinated Notes and $140.3 million of 2005 Senior Subordinated Notes. The 2012 Senior Subordinated Notes mature on September 15, 2018. The Authority may redeem the 2012 Senior Subordinated Notes, in whole or in part, at any time, at a price equal to 100% of the principal amount plus accrued interest. If a change of control of the Authority occurs, the Authority must offer to repurchase the 2012 Senior Subordinated Notes at a price equal to 101% of the principal amount, plus accrued interest. In addition, if the Authority undertakes certain types of asset sales or suffers events of loss, and the Authority 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, commencing September 15, 2012. The initial interest payment on the 2012 Senior Subordinated Notes is payable entirely in cash. For any subsequent interest payment period through March 15, 2018, the Authority may, at its option, elect to pay interest on the 2012 Senior Subordinated Notes either entirely in cash or by paying up to 2% in 2012 Senior Subordinated Notes (“PIK Interest”). If the Authority elects to pay PIK Interest, such election will increase the principal amount of the 2012 Senior Subordinated Notes in an amount equal to the amount of PIK Interest for the applicable interest payment period to holders of 2012 Senior Subordinated Notes on the relevant record date.
The 2012 Senior Subordinated Notes and guarantees have not been and will not be registered under the Securities Act of 1933 or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements.
The Authority's senior subordinated notes are uncollateralized general obligations of the Authority, and are subordinated
to borrowings under the Bank Credit Facility, Term Loan Facility, 2009 Second Lien Notes, 2012 Second Lien Notes, 2012 Third Lien Notes and 2005 Senior Unsecured Notes. The senior subordinated notes are fully and unconditionally guaranteed, jointly and severally, by the Guarantors.
The senior and senior subordinated note indentures contain certain non-financial and financial covenant requirements with which the Authority and the Tribe must comply. The non-financial covenant requirements include, among other things, reporting obligations, compliance with laws and regulations, maintenance of licenses and insurances and continued existence of the Authority. The financial covenant requirements include, among other things, subject to certain exceptions, limitations on the Authority's and the Guarantors' ability to incur additional indebtedness, pay dividends or distributions, make certain investments, create liens on assets, enter into transactions with affiliates, merge or consolidate with another company, transfer or sell assets or impair assets constituting collateral.
As of June 30, 2012, the Authority and the Tribe were in compliance with all respective covenant requirements under the senior and senior subordinated note indentures.
The Authority or its affiliates may, from time to time, seek to purchase or otherwise retire outstanding indebtedness for cash in open market purchases, privately negotiated transactions or otherwise. Any such transaction will depend on prevailing market conditions and the Authority's liquidity and covenant requirement restrictions, among other factors.
Line of Credit
As of June 30, 2012, the Authority had a $16.5 million revolving credit facility with Bank of America, N.A. (the “Line of Credit”). The Line of Credit was amended in March 2012 to, among other things, extend the maturity date to March 31, 2015. Pursuant to the provisions of the Bank Credit Facility, the Line of Credit may be replaced by an Autoborrow Loan governed by the terms of an Autoborrow Agreement described in the Bank Credit Facility. Under the Line of Credit, as amended, 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. Borrowings under the Line of Credit are uncollateralized obligations. As of June 30, 2012, no amount was drawn on the Line of Credit. The Line of Credit contains negative covenants and financial maintenance covenants that are substantially the same as the corresponding covenants contained in the Bank Credit Facility. As of June 30, 2012, the Authority was in compliance with all covenant requirements under the Line of Credit and had $16.5 million of borrowing capacity thereunder.
2009 Mohegan Tribe Promissory Note
In September 2009, the Tribe made a $10.0 million loan to Salishan-Mohegan (the “2009 Mohegan Tribe Promissory Note”). The 2009 Mohegan Tribe Promissory Note was amended in March 2012 to extend the maturity date to September 30, 2014. As amended, the 2009 Mohegan Tribe Promissory Note accrues interest at an annual rate of 10.0%. Accrued interest is payable quarterly in the amount of $1.2 million, commencing December 31, 2013 and continuing through June 31, 2014, with the balance of accrued and unpaid interest due at maturity. Principal outstanding under the 2009 Mohegan Tribe Promissory Note amortizes as follows: (i) $1.625 million per quarter, commencing December 31, 2012 and continuing through September 30, 2013 and (ii) $875,000 per quarter, commencing December 31, 2013.
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 proceeds of which were used to repay, among other things, the Salishan-Mohegan Bank Credit Facility. The 2012 Mohegan Tribe Minor's Trust Promissory Note matures on March 31, 2016. The 2012 Mohegan Tribe Minor's Trust Promissory Note accrues interest at an annual rate of 10.0%. Accrued interest is payable quarterly, commencing June 30, 2012. Principal outstanding under the 2012 Mohegan Tribe Minor's Trust Promissory Note amortizes as follows: (i) $500,000 per quarter, commencing December 31, 2012 and continuing through September 30, 2014 and (ii) $1.5 million per quarter, commencing December 31, 2014 and continuing to maturity.
Mohegan Tribe Credit Facility
In 2011, the Tribe provided Salishan-Mohegan with a $1.75 million revolving credit facility (the “Mohegan Tribe Credit Facility”). The Mohegan Tribe Credit Facility was amended in March 2012 to extend the maturity date to September 30, 2013 and reduce the borrowing capacity to $1.45 million. The Mohegan Tribe Credit Facility accrues interest at an annual rate of 15.0% payable at maturity. As amended, principal outstanding under the Mohegan Tribe Credit Facility amortizes at a rate of $362,500
per quarter, commencing December 31, 2012. As of June 30, 2012, the Mohegan Tribe Credit Facility was fully drawn.
Salishan-Mohegan Bank Credit Facility
Salishan-Mohegan previously had a $15.25 million revolving loan credit facility with Bank of America, N.A. (the “Salishan-Mohegan Bank Credit Facility”). The Salishan-Mohegan Bank Credit Facility, including accrued interest, matured in March 2012, at which time it was repaid with proceeds from the 2012 Mohegan Tribe Minor's Trust Promissory Note.
Capital Expenditures
The following table presents data related to capital expenditures (in millions):
|
| | | | | | | | | | | |
| Capital Expenditures |
| Nine Months Ended | | Remaining Forecasted | | Total Forecasted |
| June 30, 2012 | | Fiscal Year 2012 | | Fiscal Year 2012 |
Mohegan Sun: | | | | | |
Maintenance | $ | 24.1 |
| | $ | 8.9 |
| | $ | 33.0 |
|
Development | 5.6 |
| | 4.4 |
| | 10.0 |
|
Expansion - Project Horizon | 0.3 |
| | — |
| | 0.3 |
|
Subtotal | 30.0 |
| | 13.3 |
| | 43.3 |
|
Mohegan Sun at Pocono Downs: | | | | | |
Maintenance | 3.8 |
| | 0.2 |
| | 4.0 |
|
Expansion (1) | (0.3 | ) | | — |
| | (0.3 | ) |
Subtotal | 3.5 |
| | 0.2 |
| | 3.7 |
|
Corporate: | | | | | |
Expansion - Project Sunlight | 0.6 |
| | 5.2 |
| | 5.8 |
|
Subtotal | 0.6 |
| | 5.2 |
| | 5.8 |
|
Total | $ | 34.1 |
| | $ | 18.7 |
| | $ | 52.8 |
|
__________ | |
(1) | Represents adjustments to the cost for Project Sunrise and table game and poker operations expansions. |
We primarily rely on cash flows provided by operating activities to fund maintenance capital expenditures at Mohegan Sun and Mohegan Sun at Pocono Downs. We plan to fund any development or expansion capital expenditures at Mohegan Sun and Mohegan Sun at Pocono Downs through a combination of existing cash, cash flows provided by operating activities and draws under our bank credit facility. Project Sunlight will be funded through a fully-funded $45 million non-recourse term loan obtained by Downs Lodging, LLC, our wholly-owned unrestricted subsidiary, and a $5 million equity contribution by us.
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, |
| 2012 | | 2011 | | 2012 | | 2011 |
Bank credit facility | $ | 5,664 |
| | $ | 5,659 |
| | $ | 16,011 |
| | $ | 17,739 |
|
Term loan facility, including accretion of discount | 5,340 |
| | — |
| | 6,874 |
| | — |
|
2009 11 1/2% second lien senior secured notes, includes accretion of bond discount | 6 |
| | 5,917 |
| | 10,221 |
| | 17,738 |
|
2012 11 1/2% second lien senior secured notes, includes accretion of bond discount | 5,927 |
| | — |
| | 7,572 |
| | — |
|
2012 10 1/2% third lien senior secured notes | 10,967 |
| | — |
| | 14,013 |
| | — |
|
2005 6 1/8% senior unsecured notes | 242 |
| | 3,828 |
| | 6,902 |
| | 11,484 |
|
2001 8 3/8% senior subordinated notes | — |
| | 42 |
| | — |
| | 126 |
|
2002 8% senior subordinated notes | — |
| | 5,000 |
| | 8,980 |
| | 15,000 |
|
2004 7 1/8% senior subordinated notes | 377 |
| | 4,008 |
| | 7,384 |
| | 12,024 |
|
2005 6 7/8% senior subordinated notes | 166 |
| | 2,578 |
| | 4,652 |
| | 7,734 |
|
2012 11 % senior subordinated notes | 9,465 |
| | — |
| | 12,094 |
| | — |
|
Line of credit | — |
| | 68 |
| | 95 |
| | 211 |
|
WNBA promissory note | — |
| | — |
| | — |
| | 6 |
|
Salishan-Mohegan bank credit facility | — |
| | 164 |
| | 250 |
| | 453 |
|
2009 Mohegan Tribe promissory note (Salishan-Mohegan) | 281 |
| | 374 |
| | 997 |
| | 1,122 |
|
2012 Mohegan Tribe Minor's Trust promissory note (Salishan-Mohegan) | 497 |
| | — |
| | 508 |
| | — |
|
Mohegan Tribe credit facility (Salishan-Mohegan) | 54 |
| | 15 |
| | 147 |
| | 18 |
|
Capital leases | 178 |
| | 55 |
| | 278 |
| | 168 |
|
Amortization of net deferred gain on settlement of derivative instruments | (23 | ) | | (117 | ) | | (231 | ) | | (351 | ) |
Amortization of debt issuance costs | 2,440 |
| | 1,787 |
| | 6,300 |
| | 5,365 |
|
| — |
| | — |
| | — |
| | — |
|
Total interest expense | $ | 41,581 |
| | $ | 29,378 |
| | $ | 103,047 |
| | $ | 88,837 |
|
Contractual Obligations
The following table presents estimated future payment obligations related to our debt and the timing of those payments as of June 30, 2012 (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 | $ | 1,662,996 |
| | $ | 27,237 |
| | $ | 437,298 |
| | $ | 654,271 |
| | $ | 544,190 |
|
Capital leases | 8,862 |
| | 2,376 |
| | 3,940 |
| | 1,665 |
| | 881 |
|
Interest payments on long-term debt and capital leases | 743,327 |
| | 169,909 |
| | 301,251 |
| | 203,857 |
| | 68,310 |
|
Total | $ | 2,415,185 |
| | $ | 199,522 |
| | $ | 742,489 |
| | $ | 859,793 |
| | $ | 613,381 |
|
________________________ | |
(1) | Represents payment obligations from July 1, 2012 to June 30, 2013. |
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, relinquishment payments, foreseeable capital expenditure requirements and distributions to the Tribe 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, 2011 for further details regarding risks relating to our sufficiency of resources. Any future investments in Mohegan Sun and Mohegan Sun at Pocono Downs are anticipated to be funded through a combination of existing cash balances, future operating cash flows and draws under our Bank Credit Facility. Project Sunlight will be funded through a fully-funded $45 million non-recourse term loan obtained by Downs Lodging, LLC and a $5 million equity contribution by us. Inclusive of letters of credit, which reduce borrowing availability under the Bank Credit Facility, and after taking into account restrictive financial covenant requirements, we had approximately
$72.7 million of borrowing capacity under the Bank Credit Facility and Line of Credit as of June 30, 2012. Distributions to the Tribe are anticipated to total approximately $53.0 million for fiscal 2012.
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, 2011.
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.
New Accounting Pronouncements
In July 2012, the Financial Accounting Standards Board, or the FASB, issued revised guidance pertaining to the accounting standard for indefinite-lived intangible assets. The revised guidance allows an entity the option to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired before performing the two-step indefinite-lived intangible asset impairment test. The revised guidance is effective for interim and annual periods beginning after September 15, 2012; however, early adoption is permitted. We do not expect its adoption to impact our financial position, results of operations or cash flows.
In September 2011, the FASB issued revised guidance pertaining to the accounting standard for goodwill impairment tests. The revised guidance allows an entity the option to assess qualitative factors to determine whether the fair value of a reporting unit is less than its carrying value before performing the two-step goodwill impairment test. The revised guidance is effective for interim and annual periods beginning after December 15, 2011. We adopted this guidance in our second quarter of fiscal 2012, and its adoption did not impact our financial position, results of operations or cash flows.
In May 2011, the FASB issued amended guidance seeking to improve the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. generally accepted accounting principles, or GAAP, and International Financial Reporting Standards, or IFRS. While consistent with existing fair value measurement principles under GAAP, the amended guidance expands existing disclosure requirements for fair value measurements and eliminates unnecessary differences between GAAP and IFRS. The amended guidance is effective for interim and annual periods beginning after December 15, 2011. We adopted this guidance in our second quarter of fiscal 2012, and its adoption did not impact our financial position, results of operations or cash flows.
In April 2010, the FASB issued guidance pertaining to accruals for casino jackpot liabilities. The new guidance clarifies that an entity should not accrue jackpot liabilities (or portions thereof) before a jackpot is won if the entity can avoid paying such jackpot. The new guidance specifies that jackpots should be accrued and charged to revenue when the entity has the obligation to pay such jackpot and applies to both base and progressive jackpots and requires a cumulative-effect adjustment to opening retained earnings in the period of adoption. The new guidance was effective for annual periods, and interim periods within those annual periods, beginning on or after December 15, 2010. We adopted this guidance in our first quarter of fiscal 2012, and as such, recorded a cumulative-effect adjustment, which decreased other current liabilities and increased retained earnings by $2.0 million.
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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. Our primary exposure to market risk is interest rate risk associated with our bank credit facility and term loan facility, which both accrue interest on the basis of a base rate formula or a Eurodollar rate formula, plus applicable rates, as defined under the respective facility. As of June 30, 2012, $398.0 million and $225.0 million was outstanding under the bank credit facility and term loan facility, respectively.
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 as of June 30, 2012 about our current financial instruments or debt obligations that are sensitive to changes in interest rates. The table presents principal payments and related weighted average interest rates by expected maturity dates. Weighted average variable rates are 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 instruments are based on quoted market prices or prices of similar instruments as of June 30, 2012.
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| Expected Maturity Date | | Total | | Fair Value |
| 2012 | | 2013 | | 2014 | | 2015 | | 2016 | | Thereafter | |
Liabilities (in thousands) | | | | | | | | | | | | | | | |
Long-term debt and capital lease obligations (including current portions): | | | | | | | | | | | | | | | |
Fixed rate | $ | 874 |
| | $ | 27,749 |
| | $ | 28,845 |
| | $ | 17,085 |
| | $ | 10,824 |
| | $ | 963,481 |
| | $ | 1,048,858 |
| | $ | 876,089 |
|
Average interest rate | 8.8 | % | | 7.9 | % | | 7.7 | % | | 8.0 | % | | 9.5 | % | | 10.9 | % | | 10.6 | % | | |
Variable rate | $ | 1,000 |
| | $ | 4,000 |
| | $ | 4,000 |
| | $ | 389,000 |
| | $ | 225,000 |
| | $ | — |
| | $ | 623,000 |
| | $ | 601,673 |
|
Average interest rate (1) | 5.5 | % | | 5.5 | % | | 5.5 | % | | 5.5 | % | | 9.0 | % | | — |
| | 6.8 | % | | |
___________ | |
(1) | A 100 basis point change in average interest rate would impact annual interest expense by approximately $6.2 million. |
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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, 2012. 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, 2012, 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, 2012, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
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.
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, 2011.
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.
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.
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| | MOHEGAN TRIBAL GAMING AUTHORITY |
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Date: | August 13, 2012 | By: | /S/ BRUCE S. BOZSUM |
| | | Bruce S. Bozsum Chairman and Member, Management Board |
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Date: | August 13, 2012 | By: | /S/ MITCHELL GROSSINGER ETESS |
| | | Mitchell Grossinger Etess Chief Executive Officer, Mohegan Tribal Gaming Authority (Principal Executive Officer) |
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Date: | August 13, 2012 | By: | /S/ MARIO C. KONTOMERKOS |
| | | Mario C. Kontomerkos Chief Financial Officer, Mohegan Tribal Gaming Authority (Principal Financial and Accounting Officer) |
EXHIBIT INDEX
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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 November 1, 2004 and incorporated by reference herein). |
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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 (the 1996 Form S-1) and incorporated by reference herein). |
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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). |
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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). |
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3.5 |
| | Certificate of Organization of Mohegan Commercial Ventures PA, LLC, dated as of January 6, 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). |
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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). |
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3.7 |
| | Certificate of Limited Partnership of Downs Racing, L.P., dated as of January 7, 2005, as amended (filed as Exhibit 3.7 to the 2005 Form S-4 and incorporated by reference herein). |
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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). |
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3.9 |
| | Certificate of Limited Partnership of Backside, L.P., dated as of January 7, 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). |
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3.11 |
| | Certificate of Limited Partnership of Mill Creek Land, L.P., dated as of January 7, 2005, as amended (filed as Exhibit 3.11 to the 2005 Form S-4 and incorporated by reference herein). |
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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). |
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3.13 |
| | Certificate of Limited Partnership of Northeast Concessions, L.P., dated as of January 7, 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). |
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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). |
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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). |
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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 (the “2006 Form 10-K”) and incorporated by reference herein). |
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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). |
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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). |
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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 (the “2007 Form 10-K”), 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). |
| | |
4.1 |
| | Relinquishment Agreement, dated as of February 7, 1998, between the Mohegan Tribal Gaming Authority, The Mohegan Tribe of Indians of Connecticut and Trading Cove Associates (filed as Exhibit 10.14 to the Authority’s Form 10-K405 for the fiscal year ended September 30, 1998, filed with the SEC on December 29, 1998 and incorporated by reference herein). |
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4.2 |
| | Supplemental Indenture No. 8, dated as of March 5, 2012, between the Mohegan Tribal Gaming Authority, The Mohegan Tribe of Indians of Connecticut, the Subsidiary Guarantors (as defined under the Indenture) and U.S. Bank National Association, as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.11 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).] |
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4.3 |
| | Indenture, dated as of August 3, 2004, between the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut, Mohegan Basketball Club, LLC and U.S. Bank National Association, as Trustee, relating to the 7 1/8% Senior Subordinated Notes Due 2014 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.19 to the Authority's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2004 (the “June 2004 Form 10-Q”), filed with the SEC on August 16, 2004 and incorporated by reference herein). |
| | |
4.4 |
| | Supplemental Indenture No. 1, dated as of January 25, 2005, between the Mohegan Tribal Gaming Authority, the Subsidiary Guarantors (as defined under the Indenture), and U.S. Bank National Association, as Trustee, relating to the 7 1/8% Senior Subordinated Notes Due 2014 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.25 to the Authority’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2004, filed with the SEC on February 14, 2005 (the “December 2004 Form 10-Q”) and incorporated by reference herein). |
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4.5 |
| | Supplemental Indenture No. 2, dated as of August 4, 2006, between the Mohegan Tribal Gaming Authority, Mohegan Ventures-Northwest, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as defined under the Indenture) and U.S. Bank National Association, as Trustee, relating to the 7 1/8% Senior Subordinated Notes Due 2014 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.20 to the June 2006 Form 10-Q and incorporated by reference herein). |
| | |
4.6 |
| | Supplemental Indenture No. 3, dated as of December 18, 2006, between the Mohegan Tribal Gaming Authority, Mohegan Golf, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as defined under the Indenture) and U.S. Bank National Association, as Trustee, relating to the 7 1/8% Senior Subordinated Notes Due 2014 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.23 to the 2006 Form 10-K and incorporated by reference herein). |
| | |
4.70 |
| | Supplemental Indenture No. 4, dated as of March 28, 2007, between the Mohegan Tribal Gaming Authority, Wisconsin Tribal Gaming, LLC and Mohegan Ventures Wisconsin, LLC (each a Subsidiary Guarantor), the other Subsidiary Guarantors (as defined under the Indenture) and U.S. Bank National Association, as Trustee, relating to the 7 1/8% Senior Subordinated Notes Due 2014 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.26 to the March 2007 Form 10-Q and incorporated by reference herein). |
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4.8 |
| | Supplemental Indenture No. 5, dated as of August 27, 2007, between the Mohegan Tribal Gaming Authority, MTGA Gaming, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as defined under the Indenture) and U.S. Bank National Association, as Trustee, relating to the 7 1/8% Senior Subordinated Notes Due 2014 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.29 to the 2007 Form 10-K and incorporated by reference herein). |
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4.9 |
| | Supplemental Indenture No. 6, dated as of March 5, 2012, between the Mohegan Tribal Gaming Authority, The Mohegan Tribe of Indians of Connecticut, the Subsidiary Guarantors (as defined under the Indenture) and U.S. Bank National Association, as Trustee, relating to the 7 1/8% Senior Subordinated Notes Due 2014 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.19 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). |
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4.10 |
| | Form of Global 7 1/8% Senior Subordinated Notes Due 2014 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.20 to the June 2004 Form 10-Q and incorporated by reference herein). |
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4.11 |
| | Indenture, dated as of February 8, 2005, between the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut, the Subsidiary Guarantors (as defined under the Indenture) and U.S. Bank National Association, as Trustee, relating to the 6 7/8% Senior Subordinated Notes Due 2015 (filed as Exhibit 4.28 to the December 2004 Form 10-Q and incorporated by reference herein). |
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4.12 |
| | Supplemental Indenture No. 1, dated as of August 4, 2006, between the Mohegan Tribal Gaming Authority, Mohegan Ventures-Northwest, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as defined under the Indenture) and U.S. Bank National Association, as Trustee, relating to the 6 7/8% Senior Subordinated Notes Due 2015 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.23 to the June 2006 Form 10-Q and incorporated by reference herein). |
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4.13 |
| | Supplemental Indenture No. 2, dated as of December 18, 2006, between the Mohegan Tribal Gaming Authority, Mohegan Golf, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as defined under the Indenture) and U.S. Bank National Association, as Trustee, relating to the 6 7/8% Senior Subordinated Notes Due 2015 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.27 to the 2006 Form 10-K and incorporated by reference herein). |
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4.14 |
| | Supplemental Indenture No. 3, dated as of March 28, 2007, between the Mohegan Tribal Gaming Authority, Wisconsin Tribal Gaming, LLC and Mohegan Ventures Wisconsin, LLC (each a Subsidiary Guarantor), the other Subsidiary Guarantors (as defined under the Indenture) and U.S. Bank National Association, as Trustee, relating to the 6 7/8% Senior Subordinated Notes Due 2015 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.31 to the March 2007 Form 10-Q and incorporated by reference herein). |
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4.15 |
| | Supplemental Indenture No. 4, dated as of August 27, 2007, between the Mohegan Tribal Gaming Authority, MTGA Gaming, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as defined under the Indenture) and U.S. Bank National Association, as Trustee, relating to the 6 7/8% Senior Subordinated Notes Due 2015 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.35 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). |
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4.16 |
| | Supplemental Indenture No. 5, dated as of March 5, 2012, between the Mohegan Tribal Gaming Authority, The Mohegan Tribe of Indians of Connecticut, the Subsidiary Guarantors (as defined under the Indenture) and U.S. Bank National Association, as Trustee, relating to the 6 7/8% Senior Subordinated Notes Due 2015 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.26 to the March 2012 Form 10-Q and incorporated by reference herein).
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4.17 |
| | Form of Global 6 7/8% Senior Subordinated Notes Due 2015 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.29 to the December 2004 Form 10-Q and incorporated by reference herein). |
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4.18 |
| | Indenture, dated as of February 8, 2005, between the Mohegan Tribal Gaming Authority, The Mohegan Tribe of Indians of Connecticut, the Subsidiary Guarantors (as defined under the Indenture) and Wachovia Bank, National Association, as Trustee, relating to the 6 1/8% Senior Notes Due 2013 (filed as Exhibit 4.31 to the December 2004 Form 10-Q and incorporated by reference herein). |
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4.19 |
| | Supplemental Indenture No. 1, dated as of August 4, 2006, between the Mohegan Tribal Gaming Authority, Mohegan Ventures-Northwest, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as defined under the Indenture) and U.S. Bank National Association (as successor to Wachovia Bank, National Association), as Trustee, relating to the 6 1/8% Senior Notes Due 2013 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.26 to the June 2006 Form 10-Q and incorporated by reference herein). |
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4.20 |
| | Supplemental Indenture No. 2, dated as of December 18, 2006, between the Mohegan Tribal Gaming Authority, Mohegan Golf, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as defined under the Indenture) and U.S. Bank National Association (as successor to Wachovia Bank, National Association), as Trustee, relating to the 6 1/8% Senior Notes Due 2013 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.31 to the 2006 Form 10-K and incorporated by reference herein). |
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4.21 |
| | Supplemental Indenture No. 3, dated as of March 28, 2007, between the Mohegan Tribal Gaming Authority, Wisconsin Tribal Gaming, LLC and Mohegan Ventures Wisconsin, LLC (each a Subsidiary Guarantor), the other Subsidiary Guarantors (as defined under the Indenture) and U.S. Bank National Association (as successor to Wachovia Bank, National Association), as Trustee, relating to the 6 1/8% Senior Notes Due 2013 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.36 to the March 2007 Form 10-Q and incorporated by reference herein). |
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4.22 |
| | Supplemental Indenture No. 4, dated as of August 27, 2007, between the Mohegan Tribal Gaming Authority, MTGA Gaming, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as defined under the Indenture) and U.S. Bank National Association, as Trustee, relating to 6 1/8% Senior Notes Due 2013 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.41 to the 2007 Form 10-K and incorporated by reference herein). |
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4.23 |
| | Supplemental Indenture No. 5, dated as of March 5, 2012, between the Mohegan Tribal Gaming Authority, The Mohegan Tribe of Indians of Connecticut, the Subsidiary Guarantors (as defined under the Indenture) and U.S. Bank National Association, as Trustee, relating to 6 1/8% Senior Notes Due 2013 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.33 to the March 2012 Form 10-Q and incorporated by reference herein). |
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4.24 |
| | Form of Global 6 1/8% Senior Notes Due 2013 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.32 to the December 2004 Form 10-Q and incorporated by reference herein). |
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4.25 |
| | Indenture, dated as of October 26, 2009, between the Mohegan Tribal Gaming Authority, The Mohegan Tribe of Indians of Connecticut, the Subsidiary Guarantors (as defined under the Indenture) and U.S. Bank National Association, as Trustee, relating to the 2009 11 1/2% Second Lien Senior Secured Notes Due 2017 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.43 to the Authority’s Annual Report on Form 10-K for the fiscal year ended September 30, 2009, filed with the SEC on December 28, 2009 (the “2009 Form 10-K”) and incorporated by reference herein). |
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4.26 |
| | Supplemental Indenture No.1, dated as of March 5, 2012, between the Mohegan Tribal Gaming Authority, The Mohegan Tribe of Indians of Connecticut, the Subsidiary Guarantors (as defined under the Indenture) and U.S. Bank National Association, as Trustee, relating to the 2009 11 1/2% Second Lien Senior Secured Notes Due 2017 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.36 to the March 2012 Form 10-Q and incorporated by reference herein). |
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4.27 |
| | Form of Global 2009 11 1/2% Second Lien Senior Secured Notes Due 2017 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.44 to the 2009 Form 10-K and incorporated by reference herein). |
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4.28 |
| | 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 2012 11 1/2% Second Lien Senior Secured Notes Due 2017 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.38 to the March 2012 Form 10-Q and incorporated by reference herein). |
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4.29 |
| | Form of Global 2012 11 1/2% Second Lien Senior Secured Notes Due 2017 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.39 to the March 2012 Form 10-Q and incorporated by reference herein). |
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4.30 |
| | 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 10 1/2% Third Lien Senior Secured Notes Due 2016 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.40 to the March 2012 Form 10-Q and incorporated by reference herein). |
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4.31 |
| | Form of Global 10 1/2% Third Lien Senior Secured Notes Due 2016 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.41 to the March 2012 Form 10-Q and incorporated by reference herein). |
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4.32 |
| | 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 March 2012 Form 10-Q and incorporated by reference herein). |
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4.33 |
| | 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). |
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31.1 |
| | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer (filed herewith). |
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31.2 |
| | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer (filed herewith). |
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32.1 |
| | Section 1350 Certification of Chief Executive Officer (filed herewith). |
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32.2 |
| | Section 1350 Certification of Chief Financial Officer (filed herewith). |
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101.INS* |
| | XBRL Instance Document (filed herewith). |
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101.SCH* |
| | XBRL Taxonomy Extension Schema (filed herewith). |
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101.CAL* |
| | XBRL Taxonomy Calculation Linkbase (filed herewith).
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101.DEF* |
| | XBRL Taxonomy Extension Definition Linkbase (filed herewith). |
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101.LAB* |
| | XBRL Taxonomy Extension Label Linkbase (filed herewith). |
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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. |