BASIS OF PRESENTATION:

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In accordance with Rule 10-01, the accompanying unaudited condensed consolidated financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete consolidated financial statements. The accompanying year-end condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. In management's opinion, all adjustments, including normal recurring accruals and adjustments, necessary for a fair statement of the Authority's operating results for the interim period, have been included. The Authority's operating results for the three months and nine months ended June 30, 2013 are not necessarily indicative of results for the fiscal year ending September 30, 2013.

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, 2012.

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 was not material to 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.

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, as Mohegan Ventures-NW is deemed to be the primary beneficiary. In addition, the accounts of MG&H, Mohegan Resorts and its subsidiaries were consolidated into the accounts of MTGA Gaming, as MTGA Gaming was deemed to be the primary beneficiary. However, on March 29, 2013, MG&H purchased and acquired all of the Tribe's membership interests in MG&H and retired the membership interests (refer to Note 1). In consolidation, all intercompany balances and transactions were eliminated.

Long-Term Receivables

Long-term receivables consist primarily of receivables from affiliates and tenants and others. 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		Tenants and Others			Total
Balance, March 31, 2013 (1)	$	53,678	$	3,520		$	57,198
Additions:
Issuance of affiliate advances and tenant loans, including interest receivable	1,920		74			1,994
Deductions:
Payments received	—		(35		)	(35		)
Balance, June 30, 2013 (1)	$	55,598	$	3,559		$	59,157

Balance, September 30, 2012 (1)	$	49,841	$	3,533		$	53,374
Additions:
Issuance of affiliate advances and tenant loans, including interest receivable	5,757		129			5,886
Deductions:
Payments received	—		(103		)	(103		)
Balance, June 30, 2013 (1)	$	55,598	$	3,559		$	59,157

__________


(1)	Includes interest receivable of $25.7 million, $27.2 million and $22.9 million as of March 31, 2013, June 30, 2013 and September 30, 2012, respectively. The WTG receivables no longer accrue interest pursuant to a release and reimbursement agreement entered into in September 2010.



	Reserves for Doubtful Collection of Long-Term Receivables
	Affiliates		Tenants and Others			Total
Balance, March 31, 2013	$	22,958	$	65		$	23,023
Additions:
Charges to bad debt expense	576		—			576
Deductions:
Adjustments	—		(2		)	(2		)
Balance, June 30, 2013	$	23,534	$	63		$	23,597

Balance, September 30, 2012	$	21,807	$	70		$	21,877
Additions:
Charges to bad debt expense	1,727		—			1,727
Deductions:
Adjustments	—		(7		)	(7		)
Balance, June 30, 2013	$	23,534	$	63		$	23,597

Fair Value of Financial Instruments

The fair value amounts presented below are reported to satisfy disclosure requirements pursuant to authoritative guidance issued by the FASB pertaining to disclosures about fair values of financial instruments and are not necessarily indicative of amounts that the Authority could realize in a current market transaction.

The Authority applies the following fair value hierarchy, which prioritizes the inputs utilized to measure fair value into three levels:


•	Level 1 - Quoted prices for identical assets or liabilities in active markets;


•	Level 2 - Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets or valuations based on models where the significant inputs are observable or can be corroborated by observable market data; and


•	Level 3 - Valuations based on models where the significant inputs are unobservable. The unobservable inputs reflect the Authority's estimates or assumptions that market participants would utilize in pricing such assets or liabilities.

The Authority's assessment of the significance of a particular input requires judgment and may affect the valuation of financial assets and liabilities and their placement within the fair value hierarchy.

The carrying amount of cash and cash equivalents, receivables, trade payables and promissory notes approximates fair value. The estimated fair value of the Authority's financing facilities and notes were as follows (in thousands):



	June 30, 2013
	Carrying Value		Fair Value
Bank Credit Facility	$	394,000	$	378,240
Term Loan Facility	$	221,737	$	221,625
2009 11 1/2% Second Lien Senior Secured Notes	$	195	$	222
2012 11 1/2% Second Lien Senior Secured Notes	$	194,819	$	221,778
2012 10 1/2% Third Lien Senior Secured Notes	$	417,771	$	406,805
2004 7 1/8% Senior Subordinated Notes	$	21,156	$	20,098
2005 6 7/8% Senior Subordinated Notes	$	9,654	$	9,503
2012 11 % Senior Subordinated Notes	$	344,190	$	320,527

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, 2013.

Severance Costs and Expenses

In September 2012, the Authority implemented a workforce reduction of approximately 330 positions in Uncasville, Connecticut, in an effort to further streamline its organization and better align operating costs with current market and business conditions. In addition, in March 2013, the Authority implemented a workforce reduction at its Pennsylvania Facilities. The costs associated with related post-employment severance benefits were expensed at the time the termination was communicated to the employees. Cash payments related to the September 2012 workforce reduction commenced in October 2012 and are anticipated to be completed in September 2014. Cash payments related to the March 2013 workforce reduction commenced in March 2013 and are anticipated to be completed in August 2013. The Authority does not anticipate incurring any additional severance charges in connection with these workforce reductions, other than charges that may arise from adjustments to the initial estimates utilized under the plans. The following table presents a reconciliation of the related severance liability by business segment (in thousands):



	Mohegan Sun			Corporate			Mohegan Sun at Pocono Downs			Total
Balance, March 31, 2013	$	3,972		$	—		$	99		$	4,071
Adjustments	—			—			51			51
Cash payments	(1,993		)	—			(140		)	(2,133		)
Balance, June 30, 2013	$	1,979		$	—		$	10		$	1,989

Balance, September 30, 2012	$	12,497		$	24		$	—		$	12,521
Accrued severance at measurement date	—			—			124			124
Adjustments	(146		)	—			51			(95		)
Cash payments	(10,372		)	(24		)	(165		)	(10,561		)
Balance, June 30, 2013	$	1,979		$	—		$	10		$	1,989

Investments in Unconsolidated Affiliates

In October 2012, the Authority, through its indirect wholly-owned subsidiary, MGA Holding NJ, LLC, acquired a 10% ownership interest in Resorts Atlantic City. The Authority's investment in Resorts Atlantic City is accounted for under the equity method as the Authority has significant influence.