10-Q 1 a20131231-10q.htm 10-Q 2013.12.31-10Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549 
_________________________________
FORM 10-Q
 _____________________________________
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2013
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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


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


PART I. FINANCIAL INFORMATION

Item 1.
Financial Statements

MOHEGAN TRIBAL GAMING AUTHORITY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
 
 
December 31,
2013
 
September 30,
2013
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
75,602

 
$
63,624

Restricted cash
4,951

 
13,757

Receivables, net
22,596

 
26,142

Inventories
15,182

 
13,990

Other current assets
21,145

 
20,518

Total current assets
139,476

 
138,031

Non-current assets:
 
 
 
Property and equipment, net
1,472,707

 
1,476,175

Goodwill
39,459

 
39,459

Other intangible assets, net
405,416

 
405,518

Other assets, net
75,799

 
76,967

Total assets
$
2,132,857

 
$
2,136,150

LIABILITIES AND CAPITAL
 
 
 
Current liabilities:
 
 
 
Current portion of long-term debt
$
44,819

 
$
25,219

Current portion of relinquishment liability
68,261

 
62,947

Due to Mohegan Tribe
7,584

 
6,308

Current portion of capital leases
1,939

 
2,302

Trade payables
15,262

 
10,531

Construction payables
8,645

 
11,011

Accrued interest payable
32,634

 
23,296

Other current liabilities
128,454

 
123,982

Total current liabilities
307,598

 
265,596

Non-current liabilities:
 
 
 
Long-term debt, net of current portion
1,673,127

 
1,628,173

Relinquishment liability, net of current portion
—

 
11,418

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

 
23,420

Capital leases, net of current portion
2,943

 
3,138

Other long-term liabilities
5,274

 
5,020

Total liabilities
2,010,862

 
1,936,765

Commitments and Contingencies


 


Capital:
 
 
 
Retained earnings
121,982

 
199,236

Mohegan Tribal Gaming Authority capital
121,982

 
199,236

Non-controlling interests
13

 
149

Total capital
121,995

 
199,385

Total liabilities and capital
$
2,132,857

 
$
2,136,150

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


3

MOHEGAN TRIBAL GAMING AUTHORITY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(in thousands)
(unaudited)
 
 
For the
 
For the
 
Three Months Ended
 
Three Months Ended
 
December 31, 2013
 
December 31, 2012
Revenues:
 
 
 
Gaming
$
274,753

 
$
289,609

Food and beverage
22,719

 
20,989

Hotel
10,692

 
9,944

Retail, entertainment and other
29,505

 
27,064

Gross revenues
337,669

 
347,606

Less-Promotional allowances
(24,846
)
 
(22,851
)
Net revenues
312,823

 
324,755

Operating costs and expenses:
 
 
 
Gaming
176,302

 
175,786

Food and beverage
10,099

 
10,636

Hotel
3,720

 
3,393

Retail, entertainment and other
12,776

 
10,306

Advertising, general and administrative
46,942

 
46,584

Corporate
9,432

 
5,733

Depreciation and amortization
19,118

 
20,164

(Gain) loss on disposition of assets
(1
)
 
133

Severance
—

 
(179
)
Pre-opening
1,162

 
—

Total operating costs and expenses
279,550

 
272,556

Income from operations
33,273

 
52,199

Other income (expense):
 
 
 
Accretion of discount to the relinquishment liability
(551
)
 
(1,243
)
Interest income
1,644

 
1,457

Interest expense, net of capitalized interest
(38,969
)
 
(43,274
)
Loss on early extinguishment of debt
(62,083
)
 
(8
)
Other expense, net
(704
)
 
(945
)
Total other expense
(100,663
)
 
(44,013
)
Net income (loss)
(67,390
)
 
8,186

Loss attributable to non-controlling interests
136

 
914

Net income (loss) attributable to Mohegan Tribal Gaming Authority
$
(67,254
)
 
$
9,100


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


4

MOHEGAN TRIBAL GAMING AUTHORITY
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL
(in thousands)
(unaudited)
 
 
Total                 
 
Mohegan Tribal  Gaming Authority
 
Non-controlling      
Interests
Balance, September 30, 2013
$
199,385

 
$
199,236

 
$
149

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

Balance, December 31, 2013
$
121,995

 
$
121,982

 
$
13

 
 
 
 
 
 
Balance, September 30, 2012
$
209,263

 
$
208,681

 
$
582

Net income (loss)
8,186

 
9,100

 
(914
)
Distributions to Mohegan Tribe
(10,000
)
 
(10,000
)
 
—

Balance, December 31, 2012
$
207,449

 
$
207,781

 
$
(332
)

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


5

MOHEGAN TRIBAL GAMING AUTHORITY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
For the
 
For the
 
Three Months Ended
 
Three Months Ended
 
December 31, 2013
 
December 31, 2012
Cash flows provided by (used in) operating activities:
 
 
 
Net income (loss)
$
(67,390
)
 
$
8,186

Adjustments to reconcile net income to net cash flows provided by operating activities:
 
 
 
Depreciation and amortization
19,118

 
20,164

Accretion of discount to the relinquishment liability
551

 
1,243

Cash paid for accretion of discount to the relinquishment liability
(621
)
 
(1,031
)
Loss on early extinguishment of debt
58,287

 
8

Payments of tender offer costs and discounts
(48,155
)
 
—

Amortization of debt issuance costs and accretion of bond discounts
2,326

 
3,021

Amortization of net deferred gain on settlement of derivative instruments
—

 
(25
)
Provision for losses on receivables
802

 
1,147

(Gain) loss on disposition of assets
(1
)
 
133

Loss from unconsolidated affiliates
696

 
934

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

 
(658
)
(Increase) decrease in inventories
(1,192
)
 
442

(Increase) decrease in other assets
(2,851
)
 
6,508

Increase (decrease) in trade payables
4,739

 
(2,792
)
Increase (decrease) in accrued interest
9,338

 
(22,331
)
Increase (decrease) in other liabilities
8,273

 
(5,535
)
Net cash flows provided by (used in) operating activities
(12,704
)
 
9,414

Cash flows provided by (used in) investing activities:
 
 
 
Purchases of property and equipment, net of increase (decrease) in construction payables of $(2,366) and $2,810, respectively
(15,168
)
 
(10,372
)
Issuance of third-party loans and advances
(382
)
 
(661
)
Payments received on third-party loans
532

 
34

Decrease in restricted cash, net
7,518

 
3,976

Proceeds from asset sales
5

 
118

Investments in unconsolidated affiliates
(29
)
 
(4,927
)
Net cash flows used in investing activities
(7,524
)
 
(11,832
)
Cash flows provided by (used in) financing activities:
 
 
 
Prior Bank Credit Facility repayments - Term
(393,000
)
 
(1,000
)
Prior Term Loan Facility repayments
(222,103
)
 
—

Senior Secured Credit Facility borrowings - Revolving
56,000

 
—

Senior Secured Credit Facility repayments - Revolving
(42,000
)
 
—

Senior Secured Credit Facility borrowings - Term Loan A, net of discount
124,343

 
—

Senior Secured Credit Facility borrowings - Term Loan B, net of discount
720,952

 
—

Line of Credit borrowings
78,794

 
—

Line of Credit repayments
(69,441
)
 
—

Repayments to Mohegan Tribe
(1,375
)
 
(2,487
)
Repayments of other long-term debt
(190,935
)
 
—

Principal portion of relinquishment liability payments
(6,034
)
 
(5,622
)
Distributions to Mohegan Tribe
(10,000
)
 
(10,000
)
Payments of financing fees
(12,437
)
 
(2,721
)
Payments on capital lease obligations
(558
)
 
(1,662
)
Net cash flows provided by (used in) financing activities
32,206

 
(23,492
)
Net increase (decrease) in cash and cash equivalents
11,978

 
(25,910
)
Cash and cash equivalents at beginning of period
63,624

 
114,084

Cash and cash equivalents at end of period
$
75,602

 
$
88,174

Supplemental disclosure:
 
 
 
Cash paid during the period for interest
$
27,579

 
$
61,915

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

6

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

NOTE 1—ORGANIZATION:
The Mohegan Tribe of Indians of Connecticut (the “Mohegan Tribe” or the “Tribe”) established the Mohegan Tribal Gaming Authority (the “Authority”) in July 1995 with the exclusive authority to conduct and regulate gaming activities for the Tribe on Tribal lands and the non-exclusive authority to conduct such activities elsewhere. The Tribe is a federally-recognized Indian tribe with an approximately 544-acre reservation situated in Southeastern Connecticut, adjacent to Uncasville, Connecticut. Under the Indian Gaming Regulatory Act of 1988, federally-recognized Indian tribes are permitted to conduct full-scale casino gaming operations on tribal lands, subject to, among other things, the negotiation of a compact with the affected state. The Tribe and the State of Connecticut entered into a compact (the “Mohegan Compact”), which was approved by the United States Secretary of the Interior. The Authority is primarily engaged in the ownership, operation and development of gaming facilities. In October 1996, the Authority opened Mohegan Sun, a gaming and entertainment complex situated on a 185-acre site on the Tribe's reservation. The Authority is governed by a nine-member Management Board, whose members also comprise the Mohegan Tribal Council, the governing body of the Tribe. Any change in the composition of the Mohegan Tribal Council results in a corresponding change in the Authority's Management Board.
As of December 31, 2013, 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”), Downs Lodging, LLC ("Downs Lodging") and Mohegan Gaming Advisors, LLC ("Mohegan Gaming Advisors").
MBC owns and operates the Connecticut Sun, a professional basketball team in the Women's National Basketball Association (the “WNBA”). MBC currently owns a 4.2% membership interest in WNBA, LLC.
Mohegan Golf owns and operates the Mohegan Sun Country Club at Pautipaug golf course in Southeastern Connecticut.
MCV-PA holds a 0.01% general partnership interest in each of Downs Racing, L.P., Backside, L.P., Mill Creek Land, L.P. and Northeast Concessions, L.P. (collectively, along with MCV-PA, the “Pocono Downs Subsidiaries”), while the Authority holds the remaining 99.99% limited partnership interest in each entity. Downs Racing, L.P. (“Downs Racing”) owns and operates Mohegan Sun 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 Facilities”). The Authority views Mohegan Sun and the Pennsylvania Facilities as two separate operating segments.
Mohegan Ventures-NW and the Tribe hold 49.15% and 9.85% membership interests in Salishan-Mohegan, LLC (“Salishan-Mohegan”), respectively. Salishan-Mohegan was formed with an unrelated third-party to participate in the development and management of a proposed casino to be owned by the federally-recognized Cowlitz Indian Tribe of Washington (the “Cowlitz Tribe”) and to be located in Clark County, Washington (the “Cowlitz Project”). Salishan-Mohegan holds a 100% membership interest in Salishan-Mohegan Two, LLC ("Salishan-Mohegan Two"), which was formed to acquire certain property related to the Cowlitz Project.
MVW holds a 100% membership interest in Wisconsin Tribal Gaming, LLC (“WTG”), which was formed to participate in the development of a proposed casino to be owned by the federally-recognized Menominee Indian Tribe of Wisconsin (the “Menominee Tribe”) and to be located in Kenosha, Wisconsin (the “Menominee Project”).
MTGA Gaming holds a 100% membership interest in Mohegan Gaming & Hospitality, LLC (“MG&H”), an unrestricted subsidiary of the Authority. MG&H holds a 100% membership interest in Mohegan Resorts, LLC (“Mohegan Resorts”). Mohegan Resorts holds a 100% membership interest in Mohegan Resorts Mass, LLC, which was formed to pursue potential gaming opportunities in the Commonwealth of Massachusetts. Mohegan Resorts also holds 100% membership interests in Mohegan Resorts New York, LLC and Mohegan Gaming New York, LLC (collectively, the “Mohegan New York Entities”). The Mohegan New York Entities were formed to pursue potential gaming opportunities in the State of New York.
Downs Lodging, an unrestricted subsidiary of the Authority, was formed to develop, finance and build Project Sunlight, a hotel and convention center located at Mohegan Sun at Pocono Downs.
Mohegan Gaming Advisors, an unrestricted subsidiary of the Authority, was formed to pursue gaming opportunities outside the State of Connecticut, including management contracts and consulting agreements for casino and entertainment properties in the United States. Mohegan Gaming Advisors holds 100% membership interests in MGA Holding NJ, LLC and MGA

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

Gaming NJ, LLC (collectively, the "Mohegan New Jersey Entities"). The Mohegan New Jersey Entities were formed to pursue management contracts and consulting agreements in the State of New Jersey. In October 2012, MGA Holding NJ, LLC acquired a 10% ownership interest in Resorts Casino Hotel in Atlantic City, New Jersey.
Mohegan Gaming Advisors also holds 100% membership interests in MGA Holding MA, LLC and MGA Gaming MA, LLC (collectively, the “Mohegan MA Entities”). The Mohegan MA Entities were formed to pursue potential gaming opportunities in the Commonwealth of Massachusetts.
In addition, Mohegan Gaming Advisors holds 100% membership interests in MGA Holding PA, LLC and MGA Gaming PA, LLC (collectively, the “Mohegan PA Entities”). The Mohegan PA Entities were formed to pursue potential gaming opportunities in the Commonwealth of Pennsylvania.


NOTE 2—BASIS OF PRESENTATION:
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In accordance with Rule 10-01, the accompanying unaudited condensed consolidated financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete consolidated financial statements. The accompanying year-end condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. In management's opinion, all adjustments, including normal recurring accruals and adjustments, necessary for a fair statement of the Authority's operating results for the interim period, have been included.
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, the Authority's operating results for the three months ended December 31, 2013 are not necessarily indicative of operating results for other interim periods or an entire fiscal year.
The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Authority's Annual Report on Form 10-K for the fiscal year ended September 30, 2013.
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 consolidation, all intercompany balances and transactions were eliminated.
Revision
The Authority recorded an adjustment to correct an error in the classification of its 2004 7 1/8% Senior Subordinated Notes due August 2014 as of September 30, 2013, which was incorrectly included within long-term debt, net of current portion, in the Authority's previously reported September 30, 2013 balance sheet. The Authority correctly disclosed the current portion of long-term debt within the debt maturities schedule accompanying Note 6 to its previously reported September 30, 2013 balance sheet, however, inadvertently included these notes within long-term debt, net of current portion, in the previously reported September 30, 2013 balance sheet. The effect of this revision on the September 30, 2013 balance sheet was a decrease in long-term debt, net of current portion, and an increase in current portion of long-term debt of $21.2 million. The supplemental condensed consolidating balance sheet within Note 8 also has been revised to reflect this adjustment. The Authority has concluded that this error was not material to the previously issued financial statements.
In addition, certain amounts in the accompanying 2013 condensed consolidated financial statements have been reclassified to conform to 2014 presentation.



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

Long-Term Receivables
Long-term receivables consist primarily of receivables from affiliates and tenants and others. The following table presents a reconciliation of long-term receivables, including current portions, and the related reserves for doubtful collection of these long-term receivables (in thousands):
 
Long-Term Receivables
 
Affiliates
 
Tenants and Others
 
Total
Balance, September 30, 2013 (1)
$
57,782

 
$
3,530

 
$
61,312

Additions:
 
 
 
 
 
   Issuance of affiliate advances and tenant and other loans, including interest receivable
2,114

 
—

 
2,114

Deductions:
 
 
 
 
 
   Payments received
—

 
(804
)
 
(804
)
Balance, December 31, 2013 (1)
$
59,896

 
$
2,726

 
$
62,622

__________
(1)
Includes interest receivable of $30.4 million and $29.1 million as of December 31, 2013 and September 30, 2013, 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, September 30, 2013
$
24,189

 
$
61

 
$
24,250

Additions:
 
 
 
 
 
   Charges to bad debt expense
634

 
—

 
634

Deductions:
 
 
 
 
 
   Adjustments
—

 
(3
)
 
(3
)
Balance, December 31, 2013
$
24,823

 
$
58

 
$
24,881

Fair Value of Financial Instruments
The fair value amounts presented below are reported to satisfy disclosure requirements pursuant to authoritative guidance issued by the FASB pertaining to disclosures about fair values of financial instruments and are not necessarily indicative of amounts that the Authority could realize in a current market transaction.
The Authority applies the following fair value hierarchy, which prioritizes the inputs utilized to measure fair value into three levels:
•
Level 1 - Quoted prices for identical assets or liabilities in active markets;
•
Level 2 - Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets or valuations based on models where the significant inputs are observable or can be corroborated by observable market data; and
•
Level 3 - Valuations based on models where the significant inputs are unobservable. The unobservable inputs reflect the Authority's estimates or assumptions that market participants would utilize in pricing such assets or liabilities.
The Authority's assessment of the significance of a particular input requires judgment and may affect the valuation of financial assets and liabilities and their placement within the fair value hierarchy.
The carrying amount of cash and cash equivalents, receivables, trade payables and promissory notes and certain credit facilities approximates fair value. The estimated fair value of the Authority's financing facilities and notes were as follows (in thousands):
 
December 31, 2013
 
Carrying Value         
 
Fair Value         
Senior Secured Credit Facility - Revolving
$
14,000

 
$
13,790

Senior Secured Credit Facility - Term Loan A
$
124,358

 
$
125,000

Senior Secured Credit Facility - Term Loan B
$
720,101

 
$
740,950

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

 
$
537,500

2004 7 1/8% Senior Subordinated Notes
$
21,156

 
$
21,130

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

 
$
9,642

2012 11 % Senior Subordinated Notes
$
271,180

 
$
275,878


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

The estimated fair values of the Authority's financing facilities and notes were based on Level 2 inputs (quoted market prices or prices of similar instruments) on or about December 31, 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. The costs associated with related post-employment severance benefits were expensed at the time the termination was communicated to the employees. Cash payments commenced in October 2012 and are anticipated to be completed in September 2014. The Authority does not anticipate incurring any additional severance charges in connection with this workforce reduction, other than charges that may arise from adjustments to the initial estimates utilized under the plan. The following table presents a reconciliation of the related severance liability (in thousands):
 
Mohegan Sun
Balance, September 30, 2013
$
1,417

Cash payments
(387
)
Balance, December 31, 2013
$
1,030



NOTE 3—LONG-TERM DEBT:
Long-term debt consisted of the following (in thousands, including current maturities):
 
December 31,
2013
 
September 30,
2013
Prior Bank Credit Facility
$
—

 
$
393,000

Prior Term Loan Facility, net of discount of $3,005
—

 
221,995

Senior Secured Credit Facility - Revolving, due June 2018
14,000

 
—

Senior Secured Credit Facility - Term Loan A, due June 2018, net of discount of $642
124,358

 
—

Senior Secured Credit Facility - Term Loan B, due June 2018, net of discount of $9,899
720,101

 
—

2009 11 1/2% Second Lien Senior Secured Notes, net of discount of $5
—

 
195

2012 11 1/2% Second Lien Senior Secured Notes, net of discount of $8,898
—

 
190,902

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

 
500,000

2004 7 1/8% Senior Subordinated Notes, due August 2014
21,156

 
21,156

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

 
9,654

2012 11 % Senior Subordinated Notes, due September 2018, net of discount of $4,010 and $4,168, respectively
271,180

 
271,022

Line of Credit
9,353

 
—

2009 Mohegan Tribe Promissory Note, due September 2014
2,625

 
3,500

2012 Mohegan Tribe Minor's Trust Promissory Note, due March 2016
17,500

 
18,000

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

 
7,420

Downs Lodging Credit Facility, due July 2016
45,000

 
45,000

Other
3,144

 
468

Long-term debt, excluding capital leases
1,745,491

 
1,682,312

Less: current portion of long-term debt
(50,444
)
 
(30,719
)
Long-term debt, net of current portion
$
1,695,047

 
$
1,651,593


Maturities of long-term debt are as follows (in thousands, including current maturities):
Less than 1 year
$
50,444

1-3 years
106,229

3-5 years
1,102,186

More than 5 years
501,183

Total
$
1,760,042


On November 19, 2013, the Authority completed a series of refinancing transactions relating to its Prior Bank Credit Facilities and 2009 and 2012 Second Lien Senior Secured Notes, including the repayment and termination of the Prior Bank Credit

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

Facilities and the repurchase or redemption of the 2009 and 2012 Second Lien Senior Secured Notes with proceeds from new Senior Secured Credit Facilities (all further discussed below).
The Authority incurred approximately $60.9 million in costs in connection with these refinancing transactions, consisting primarily of consulting, legal and tender and consent fees. Previously deferred debt issuance costs and debt discounts totaling $22.4 million, as well as $39.7 million in new transaction costs were expensed and recorded as a loss on early extinguishment of debt in the accompanying condensed consolidated statement of loss for the three months ended December 31, 2013. New debt issuance costs totaling $11.5 million were capitalized and included in other assets, net, in the accompanying condensed consolidated balance sheet as of December 31, 2013 and will be amortized over the term of the related debt. The remaining $9.7 million in new costs was reflected as debt discount and included in long-term debt, net of current portion, in the accompanying consolidated balance sheet as of December 31, 2013 and will be amortized over the term of the related debt.
Prior Bank Credit Facilities
First Lien, First Out Credit Facility
In March 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 "Prior Bank Credit Facility"). On November 19, 2013, the Authority repaid and terminated the Prior Bank Credit Facility with proceeds from new Senior Secured Credit Facilities (further discussed below). As of September 30, 2013, accrued interest, including commitment fees, on the Prior Bank Credit Facility was $61,000.
First Lien, Second Out Term Loan Facility
In March 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 "Prior Term Loan Facility" and, together with the Prior Bank Credit Facility, the "Prior Bank Credit Facilities"). On November 19, 2013, the Authority repaid and terminated the Prior Term Loan Facility with proceeds from new Senior Secured Credit Facilities (further discussed below). As of September 30, 2013, accrued interest on the Prior Term Loan Facility was $1.1 million.
Senior Secured Credit Facilities
On November 19, 2013, the Authority entered into a loan agreement among the Authority, the Tribe, the Guarantors as defined below, RBS Citizens, N.A. as Administrative and Collateral Agent and the other lenders and financial institutions party thereto, providing for $955.0 million in aggregate principal amount of senior secured credit facilities (the “Senior Secured Credit Facilities”), comprised of a $100.0 million senior secured revolving credit facility (the “Revolving Facility”), a $125.0 million senior secured term loan A facility (the “Term Loan A Facility”) and a $730.0 million senior secured term loan B facility (the “Term Loan B Facility"). The Senior Secured Credit Facilities mature on June 15, 2018, subject to extension based on the satisfaction of certain conditions to November 19, 2018 (in the case of the Revolving Facility and the Term Loan A Facility) and November 19, 2019 (in the case of the Term Loan B Facility).
The Term Loan A Facility amortizes in equal quarterly installments in an aggregate annual amount equal to 5.0% of the original principal amount for the first year after the closing date, 7.5% of the original principal amount for the second year after the closing date and 10.0% of the original principal amount in each year thereafter, with the balance payable on the maturity date of the Term Loan A Facility. The Term Loan B Facility amortizes in equal quarterly installments in an aggregate annual amount equal to 1.0% of the original principal amount. Amortization of the Term Loan A Facility and Term Loan B Facility begins with the first full fiscal quarter after the closing date. The proceeds from the Term Loan A Facility and Term Loan B Facility, together with a drawing under the Revolving Facility, were used to satisfy in full all amounts due under the Authority's Prior Bank Credit Facilities, to repurchase or redeem all of the Authority's outstanding 2009 and 2012 Second Lien Senior Secured Notes and to otherwise satisfy and discharge the obligations in respect of such notes and to pay related fees and expenses. The Revolving Facility will otherwise be available for general corporate purposes.
As of December 31, 2013, amounts outstanding under the Revolving Facility, Term Loan A Facility and Term Loan B Facility totaled $14.0 million, $125.0 million and $730.0 million, respectively. As of December 31, 2013, letters of credit issued under the Revolving Facility totaled $2.8 million, of which no amount was drawn. Inclusive of letters of credit, which reduce borrowing availability under the Revolving Facility, and after taking into account restrictive financial covenant requirements, the Authority had approximately $73.8 million of borrowing capacity under its Revolving Facility and Line of Credit as of December 31, 2013.

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

Borrowings under the Senior Secured Credit Facilities incur interest as follows: (i) for base rate loans under the Revolving Facility and Term Loan A Facility, a base rate equal to the highest of (a) the prime rate, (b) the federal funds rate plus 50 basis points and (c) the one-month LIBOR rate plus 100 basis points (the highest of (a), (b) and (c), the “base rate”), plus a leverage-based margin of 250 to 350 basis points; (ii) for Eurodollar rate loans under the Revolving Facility and Term Loan A Facility, the applicable LIBOR rate plus a leverage-based margin of 350 to 450 basis points; (iii) for base rate loans under the Term Loan B Facility, the base rate (subject to a 2.0% floor) plus 350 basis points; and (iv) for Eurodollar rate loans under the Term Loan B Facility, the applicable LIBOR rate (subject to a 1.0% floor) plus 450 basis points. The Authority also is required to pay a leverage-based commitment fee of between 37.5 and 50 basis points for unused commitments under the Revolving Facility. Interest on base rate loans is payable quarterly in arrears. Interest on Eurodollar rate loans of three months or less is payable at the end of each applicable interest period and for Eurodollar rate loans of more than three months, interest is payable at intervals of three months duration after the beginning of such interest period.
As of December 31, 2013, the $14.0 million outstanding under the Revolving Facility was comprised of a $4.0 million base rate loan based on a base rate of 3.25% plus 325 basis points and a $10.0 million Eurodollar rate loan based on a Eurodollar rate of 0.17% plus 425 basis points. The commitment fee was 0.50% as of December 31, 2013. As of December 31, 2013, the $125.0 million outstanding under the Term Loan A Facility was based on a Eurodollar rate of 0.25% plus 425 basis points. As of December 31, 2013, the $730.0 million outstanding under the Term Loan B Facility was based on the Eurodollar rate floor of 1.0% plus 450 basis points. As of December 31, 2013, accrued interest, including commitment fees, on the Senior Secured Credit Facilities was $895,000.
The Authority's obligations under the Senior Secured Credit Facilities are fully and unconditionally guaranteed, jointly and severally, by the Pocono Downs Subsidiaries, MBC, Mohegan Golf, Mohegan Ventures-NW, MVW, WTG and MTGA Gaming (collectively, the “Guarantors”). The Senior Secured Credit Facilities are collateralized by a first priority lien on substantially all of the Authority's property and assets and those of the Guarantors (other than MBC), including the assets that comprise Mohegan Sun 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 also are required to pledge additional assets as collateral for the Senior Secured Credit Facilities as they and future guarantor subsidiaries acquire them.
The Senior Secured Credit Facilities contain customary covenants applicable to the Authority and its restricted subsidiaries, including covenants governing: incurrence of indebtedness, incurrence of liens, payment of dividends and other distributions, investments, asset sales, affiliate transactions, mergers or consolidations and capital expenditures. Additionally, the Senior Secured Credit Facilities include financial maintenance covenants pertaining to total leverage, secured leverage and minimum fixed charge coverage.
As of December 31, 2013, the Authority and the Tribe were in compliance with all respective covenant requirements under the Senior Secured Credit Facilities.
The Authority continues to monitor revenues and expenditures to ensure continued compliance with its financial covenant requirements under the Senior Secured Credit Facilities. While the Authority anticipates that it will remain in compliance with all covenant requirements under its Senior Secured Credit Facilities for all periods prior to maturity, it may need to increase revenues or offset any future declines in revenues by implementing cost saving initiatives to ensure compliance with these financial covenant requirements. If the Authority is unable to satisfy its financial covenant requirements, it would need to obtain waivers or consents under the Senior Secured Credit Facilities; however, the Authority can provide no assurance that it would be able to obtain such waivers or consents. If the Authority is unable to obtain such waivers or consents, it would be in default under its Senior Secured Credit Facilities, which may result in cross-defaults under its other outstanding indebtedness and allow its lenders and creditors to exercise their rights and remedies as defined under their respective agreements, including their right to accelerate the repayment of the Authority's outstanding indebtedness. If such acceleration were to occur, the Authority can provide no assurance that it would be able to obtain the financing necessary to repay such accelerated indebtedness.
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 11.5% per annum (the “2009 Second Lien Notes”). In March 2012, the Authority completed a private exchange offer and consent solicitation pursuant to which an aggregate principal amount of $199.8 million 2009 Second Lien Notes were tendered and exchanged, leaving an aggregate principal amount of $200,000 2009 Second Lien Notes outstanding. The 2009 Second Lien Notes were scheduled to mature on November 1, 2017. The first call date for the 2009 Second Lien Notes was November 1, 2013. On November 19, 2013, the Authority called for redemption all $200,000 of its outstanding 2009 Second Lien Notes. The 2009

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

Second Lien Notes were redeemed on December 19, 2013. As of September 30, 2013, accrued interest on the 2009 Second Lien Notes was $10,000.
2012 11 ½% Second Lien Senior Secured Notes
In March 2012, the Authority issued $199.8 million Second Lien Senior Secured Notes with fixed interest payable at a rate of 11.5% per annum (the “2012 Second Lien Notes”) in exchange for an equal amount of 2009 Second Lien Notes. The 2012 Second Lien Notes were scheduled to mature on November 1, 2017. Subsequent to November 1, 2014, the Authority was entitled to redeem the 2012 Second Lien Notes, in whole or in part, at a premium decreasing ratably to zero, plus accrued interest. On November 19, 2013, the Authority completed a tender offer and consent solicitation for its outstanding 2012 Second Lien Notes. As part of the tender offer, the Authority solicited and received requisite consents from tendering holders to certain amendments to the indentures governing the 2012 Second Lien Notes, which eliminated certain restrictive covenants under the notes and related indenture. Pursuant to this transaction, the Authority repurchased or redeemed all of its outstanding 2012 Second Lien Notes in the aggregate principal amount of $199.8 million. As of September 30, 2013, accrued interest on the 2012 Second Lien Notes was $9.6 million.
Senior Unsecured Notes
2013 9 3/4% Senior Unsecured Notes
In August 2013, the Authority issued $500.0 million Senior Unsecured Notes with fixed interest payable at a rate of 9.75% per annum (the “2013 Senior Unsecured Notes”). The net proceeds from this transaction, together with borrowings under the Prior Bank Credit Facility, were used to repurchase or redeem all of the Authority's then outstanding 2012 10.5% Third Lien Senior Secured Notes, to repurchase $69.0 million of the Authority's outstanding 2012 11.0% Senior Subordinated Notes and to pay related fees and expenses. The 2013 Senior Unsecured Notes mature on September 1, 2021. The Authority may redeem the 2013 Senior Unsecured Notes, in whole or in part, at any time prior to September 1, 2016 at a price equal to 100% of the principal amount plus a make-whole premium and accrued interest and additional interest (pursuant to the registration rights agreement described below), if any, to the date of redemption. On or after September 1, 2016, the Authority may redeem the 2013 Senior Unsecured Notes, in whole or in part, at specified redemption prices, together with accrued interest and additional interest, if any, to the date of redemption. If the Authority experiences specific kinds of change of control triggering events, the Authority must offer to repurchase the 2013 Senior Unsecured Notes at a price equal to 101% of the principal amount thereof, plus accrued interest and additional interest, if any, to the purchase date. In addition, if the Authority undertakes certain types of asset sales and does not use the related sale proceeds for specified purposes, the Authority may be required to offer to repurchase the 2013 Senior Unsecured Notes at a price equal to 100% of the principal amount, plus accrued interest and additional interest, if any. Interest on the 2013 Senior Unsecured Notes is payable semi-annually on March 1st and September 1st, commencing March 1, 2014. As of December 31, 2013 and September 30, 2013, accrued interest on the 2013 Senior Unsecured Notes was $18.4 million and $6.2 million, respectively.
The 2013 Senior Unsecured Notes are uncollateralized general obligations of the Authority and are effectively subordinated to all of the Authority’s and the Guarantors' and future guarantor subsidiaries' senior secured indebtedness, including the Senior Secured Credit Facilities, to the extent of the value of the collateral securing such indebtedness. The 2013 Senior Unsecured Notes also are effectively subordinated to any indebtedness and other liabilities (including trade payables) of the Authority’s subsidiaries that do not guarantee the 2013 Senior Unsecured Notes. The 2013 Senior Unsecured Notes rank equally in right of payment with the Authority’s other unsecured, unsubordinated indebtedness, including trade payables and the senior portion of the Authority’s payment obligations under its Relinquishment Agreement. The 2013 Senior Unsecured Notes are fully and unconditionally guaranteed, jointly and severally, by the Guarantors.
The 2013 Senior Unsecured Notes indenture contains certain covenants that, subject to certain significant exceptions, limit, among other things, the Authority’s and Guarantors’ ability to incur additional debt, pay dividends or distributions, make certain investments, create liens on assets, enter into transactions with affiliates, merge or consolidate with another company or transfer and sell assets. The 2013 Senior Unsecured Notes indenture includes customary events of default, including, but not limited to, failure to make required payments, failure to comply with certain agreements or covenants, failure to pay certain other indebtedness, the occurrence of which is caused by a failure to pay principal, premium or interest or results in the acceleration of such indebtedness, certain events of bankruptcy and insolvency and certain judgment defaults.
Registration Rights Agreement
In August 2013, the Authority and the Guarantors entered into a registration rights agreement with Credit Suisse Securities (USA) LLC and RBS Securities Inc., as representatives of the initial purchasers of the 2013 Senior Unsecured Notes. Upon the terms and subject to the conditions of this agreement, the Authority agreed to offer to exchange the 2013 Senior Unsecured Notes

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

pursuant to a registration statement effective within 240 days of issuance for a new issue of substantially identical debt securities registered under the Securities Act of 1933 (the "Exchange Offer"). Under certain circumstances, the Authority also may be obligated under the registration rights agreement to file a shelf registration statement with respect to the 2013 Senior Unsecured Notes. On February 10, 2014, the Authority commenced the Exchange Offer.
Senior Subordinated Notes
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.
In March 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 2004 Senior Subordinated Notes remains outstanding as of December 31, 2013. As of December 31, 2013 and September 30, 2013, accrued interest on the 2004 Senior Subordinated Notes was $565,000 and $188,000, 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.
In March 2012, the Authority completed a private exchange offer and consent solicitation for any or all of its outstanding 2005 Senior Subordinated Notes. As part of the exchange offer, the Authority solicited and received consents from tendering holders to certain amendments to the indentures governing the 2005 Senior Subordinated Notes, which eliminated certain covenants under the notes and related indenture. The aggregate principal amount of 2005 Senior Subordinated Notes tendered and exchanged was $140.3 million. An aggregate principal amount of $9.7 million 2005 Senior Subordinated Notes remains outstanding as of December 31, 2013. As of December 31, 2013 and September 30, 2013, accrued interest on the 2005 Senior Subordinated Notes was $249,000 and $83,000, respectively.
2012 11% Senior Subordinated Notes
In March 2012, the Authority issued $344.2 million Senior Subordinated Toggle Notes with fixed interest payable at a rate of 11.0% 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. The initial interest payment on the 2012 Senior Subordinated Notes was payable entirely in cash. For any subsequent interest payment period through March 15, 2018, the Authority may, at its option, elect to pay interest on the 2012 Senior Subordinated Notes either entirely in cash or by paying up to 2.0% in 2012 Senior Subordinated Notes (“PIK Interest”). If the Authority elects to pay PIK Interest, such election will increase the principal amount of the 2012 Senior Subordinated Notes in an amount equal to the amount of PIK Interest for the applicable interest payment period to holders of 2012 Senior Subordinated Notes on the relevant record date.
In August 2013, the Authority repurchased an aggregate principal amount of $69.0 million 2012 Senior Subordinated Notes. An aggregate principal amount of $275.2 million 2012 Senior Subordinated Notes remains outstanding as of December 31, 2013. As of December 31, 2013 and September 30, 2013, accrued interest on the 2012 Senior Subordinated Notes was $8.9 million and $1.3 million, respectively.

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

The 2012 Senior Subordinated Notes and guarantees have not been and will not be registered under the Securities Act of 1933 or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements.
The Authority's senior subordinated notes are uncollateralized general obligations of the Authority and are subordinated to borrowings under the Senior Secured Credit Facilities and 2013 Senior Unsecured Notes. The senior subordinated notes are fully and unconditionally guaranteed, jointly and severally, by the Guarantors.
The senior and senior subordinated note indentures contain certain non-financial and financial covenant requirements with which the Authority and the Tribe must comply. The non-financial covenant requirements include, among other things, reporting obligations, compliance with laws and regulations, maintenance of licenses and insurances and continued existence of the Authority. The financial covenant requirements include, among other things, subject to certain exceptions, limitations on the Authority's and the Guarantors' ability to incur additional indebtedness, pay dividends or distributions, make certain investments, create liens on assets, enter into transactions with affiliates, merge or consolidate with another company, transfer or sell assets or impair assets constituting collateral.
As of December 31, 2013, 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
On November 19, 2013, in connection with the new Senior Secured Credit Facilities, the Authority entered into a new $16.5 million revolving credit facility with Bank of America, N.A. (the “Line of Credit”). The Line of Credit is coterminous with the Senior Secured Credit Facilities. Pursuant to provisions of the Senior Secured Credit Facilities, under certain circumstances, the Line of Credit may be converted into loans under the Senior Secured Credit Facilities. Under the Line of Credit, each advance accrues interest on the basis of a one-month LIBOR Rate plus an applicable margin based on the Authority's total leverage ratio, as each term is defined under the Line of Credit. As of December 31, 2013, $9.4 million was drawn on the Line of Credit. Borrowings under the Line of Credit are uncollateralized obligations. The Line of Credit contains negative covenants and financial maintenance covenants that are substantially the same as those contained in the Senior Secured Credit Facilities. As of December 31, 2013, the Authority was in compliance with all covenant requirements under the Line of Credit. As of December 31, 2013, accrued interest on the Line of Credit was $24,000. As of September 30, 2013, there was no accrued interest on the Line of Credit.
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”) which matures on September 30, 2014. 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 30, 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 December 31, 2013 and September 30, 2013, accrued interest on the Mohegan Tribe Promissory Note was $3.6 million and $4.7 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 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. 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 December 31, 2013 and September 30, 2013, accrued interest on the 2012 Mohegan Tribe Minor's Trust Promissory Note was $5,000.


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

2013 Mohegan Tribe Promissory Note
In March 2013, MG&H purchased and acquired all of the Tribe's membership interest in MG&H in exchange for a promissory note in the principal amount of $7.4 million (the “2013 Mohegan Tribe Promissory Note”). The 2013 Mohegan Tribe Promissory Note matures on December 31, 2018. The 2013 Mohegan Tribe Promissory Note accrues interest at an annual rate of 4.0% payable quarterly. As of December 31, 2013 and September 30, 2013, accrued interest on the 2013 Mohegan Tribe Promissory Note was $1,000.
Downs Lodging Credit Facility
In July 2012, Downs Lodging, a single purpose entity and wholly-owned unrestricted subsidiary of the Authority, entered into a credit agreement providing for a $45.0 million term loan from a third-party lender (the “Downs Lodging Credit Facility”). The proceeds from the Downs Lodging Credit Facility were used by Downs Lodging to fund Project Sunlight, a hotel and convention center expansion project at Mohegan Sun at Pocono Downs. The Downs Lodging Credit Facility matures on July 12, 2016 and accrues interest at an annual rate of 13.0%. Under the terms of the Downs Lodging Credit Facility, accrued interest of 10.0% is payable monthly in cash during the term of the loan, with the remaining 3.0% due at maturity. In addition, a 3.0% exit fee is payable upon repayment of the loan principal. The Downs Lodging Credit Facility is a senior secured obligation of Downs Lodging, collateralized by all existing and future assets of Downs Lodging. The Downs Lodging Credit Facility subjects Downs Lodging to certain covenant requirements customarily found in loan agreements for similar transactions. As of December 31, 2013, Downs Lodging was in compliance with all covenant requirements under the Downs Lodging Credit Facility. As of December 31, 2013 and September 30, 2013, there was no accrued interest on the Downs Lodging Credit Facility.



NOTE 4—RELATED PARTY TRANSACTIONS:
Distributions to the Tribe totaled $10.0 million for each of the three months ended December 31, 2013 and 2012.
The Tribe provides certain governmental and administrative services in connection with the operation of Mohegan Sun. The Authority incurred expenses for such services totaling $7.0 million for each of the three months ended December 31, 2013 and 2012.
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 $4.5 million and $4.1 million for the three months ended December 31, 2013 and 2012, respectively.
The Authority incurred interest expense associated with borrowings from the Mohegan Tribe totaling $616,000 and $808,000 for the three months ended December 31, 2013 and 2012, respectively.
As of December 31, 2013 and September 30, 2013, outstanding payables to the Tribe totaled $2.0 million and $808,000, respectively, and were included in "Current liabilities - Due to Mohegan Tribe" in the accompanying condensed consolidated balance sheets.


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

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

during any month does not exceed a certain threshold of gross revenues from slot machines for such month. In the event free promotional slot plays granted by the Authority exceed such threshold, contribution payments are required on such excess face amount of free promotional slot plays at the same rate as Slot Win Contribution payments, or 25%. 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 $36.3 million and $37.1 million for the three months ended December 31, 2013 and 2012, respectively. As of December 31, 2013 and September 30, 2013, the combined outstanding Slot Win Contribution and free promotional slot play contribution totaled $11.5 million and $12.7 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 $29.7 million and $30.2 million for the three months ended December 31, 2013 and 2012, respectively. As of December 31, 2013 and September 30, 2013, outstanding Pennsylvania Slot Machine Tax payments totaled $6.5 million and $5.5 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”). The Pennsylvania Table Game Tax is currently 12%, plus the 2% local share assessments.
The Authority reflected expenses associated with the Pennsylvania Table Game Tax totaling $1.5 million for each of the three months ended December 31, 2013 and 2012. As of December 31, 2013 and September 30, 2013, outstanding Pennsylvania Table Game Tax payments totaled $207,000 and $127,000, 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 $1.1 million and $1.2 million for the three months ended December 31, 2013 and 2012, respectively. As of December 31, 2013 and September 30, 2013, outstanding Pennsylvania Regulatory Fee payments to the PGCB totaled $160,000 and $132,000, 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

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

the Commonwealth of Pennsylvania. Currently, 12 of the 14 authorized gaming facilities have commenced operations. As of December 31, 2013, 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 $160,000 and $163,000 for the three months ended December 31, 2013 and 2012, respectively.
Horsemen’s Agreement
Downs Racing and the PHHA are parties to an agreement that governs all live harness racing and simulcasting and account wagering at the Pennsylvania Facilities through December 31, 2014. As of December 31, 2013 and September 30, 2013, outstanding payments to the PHHA for purses earned by horsemen, but not yet paid, and other fees totaled $6.3 million and $7.8 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 $4.8 million and $4.7 million for the three months ended December 31, 2013 and 2012, 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

18
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 December 31, 2013 and September 30, 2013, the carrying amount of the relinquishment liability was $68.3 million and $74.4 million, respectively. The decrease in the relinquishment liability during the three months ended December 31, 2013 was due to $6.6 million in relinquishment payments. This reduction in the liability was offset by $551,000 representing the accretion of discount to the relinquishment liability.
Relinquishment payments consisted of the following (in millions):
 
For the Three Months Ended
 
December 31, 2013
 
December 31, 2012
Principal
$
6.0

 
$
5.6

Accretion of discount
0.6

 
1.0

Total
$
6.6

 
$
6.6

The accretion of discount to the relinquishment liability reflects the accretion of the discount to the present value of the relinquishment liability for the impact of the time value of money. As of December 31, 2013 and September 30, 2013, relinquishment payments earned but unpaid were $18.6 million and $13.3 million, respectively.






























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

NOTE 7—SEGMENT REPORTING:
As of December 31, 2013, the Authority owns and operates, either directly or through wholly-owned subsidiaries, Mohegan Sun, the Connecticut Sun franchise, and the Mohegan Sun Country Club at Pautipaug (collectively, the “Connecticut Facilities”), and the Pennsylvania Facilities. Substantially all of the Authority's revenues are derived from these operations. The Connecticut Sun franchise and the Mohegan Sun Country Club at Pautipaug are aggregated with the Mohegan Sun operating segment because these operations all share similar economic characteristics, which is to generate gaming and entertainment revenues by attracting patrons to Mohegan Sun. The Authority's executive officers review and assess the performance and operating results and determine the proper allocation of resources to the Connecticut Facilities and the Pennsylvania Facilities on a separate basis. Accordingly, the Authority has two separate reportable segments: (1) Mohegan Sun, which includes the operations of the Connecticut Facilities, and (2) Mohegan Sun at Pocono Downs, which includes the operations of the Pennsylvania Facilities. The Authority's operations related to investments in unconsolidated affiliates and certain other corporate and management operations have not been identified as separate reportable segments, therefore, these operations are included in corporate and other in the following segment disclosures to reconcile to consolidated results.
 
For the Three Months Ended
(in thousands)
December 31, 2013
 
December 31, 2012
Net revenues:
 
 
 
Mohegan Sun
$
241,933

 
$
253,190

Mohegan Sun at Pocono Downs
70,683

 
71,288

Corporate and other
739

 
277

Inter-segment revenues
(532
)
 
—

Total
$
312,823

 
$
324,755

Income (loss) from operations:
 
 
 
Mohegan Sun
$
34,643

 
$
48,126

Mohegan Sun at Pocono Downs
7,577

 
9,558

Corporate and other
(8,947
)
 
(5,485
)
Total
33,273

 
52,199

Accretion of discount to the relinquishment liability
(551
)
 
(1,243
)
Interest income
1,644

 
1,457

Interest expense, net of capitalized interest
(38,969
)
 
(43,274
)
Loss on early extinguishment of debt
(62,083
)
 
(8
)
Other expense, net
(704
)
 
(945
)
Net income (loss)
(67,390
)
 
8,186

Loss attributable to non-controlling interests
136

 
914

Net income (loss) attributable to Mohegan Tribal Gaming Authority
$
(67,254
)
 
$
9,100


 
For the Three Months Ended
 
December 31, 2013
 
December 31, 2012
Capital expenditures incurred:
 
 
 
Mohegan Sun
$
5,039

 
$
4,301

Mohegan Sun at Pocono Downs
987

 
2,133

Corporate and other
9,504

 
7,257

Total
$
15,530

 
$
13,691

 
 
 
 
 
December 31, 2013
 
September 30, 2013
Total assets:
 
 
 
Mohegan Sun
$
1,421,338

 
$
1,425,152

Mohegan Sun at Pocono Downs
565,808

 
558,700

Corporate and other
145,711

 
152,298

Total
$
2,132,857

 
$
2,136,150






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

NOTE 8—SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENT INFORMATION:
As of December 31, 2013, substantially all of the Authority's outstanding debt is fully and unconditionally guaranteed, on a joint and several basis, by the following 100% owned subsidiaries of the Authority: the Pocono Downs Subsidiaries, MBC, Mohegan Golf, Mohegan Ventures-NW, MVW, WTG and MTGA Gaming. Separate financial statements and other disclosures concerning the Pocono Downs Subsidiaries, MBC, Mohegan Golf, Mohegan Ventures-NW, MVW, WTG and MTGA Gaming are not presented below because the Authority believes that the summarized financial information provided below and in Note 7 are adequate for investor analysis of these subsidiaries. Condensed consolidating financial statement information for the Authority, its 100% owned guarantor subsidiaries and its non-guarantor subsidiaries and entities as of December 31, 2013 and September 30, 2013 and for the three months ended December 31, 2013 and 2012 is as follows (in thousands):

















































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

CONDENSED CONSOLIDATING BALANCE SHEETS
 
December 31, 2013
 
Authority
 
Total
Guarantor
Subsidiaries (1)
 
Total  Non-Guarantor
Subsidiaries and Entities (2)
 
Consolidating/
Eliminating
Adjustments
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
52,186

 
$
21,331

 
$
2,085

 
$
—

 
$
75,602

Restricted cash
183

 
529

 
4,239

 
—

 
4,951

Receivables, net
20,123

 
2,286

 
394

 
(207
)
 
22,596

Inventories
13,728

 
1,454

 
—

 
—

 
15,182

Other current assets
18,683

 
1,390

 
1,072

 
—

 
21,145

Total current assets
104,903

 
26,990

 
7,790

 
(207
)
 
139,476

Non-current assets:
 
 
 
 
 
 
 
 
 
Property and equipment, net
1,183,134

 
$
229,572

 
$
60,001

 
$
—

 
$
1,472,707

Goodwill
—

 
39,459

 
—

 
—

 
39,459

Other intangible assets, net
120,481

 
284,935

 
—

 
—

 
405,416

Other assets, net
33,272

 
3,902

 
45,332

 
(6,707
)
 
75,799

Intercompany receivables
248,257

 
45,004

 
357

 
(293,618
)
 
—

Investment in subsidiaries
320,770

 
—

 
—

 
(320,770
)
 
—

Total assets
$
2,010,817

 
$
629,862

 
$
113,480

 
$
(621,302
)
 
$
2,132,857

LIABILITIES AND CAPITAL
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Current portion of long-term debt
$
44,359

 
$
—

 
$
460

 
$
—

 
$
44,819

Current portion of relinquishment liability
68,261

 
—

 
—

 
—

 
68,261

Due to Mohegan Tribe
1,959

 
—

 
5,625

 
—

 
7,584

Current portion of capital leases
1,939

 
70

 
—

 
(70
)
 
1,939

Trade payables
11,792

 
2,406

 
1,064

 
—

 
15,262

Construction payables
2,484

 
213

 
5,948

 
—

 
8,645

Accrued interest payable
29,063

 
—

 
3,571

 
—

 
32,634

Other current liabilities
94,619

 
31,249

 
2,723

 
(137
)
 
128,454

Total current liabilities
254,476

 
33,938

 
19,391

 
(207
)
 
307,598

Non-current liabilities:
 
 
 
 
 
 
 
 
 
Long-term debt, net of current portion
1,628,127

 
—

 
45,000

 
—

 
1,673,127

Relinquishment liability, net of current portion
—

 
—

 
—

 
—

 
—

Due to Mohegan Tribe, net of current portion
—

 
—

 
21,920

 
—

 
21,920

Capital leases, net of current portion
2,943

 
6,498

 
—

 
(6,498
)
 
2,943

Other long-term liabilities
2,764

 
—

 
2,510

 
—

 
5,274

Intercompany payables
—

 
246,751

 
46,867

 
(293,618
)
 
—

Accumulated losses in excess of investment in subsidiaries
—

 
12,139

 
—

 
(12,139
)
 
—

Total liabilities
1,888,310

 
299,326

 
135,688

 
(312,462
)
 
2,010,862

Capital:
 
 
 
 
 
 
 
 
 
Retained earnings
122,507

 
330,536

 
(22,208
)
 
(308,853
)
 
121,982

Mohegan Tribal Gaming Authority capital
122,507

 
330,536

 
(22,208
)
 
(308,853
)
 
121,982

Non-controlling interests
—

 
—

 
—

 
13

 
13

Total capital
122,507

 
330,536

 
(22,208
)
 
(308,840
)
 
121,995

Total liabilities and capital
$
2,010,817

 
$
629,862

 
$
113,480

 
$
(621,302
)
 
$
2,132,857

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



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

 
September 30, 2013
 
Authority
 
Total
Guarantor
Subsidiaries (1)
 
Total  Non-Guarantor
Subsidiaries and Entities (2)
 
Consolidating/
Eliminating
Adjustments
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
44,060

 
$
18,655

 
$
909

 
$
—

 
$
63,624

Restricted cash
—

 
1,714

 
12,043

 
—

 
13,757

Receivables, net
23,186

 
2,717

 
239

 
—

 
26,142

Inventories
12,928

 
1,062

 
—

 
—

 
13,990

Other current assets
18,125

 
1,197

 
1,196

 
—

 
20,518

Total current assets
98,299

 
25,345

 
14,387

 
—

 
138,031

Non-current assets:
 
 
 
 
 
 
 
 
 
Property and equipment, net
1,193,676

 
$
225,263

 
$
57,236

 
$
—

 
$
1,476,175

Goodwill
—

 
39,459

 
—

 
—

 
39,459

Other intangible assets, net
120,508

 
285,010

 
—

 
—

 
405,518

Other assets, net
35,159

 
3,891

 
38,127

 
(210
)
 
76,967

Intercompany receivables
238,545

 
37,149

 
—

 
(275,694
)
 
—

Investment in subsidiaries
332,737

 
—

 
—

 
(332,737
)
 
—

Total assets
$
2,018,924

 
$
616,117

 
$
109,750

 
$
(608,641
)
 
$
2,136,150

LIABILITIES AND CAPITAL
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Current portion of long-term debt
$
25,156

 
$
—

 
$
63

 
$
—

 
$
25,219

Current portion of relinquishment liability
62,947

 
—

 
—

 
—

 
62,947

Due to Mohegan Tribe
808

 
—

 
5,500

 
—

 
6,308

Current portion of capital leases
2,302

 
—

 
—

 
—

 
2,302

Trade payables
8,901

 
1,613

 
17

 
—

 
10,531

Construction payables
6,790

 
558

 
3,663

 
—

 
11,011

Accrued interest payable
18,616

 
—

 
4,680

 
—

 
23,296

Other current liabilities
93,377

 
29,580

 
1,025

 
—

 
123,982

Total current liabilities
218,897

 
31,751

 
14,948

 
—

 
265,596

Non-current liabilities:
 
 
 
 
 
 
 
 
 
Long-term debt, net of current portion
1,582,768

 
—

 
45,405

 
—

 
1,628,173

Relinquishment liability, net of current portion
11,418

 
—

 
—

 
—

 
11,418

Due to Mohegan Tribe, net of current portion
—

 
—

 
23,420

 
—

 
23,420

Capital leases, net of current portion
3,138

 
—

 
—

 
—

 
3,138

Other long-term liabilities
2,941

 
—

 
2,079

 
—

 
5,020

Intercompany payables
—

 
236,772

 
38,922

 
(275,694
)
 
—

Accumulated losses in excess of investment in subsidiaries
—

 
6,832

 
—

 
(6,832
)
 
—

Total liabilities
1,819,162

 
275,355

 
124,774

 
(282,526
)
 
1,936,765

Capital:
 
 
 
 
 
 
 
 
 
Retained earnings
199,762

 
340,762

 
(15,024
)
 
(326,264
)
 
199,236

Mohegan Tribal Gaming Authority capital
199,762

 
340,762

 
(15,024
)
 
(326,264
)
 
199,236

Non-controlling interests
—

 
—

 
—

 
149

 
149

Total capital
199,762

 
340,762

 
(15,024
)
 
(326,115
)
 
199,385

Total liabilities and capital
$
2,018,924

 
$
616,117

 
$
109,750

 
$
(608,641
)
 
$
2,136,150

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



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

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

 
$
66,279

 
$
—

 
$
—

 
$
274,753

Food and beverage
15,924

 
6,795

 
—

 
—

 
22,719

Hotel
10,251

 
441

 
—

 
—

 
10,692

Retail, entertainment and other
27,259

 
2,026

 
752

 
(532
)
 
29,505

Gross revenues
261,908

 
75,541

 
752

 
(532
)
 
337,669

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

 
70,966

 
749

 
(533
)
 
312,823

Operating costs and expenses:
 
 
 
 
 
 
 
 
 
Gaming
128,116

 
48,186

 
—

 
—

 
176,302

Food and beverage
8,004

 
2,095

 
—

 
—

 
10,099

Hotel
3,657

 
535

 
—

 
(472
)
 
3,720

Retail, entertainment and other
11,932

 
845

 
—

 
(1
)
 
12,776

Advertising, general and administrative
38,503

 
8,458

 
6,045

 
(6,064
)
 
46,942

Corporate
3,428

 
—

 
—

 
6,004

 
9,432

Depreciation and amortization
15,532

 
3,421

 
165

 
—

 
19,118

Gain on disposition of assets
(1
)
 
—

 
—

 
—

 
(1
)
Pre-opening
—

 
1,162

 
—

 
—

 
1,162

Total operating costs and expenses
209,171

 
64,702

 
6,210

 
(533
)
 
279,550

Income (loss) from operations
32,470

 
6,264

 
(5,461
)
 
—

 
33,273

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

 
—

 
—

 
(551
)
Interest income
25

 
984

 
1,649

 
(1,014
)
 
1,644

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

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

 
—

 
—

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

 
16,424

 
—

Other expense, net
(2
)
 
—

 
(702
)
 
—

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

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

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

 
—

 
—

 
136

 
136

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

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


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

 
For the Three Months Ended December 31, 2012
 
Authority  
 
Total
Guarantor
Subsidiaries (1)
 
Total  Non-Guarantor Subsidiaries
and Entities (2)
 
Consolidating/
Eliminating
Adjustments
 
Consolidated
Net revenues
$
252,750

 
$
71,956

 
$
353

 
$
(304
)
 
$
324,755

Operating costs and expenses:
 
 
 
 
 
 
 
 
 
Gaming and other operations
147,613

 
52,752

 
—

 
(244
)
 
200,121

Advertising, general and administrative
42,183

 
7,551

 
2,643

 
(60
)
 
52,317

Depreciation and amortization
16,855

 
3,309

 
—

 
—

 
20,164

Loss on disposition of assets
133

 
—

 
—

 
—

 
133

Severance
(179
)
 
—

 
—

 
—

 
(179
)
Total operating costs and expenses
206,605

 
63,612

 
2,643

 
(304
)
 
272,556

Income (loss) from operations
46,145

 
8,344

 
(2,290
)
 
—

 
52,199

Accretion of discount to the relinquishment liability
(1,243
)
 
—

 
—

 
—

 
(1,243
)
Interest expense, net of capitalized interest
(30,115
)
 
(10,864
)
 
(2,661
)
 
366

 
(43,274
)
Loss on interests in subsidiaries
(5,750
)
 
(879
)
 
—

 
6,629

 
—

Other income, net
63

 
370

 
437

 
(366
)
 
504

Net income (loss)
9,100

 
(3,029
)
 
(4,514
)
 
6,629

 
8,186

Loss attributable to non-controlling interests
—

 
—

 
—

 
914

 
914

Net income (loss) attributable to Mohegan Tribal Gaming Authority
$
9,100

 
$
(3,029
)
 
$
(4,514
)
 
$
7,543

 
$
9,100

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
















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

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
 
For the Three Months Ended December 31, 2013
 
Authority
 
Total
Guarantor
Subsidiaries (1) 
 
Total  Non-Guarantor
Subsidiaries and Entities (2)
 
Consolidating/
  Eliminating
  Adjustments  
 
Consolidated  
Cash flows provided by (used in) operating activities:
 
 
 
 
 
 
 
 
 
Net income (loss)
$
(67,255
)
 
$
(9,376
)
 
$
(7,184
)
 
$
16,425

 
$
(67,390
)
Adjustments to reconcile net income to net cash flows provided by operating activities:
 
 
 
 
 
 
 
 
 
Depreciation and amortization
15,532

 
3,421

 
165

 
—

 
19,118

Accretion of discount to the relinquishment liability
551

 
—

 
—

 
—

 
551

Cash paid for accretion of discount to the relinquishment liability
(621
)
 
—

 
—

 
—

 
(621
)
Loss on early extinguishment of debt
58,287

 
—

 
—

 
—

 
58,287

Payments of tender offer costs and discounts
(48,155
)
 
—

 
—

 
—

 
(48,155
)
Amortization of debt issuance costs and accretion of bond discounts
2,246

 
—

 
80

 
—

 
2,326

Provision for losses on receivables
171

 
(3
)
 
634

 
—

 
802

Gain on disposition of assets
(1
)
 
—

 
—

 
—

 
(1
)
Loss from unconsolidated affiliates
2

 
—

 
694

 
—

 
696

Changes in operating assets and liabilities:
 
 
 
 
 
 
 
 
 
(Increase) decrease in receivables
2,890

 
434

 
(79
)
 
131

 
3,376

Increase in inventories
(800
)
 
(392
)
 
—

 
—

 
(1,192
)
Increase in other assets
(1,158
)
 
(207
)
 
(1,485
)
 
(1
)
 
(2,851
)
Increase in trade payables
2,891

 
793

 
1,055

 
—

 
4,739

Increase (decrease) in accrued interest
10,447

 
—

 
(1,109
)
 
—

 
9,338

Increase in other liabilities
3,248

 
3,136

 
2,026

 
(137
)
 
8,273

Intercompany transactions
(204
)
 
15,614

 
1,014

 
(16,424
)
 
—

Net cash flows provided by (used in) operating activities
(21,929
)
 
13,420

 
(4,189
)
 
(6
)
 
(12,704
)
Cash flows provided by (used in) investing activities:
 
 
 
 
 
 
 
 
 
Purchases of property and equipment, net of change in construction payables
(6,526
)
 
(1,423
)
 
(7,219
)
 
—

 
(15,168
)
Issuance of third-party loans and advances
—

 
—

 
(382
)
 
—

 
(382
)
Payments received on third-party loans
532

 
—

 
—

 
—

 
532

(Increase) decrease in restricted cash, net
(4
)
 
(282
)
 
7,804

 
—

 
7,518

Proceeds from asset sales
5

 
—

 
—

 
—

 
5

Investments in unconsolidated affiliates
—

 
—

 
(29
)
 
—

 
(29
)
Intercompany transactions
2,459

 
(6,885
)
 
—

 
4,426

 
—

Net cash flows provided by (used in) investing activities
(3,534
)
 
(8,590
)
 
174

 
4,426

 
(7,524
)
Cash flows provided by (used in) financing activities:
 
 
 
 
 
 
 
 
 
Prior Bank Credit Facility repayments - Term
(393,000
)
 
—

 
—

 
—

 
(393,000
)
Prior Term Loan Facility repayments
(222,103
)
 
—

 
—

 
—

 
(222,103
)
Senior Secured Credit Facility borrowings - Revolving
56,000

 
—

 
—

 
—

 
56,000

Senior Secured Credit Facility repayments - Revolving
(42,000
)
 
—

 
—

 
—

 
(42,000
)
Senior Secured Credit Facility borrowings - Term Loan A, net of discount
124,343

 
—

 
—

 
—

 
124,343

Senior Secured Credit Facility borrowings - Term Loan B, net of discount
720,952

 
—

 
—

 
—

 
720,952

Line of Credit borrowings
78,794

 
—

 
—

 
—

 
78,794

Line of Credit repayments
(69,441
)
 
—

 
—

 
—

 
(69,441
)
Repayments to Mohegan Tribe
—

 
—

 
(1,375
)
 
—

 
(1,375
)
Repayments of other long-term debt
(190,927
)
 
—

 
(8
)
 
—

 
(190,935
)
Principal portion of relinquishment liability payments
(6,034
)
 
—

 
—

 
—

 
(6,034
)
Distributions to Mohegan Tribe
(10,000
)
 
—

 
—

 
—

 
(10,000
)
Payments of financing fees
(12,437
)
 
—

 
—

 
—

 
(12,437
)

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

Payments on capital lease obligations
(558
)
 
(6
)
 
—

 
6

 
(558
)
Intercompany transactions
—

 
(2,148
)
 
6,574

 
(4,426
)
 
—

Net cash flows provided by (used in) financing activities
33,589

 
(2,154
)
 
5,191

 
(4,420
)
 
32,206

Net increase in cash and cash equivalents
8,126

 
2,676

 
1,176

 
—

 
11,978

Cash and cash equivalents at beginning of period
44,060

 
18,655

 
909

 
—

 
63,624

Cash and cash equivalents at end of period
$
52,186

 
$
21,331

 
$
2,085

 
$
—

 
$
75,602

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

 
For the Three Months Ended December 31, 2012
 
Authority  
 
Total
Guarantor
Subsidiaries (1)
 
Total  Non-Guarantor Subsidiaries
and Entities (2)
 
Consolidating/
Eliminating
Adjustments
 
Consolidated
Net cash flows provided by (used in) operating activities
$
(2,506
)
 
$
14,880

 
$
(2,960
)
 
$
—

 
$
9,414

Cash flows provided by (used in) investing activities:
 
 
 
 
 
 
 
 
 
Purchases of property and equipment
(5,763
)
 
(1,490
)
 
(3,119
)
 
—

 
(10,372
)
(Increase) decrease in restricted cash, net
—

 
(341
)
 
4,317

 
—

 
3,976

Investments in unconsolidated affiliates
—

 
—

 
(4,927
)
 
—

 
(4,927
)
Other cash flows provided by (used in) investing activities
19,407

 
(4,425
)
 
(661
)
 
(14,830
)
 
(509
)
Net cash flows provided by (used in) investing activities
13,644

 
(6,256
)
 
(4,390
)
 
(14,830
)
 
(11,832
)
Cash flows provided by (used in) financing activities:
 
 
 
 
 
 
 
 
 
Prior Bank Credit Facility repayments - Term
(1,000
)
 
—

 
—

 
—

 
(1,000
)
Repayments to Mohegan Tribe
—

 
—

 
(2,487
)
 
—

 
(2,487
)
Principal portion of relinquishment liability payments
(5,622
)
 
—

 
—

 
—

 
(5,622
)
Distributions to Mohegan Tribe
(10,000
)
 
—

 
—

 
—

 
(10,000
)
Payments of financing fees
(2,525
)
 
—

 
(196
)
 
—

 
(2,721
)
Other cash flows provided by (used in) financing activities
(16,034
)
 
(10,405
)
 
9,947

 
14,830

 
(1,662
)
Net cash flows provided by (used in) financing activities
(35,181
)
 
(10,405
)
 
7,264

 
14,830

 
(23,492
)
Net decrease in cash and cash equivalents
(24,043
)
 
(1,781
)
 
(86
)
 
—

 
(25,910
)
Cash and cash equivalents at beginning of period
91,836

 
21,757

 
491

 
—

 
114,084

Cash and cash equivalents at end of period
$
67,793

 
$
19,976

 
$
405

 
$
—

 
$
88,174

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



27

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 our Pennsylvania off-track wagering facilities;
•
the local, regional, national or global economic climate, including the lingering effects of the most recent economic recession, which negatively affected our revenues and earnings;
•
increased competition, including the expansion of gaming in New England, New York, New Jersey or Pennsylvania;
•
our leverage and ability to meet our debt service obligations and maintain compliance with financial debt covenants;
•
the continued availability of financing;
•
our dependence on existing management;
•
our ability to integrate new amenities from expansions to our facilities into our current operations and manage the expanded facilities;
•
changes in federal or state tax laws or the administration of such laws;
•
changes in gaming laws or regulations, including the limitation, denial or suspension of licenses required under gaming laws and regulations;
•
changes in applicable laws pertaining to the service of alcohol, smoking or other amenities offered at our facilities;
•
our ability to successfully implement our diversification strategy;
•
an act of terrorism on the United States;
•
our customers' access to inexpensive transportation to our facilities and changes in oil, fuel or other transportation-related expenses; and
•
unfavorable weather conditions.
Additional information concerning potential factors that could affect our financial results is included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2013, 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, federally-recognized Indian tribes are permitted to conduct full-scale casino gaming operations on tribal lands, subject to, among other things, the negotiation of a compact with the affected state. The Tribe and the State of Connecticut entered into a compact, the Mohegan Compact, which was approved by the United States Secretary of the Interior. We were established as an instrumentality of the Tribe, with the exclusive authority to conduct and regulate gaming activities for the Tribe on Tribal lands and the non-exclusive authority to conduct such activities elsewhere. Our gaming operation at Mohegan Sun is one of only two legally authorized gaming operations in southern New England offering traditional slot machines and table games. Through our subsidiary, Downs Racing, L.P., or Downs Racing, we also own and operate Mohegan Sun 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 facilities. We are governed by a nine-member

28

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, both components of Mohegan Sun's Project Horizon expansion.
Mohegan Sun currently operates in an approximately 3.1 million square-foot facility, which includes the following:
Casino of the Earth
As of December 31, 2013, Casino of the Earth offered:
•
approximately 188,000 square feet of gaming space;
•
approximately 2,910 slot machines and 160 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, a Hong Kong-style food outlet offering authentic Southeast Asian cuisine, Bobby Flay's Bobby's Burger Palace, Bow & Arrow Sports Bar and multiple service bars, all operated by us, as well as Ballo Italian Restaurant & Social Club, Frank Pepe Pizzeria Napoletana, Hash House a Go Go and Fidelia's Market, an approximately 290-seat multi-station food court, operated by third-parties, for a total restaurant seating of approximately 2,075;
•
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 December 31, 2013, Casino of the Sky offered:
•
approximately 119,000 square feet of gaming space;
•
approximately 2,050 slot machines and 100 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 restaurant seating of approximately 2,285;
•
The Shops at Mohegan Sun containing 32 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;
•
Landsdowne Irish Pub and Music House, Avalon Nightclub and Vista Lounge, 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 December 31, 2013, Casino of the Wind offered:
•
approximately 45,000 square feet of gaming space;
•
approximately 560 slot machines, 25 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, for a total restaurant seating of approximately 475;
•
Mist, a nightlife entertainment venue operated by us; and
•
a retail shop operated by a third-party.
Mohegan Sun offers parking for approximately 13,000 patrons and 3,900 employees. We also operate an approximately 3,600-square-foot, 20-pump gasoline and convenience center for patrons, as well as a 10-pump gasoline center for employees, both located adjacent to Mohegan Sun. In addition, Mohegan Sun is a CT Lottery retailer.

29

Connecticut Sun
Through Mohegan Basketball Club, LLC, or MBC, we own and operate the Connecticut Sun franchise, a professional basketball team in the Women's National Basketball Association. The team plays its home games in the Mohegan Sun Arena.
Mohegan Sun Country Club at Pautipaug
Through Mohegan Golf, LLC, or Mohegan Golf, we own and operate the Mohegan Sun Country Club at Pautipaug, a private 18-hole championship golf course, restaurant and bar located in Sprague and Franklin, Connecticut.
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, and, in July 2010, we opened our table game and poker operations, including additional non-smoking sections and a high-limit gaming area. We recently completed Project Sunlight, a hotel and convention center expansion located adjacent to the Mohegan Sun at Pocono Downs casino.
Mohegan Sun at Pocono Downs currently operates in an approximately 400,000-square-foot facility, which includes the following as of December 31, 2013:
•
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;
•
a 238-room hotel;
•
approximately 20,000 square feet of convention space;
•
food and beverage amenities, including: Ruth's Chris Steakhouse, Rustic Kitchen Bistro and Bar, which features dining and a live cooking show, Bar Louie, a casual bar and restaurant, Timbers Buffet, a 300-seat Mohegan Indian cultural heritage themed multi-station buffet, and a food court, including: Johnny Rockets, Wok 8, Puck Express by Wolfgang Puck and Ben & Jerry's Ice Cream, for a total seating of approximately 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.
Project Sunlight
Project Sunlight, a $50 million hotel expansion project located adjacent to the Mohegan Sun at Pocono Downs casino, opened to the public on November 15, 2013. This expansion includes a 238-room hotel and an approximately 20,000-square-foot convention center. The hotel is comprised of a combination of standard guest rooms and suites and features rooms with exclusive views of the race track, as well as a fitness center and an indoor pool. A new porte-cochere also was added for additional guest convenience. The convention center is located adjacent to the hotel and can accommodate a number of different sized groups, including up to 800 for seated banquets. This space also can be converted into a 1,500-seat concert venue.
Market and Competition from Other Gaming Operations
Our gaming operation at Mohegan Sun is one of only two current gaming operations in southern New England offering traditional slot machines and table games, with the other operation being our sole gaming competitor in the State of Connecticut, Foxwoods Resort Casino, or Foxwoods, owned by the Mashantucket Pequot Tribe and located approximately 10 miles from Mohegan Sun. We also face competition from 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, 2013 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, 2013.

30


Results of Operations
Summary Operating Results
As of December 31, 2013, we own and operate, either directly or through wholly-owned subsidiaries, Mohegan Sun, the Connecticut Sun franchise, and the Mohegan Sun Country Club at Pautipaug, or collectively, the Connecticut facilities, and the Pennsylvania facilities. Substantially all of our revenues are derived from these operations. The Connecticut Sun franchise and the Mohegan Sun Country Club at Pautipaug are aggregated with the Mohegan Sun operating segment because these operations all share similar economic characteristics, which is to generate gaming and entertainment revenues by attracting patrons to Mohegan Sun. Our executive officers review and assess the performance and operating results and determine the proper allocation of resources to the Connecticut facilities and the Pennsylvania facilities on a separate basis. Accordingly, we have two separate reportable segments: (1) Mohegan Sun, which includes the operations of the Connecticut facilities, and (2) Mohegan Sun at Pocono Downs, which includes the operations of the Pennsylvania facilities.
The following table summarizes our results on a property basis (in thousands, except where noted):
 
For the Three Months Ended December 31,
 
2013
 
2012
 
Variance    
 
Percentage
Variance    
Net revenues:
 
 
 
 
 
 
 
Mohegan Sun
$
241,933

 
$
253,190

 
$
(11,257
)
 
(4.4
)%
Mohegan Sun at Pocono Downs
70,683

 
71,288

 
(605
)
 
(0.8
)%
Corporate and other
739

 
277

 
462

 
166.8
 %
Inter-segment revenues
(532
)
 
—

 
(532
)
 
100.0
 %
Total
$
312,823

 
$
324,755

 
$
(11,932
)
 
(3.7
)%
Income (loss) from operations:
 
 
 
 
 
 
 
Mohegan Sun
$
34,643

 
$
48,126

 
$
(13,483
)
 
(28.0
)%
Mohegan Sun at Pocono Downs
7,577

 
9,558

 
(1,981
)
 
(20.7
)%
Corporate and other
(8,947
)
 
(5,485
)
 
(3,462
)
 
63.1
 %
Total
$
33,273

 
$
52,199

 
$
(18,926
)
 
(36.3
)%
Net income (loss) attributable to Mohegan Tribal Gaming Authority
$
(67,254
)
 
$
9,100

 
$
(76,354
)
 
(839.1
)%
Operating margin:
 
 
 
 
 
 
 
Mohegan Sun
14.3
%
 
19.0
%
 
(4.7
)%
 
(24.7
)%
Mohegan Sun at Pocono Downs
10.7
%
 
13.4
%
 
(2.7
)%
 
(20.1
)%
Total
10.6
%
 
16.1
%
 
(5.5
)%
 
(34.2
)%

The most significant factors and trends that we believe impacted our operating and financial performance were as follows:
•
lower table games hold percentage;
•
additional gaming capacity in the Northeast gaming market;
•
an increasingly competitive environment;
•
a weak regional economic environment and its related impact on consumer discretionary spending;
•
higher Corporate expenses;
•
continued changes in operations designed to improve profitability;
•
continued focus on managing expenses and enhancing operating efficiencies;
•
lower interest expense; and
•
a $62.1 million non-operating loss on early extinguishment of debt.
Net revenues for the three months ended December 31, 2013 compared to the same period in the prior year declined primarily as a result of lower table game and slot revenues at Mohegan Sun.
Income from operations for the three months ended December 31, 2013 compared to the same period in the prior year decreased primarily due to the reduction in net revenues, combined with higher Corporate expenses.
Net income attributable to the Authority for the three months ended December 31, 2013 compared to the same period in the prior year declined primarily as a result of the loss on early extinguishment of debt, combined with the reduction in income from operations. These results were partially offset by lower interest expense driven by our August and November 2013 refinancing transactions.

31

Mohegan Sun
Gross Revenues
Gross revenues consisted of the following (in thousands):
 
For the Three Months Ended December 31,
 
2013
 
2012
 
Variance    
 
Percentage
Variance
Gaming
$
208,474

 
$
222,274

 
$
(13,800
)
 
(6.2
)%
Food and beverage
15,981

 
14,938

 
1,043

 
7.0
 %
Hotel
10,251

 
9,944

 
307

 
3.1
 %
Retail, entertainment and other
27,483

 
24,816

 
2,667

 
10.7
 %
Total
$
262,189

 
$
271,972

 
$
(9,783
)
 
(3.6
)%
The following table summarizes the percentage of gross revenues from each of the four revenue sources:
 
For the Three Months Ended December 31,
 
2013
 
2012
Gaming
79.5
%
 
81.7
%
Food and beverage
6.1
%
 
5.5
%
Hotel
3.9
%
 
3.7
%
Retail, entertainment and other
10.5
%
 
9.1
%
Total
100.0
%
 
100.0
%

The following table presents data related to gaming operations (in thousands, except where noted):
 
For the Three Months Ended December 31,
 
2013
 
2012
 
Variance
 
Percentage Variance
Slots:
 
 
 
 
 
 
 
Handle
$
1,790,830

 
$
1,785,004

 
$
5,826

 
0.3
 %
Gross revenues
$
144,163

 
$
148,478

 
$
(4,315
)
 
(2.9
)%
Net revenues
$
138,926

 
$
142,656

 
$
(3,730
)
 
(2.6
)%
Free promotional slot plays (1)
$
15,959

 
$
13,820

 
$
2,139

 
15.5
 %
Weighted average number of machines (in units)
5,529

 
5,608

 
(79
)
 
(1.4
)%
Hold percentage (gross)
8.1
%
 
8.3
%
 
(0.2
)%
 
(2.4
)%
    Win per unit per day (gross) (in dollars)
$
283

 
$
288

 
$
(5
)
 
(1.7
)%
Table games:
 
 
 
 
 
 
 
Drop
$
495,722

 
$
463,614

 
$
32,108

 
6.9
 %
Revenues
$
65,733

 
$
75,551

 
$
(9,818
)
 
(13.0
)%
Weighted average number of games (in units)
284

 
287

 
(3
)
 
(1.0
)%
Hold percentage (2)
13.3
%
 
16.3
%
 
(3.0
)%
 
(18.4
)%
Win per unit per day (in dollars)
$
2,516

 
$
2,864

 
$
(348
)
 
(12.2
)%
Poker:
 
 
 
 
 
 
 
Revenues
$
2,471

 
$
2,571

 
$
(100
)
 
(3.9
)%
Weighted average number of tables (in units)
42

 
42

 
—

 
—

Revenue per unit per day (in dollars)
$
644

 
$
665

 
$
(21
)
 
(3.2
)%
__________
(1)
Free promotional slot plays are included in slot handle, but not reflected in slot revenues.
(2)
Table game hold percentage is relatively predictable over longer periods of time, but can significantly fluctuate over shorter periods.

Gaming revenues for the three months ended December 31, 2013 compared to the same period in the prior year declined primarily as a result of lower table game revenues due to the decrease in table games hold percentage. The decline in table games hold percentage primarily reflected abnormally low hold within our high-end table games segment. The decrease in gaming revenues also reflected lower slot revenues which we believe was primarily driven by a weak regional economic environment and the impact of competition.


32

The following table presents data related to food and beverage operations (in thousands, except where noted):
 
For the Three Months Ended December 31,
 
2013
 
2012
 
Variance
 
Percentage
Variance
Meals served
738

 
705

 
33

 
4.7
%
Average price per meal served (in dollars)
$
16.22

 
$
16.11

 
$
0.11

 
0.7
%

Food and beverage revenues for the three months ended December 31, 2013 compared to the same period in the prior year increased primarily due to the increase in meals served. The increase in meals served reflected changes in our promotional programs designed to improve profitability.
The following table presents data related to hotel operations (in thousands, except where noted): 
 
For the Three Months Ended December 31,
 
2013
 
2012
 
Variance
 
Percentage
Variance
Rooms occupied
104

 
104

 
—

 
—

Occupancy rate
95.8
%
 
96.1
%
 
(0.3
)%
 
(0.3
)%
Average daily room rate (in dollars)
$
95

 
$
92

 
$
3

 
3.3
 %
Revenue per available room (in dollars)
$
91

 
$
89

 
$
2

 
2.2
 %

Hotel revenues for the three months ended December 31, 2013 compared to the same period in the prior year increased primarily as a result of an increase in hotel occupancy by higher paying transient guests.
The following table presents data related to entertainment operations (in thousands, except where noted):
 
For the Three Months Ended December 31,
 
2013
 
2012
 
Variance
 
Percentage
Variance
Arena events (in events)
25

 
26

 
(1
)
 
(3.8
)%
Arena tickets
153

 
164

 
(11
)
 
(6.7
)%
Average price per Arena ticket (in dollars)
$
66.68

 
$
51.96

 
$
14.72

 
28.3
 %

Retail, entertainment and other revenues for the three months ended December 31, 2013 compared to the same period in the prior year increased primarily due to higher entertainment revenues resulting from the increase in average price per Arena ticket. The increase in average price per Arena ticket reflected an increase in the number of headliner shows held at the Mohegan Sun Arena. The increase in retail, entertainment and other revenues also reflected higher gasoline revenues due to an increase in the number of gallons of gasoline sold at the Mohegan Sun gasoline and convenience center.

Promotional Allowances
The retail value of providing promotional allowances was included in revenues as follows (in thousands):
 
For the Three Months Ended December 31,
 
2013
 
2012
 
Variance
 
Percentage
Variance
Food and beverage
$
6,838

 
$
5,398

 
$
1,440

 
26.7
 %
Hotel
3,358

 
3,544

 
(186
)
 
(5.2
)%
Retail, entertainment and other
10,060

 
9,840

 
220

 
2.2
 %
Total
$
20,256

 
$
18,782

 
$
1,474

 
7.8
 %
The estimated cost of providing promotional allowances was included in gaming costs and expenses as follows (in thousands):
 
For the Three Months Ended December 31,
 
2013
 
2012
 
Variance
 
Percentage
Variance
Food and beverage
$
6,690

 
$
5,338

 
$
1,352

 
25.3
 %
Hotel
1,761

 
1,853

 
(92
)
 
(5.0
)%
Retail, entertainment and other
9,164

 
9,377

 
(213
)
 
(2.3
)%
Total
$
17,615

 
$
16,568

 
$
1,047

 
6.3
 %

33


Promotional allowances for the three months ended December 31, 2013 compared to the same period in the prior year increased primarily as a result of higher food and beverage promotional allowances driven by changes in our promotional programs designed to improve profitability.
Operating Costs and Expenses
Operating costs and expenses consisted of the following (in thousands):
 
For the Three Months Ended December 31,
 
2013
 
2012
 
Variance
 
Percentage
Variance
Gaming
$
128,116

 
$
126,215

 
$
1,901

 
1.5
 %
Food and beverage
8,072

 
8,685

 
(613
)
 
(7.1
)%
Hotel
3,657

 
3,393

 
264

 
7.8
 %
Retail, entertainment and other
12,443

 
10,020

 
2,423

 
24.2
 %
Advertising, general and administrative
39,165

 
39,624

 
(459
)
 
(1.2
)%
Depreciation and amortization
15,838

 
17,173

 
(1,335
)
 
(7.8
)%
(Gain) loss on disposition of assets
(1
)
 
133

 
(134
)
 
(100.8
)%
Severance
—

 
(179
)
 
179

 
(100.0
)%
Total
$
207,290

 
$
205,064

 
$
2,226

 
1.1
 %

Gaming costs and expenses for the three months ended December 31, 2013 compared to the same period in the prior year increased primarily as a result of higher costs related to coupon redemptions at Mohegan Sun-owned facilities and third-party outlets. These results were partially offset by lower slot win and free promotional slot play contribution expenses commensurate with the decline in slot revenues and reduced payroll and insurance costs. Expenses associated with the combined slot win and free promotional slot play contributions totaled $36.3 million and $37.1 million for the three months ended December 31, 2013 and 2012, respectively. Gaming costs and expenses as a percentage of gaming revenues were 61.5% and 56.8% for the three months ended December 31, 2013 and 2012, respectively.
Food and beverage costs and expenses for the three months ended December 31, 2013 compared to the same period in the prior year declined primarily due to increased use of food and beverage complimentaries, resulting in higher amounts of food and beverage costs being allocated to gaming costs and expenses. The decline in food and beverage costs and expenses also reflected lower payroll costs. These results were partially offset by higher cost of goods sold commensurate with the increase in food and beverage revenues.
Hotel costs and expenses for the three months ended December 31, 2013 compared to the same period in the prior year increased primarily as a result of higher payroll costs.
Retail, entertainment and other costs and expenses for the three months ended December 31, 2013 compared to the same period in the prior year increased primarily due to higher direct entertainment costs reflecting an increase in the number of headliner shows held at the Mohegan Sun Arena. The increase in retail, entertainment and other costs and expenses also reflected higher cost of goods sold for gasoline commensurate with the increase in gasoline revenues. These results were partially offset by lower Arena expenses due to the reduction in the overall number of events held at the Mohegan Sun Arena.
Advertising, general and administrative costs and expenses for the three months ended December 31, 2013 compared to the same period in the prior year were relatively flat.







34

Mohegan Sun at Pocono Downs
Gross Revenues
Gross revenues consisted of the following (in thousands):
 
For the Three Months Ended December 31,
 
2013
 
2012
 
Variance
 
Percentage
Variance
Gaming
$
66,279

 
$
67,335

 
$
(1,056
)
 
(1.6
)%
Food and beverage
6,738

 
6,051

 
687

 
11.4
 %
Hotel (1)
441

 
—

 
441

 
100.0
 %
Retail, entertainment and other
1,791

 
1,939

 
(148
)
 
(7.6
)%
Total
$
75,249

 
$
75,325

 
$
(76
)
 
(0.1
)%
 ___________
(1)
Hotel operations commenced on November 15, 2013.

The following table summarizes the percentage of gross revenues from each of the three revenue sources:
 
For the Three Months Ended December 31,
 
2013
 
2012
Gaming
88.1
%
 
89.4
%
Food and beverage
9.0
%
 
8.0
%
Hotel (1)
0.5
%
 
—
%
Retail, entertainment and other
2.4
%
 
2.6
%
Total
100.0
%
 
100.0
%
 ___________
(1)
Hotel operations commenced on November 15, 2013.

The following table presents data related to gaming operations (in thousands, except where noted):
 
For the Three Months Ended December 31,
 
2013
 
2012
 
Variance
 
Percentage
Variance
Slots:
 
 
 
 
 
 
 
Handle
$
625,856

 
$
679,869

 
$
(54,013
)
 
(7.9
)%
Gross revenues
$
52,949

 
$
53,597

 
$
(648
)
 
(1.2
)%
Net revenues
$
52,908

 
$
53,552

 
$
(644
)
 
(1.2
)%
Free promotional slot plays (1)
$
11,331

 
$
15,281

 
$
(3,950
)
 
(25.8
)%
Weighted average number of machines (in units)
2,331

 
2,332

 
(1
)
 
(0.04
)%
Hold percentage (gross)
8.5
%
 
7.9
%
 
0.6
 %
 
7.6
 %
Win per unit per day (gross) (in dollars)
$
247

 
$
250

 
$
(3
)
 
(1.2
)%
Table games:
 
 
 
 
 
 
 
Drop
$
48,408

 
$
45,499

 
$
2,909

 
6.4
 %
Revenues
$
9,774

 
$
9,515

 
$
259

 
2.7
 %
Weighted average number of games (in units)
66

 
66

 
—

 
—

Hold percentage (2)
20.2
%
 
20.9
%
 
(0.7
)%
 
(3.3
)%
Win per unit per day (in dollars)
$
1,610

 
$
1,567

 
$
43

 
2.7
 %
Poker:
 
 
 
 
 
 
 
Revenues
$
873

 
$
1,070

 
$
(197
)
 
(18.4
)%
Weighted average number of tables (in units)
18

 
18

 
—

 
—

Revenue per unit per day (in dollars)
$
527

 
$
646

 
$
(119
)
 
(18.4
)%
 ___________
(1)
Free promotional slot plays are included in slot handle, but not reflected in slot revenues.
(2)
Table games hold percentage is relatively predictable over longer periods of time, but can significantly fluctuate over shorter periods.

Gaming revenues for the three months ended December 31, 2013 compared to the same period in the prior year declined primarily as a result of lower slot revenues. The reduction in slot revenues was due to the decline in slot handle which we believe reflected unfavorable weather conditions and a weak regional economic environment. We believe the decline in slot revenues also reflected continued changes in our operations designed to improve profitability.

35

The following table presents data related to food and beverage operations (in thousands, except where noted):
 
For the Three Months Ended December 31,
 
2013
 
2012
 
Variance
 
Percentage
Variance
Meals served
179

 
158

 
21

 
13.3
 %
Average price per meal served (in dollars)
$
17.42

 
$
17.79

 
$
(0.37
)
 
(2.1
)%
Food and beverage revenues for the three months ended December 31, 2013 compared to the same period in the prior year increased primarily due to the increase in meals served. The increase in meals served reflected changes in our promotional programs designed to improve profitability.
The following table presents data related to hotel operations (in thousands, except where noted): 
 
For the Three Months Ended December 31,
 
2013
 
2012
 
Variance
 
Percentage
Variance
Rooms occupied
8

 
—

 
8

 
100.0

Occupancy rate
81.5
%
 
—

 
81.5
%
 
100.0
%
Average daily room rate (in dollars)
$
55

 
—

 
$
55

 
100.0
%
Revenue per available room (in dollars)
$
45

 
—

 
$
45

 
100.0
%
 ___________
Hotel operations commenced on November 15, 2013.
Promotional Allowances
The retail value of providing promotional allowances was included in revenues as follows (in thousands):
 
For the Three Months Ended December 31,
 
2013
 
2012
 
Variance
 
Percentage
Variance
Food and beverage
$
4,090

 
$
3,562

 
$
528

 
14.8
 %
Hotel
158

 
—

 
158

 
100.0
 %
Retail, entertainment and other
318

 
475

 
(157
)
 
(33.1
)%
Total
$
4,566

 
$
4,037

 
$
529

 
13.1
 %

The estimated cost of providing promotional allowances was included in gaming costs and expenses as follows (in thousands):
 
For the Three Months Ended December 31,
 
2013
 
2012
 
Variance
 
Percentage
Variance
Food and beverage
$
2,891

 
$
2,714

 
$
177

 
6.5
 %
Hotel
293

 
—

 
293

 
100
 %
Retail, entertainment and other
357

 
514

 
(157
)
 
(30.5
)%
Total
$
3,541

 
$
3,228

 
$
313

 
9.7
 %

Promotional allowances for the three months ended December 31, 2013 compared to the same period in the prior year increased primarily as a result of higher food and beverage promotional allowances driven by changes in our promotional programs designed to improve profitability.






36

Operating Costs and Expenses
Operating costs and expenses consisted of the following (in thousands):
 
For the Three Months Ended December 31,
 
2013
 
2012
 
Variance
 
Percentage
  Variance  
Gaming
$
48,186

 
$
49,571

 
$
(1,385
)
 
(2.8
)%
Food and beverage
2,027

 
1,951

 
76

 
3.9
 %
Hotel (1)
535

 
—

 
535

 
100.0
 %
Retail, entertainment and other
333

 
286

 
47

 
16.4
 %
Advertising, general and administrative
7,777

 
6,960

 
817

 
11.7
 %
Depreciation and amortization
3,086

 
2,962

 
124

 
4.2
 %
Pre-opening
1,162

 
—

 
1,162

 
100.0
 %
Total
$
63,106

 
$
61,730

 
$
1,376

 
2.2
 %
 ___________
(1)
Hotel operations commenced on November 15, 2013.
Gaming costs and expenses for the three months ended December 31, 2013 compared to the same period in the prior year declined primarily due to lower Pennsylvania slot machine tax expenses commensurate with the reduction in slot revenues and continued changes in our operations designed to improve profitability. Expenses associated with the Pennsylvania slot machine tax totaled $29.7 million and $30.2 million for the three months ended December 31, 2013 and 2012, respectively. Expenses associated with the Pennsylvania table game tax totaled $1.5 million for each of the three months ended December 31, 2013 and 2012, respectively. Gaming costs and expenses as a percentage of gaming revenues were 72.7% and 73.6% for the three months ended December 31, 2013 and 2012, respectively.
Food and beverage costs and expenses for the three months ended December 31, 2013 compared to the same period in the prior year increased primarily as a result of higher payroll costs and cost of goods sold commensurate with the increase in food and beverage revenues. These results were 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 December 31, 2013 compared to the same period in the prior year increased primarily due to reduced use of retail, entertainment and other complimentaries, resulting in lower amounts of retail, entertainment and other complimentaries costs being allocated to gaming costs and expenses. These results were partially offset by lower cost of goods sold for tobacco commensurate with the decrease in tobacco revenues.
Advertising, general and administrative costs and expenses for the three months ended December 31, 2013 compared to the same period in the prior year increased primarily as a result of additional administrative costs and expenses necessary to support the addition of our hotel.
Pre-opening costs and expenses for the three months ended December 31, 2013 were comprised of personnel costs associated with preparation for the opening of our hotel operations which commenced on November 15, 2013.
Corporate and Other
Corporate and other consisted of the following (in thousands):
 
For the Three Months Ended December 31,
 
2013
 
2012
 
Variance
 
Percentage  Variance
Corporate and other:
 
 
 
 
 
 
 
Gross revenues (1)
$
763

  
$
309

 
$
454

 
146.9
 %
Less-Promotional allowances
24

 
32

 
(8
)
 
(25.0
)%
Net revenues
$
739

 
$
277

 
$
462

 
166.8
 %
 
 
 
 
 
 
 
 
Expenses
$
9,492

  
$
5,733

 
$
3,759

 
65.6
 %
Depreciation and amortization
194

  
29

 
165

 
569.0
 %
Total expenses
$
9,686

  
$
5,762

  
$
3,924

 
68.1
 %
 ___________
(1)
Includes $532,000 of inter-segment revenues which are eliminated in consolidation.

37

Corporate and other expenses for the three months ended December 31, 2013 compared to the same period in the prior year increased primarily as a result of higher professional and development related expenditures associated with our pursuit of a Massachusetts casino license.
Other Income (Expense)
Other income (expense) consisted of the following (in thousands):
 
For the Three Months Ended December 31,
 
2013
 
2012
 
Variance
 
Percentage
Variance
Accretion of discount to the relinquishment liability (1)
$
(551
)
 
$
(1,243
)
 
$
692

 
(55.7
)%
Interest income (2)
1,644

 
1,457

 
187

 
12.8
 %
Interest expense, net of capitalized interest
(38,969
)
 
(43,274
)
 
4,305

 
(9.9
)%
Loss on early extinguishment of debt
(62,083
)
 
(8
)
 
(62,075
)
 
775,937.5
 %
Other expense, net (3)
(704
)
 
(945
)
 
241

 
(25.5
)%
Total other expense
$
(100,663
)
 
$
(44,013
)
 
$
(56,650
)
 
128.7
 %
___________
(1)
Reflects accretion of the discount to the present value of the relinquishment liability for the impact of the time value of money.
(2)
Primarily represents interest earned on long-term receivables.
(3)
Primarily represents loss from unconsolidated affiliates.

Interest expense for the three months ended December 31, 2013 compared to the same period in the prior year decreased primarily as a result of lower weighted average interest rate driven by our August and November 2013 refinancing transactions. Weighted average interest rate was 9.2% for the three months ended December 31, 2013 compared to 10.1% for the three months ended December 31, 2012. Weighted average outstanding debt was $1.73 billion for the three months ended December 31, 2013 compared to $1.71 billion for the three months ended December 31, 2012.

Loss on early extinguishment of debt for the three months ended December 31, 2013 represented financing fees expensed in connection with our November 2013 refinancing transactions. We incurred approximately $60.9 million in costs in connection with these refinancing transactions, consisting primarily of consulting, legal and tender and consent fees. Previously deferred debt issuance costs and debt discounts totaling $22.4 million, as well as $39.7 million in new transaction costs were expensed and recorded as a loss on early extinguishment of debt. New debt issuance costs totaling $11.5 million were capitalized and will be amortized over the term of the related debt. The remaining $9.7 million in new debt issuance costs was reflected as debt discount and will be amortized over the term 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 operating results for the three months ended December 31, 2013 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 Three Months Ended December 31,
 
2013
 
2012
 
Variance    
 
Percentage
    Variance    
Net cash provided by (used in) operating activities
$
(12,704
)
 
$
9,414

 
$
(22,118
)
 
(234.9
)%
Net cash used in investing activities
(7,524
)
 
(11,832
)
 
4,308

 
(36.4
)%
Net cash provided by (used in) financing activities
32,206

 
(23,492
)
 
55,698

 
(237.1
)%
Net increase (decrease) in cash and cash equivalents
$
11,978

 
$
(25,910
)
 
$
37,888

 
(146.2
)%
As of December 31, 2013 and September 30, 2013, we held cash and cash equivalents of $75.6 million and $63.6 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 and relinquishment liability reassessments. The decline in cash provided by operating activities for the three months ended December 31, 2013 compared to the same period in the prior year resulted from a significant reduction in net income primarily driven by our November 2013 refinancing transactions, including the payment of tender and consent fees, and the decline in income from operations. Cash

38

provided by operating activities for the three months ended December 31, 2013 were negatively impacted by approximately $52.0 million as a result of our November 2013 refinancing transactions. These results were partially offset by lower working capital requirements.
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 to make investments, from time to time. There are numerous factors which may cause a substantial reduction in the amount of such cash flows, including, but not limited to, the following:
•
reduced discretionary spending by patrons on activities such as gaming, leisure and hospitality;
•
increased competition, including the legalization or expansion of gaming in New England, New York, New Jersey, Pennsylvania or other states in the mid-Atlantic region, or the expansion of on-line gaming in the United States;
•
unfavorable weather conditions;
•
changes in applicable laws or policies regarding smoking or alcohol service at Mohegan Sun or Mohegan Sun 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 decline in cash used in investing activities for the three months ended December 31, 2013 compared to the same period in the prior year was primarily due to our October 2012 acquisition of a 10% ownership interest in Resorts Atlantic City. The increase in cash provided by financing activities for the three months ended December 31, 2013 compared to the same period in the prior year was primarily attributable to increased borrowings to fund transaction costs associated with our November 2013 refinancing transactions.
External Sources of Liquidity
On November 19, 2013, we completed a series of refinancing transactions relating to our prior bank credit facilities and 2009 and 2012 second lien senior secured notes, including the repayment and termination of the prior bank credit facilities and the repurchase or redemption of the 2009 and 2012 second lien senior secured notes with proceeds from new senior secured credit facilities (all further discussed below).
Prior Bank Credit Facilities
First Lien, First Out Credit Facility
In March 2012, we 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, or the prior bank credit facility. On November 19, 2013, we repaid and terminated the prior bank credit facility with proceeds from new senior secured credit facilities (further discussed below).
First Lien, Second Out Term Loan Facility
In March 2012, we 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, or the prior term loan facility, and, together with the prior bank credit facility, the prior bank credit facilities. On November 19, 2013, we repaid and terminated the prior term loan facility with proceeds from new senior secured credit facilities (further discussed below).
Senior Secured Credit Facilities
On November 19, 2013, we entered into a loan agreement among us, the Tribe, the guarantors as defined below, RBS Citizens, N.A. as administrative and collateral agent and the other lenders and financial institutions party thereto, providing for $955.0 million in aggregate principal amount of senior secured credit facilities, or the senior secured credit facilities, comprised of a $100.0 million senior secured revolving credit facility, or the revolving facility, a $125.0 million senior secured term loan A facility, or the term loan A facility, and a $730.0 million senior secured term loan B facility, or the term loan B facility. The senior secured credit facilities mature on June 15, 2018, subject to extension based on the satisfaction of certain conditions to November 19, 2018 (in the case of the revolving facility and the term loan A facility) and November 19, 2019 (in the case of the term loan B facility).
The term loan A facility amortizes in equal quarterly installments in an aggregate annual amount equal to 5.0% of the original principal amount for the first year after the closing date, 7.5% of the original principal amount for the second year after the closing date and 10.0% of the original principal amount in each year thereafter, with the balance payable on the maturity date

39

of the term Loan A facility. The term loan B facility amortizes in equal quarterly installments in an aggregate annual amount equal to 1.0% of the original principal amount. Amortization of the term loan A facility and term loan B facility begins with the first full fiscal quarter after the closing date. The proceeds from the term loan A facility and term loan B facility, together with a drawing under the revolving facility, were used to satisfy in full all amounts due under our prior bank credit facilities, to repurchase or redeem all of our outstanding 2009 and 2012 second lien senior secured notes and to otherwise satisfy and discharge the obligations in respect of such notes and to pay related fees and expenses. The revolving facility will otherwise be available for general corporate purposes.
As of December 31, 2013, amounts outstanding under the revolving facility, term loan A facility and term loan B facility totaled $14.0 million, $125.0 million and $730.0 million, respectively. As of December 31, 2013, letters of credit issued under the revolving facility totaled $2.8 million, of which no amount was drawn. Inclusive of letters of credit, which reduce borrowing availability under the revolving facility, and after taking into account restrictive financial covenant requirements, we had approximately $73.8 million of borrowing capacity under the revolving facility and line of credit as of December 31, 2013.
Borrowings under the senior secured credit facilities incur interest as follows: (i) for base rate loans under the revolving facility and term loan A facility, a base rate equal to the highest of (a) the prime rate, (b) the federal funds rate plus 50 basis points and (c) the one-month LIBOR rate plus 100 basis points (the highest of (a), (b) and (c), the “base rate”), plus a leverage-based margin of 250 to 350 basis points; (ii) for Eurodollar rate loans under the revolving facility and term loan A facility, the applicable LIBOR rate plus a leverage-based margin of 350 to 450 basis points; (iii) for base rate loans under the term loan B facility, the base rate (subject to a 2.0% floor) plus 350 basis points; and (iv) for Eurodollar rate loans under the term loan B facility, the applicable LIBOR rate (subject to a 1.0% floor) plus 450 basis points. We also are required to pay a leverage-based commitment fee of between 37.5 and 50 basis points for unused commitments under the revolving facility. Interest on base rate loans is payable quarterly in arrears. Interest on Eurodollar rate loans of three months or less is payable at the end of each applicable interest period and for Eurodollar rate loans of more than three months, interest is payable at intervals of three months duration after the beginning of such interest period.
As of December 31, 2013, the $14.0 million outstanding under the revolving facility was comprised of a $4.0 million base rate loan based on a base rate of 3.25% plus 325 basis points and a $10.0 million Eurodollar rate loan based on a Eurodollar rate of 0.17% plus 425 basis points. The commitment fee was 0.50% as of December 31, 2013. As of December 31, 2013, the $125.0 million outstanding under the term loan A facility was based on a Eurodollar rate of 0.25% plus 425 basis points. As of December 31, 2013, the $730.0 million outstanding under the term loan B facility was based on the Eurodollar rate floor of 1.0% plus 450 basis points.
Our obligations under the senior secured credit facilities are fully and unconditionally guaranteed, jointly and severally, by the Pocono Downs Subsidiaries, MBC, Mohegan Golf, Mohegan Ventures-NW, MVW, WTG and MTGA Gaming, or collectively, the guarantors. The senior secured credit facilities are collateralized by a first priority lien on substantially all of our property and assets and those of the guarantors (other than MBC), including the assets that comprise Mohegan Sun at Pocono Downs and a leasehold mortgage on the land and improvements that comprise Mohegan Sun (we and the guarantors, other than MBC, are collectively referred to herein as the grantors. The grantors also are required to pledge additional assets as collateral for the senior secured credit facilities as they and future guarantor subsidiaries acquire them.
The senior secured credit facilities contain customary covenants applicable to us and our restricted subsidiaries, including covenants governing: incurrence of indebtedness, incurrence of liens, payment of dividends and other distributions, investments, asset sales, affiliate transactions, mergers or consolidations and capital expenditures. Additionally, the senior secured credit facilities include financial maintenance covenants pertaining to total leverage, secured leverage and minimum fixed charge coverage.

Maximum total leverage ratio covenant, or ratio of total debt to annualized EBITDA, as such terms are defined under the senior secured credit facilities:
Fiscal Quarters Ending:
 
December 31, 2013 through June 30, 2015
6.25:1.00
September 30, 2015 and thereafter
6.00:1.00





40

Maximum secured leverage ratio covenant, or ratio of secured debt to annualized EBITDA, as such terms are defined under the senior secured credit facilities:
Fiscal Quarters Ending:
 
December 31, 2013 through June 30, 2014
3.75:1.00
September 30, 2014 through June 30, 2015
3.50:1.00
September 30, 2015 through June 30, 2016
3.25:1.00
September 30, 2016 and thereafter
3.00:1.00
Minimum fixed charge coverage ratio covenant, as defined under the senior secured credit facilities:
Fiscal Quarters Ending:
 
December 31, 2013 and thereafter
1.05:1.00
As of December 31, 2013, we and the Tribe were in compliance with all respective covenant requirements under the senior secured credit facilities.
We continue to monitor revenues and expenditures to ensure continued compliance with our financial covenant requirements under the senior secured credit facilities. While we anticipate that we will remain in compliance with all covenant requirements under the senior secured credit facilities for all periods prior to maturity, we may need to increase revenues or offset any future declines in revenues by implementing cost saving initiatives to ensure compliance with these financial covenant requirements. If we are unable to satisfy our financial covenant requirements, we would need to obtain waivers or consents under the senior secured credit facilities; however, we can provide no assurance that we would be able to obtain such waivers or consents. If we are unable to obtain such waivers or consents, we would be in default under the senior secured credit facilities, which may result in cross-defaults under our other outstanding indebtedness and allow our lenders and creditors to exercise their rights and remedies as defined under their respective agreements, including their right to accelerate the repayment of our outstanding indebtedness. If such acceleration were to occur, we can provide no assurance that we would be able to obtain the financing necessary to repay such accelerated indebtedness.
Senior Secured Notes
2009 11  1/2% Second Lien Senior Secured Notes
In October 2009, we issued $200.0 million second lien senior secured notes with fixed interest payable at a rate of 11.5% per annum, or the 2009 second lien notes. In March 2012, we completed a private exchange offer and consent solicitation pursuant to which an aggregate principal amount of $199.8 million 2009 second lien notes were tendered and exchanged, leaving an aggregate principal amount of $200,000 2009 second lien notes outstanding. The 2009 second lien notes were scheduled to mature on November 1, 2017. The first call date for the 2009 second lien notes was November 1, 2013. On November 19, 2013, we called for redemption all $200,000 of our outstanding 2009 second lien notes. The 2009 second lien notes were redeemed on December 19, 2013.
2012 11 ½% Second Lien Senior Secured Notes
In March 2012, we issued $199.8 million second lien senior secured notes with fixed interest payable at a rate of 11.5% per annum, or the 2012 second lien notes, in exchange for an equal amount of 2009 second lien notes. The 2012 second lien notes were scheduled to mature on November 1, 2017. Subsequent to November 1, 2014, we were entitled to redeem the 2012 second lien notes, in whole or in part, at a premium decreasing ratably to zero, plus accrued interest. On November 19, 2013, we completed a tender offer and consent solicitation for our outstanding 2012 second lien notes. As part of the tender offer, we solicited and received requisite consents from tendering holders to certain amendments to the indentures governing the 2012 second lien notes, which eliminated certain restrictive covenants under the notes and related indenture. Pursuant to this transaction, we repurchased or redeemed all of our outstanding 2012 second lien notes in the aggregate principal amount of $199.8 million.
Senior Unsecured Notes
2013 9 3/4% Senior Unsecured Notes
In August 2013, we issued $500.0 million senior unsecured notes with fixed interest payable at a rate of 9.75% per annum, or the 2013 senior unsecured notes. The net proceeds from this transaction, together with borrowings under the prior bank credit facility, were used to repurchase or redeem all of our then outstanding 2012 10.5% third lien senior secured notes, to repurchase $69.0 million of our outstanding 2012 11.0% senior subordinated notes and to pay related fees and expenses. The 2013 senior unsecured notes mature on September 1, 2021. We may redeem the 2013 senior unsecured notes, in whole or in part, at any time prior to September 1, 2016 at a price equal to 100% of the principal amount plus a make-whole premium and accrued interest and additional interest (pursuant to the registration rights agreement described below), if any, to the date of redemption. On or after

41

September 1, 2016, we may redeem the 2013 senior unsecured notes, in whole or in part, at specified redemption prices, together with accrued interest and additional interest, if any, to the date of redemption. If we experience specific kinds of change of control triggering events, we must offer to repurchase the 2013 senior unsecured notes at a price equal to 101% of the principal amount thereof, plus accrued interest and additional interest, if any, to the purchase date. In addition, if we undertake certain types of asset sales and do not use the related sale proceeds for specified purposes, we may be required to offer to repurchase the 2013 senior unsecured notes at a price equal to 100% of the principal amount, plus accrued interest and additional interest, if any. Interest on the 2013 senior unsecured notes is payable semi-annually on March 1st and September 1st, commencing March 1, 2014.
The 2013 senior unsecured notes are uncollateralized general obligations and are effectively subordinated to all of our and the guarantors' and future guarantor subsidiaries' senior secured indebtedness, including the senior secured credit facilities, to the extent of the value of the collateral securing such indebtedness. The 2013 senior unsecured notes also are effectively subordinated to any indebtedness and other liabilities (including trade payables) of our subsidiaries that do not guarantee the 2013 senior unsecured notes. The 2013 senior unsecured notes rank equally in right of payment with our other unsecured, unsubordinated indebtedness, including trade payables and the senior portion of our payment obligations under our relinquishment agreement. The 2013 senior unsecured notes are fully and unconditionally guaranteed, jointly and severally, by the guarantors.
The 2013 senior unsecured notes indenture contains certain covenants that, subject to certain significant exceptions, limit, among other things, our and guarantors’ ability to incur additional debt, pay dividends or distributions, make certain investments, create liens on assets, enter into transactions with affiliates, merge or consolidate with another company or transfer and sell assets. The 2013 senior unsecured notes indenture includes customary events of default, including, but not limited to, failure to make required payments, failure to comply with certain agreements or covenants, failure to pay certain other indebtedness, the occurrence of which is caused by a failure to pay principal, premium or interest or results in the acceleration of such indebtedness, certain events of bankruptcy and insolvency and certain judgment defaults.
Registration Rights Agreement
In August 2013, we and the guarantors entered into a registration rights agreement with Credit Suisse Securities (USA) LLC and RBS Securities Inc., as representatives of the initial purchasers of the 2013 senior unsecured notes. Upon the terms and subject to the conditions of this agreement, we agreed to offer to exchange the 2013 senior unsecured notes pursuant to a registration statement effective within 240 days of issuance for a new issue of substantially identical debt securities registered under the Securities Act of 1933, or the exchange offer. Under certain circumstances, we also may be obligated under the registration rights agreement to file a shelf registration statement with respect to the 2013 senior unsecured notes. On February 10, 2014, we commenced the exchange offer.
Senior Subordinated Notes
2004 7 1/8% Senior Subordinated Notes
In August 2004, we issued $225.0 million senior subordinated notes with fixed interest payable at a rate of 7.125% per annum, or the 2004 senior subordinated notes. The 2004 senior subordinated notes mature on August 15, 2014. The 2004 senior subordinated notes are callable at our option at par. Interest on the 2004 senior subordinated notes is payable semi-annually on February 15th and August 15th.
In March 2012, we completed a private exchange offer and consent solicitation for any or all of our outstanding 2004 senior subordinated notes. As part of the exchange offer, we 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 2004 senior subordinated notes remains outstanding as of December 31, 2013.
2005 6 7/8% Senior Subordinated Notes
In February 2005, we issued $150.0 million senior subordinated notes with fixed interest payable at a rate of 6.875% per annum, or the 2005 senior subordinated notes. The 2005 senior subordinated notes mature on February 15, 2015. The 2005 senior subordinated notes are callable at our option at par. Interest on the 2005 senior subordinated notes is payable semi-annually on February 15th and August 15th.
In March 2012, we completed a private exchange offer and consent solicitation for any or all of our outstanding 2005 senior subordinated notes. As part of the exchange offer, we 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

42

million. An aggregate principal amount of $9.7 million 2005 senior subordinated notes remains outstanding as of December 31, 2013.
2012 11% Senior Subordinated Notes
In March 2012, we issued $344.2 million senior subordinated toggle notes with fixed interest payable at a rate of 11.0% per annum, or 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. We may redeem the 2012 senior subordinated notes, in whole or in part, at any time, at a price equal to 100% of the principal amount plus accrued interest. If a change of control occurs, we must offer to repurchase the 2012 senior subordinated notes at a price equal to 101% of the principal amount, plus accrued interest. In addition, if we undertake certain types of asset sales or suffer events of loss, and we do not use the related sale or insurance proceeds for specified purposes, we may be required to offer to repurchase the 2012 senior subordinated notes at a price equal to 100% of the principal amount, plus accrued interest. Interest on the 2012 senior subordinated notes is payable semi-annually on March 15th and September 15th. The initial interest payment on the 2012 senior subordinated notes was payable entirely in cash. For any subsequent interest payment period through March 15, 2018, we may, at our option, elect to pay interest on the 2012 senior subordinated notes either entirely in cash or by paying up to 2.0% in 2012 senior subordinated notes, or PIK interest. If we elect to pay PIK interest, such election will increase the principal amount of the 2012 senior subordinated notes in an amount equal to the amount of PIK interest for the applicable interest payment period to holders of 2012 senior subordinated notes on the relevant record date.
In August 2013, we repurchased an aggregate principal amount of $69.0 million 2012 senior subordinated notes. An aggregate principal amount of $275.2 million 2012 senior subordinated notes remains outstanding as of December 31, 2013.
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.
Our senior subordinated notes are uncollateralized general obligations and are subordinated to borrowings under the senior secured credit facilities and 2013 senior unsecured notes. The senior subordinated notes are fully and unconditionally guaranteed, jointly and severally, by the guarantors.
The senior and senior subordinated note indentures contain certain non-financial and financial covenant requirements with which we and the Tribe must comply. The non-financial covenant requirements include, among other things, reporting obligations, compliance with laws and regulations, maintenance of licenses and insurances and our continued existence. The financial covenant requirements include, among other things, subject to certain exceptions, limitations on our and the guarantors' ability to incur additional indebtedness, pay dividends or distributions, make certain investments, create liens on assets, enter into transactions with affiliates, merge or consolidate with another company, transfer or sell assets or impair assets constituting collateral.
As of December 31, 2013, we and the Tribe were in compliance with all respective covenant requirements under the senior and senior subordinated note indentures.
We or our affiliates may, from time to time, seek to purchase or otherwise retire outstanding indebtedness for cash in open market purchases, privately negotiated transactions or otherwise. Any such transaction will depend on prevailing market conditions and our liquidity and covenant requirement restrictions, among other factors.
Line of Credit
On November 19, 2013, in connection with the new senior secured credit facilities, we entered into a new $16.5 million revolving credit facility with Bank of America, N.A., or the line of credit. The line of credit is coterminous with the senior secured credit facilities. Pursuant to provisions of the senior secured credit facilities, under certain circumstances, the line of credit may be converted into loans under the senior secured credit facilities. Under the line of credit, each advance accrues interest on the basis of a one-month LIBOR Rate plus an applicable margin based on our total leverage ratio, as each term is defined under the line of credit. As of December 31, 2013, $9.4 million was drawn on the line of credit. Borrowings under the line of credit are uncollateralized obligations. The line of credit contains negative covenants and financial maintenance covenants that are substantially the same as those contained in the senior secured credit facilities. As of December 31, 2013, we were in compliance with all covenant requirements under the line of credit.
2009 Mohegan Tribe Promissory Note
In September 2009, the Tribe made a $10.0 million loan to Salishan-Mohegan, LLC, or Salishan-Mohegan, referred to herein as the 2009 Mohegan Tribe promissory note which matures on September 30, 2014. 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

43

December 31, 2013 and continuing through June 30, 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, referred to herein as the 2012 Mohegan Tribe Minor's Trust promissory note. 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. 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.
2013 Mohegan Tribe Promissory Note
In March 2013, Mohegan Gaming & Hospitality, LLC, or MG&H, purchased and acquired all of the Tribe's membership interest in MG&H in exchange for a promissory note in the principal amount of $7.4 million, or the 2013 Mohegan Tribe promissory note. The 2013 Mohegan Tribe promissory note matures on December 31, 2018. The 2013 Mohegan Tribe promissory note accrues interest at an annual rate of 4.0% payable quarterly.
Downs Lodging Credit Facility
In July 2012, Downs Lodging, a single purpose entity and wholly-owned unrestricted subsidiary, entered into a credit agreement providing for a $45.0 million term loan from a third-party lender, or the Downs Lodging credit facility. The proceeds from the Downs Lodging credit facility were used by Downs Lodging to fund Project Sunlight, a hotel and convention center expansion project at Mohegan Sun at Pocono Downs. The Downs Lodging credit facility matures on July 12, 2016 and accrues interest at an annual rate of 13.0%. Under the terms of the Downs Lodging credit facility, accrued interest of 10.0% is payable monthly in cash during the term of the loan, with the remaining 3.0% due at maturity. In addition, a 3.0% exit fee is payable upon repayment of the loan principal. The Downs Lodging credit facility is a senior secured obligation of Downs Lodging, collateralized by all existing and future assets of Downs Lodging. The Downs Lodging credit facility subjects Downs Lodging to certain covenant requirements customarily found in loan agreements for similar transactions. As of December 31, 2013, Downs Lodging was in compliance with all covenant requirements under the Downs Lodging credit facility.
Capital Expenditures
The following table presents data related to capital expenditures (in millions, including capitalized interest):
 
Capital Expenditures
 
Three Months Ended
 
Remaining Forecasted
 
Total Forecasted
 
December 31, 2013
 
Fiscal Year 2014
 
Fiscal Year 2014
Mohegan Sun:
 
 
 
 
 
Maintenance
$
1.9

 
$
24.0

 
$
25.9

Development
3.1

 
—

 
3.1

Subtotal
5.0

 
24.0

 
29.0

Mohegan Sun at Pocono Downs:
 
 
 
 
 
Maintenance
1.0

 
5.3

 
6.3

Subtotal
1.0

 
5.3

 
6.3

Corporate:
 
 
 
 
 
Expansion - Project Sunlight
9.5

 
—

 
9.5

Subtotal
9.5

 
—

 
9.5

Total
$
15.5

 
$
29.3

 
$
44.8

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 revolving facility.


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Interest Expense
The following table presents our interest expense (in thousands, net of capitalized interest):
 
For the Three Months Ended December 31,
 
2013
 
2012
Prior Bank Credit Facility
$
3,217

 
$
5,699

Prior Term Loan Facility, includes accretion of discount
2,924

 
5,412

Senior Secured Credit Facility - Revolving
115

 
—

Senior Secured Credit Facility - Term Loan A, includes accretion of discount
681

 
—

Senior Secured Credit Facility - Term Loan B, includes accretion of discount
4,965

 
—

2009 11 1/2% second lien senior secured notes, includes accretion of discount
5

 
6

2012 11 1/2% second lien senior secured notes, includes accretion of discount
3,285

 
5,940

2012 10 1/2% third lien senior secured notes, includes accretion of discount
—

 
10,967

2005 6 1/8% senior unsecured notes
—

 
281

2013 9 3/4% senior unsecured notes
12,187

 
—

2004 7 1/8% senior subordinated notes
377

 
417

2005 6 7/8% senior subordinated notes
166

 
193

2012 11 % senior subordinated notes, includes accretion of discount
7,726

 
9,465

Line of credit
51

 
—

2009 Mohegan Tribe promissory note
88

 
251

2012 Mohegan Tribe Minor's Trust promissory note
454

 
503

Mohegan Tribe credit facility
—

 
54

2013 Mohegan Tribe promissory note
75

 
—

Downs Lodging credit facility
1,694

 
1,557

Other
—

 
3

Capital leases
73

 
115

Amortization of net deferred gain on settlement of derivative instruments
—

 
(25
)
Amortization of debt issuance costs
1,621

 
2,588

Capitalized interest
(735
)
 
(152
)
Total interest expense, net of capitalized interest
$
38,969

 
$
43,274

Contractual Obligations
The following table presents estimated future payment obligations related to our debt and the timing of those payments as of December 31, 2013 (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
$
1,760,042

 
$
50,444

 
$
106,229

 
$
1,102,186

 
$
501,183

Interest payments on long-term debt and capital leases
803,178

 
140,512

 
270,749

 
245,667

 
146,250

Total
$
2,563,220

 
$
190,956

 
$
376,978

 
$
1,347,853

 
$
647,433

 ________________________
(1)
Represents payment obligations from January 1, 2014 to December 31, 2014.
There has been no material change to the other contractual obligations previously disclosed in our Annual Report on Form 10-K for the fiscal year ended September 30, 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, 2013 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 revolving facility. Inclusive of letters of credit, which reduce borrowing availability under the revolving facility, and after taking into account restrictive financial covenant requirements, we had approximately $73.8 million of borrowing capacity under

45

the revolving facility and line of credit as of December 31, 2013. Distributions to the Tribe are anticipated to total approximately $50 million for fiscal 2014.
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, 2013.
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.

46

Item 3.
Quantitative and Qualitative Disclosures about Market Risk.
Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. As of December 31, 2013, our primary exposure to market risk was interest rate risk associated with our senior secured credit facilities which accrued interest on the basis of a base rate formula or a Eurodollar rate formula, plus applicable rates, as defined under the respective facility.
We attempt to manage our interest rate risk through a controlled combination of long-term fixed rate borrowings and variable rate borrowings in accordance with established policies and procedures. We do not hold or issue financial instruments for speculative or trading purposes.
The following table presents information about our debt obligations as of December 31, 2013 that were sensitive to changes in interest rates. The table presents principal payments and related weighted average interest rates by expected maturity dates. Weighted average variable interest rates were based on implied forward rates in respective yield curves, which should not be considered to be precise indicators of actual future interest rates. Fair values for our debt obligations were based on quoted market prices or prices of similar instruments as of December 31, 2013. 
 
Expected Maturity Date
 
Total
 
Fair Value
 
2014
 
2015
 
2016
 
2017
 
2018
 
Thereafter
 
Liabilities (in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt and capital lease obligations (including current portions):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed rate
$
27,305

 
$
17,152

 
$
56,124

 
$
1,156

 
$
276,154

 
$
508,679

 
$
886,570

 
$
924,720

Average interest rate
7.6
%
 
7.7
%
 
12.3
%
 
2.9
%
 
11.0
%
 
9.6
%
 
10.1
%
 
 
Variable rate
$
19,516

 
$
15,894

 
$
19,019

 
$
19,800

 
$
804,125

 
—

 
$
878,354

 
$
888,953

Average interest rate (1)
4.5
%
 
5.1
%
 
5.7
%
 
6.8
%
 
7.6
%
 
—

 
6.2
%
 
 
___________
(1)
A 100 basis point change in average interest rate would impact annual interest expense by approximately $8.8 million.

Item 4.
Controls and Procedures
Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2013. 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 December 31, 2013, 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 December 31, 2013, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



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PART II. OTHER INFORMATION

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

Item 1A.
Risk Factors

There has been no material change from the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2013.

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



48

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

 
 
MOHEGAN TRIBAL GAMING AUTHORITY
 
 
 
 
Date:
February 14, 2014
By:
/S/    KEVIN P. BROWN         
 
 
 
Kevin P. Brown
Chairman and Member, Management Board
 
 
 
 
Date:
February 14, 2014
By:
/S/    MITCHELL GROSSINGER ETESS        
 
 
 
Mitchell Grossinger Etess
Chief Executive Officer,
Mohegan Tribal Gaming Authority
(Principal Executive Officer)
 
 
 
 
Date:
February 14, 2014
By:
/S/    MARIO C. KONTOMERKOS        
 
 
 
Mario C. Kontomerkos
Chief Financial Officer,
Mohegan Tribal Gaming Authority
(Principal Financial and Accounting Officer)


49

EXHIBIT INDEX
 
Exhibit No.
  
Description
3.1
  
Constitution of the Mohegan Tribe of Indians of Connecticut, as amended (filed as Exhibit 3.1 to the Authority’s Registration Statement on Form S-4, filed with the SEC on January 27, 2014 (the “2014 Form S-4”) and incorporated by reference herein).

 
 
 
3.2
  
Ordinance No. 95-2 of the Tribe for Gaming on Tribal Lands, enacted on July 15, 1995 (filed as Exhibit 3.2 to the Authority’s Amendment No. 1 to its Registration Statement on Form S-1, filed with the SEC on February 29, 1996 and incorporated by reference herein).

 
 
 
3.3
  
Articles of Organization of Mohegan Basketball Club, LLC, dated as of January 27, 2003 (filed as Exhibit 3.3 to the Authority’s Registration Statement on Form S-4, filed with the SEC on September 23, 2003 (the “2003 Form S-4”) and incorporated by reference herein).

 
 
 
3.4
  
Operating Agreement of Mohegan Basketball Club, LLC, a Mohegan Tribe of Indians of Connecticut limited liability company, dated as of January 24, 2003 (filed as Exhibit 3.4 to the 2003 Form S-4 and incorporated by reference herein).

 
 
 
3.5
  
Certificate of Organization of Mohegan Commercial Ventures PA, LLC, dated as of January 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).

 
 
 
3.6
  
Operating Agreement of Mohegan Commercial Ventures PA, LLC, a Commonwealth of Pennsylvania limited liability company, dated as of December 15, 2004 (filed as Exhibit 3.6 to the 2005 Form S-4 and incorporated by reference herein).

 
 
 
3.7
  
Certificate of Limited Partnership of Downs Racing, L.P., dated as of January 7, 2005, as amended (filed as Exhibit 3.7 to the 2005 Form S-4 and incorporated by reference herein).

 
 
 
3.8
  
Amended and Restated Limited Partnership Agreement of Downs Racing, L.P., dated as of January 25, 2005 (filed as Exhibit 3.8 to the 2005 Form S-4 and incorporated by reference herein).

 
 
 
3.9
  
Certificate of Limited Partnership of Backside, L.P., dated as of January 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).

 
 
 
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).

 
 
 
3.12
  
Amended and Restated Limited Partnership Agreement of Mill Creek Land, L.P., dated as of January 25, 2005 (filed as Exhibit 3.12 to the 2005 Form S-4 and incorporated by reference herein).

 
 
 
3.13
  
Certificate of Limited Partnership of Northeast Concessions, L.P., dated as of January 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).

 
 
 
3.15
  
Articles of Organization of Mohegan Ventures-Northwest, LLC, dated as of July 23, 2004 (filed as Exhibit 3.15 to the Authority’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2006, filed with the SEC on August 10, 2006 (the “June 2006 Form 10-Q”) and incorporated by reference herein).

 
 
 
3.16
  
Operating Agreement of Mohegan Ventures-Northwest, LLC, a Mohegan Tribe of Indians of Connecticut limited liability company, dated as of July 23, 2004 (filed as Exhibit 3.16 to the June 2006 Form 10-Q and incorporated by reference herein).

 
 
 
3.17
 
Articles of Organization of Mohegan Golf, LLC, dated as of November 20, 2006 (filed as Exhibit 3.17 to the Authority’s Annual Report on Form 10-K for the fiscal year ended September 30, 2006, filed with the SEC on December 21, 2006 (the “2006 Form 10-K”) and incorporated by reference herein).

 
 
 
3.18
 
Certificate of Formation of Wisconsin Tribal Gaming, LLC, dated as of February 27, 2007 (filed as Exhibit 3.18 to the Authority’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2007, filed with the SEC on May 15, 2007 (the “March 2007 Form 10-Q”) and incorporated by reference herein).


50

Exhibit No.
  
Description
3.19
  
Articles of Organization of Mohegan Ventures Wisconsin, LLC, dated as of March 1, 2007 (filed as Exhibit 3.19 to the March 2007 Form 10-Q and incorporated by reference herein).

 
 
 
3.20
  
Certificate of Formation of MTGA Gaming, LLC, dated as of July 27, 2007 (filed as Exhibit 3.20 to the Authority’s Annual Report on Form 10-K for the fiscal year ended September 30, 2007, filed with the SEC on December 21, 2007 (the “2007 Form 10-K”) and incorporated by reference herein).

 
 
 
3.21
  
Articles of Amendment of Mohegan Golf, LLC, dated as of April 8, 2008 (filed as Exhibit 3.18 to the Authority’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2008, filed with the SEC on May 15, 2008 and incorporated by reference herein).

 
 
 
3.22
 
Operating Agreement of Mohegan Golf, LLC, dated as of April 8, 2008 (filed as Exhibit 3.22 to the 2014 Form S-4 and incorporated herein by reference).

 
 
 
3.23
 
Operating Agreement of Mohegan Ventures Wisconsin, LLC, dated as of March 1, 2007 (filed as Exhibit 3.23 to the 2014 Form S-4 and incorporated herein by reference).
 
 
 
3.24
 
Certificate of Amendment to Certificate of Formation of Wisconsin Tribal Gaming, LLC, dated as of May 20, 2009 (filed as Exhibit 3.24 to the 2014 Form S-4 and incorporated herein by reference).

 
 
 
3.25
 
Operating Agreement of Wisconsin Tribal Gaming, LLC, dated as of March 1, 2007 (filed as Exhibit 3.25 to the 2014 Form S-4 and incorporated herein by reference).
 
 
 
3.26
 
Certificate of Amendment to Certificate of Formation of MTGA Gaming, LLC, dated as of May 20, 2009 (filed as Exhibit 3.26 to the 2014 Form S-4 and incorporated herein by reference).

 
 
 
3.27
 
Operating Agreement of MTGA Gaming, LLC, dated as of August 1, 2007 (filed as Exhibit 3.27 to the 2014 Form S-4 and incorporated herein by reference).

 
 
 
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).

 
 
 
4.2
 
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, filed with the SEC on August 16, 2004 (the “June 2004 Form 10-Q”) and incorporated by reference herein).

 
 
 
4.3
 
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).

 
 
 
4.4
 
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).

 
 
 
4.5
 
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).

 
 
 
4.6
 
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).

 
 
 


51

Exhibit No.
  
Description
4.7
 
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).
 
 
 
4.8
 
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).
 
 
 
4.9
 
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).
 
 
 
4.10
 
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).
 
 
 
4.11
 
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).

 
 
 
4.12
  
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).

 
 
 
4.13
 
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).

 
 
 
4.14
 
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 2007 Form 10-K and incorporated by reference herein).

 
 
 
4.15
 
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).

 
 
 
4.16
 
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).

 
 
 
4.17
 
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).

 
 
 
4.18
 
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).

 
 
 



52




Exhibit No.
  
Description
4.19
 
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).

 
 
 
4.20
 
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).
 
 
 
4.21
 
Supplemental Indenture No. 1, dated as of July 30, 2013, between the Mohegan Tribal Gaming Authority, The Mohegan Tribe of Indians of Connecticut, the Guarantors (as defined under the Indenture) and U.S. Bank National Association, as Trustee, relating to the 2012 11 1/2% Second Lien Senior Secured Notes Due 2017 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.21 to the Authority’s Annual Report on Form 10-K for the fiscal year ended September 30, 2013, filed with the SEC on December 27, 2013 (the “2013 Form 10-K”) and incorporated by reference herein).
 
 
 
4.22
 
Supplemental Indenture No. 2, dated as of November 19, 2013, between the Mohegan Tribal Gaming Authority, The Mohegan Tribe of Indians of Connecticut, the Guarantors (as defined under the Indenture) and U.S. Bank National Association, as Trustee, relating to the 2012 11 1/2% Second Lien Senior Secured Notes Due 2017 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.22 to the 2013 Form 10-K and incorporated herein by reference).
 
 
 
4.23
 
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).

 
 
 
4.24
 
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).
 
 
 
4.25
 
Form of Global 11% Senior Subordinated Notes Due 2018 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.43 to the March 2012 Form 10-Q and incorporated by reference herein).
 
 
 
4.26
 
Indenture, dated as of August 15, 2013, between the Mohegan Tribal Gaming Authority, The Mohegan Tribe of Indians of Connecticut, the Guarantors (as defined under the Indenture) and U.S. Bank National Association, as Trustee, relating to the 9 3/4% Senior Notes Due 2021 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.29 to the 2013 Form 10-K and incorporated herein by reference).
 
 
 
4.27
 
Form of Global 9 3/4% Senior Notes Due 2021 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.30 to the 2013 Form 10-K and incorporated herein by reference).
 
 
 
4.28
 
Registration Rights Agreement, dated August 15, 2013, between the Mohegan Tribal Gaming Authority, the subsidiary guarantors party thereto and Credit Suisse Securities (USA) LLC and RBS Securities Inc., as representatives of the several initial purchasers, relating to the 9 3/4% Senior Notes Due 2021 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.31 to the 2013 Form 10-K and incorporated herein by reference).
 
 
 







53

Exhibit No.
  
Description
31.1
  
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer (filed herewith).
 
 
 
31.2
  
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer (filed herewith).
 
 
 
32.1
  
Section 1350 Certification of Chief Executive Officer (filed herewith).
 
 
 
32.2
  
Section 1350 Certification of Chief Financial Officer (filed herewith).
 
 
 
101.INS**
 
XBRL Instance Document (filed herewith).

 
 
 
101.SCH**
 
XBRL Taxonomy Extension Schema (filed herewith).

 
 
 
101.CAL**
 
XBRL Taxonomy Calculation Linkbase (filed herewith).

 
 
 
101.DEF**
 
XBRL Taxonomy Extension Definition Linkbase (filed herewith).

 
 
 
101.LAB**
 
XBRL Taxonomy Extension Label Linkbase (filed herewith).
 
 
 
101.PRE**
 
XBRL Taxonomy Extension Presentation Linkbase (filed herewith).
 ________________________
*
Pursuant to Rule 406T of Regulation S-T, the XBRL related information in Exhibits 101 to this Quarterly Report on Form 10-Q shall not be deemed to be "filed" for purposes of Section 18 of the Exchange Act of 1934, as amended, or otherwise subject to liability under that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.
 

54