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 and nine months ended June 30, 2014 are not necessarily indicative of operating results for other interim periods or an entire fiscal year.

The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Authority's Annual Report on Form 10-K for the fiscal year ended September 30, 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 7¹/8% 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 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.

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, March 31, 2014 (1)	$	62,002	$	2,669		$	64,671
Additions:
Issuance of affiliate advances and tenant and other loans, including interest receivable	2,088		103			2,191
Deductions:
Payments received	—		(105		)	(105		)
Balance, June 30, 2014 (1)	$	64,090	$	2,667		$	66,757

Balance, September 30, 2013 (1)	$	57,782	$	3,530		$	61,312
Additions:
Issuance of affiliate advances and tenant and other loans, including interest receivable	6,308		103			6,411
Deductions:
Payments received	—		(966		)	(966		)
Balance, June 30, 2014 (1)	$	64,090	$	2,667		$	66,757

__________


(1)	Includes interest receivable of $33.6 million, $32.0 million and $29.1 million as of June 30, 2014, March 31, 2014 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, March 31, 2014	$	25,455	$	57		$	25,512
Additions:
Charges to bad debt expense	627		—			627
Deductions:
Adjustments	—		(3		)	(3		)
Balance, June 30, 2014	$	26,082	$	54		$	26,136

Balance, September 30, 2013	$	24,189	$	61		$	24,250
Additions:
Charges to bad debt expense	1,893		—			1,893
Deductions:
Adjustments	—		(7		)	(7		)
Balance, June 30, 2014	$	26,082	$	54		$	26,136

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):



	June 30, 2014
	Carrying Value		Fair Value
Senior Secured Credit Facility - Revolving	$	20,000	$	19,700
Senior Secured Credit Facility - Term Loan A	$	121,313	$	121,723
Senior Secured Credit Facility - Term Loan B	$	717,509	$	738,153
2013 9 3/4% Senior Unsecured Notes	$	500,000	$	560,000
2004 7 1/8% Senior Subordinated Notes	$	21,156	$	21,103
2005 6 7/8% Senior Subordinated Notes	$	9,654	$	9,485
2012 11% Senior Subordinated Notes	$	271,511	$	277,254

The estimated fair values of the Authority's financing facilities and notes were based on Level 2 inputs (quoted market prices or prices of similar instruments) on or about June 30, 2014.

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, March 31, 2014	$	692
Cash payments	(338		)
Balance, June 30, 2014	$	354

Balance, September 30, 2013	$	1,417
Cash payments	(1,063		)
Balance, June 30, 2014	$	354

New Accounting Standard

In May 2014, the FASB issued an accounting standard update on revenue recognition that will be applied to all contracts with customers. The update requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects what it expects in exchange for the goods or services. It also requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. This guidance will be required to be applied on a retrospective basis, using one of two methodologies, and will be effective for annual reporting periods beginning after December 15, 2016, with early application not being permitted. The Authority is currently evaluating the impact that this guidance will have on its financial position and results of operations.