BASIS OF PRESENTATION:

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In accordance with Rule 10-01, the accompanying unaudited condensed consolidated financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete consolidated financial statements. The accompanying year-end condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. In management's opinion, all adjustments, including normal recurring accruals and adjustments, necessary for a fair statement of the Authority's operating results for the interim period, have been included. In addition, certain amounts in the accompanying 2015 condensed consolidated financial statements and supplemental condensed consolidating financial statements have been reclassified to conform to the 2016 presentation.

The gaming market in the Northeastern United States is seasonal in nature, with peak gaming activities often occurring at Mohegan Sun and Mohegan Sun Pocono during the months of May through August. Accordingly, the Authority's operating results for the three months and nine months ended June 30, 2016 are not necessarily indicative of operating results for other interim periods or an entire fiscal year.

The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Authority's Annual Report on Form 10-K for the fiscal year ended September 30, 2015.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Authority and its majority and wholly-owned subsidiaries and entities. In accordance with authoritative guidance issued by the Financial Accounting Standards Board (the “FASB”) pertaining to consolidation of variable interest entities, the accounts of Salishan-Mohegan are consolidated into the accounts of Mohegan Ventures-NW, the accounts of Inspire Integrated Resort are consolidated into the accounts of Mohegan Gaming Advisors and the accounts of NEBW are consolidated into the accounts of Mohegan Lacrosse as Mohegan Ventures-NW, Mohegan Gaming Advisors and Mohegan Lacrosse are deemed to be the primary beneficiaries. In consolidation, all inter-company balances and transactions were eliminated.

Restricted Cash

Restricted cash consists of deposits that are contractually restricted as to their withdrawal or use. Restricted cash primarily includes cash held by Inspire Integrated Resort in connection with its pre-approval for a license to build an integrated resort at Incheon International Airport in South Korea. In February 2016, KCC Corporation and its affiliates contributed approximately $50.0 million to Inspire Integrated Resort for a 49.81% membership interest in Inspire Integrated Resort. In July 2016, an additional $50.0 million of cash, classified as cash and cash equivalents on the June 30, 2016 condensed consolidated balance sheet, was reclassified as restricted cash.

Long-Term Receivables

Long-term receivables consist primarily of receivables from affiliates and others.

Receivables from affiliates, which are included in receivables, net, and other assets, net, in the accompanying condensed consolidated balance sheets, consist of reimbursable costs and expenses advanced by Salishan-Mohegan on behalf of the Cowlitz Tribe for the Cowlitz Project (refer to Note 6) and WTG on behalf of the Menominee Tribe for the Menominee Project.

The Salishan-Mohegan receivables are payable upon: (1) the related property being taken into trust by the United States Department of the Interior and (2) the receipt of necessary financing for the development of the proposed casino. In March 2015, the Cowlitz Project site was taken into trust by the United States Department of the Interior for the benefit of the Cowlitz Tribe. In addition, in December 2015, the Cowlitz Tribal Gaming Authority (the “CTGA”) obtained financing for the Cowlitz Project. The financing provided funding for construction of the Cowlitz Project and a partial repayment of the Salishan-Mohegan receivables. The Authority maintains a reserve for doubtful collection of the remaining Salishan-Mohegan receivables, which is based on the Authority's estimate of the probability that the receivables will be collected. The Authority assesses the reserve for doubtful collection of the Salishan-Mohegan receivables for adequacy on a quarterly basis. In connection with the financing for the Cowlitz Project, the Authority reduced the reserve for doubtful collection of the Salishan-Mohegan receivables. Future developments in the construction and opening of the proposed casino or other matters affecting the Cowlitz Project could affect the collectability of the Salishan-Mohegan receivables and the related reserve. The WTG receivables, which were fully reserved, were written-off following the expiration of a release and reimbursement agreement in December 2015.

Receivables from others, which are primarily included in other assets, net, in the accompanying condensed consolidated balance sheets, consist of funds loaned to a third-party in connection with the Cowlitz Project and a loan to a tenant of Mohegan Sun.

The following table presents a reconciliation of long-term receivables, including current portions, and the related reserves for doubtful collection of these long-term receivables (in thousands):



	Long-Term Receivables
	Affiliates			Others			Total
Balance, March 31, 2016 (1)	$	81,582		$	2,527		$	84,109
Additions:
Advances and other loans, including interest receivable	2,839			496			3,335
Development fees	1,446			—			1,446
Deductions:
Payments	(2,818		)	(42		)	(2,860		)
Balance, June 30, 2016 (1)	$	83,049		$	2,981		$	86,030

Balance, September 30, 2015 (1)	$	100,527		$	1,811		$	102,338
Additions:
Advances and other loans, including interest receivable	7,273			1,294			8,567
Development fees	7,260			—			7,260
Deductions:
Payments (2)	(22,218		)	(124		)	(22,342		)
Adjustments (3)	(9,793		)	—			(9,793		)
Balance, June 30, 2016 (1)	$	83,049		$	2,981		$	86,030

__________


(1)	Includes interest receivable of $47.9 million, $45.7 million and $43.4 million as of June 30, 2016, March 31, 2016 and September 30, 2015, respectively.


(2)	Payments of receivables from affiliates primarily represent a partial repayment of the Salishan-Mohegan receivables.


(3)	Adjustments represent the write-off of the WTG receivables.



	Reserves for Doubtful Collection of Long-Term Receivables
	Affiliates			Others			Total
Balance, March 31, 2016	$	15,153		$	37		$	15,190
Additions:
Charges to bad debt expense	568			—			568
Deductions:
Adjustments	—			(37		)	(37		)
Balance, June 30, 2016	$	15,721		$	—		$	15,721

Balance, September 30, 2015	$	31,028		$	42		$	31,070
Additions:
Charges to bad debt expense	1,801			—			1,801
Deductions:
Adjustments (1)	(17,108		)	(42		)	(17,150		)
Balance, June 30, 2016	$	15,721		$	—		$	15,721

__________.


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

Fair Value of Financial Instruments

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

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


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


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


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

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

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



	June 30, 2016
	Carrying Value		Fair Value
Senior Secured Credit Facility - Revolving	$	19,000	$	18,355
Senior Secured Credit Facility - Term Loan A	$	98,288	$	97,938
Senior Secured Credit Facility - Term Loan B	$	765,495	$	771,754
2013 9 3/4% Senior Unsecured Notes	$	578,273	$	623,025
2015 Senior Unsecured Notes	$	97,986	$	97,625
2012 11% Senior Subordinated Notes	$	99,217	$	100,190

The estimated fair values of the Authority's financing facilities and notes were based on Level 2 inputs (quoted market prices or prices of similar instruments) on or about June 30, 2016.

Share Based Compensation

The Authority accounts for share based compensation for non-employees in accordance with authoritative guidance pertaining to share based payments. Share based compensation is measured at the measurement date, based on the calculated fair value of the award, and is recognized over the requisite service period. Share based compensation is recognized as an operating expense and totaled $6.1 million for the nine months ended June 30, 2016.

Foreign Currency

The Authority accounts for foreign currency translation in accordance with authoritative guidance pertaining to currency translation. The local currency is the functional currency for Inspire Integrated Resort. For local currency functional locations, assets and liabilities are translated at the end-of-period rates, while revenue and expenses are translated at average rates in effect during the period. Equity is translated at historical rates and the resulting cumulative translation adjustments are included as a component of accumulated other comprehensive income. Translation adjustments resulting from this process are credited or charged to other comprehensive income (loss). Other assets held overseas are remeasured into U.S. dollars at end-of-period exchange rates. Gains or losses from foreign currency remeasurements are included in other income (expense), net.

Accumulated Other Comprehensive Income and Comprehensive Income

As of June 30, 2016, accumulated other comprehensive income consisted solely of foreign currency translation adjustments. Comprehensive income included net income attributable to the Authority and all other non-stockholder changes in equity for the three months and nine months ended June 30, 2016.

Additional Cash Flow Information

On June 30, 2016, the bank that administers the Authority’s debt service payments for its Senior Secured Credit Facilities made a required principal payment on behalf of the Authority totaling $5.2 million, but did not accordingly debit the Authority’s bank account for the payment. As of June 30, 2016, the Authority reflected this transaction as a reduction to current portion of long-term debt and a corresponding increase to other current liabilities. On the following banking day, the bank withdrew the $5.2 million from the Authority’s bank account, resulting in a reduction to the Authority’s cash and cash equivalents and other current liabilities. Accordingly, the Authority classified the payment made by the bank as a non-cash financing outflow and the related amount owed to the bank as a non-cash financing inflow in the accompanying condensed consolidated statement of cash flows for the nine months ended June 30, 2016.

In addition, in connection with the financing for the Cowlitz Project, the Cowlitz Tribe repaid $6.0 million of principal outstanding under the 2012 Mohegan Tribe Minor's Trust Promissory Note on behalf of Salishan-Mohegan. Accordingly, the Authority classified this payment as a non-cash financing outflow and the related reduction to the Salishan-Mohegan receivables as a non-cash investing inflow in the accompanying condensed consolidated statement of cash flows for the nine months ended June 30, 2016.

New Accounting Standards

In May 2014, the FASB issued an accounting standards update on revenue recognition that will be applied to all contracts with customers. The update requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects what it expects in exchange for the goods or services. It also requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. This guidance will be required to be applied on a retrospective basis, using one of two methodologies, and was to be effective for annual reporting periods beginning after December 15, 2016, with early application not being permitted. However, in July 2015, the FASB deferred the effective date by one year. This guidance will now be effective for annual reporting periods beginning after December 15, 2017, and interim reporting periods thereafter. Entities are permitted to adopt the guidance as of the original effective date. The Authority is currently evaluating the impact that this guidance will have on its financial statements.

In August 2014, the FASB issued an accounting standards update which provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. The update requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date the financial statements are issued. It also requires management to provide certain disclosures if conditions or events raise substantial doubt about the entity's ability to continue as a going concern. This guidance will be required for annual reporting periods ending after December 15, 2016, and interim reporting periods thereafter, with early application permitted. The Authority is currently evaluating the impact that this guidance will have on its financial statements.

In February 2015, the FASB issued an accounting standards update which amends existing requirements applicable to reporting entities that are required to evaluate whether certain legal entities should be consolidated. This guidance will be required to be applied either on a retrospective or modified retrospective basis and will be effective for annual reporting periods beginning after December 15, 2015, and interim reporting periods thereafter, with early application permitted. The Authority is currently evaluating the impact that this guidance will have on its financial statements.

In February 2016, the FASB issued new guidance pertaining to leases based on the principle that entities should recognize assets and liabilities arising from leases. This guidance does not significantly change the lessees’ recognition, measurement and presentation of expenses and cash flows from the previous accounting standards. Leases are classified as operating or financing. The guidance's primary change is the requirement for entities to recognize a right-of-use asset representing the right to use the leased asset and a lease liability for payments during the term of operating lease arrangements. Lessees are permitted to make an accounting policy election to not recognize the asset and liability for leases with a term of twelve months or less. Lessors’ accounting is largely unchanged from the previous accounting standard. In addition, the guidance expands disclosure requirements of lease arrangements. This guidance will be required to be applied on a modified retrospective basis, which includes a number of practical expedients, and will be effective for annual reporting periods beginning after December 15, 2018, and interim reporting periods thereafter, with early application permitted. The Authority is currently evaluating the impact that this guidance will have on its financial statements.