ORGANIZATION AND BASIS OF PRESENTATION:

Organization

The Mohegan Tribe of Indians of Connecticut (the “Mohegan Tribe”) established the Mohegan Tribal Gaming Authority in July 1995 with the exclusive authority to conduct and regulate gaming activities for the Mohegan Tribe on tribal lands and the non-exclusive authority to conduct such activities elsewhere. The Mohegan Tribe is a sovereign Indian nation with independent legal jurisdiction over its people and land. Like other sovereign governments, the Mohegan Tribe and its entities, including the Mohegan Tribal Gaming Authority, are generally not subject to federal, state or local income taxes. However, MGE Niagara Entertainment Inc. (“MGE Niagara”), a wholly-owned subsidiary, is subject to tax in Ontario, Canada, and certain non-tribal entities are subject to state or local income taxes in the United States. The Mohegan Tribal Gaming Authority d/b/a Mohegan Gaming & Entertainment (the “Company”) is primarily engaged in the ownership, operation and development of integrated entertainment facilities both domestically and internationally, including Mohegan Sun, a gaming and entertainment complex located on an approximately 196-acre site in Uncasville, Connecticut, and Mohegan Sun Pocono, a gaming and entertainment facility located on an approximately 400-acre site in Plains Township, Pennsylvania.

In September 2018, MGE Niagara was selected by the Ontario Lottery and Gaming Corporation (the “OLG”) to be the service provider for the Niagara Fallsview Casino Resort, Casino Niagara and the future 5,000-seat Niagara Falls Entertainment Centre, all in Niagara Falls, Canada (collectively, the “MGE Niagara Resorts”). On June 11, 2019 (the “Closing Date”), MGE Niagara completed the acquisition of the MGE Niagara Resorts (the “Acquisition”) and assumed the day-to-day operations of the properties under the terms of a 21-year Casino Operating and Services Agreement (the “COSA”) with the OLG.

The Company also (i) owns 100% of Salishan-Mohegan, LLC (“Salishan-Mohegan”), which developed and currently manages ilani Casino Resort in Clark County, Washington, a gaming and entertainment facility owned by the federally-recognized Cowlitz Indian Tribe and the Cowlitz Tribal Gaming Authority, (ii) holds the development rights to any future development at ilani Casino Resort through Salishan-Mohegan Development Company, LLC, a majority-owned subsidiary of Salishan-Mohegan, (iii) manages Resorts Casino Hotel in Atlantic City, New Jersey, and owns 10% of the casino’s holding company and its subsidiaries, including those conducting or licensing online gaming and retail sports wagering in New Jersey, (iv) manages Paragon Casino Resort in Marksville, Louisiana and (v) owns 100% of Inspire Integrated Resort Co., Ltd. and MGA Korea, LLC, which were formed to develop and construct an integrated resort and casino project to be located adjacent to the Incheon International Airport in South Korea.

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 (“US GAAP”) 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 US GAAP 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 US GAAP. All adjustments, including normal recurring accruals and adjustments, necessary for a fair statement of the Company's operating results for the interim period, have been included.

The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2019. The preparation of financial statements in conformity with US GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures of contingent assets and liabilities.

Revenue Disaggregation

The Company is primarily engaged in the ownership, operation and development of integrated entertainment facilities both domestically and internationally. The Company’s current wholly-owned operations are focused within Connecticut and Pennsylvania. The Company also currently manages other gaming facilities elsewhere within the United States and Canada. The Company generates revenues by providing the following types of goods and services: gaming, food and beverage, hotel, retail, entertainment and other and management and development.

Revenue disaggregation by geographic location and revenue type for the three months ended December 31, 2019 was as follows (in thousands):



	Connecticut		Pennsylvania		Canada
	(Mohegan Sun)		(Mohegan Sun Pocono)		(MGE Niagara Resorts)		Other
Gaming	$	160,259	$	51,978	$	52,032	$	—
Food and beverage	28,533		6,082		15,953		(36		)
Hotel	22,048		1,980		3,563		(2		)
Retail, entertainment and other	32,495		1,914		13,426		146
Management and development	—		—		—		9,012
Net revenues	$	243,335	$	61,954	$	84,974	$	9,120

Revenue disaggregation by geographic location and revenue type for the three months ended December 31, 2018 was as follows (in thousands):



	Connecticut		Pennsylvania		Canada
	(Mohegan Sun)		(Mohegan Sun Pocono)		(MGE Niagara Resorts)		Other
Gaming	$	170,482	$	51,453	$	—	$	—
Food and beverage	29,135		5,713		—		(42		)
Hotel	21,220		1,758		—		(1		)
Retail, entertainment and other	31,842		1,867		—		421
Management and development	—		—		—		5,712
Net revenues	$	252,679	$	60,791	$	—	$	6,090

Contract and Contract-related Assets

As of December 31, 2019 and September 30, 2019, contract assets related to the COSA totaled $95.7 million and $53.2 million, respectively.

Contract and Contract-related Liabilities

A difference may exist between the timing of cash receipts from patrons and the recognition of revenues, resulting in a contract or contract-related liability. In general, the Company has three types of such liabilities: (1) outstanding gaming chips and slot tickets liability, which represents amounts owed in exchange for outstanding gaming chips and slot tickets held by patrons; (2) loyalty points deferred revenue liability and (3) patron advances and other liability, which primarily represents funds deposited in advance by patrons for gaming and advance payments by patrons for goods and services such as advance ticket sales, deposits on rooms and convention space and gift card purchases. These liabilities are generally expected to be recognized as revenues within one year and are recorded within other current liabilities.

The following table summarizes these liabilities (in thousands):



	December 31, 2019		September 30, 2019
Outstanding gaming chips and slot tickets liability	$	11,350	$	7,968
Loyalty points deferred revenue liability	39,374		40,968
Patron advances and other liability	20,698		22,312
Total	$	71,422	$	71,248

As of December 31, 2019 and September 30, 2019, customer contract liabilities related to Mohegan Sun Pocono's revenue sharing agreement with Unibet Interactive Inc. totaled $17.7 million and $18.0 million, respectively, and are primarily recorded within other long-term liabilities.

Fair Value of Financial Instruments

The Company 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 Company's estimates or assumptions that market participants would utilize in pricing such assets or liabilities.

The Company'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, restricted cash and cash equivalents, receivables and trade payables approximates fair value. The estimated fair values of the Company's long-term debt were as follows (in thousands):



	December 31, 2019
	Carrying Value		Fair Value
Senior secured credit facility - revolving (1)	$	137,000	$	134,089
Senior secured credit facility - term loan A (1)	253,272		252,122
Senior secured credit facility - term loan B (1)	804,174		789,393
2016 7 7/8% senior unsecured notes (1)	490,821		512,500
Line of credit (1)	75		74
MGE Niagara Resorts credit facility - revolving (1)	30,728		30,728
MGE Niagara Resorts credit facility - term loan (1)	73,936		74,900
MGE Niagara Resorts convertible debenture (2)	30,728		30,728
Mohegan Expo credit facility (3)	28,831		29,657
Guaranteed credit facility (3)	31,264		32,375
Redemption note payable (3)	78,035		78,035
Other (3)	1,154		1,154
Long-term debt	$	1,960,018	$	1,965,755

________


(1)	Estimated fair values were based on Level 2 inputs (quoted market prices or prices of similar instruments) as of December 31, 2019.


(2)	Estimated fair value was based on Level 3 inputs (changes in market conditions) from date of issuance (June 11, 2019) to December 31, 2019.


(3)	Estimated fair values were based on Level 3 inputs (present value of future payments discounted to carrying value) as of December 31, 2019.