8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): December 6, 2018

MOHEGAN TRIBAL GAMING AUTHORITY

(Exact name of registrant as specified in its charter)

Not Applicable	033-80655	06-1436334
(State or other jurisdiction of incorporation)	(Commission File Number)	(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)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Securities Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Securities Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Securities Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company pursuant to Rule 405 of the Securities Act (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Exchange Act.  ☐

Section 2 Financial Information

Item 2.02 Results of Operations and Financial Condition.

The Mohegan Tribal Gaming Authority d/b/a Mohegan Gaming & Entertainment (“MGE”) today issued a press release announcing the operating results for its fourth fiscal quarter ended September 30, 2018. A copy of the press release is attached hereto as Exhibit 99.1. The press release and related information also may be found on MGE’s website at www.mohegangaming.com, under the “Financial Information/Financial Updates” section.

The information, including the exhibit attached hereto, in this Current Report is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities 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.

Section 9 Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

The following exhibit is furnished as part of this Current Report:

99.1 Press Release of Mohegan Gaming & Entertainment, dated December 6, 2018.

Exhibit Index

Exhibit No.	Description
99.1	Press Release of Mohegan Gaming & Entertainment, dated December 6, 2018.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	MOHEGAN TRIBAL GAMING AUTHORITY D/B/A
	MOHEGAN GAMING & ENTERTAINMENT
Date: December 6, 2018	By:	/s/ Kevin P. Brown
		Kevin P. Brown
		Chairman, Management Board

EX-99.1

Exhibit 99.1

MOHEGAN GAMING & ENTERTAINMENT

ANNOUNCES FOURTH QUARTER AND FISCAL YEAR 2018 OPERATING RESULTS

Uncasville, Connecticut, December 6, 2018 – Mohegan Gaming & Entertainment (“MGE” or the “Company”), a master developer and operator of premier global integrated entertainment resorts, including Mohegan Sun in Uncasville, Connecticut and Inspire Korea in Incheon, South Korea, announced today operating results for its fourth fiscal quarter ended September 30, 2018.

“Consistent with the Company’s updated guidance, consolidated fourth quarter revenue and Adjusted EBITDA were below prior year results, in part due to the impact of a recent competitive opening in the Northeast gaming market. The declines in Connecticut were partially offset by stronger year-over-year EBITDA growth in Pennsylvania and in Corporate. Overall results also reflect the initial implementation phases of our previously disclosed multi-year profit enhancement initiatives, initiatives which will continue for the foreseeable future,” said Mario Kontomerkos, President & Chief Executive Officer of MGE. “The fourth quarter was also notable for the Company as we were named the winning bidder to acquire certain assets associated with two significant destination casino resorts in Niagara Falls, Canada. Further, subsequent to quarter end, we made substantial progress advancing our development efforts in South Korea and also received approximately $107 million in repayments as the result of a successful ilani refinancing. Together, these achievements diversify and strengthen our long-term revenue sources and credit profile, and ensure the continued long-term success of MGE.”

Selected consolidated operating results for the fourth quarter ended September 30, 2018 and prior year period (unaudited):

• Net revenues of $347.2 million vs. $362.0 million in the prior year period, a 4.1% decrease;

• Gaming revenues of $291.1 million vs. $307.1 million in the prior year period, a 5.2% decrease;

• Gross slot revenues of $205.0 million vs. $213.7 million in the prior year period, a 4.0% decrease;

• Table game revenues of $86.9 million vs. $94.3 million in the prior year period, a 7.9% decrease;

• Non-gaming revenues of $85.0 million vs. $84.5 million in the prior year period, a 0.5% increase;

• Total operating expenses of $277.7 million vs. $283.6 million in the prior year period, a 2.1% decrease; and

• Adjusted EBITDA of $94.5 million vs. $102.0 million in the prior year period, a 7.3% decrease.

Consolidated net revenues declined modestly during the quarter, primarily driven by a softer July gaming performance, a challenging year over year comparison in gaming revenues at Mohegan Sun in September of 2017, and continued increases in promotional activity in the Mohegan Sun Pocono gaming market. These factors, as well as increases in slot taxes assessed by the Commonwealth of Pennsylvania, contributed to the year-over-year decline in Adjusted EBITDA. Though early in the competitive cycle, the impact of new competition in the New England region has been in-line to slightly better than expected. Total operating expenses were lower than prior year driven by the benefit of the implementation of cost reduction programs. These savings were partially offset by increased costs associated with higher healthcare expenses and utility costs.

Mohegan Sun

Operating results (in thousands, unaudited):

	For the Three Months Ended
	September 30, 2018		September 30, 2017		Variance			Percentage Variance
Net revenues	$	275,167	$	284,145	$	(8,978	)		(3.2	%)
Income from operations	$	54,940	$	70,939	$	(15,999	)		(22.6	%)
Adjusted EBITDA	$	75,171	$	87,306	$	(12,135	)		(13.9	%)

Net revenues declined modestly during the quarter, primarily driven by softer overall gaming revenues early in the fourth fiscal quarter and a challenging comparison in the month of September 2017. Overall non-gaming revenue increased during the quarter, driven by better entertainment revenues – especially notable given one less headliner this year in comparison to last year. Additionally, food and beverage revenues were also higher in the period, partially offset by lower tenant revenues and hotel revenues. Overall, Mohegan Sun experienced a decrease in Adjusted EBITDA primarily due to softer gaming revenues, higher health care expenses, and higher overall utility costs in the quarter. Adjusted EBITDA margin decreased to 27.3% for the quarter ended September 30, 2018, from 30.7% in the fourth quarter of fiscal 2017.

Mohegan Sun Pocono

Operating results (in thousands, unaudited):

	For the Three Months Ended
	September 30, 2018		September 30, 2017		Variance			Percentage Variance
Net revenues	$	65,467	$	71,186	$	(5,719	)		(8.0	%)
Income from operations (1)	$	10,778	$	3,268	$	7,510			229.8	%
Adjusted EBITDA (1)	$	14,265	$	11,391	$	2,874			25.2	%

(1) The prior period reflects a $3.2 million adjustment that was recorded subsequent to the issuance of our fourth quarter fiscal 2017 earnings release, but prior to the filing of our 2017 Form 10-K, due to the finalization of a repayment schedule pertaining to certain Pennsylvania Gaming Control Board start-up costs that were allocated to gaming operators.

Net revenues declined by $5.7 million, or 8.0%. Overall revenues were impacted by lower gaming revenues, which reflect our efforts to manage profitable guest trips and continued aggressive promotional activity from a regional competitor. The year-over-year increase in Adjusted EBITDA primarily reflects the impact of a $3.2 million charge in the fourth quarter of last fiscal year related to the finalization of a repayment schedule to the Pennsylvania Gaming Control Board that was required by all operators in Pennsylvania. Overall EBITDA was adversely impacted from lower revenues, due in part to lower table hold in the quarter, and from higher slot taxes driven, in part, by a 1% increase in slot taxes assessed by the Commonwealth of Pennsylvania that went into effect on January 1, 2018. These results were partially offset by a reduction in gaming costs and expenses, including lower payroll costs and certain casino marketing and promotional expenses, as well as lower costs related to Momentum Dollar redemptions at Mohegan Sun Pocono-owned outlets. Adjusting for the incremental 1% slot tax as discussed above and table hold in the period, overall Adjusted EBITDA at Mohegan Sun Pocono would have been approximately $1.25 million higher. Adjusted EBITDA margin increased to 21.8% for the quarter ended September 30, 2018, from 16.0% in the fourth quarter of fiscal 2017.

Corporate

Operating results (in thousands, unaudited):

	For the Three Months Ended
	September 30, 2018		September 30, 2017		Variance			Percentage Variance
Net revenues	$	6,654	$	6,761	$	(107	)		(1.6	%)
Income from operations	$	3,840	$	4,220	$	(380	)		(9.0	%)
Adjusted EBITDA	$	5,086	$	3,312	$	1,774			53.6	%

Adjusted EBITDA for the quarter ended September 30, 2018 reflects decreased consulting costs associated with our various diversification initiatives. The decrease in net revenues was primarily driven by lower development and consulting fees, partially offset by higher management fees at ilani Casino Resort driven by continued improvement in performance at the property.

MGE Property Information

	Net Revenues						Income (Loss) from Operations						Adjusted EBITDA
(in thousands, unaudited)	For the Three Months Ended						For the Three Months Ended						For the Three Months Ended
	September 30, 2018			September 30, 2017			September 30, 2018			September 30, 2017			September 30, 2018			September 30, 2017
Mohegan Sun	$	275,167		$	284,145		$	54,940		$	70,939		$	75,171		$	87,306
Mohegan Sun Pocono		65,467			71,186			10,778			3,268			14,265			11,391
Corporate		6,654			6,761			3,840			4,220			5,086			3,312
Inter-segment revenues		(60	)		(60	)		—			—			—			—
Total	$	347,228		$	362,032		$	69,558		$	78,427		$	94,522		$	102,009
	Net Revenues						Income (Loss) from Operations						Adjusted EBITDA
	For the Fiscal Year Ended						For the Fiscal Year Ended						For the Fiscal Year Ended
	September 30, 2018			September 30, 2017			September 30, 2018			September 30, 2017			September 30, 2018			September 30, 2017
Mohegan Sun	$	1,068,892		$	1,079,920		$	230,890		$	249,403		$	308,233		$	313,277
Mohegan Sun Pocono		265,691			278,938			37,541			33,145			51,495			50,418
Corporate		21,289			21,385			(23,897	)		(25,313	)		(21,127	)		(18,019	)
Inter-segment revenues		(240	)		(240	)		—			—			—			—
Total	$	1,355,632		$	1,380,003		$	244,534		$	257,235		$	338,601		$	345,676

Other Information

Liquidity

As of September 30, 2018, MGE held cash and cash equivalents of $103.9 million, compared to $89.0 million as of September 30, 2017. As of September 30, 2018, $66.0 million was drawn on MGE’s $250.0 million revolving credit facility, while no amounts were drawn on MGE’s $25.0 million line of credit. As of September 30, 2018, letters of credit issued under the revolving credit facility totaled $2.3 million, of which no amounts were drawn. Inclusive of letters of credit, which reduce borrowing availability under the revolving credit facility, MGE had approximately $181.7 million of borrowing capacity under its revolving credit facility and line of credit as of September 30, 2018.

Conference Call

MGE will host a conference call and simultaneous webcast regarding its fourth quarter of fiscal 2018 operating results on December, 6^th, 2018 at 11:00 a.m. (Eastern Daylight Time).

Those interested in participating in the call should dial as follows:

(877) 756-4274

(508) 637-5458 (International)

Conference ID: 3368739

Please call five minutes in advance to ensure that you are connected prior to the initiation of the call. Questions and answers will be reserved for call-in analysts and investors.

Parties who want to listen to the live conference call on the Internet may do so through a web link on MGE’s website at www.mohegangaming.com, under the “Financial Information/Financial Updates” section. Interested parties also may listen to a taped replay of the entire conference call commencing two hours after the call’s completion on December 6^th, 2018. This replay will run through December 20, 2018.

The access number for a taped replay of the conference call is as follows:

(855) 859-2056

(404) 537-3406 (International)

Conference ID: 3368739

About Mohegan Gaming & Entertainment

Mohegan Gaming & Entertainment (MGE) is a master developer and operator of premier global integrated entertainment resorts, including Mohegan Sun in Uncasville, Connecticut and Inspire in Incheon, South Korea. MGE is owner, developer, and/or manager of integrated entertainment resorts throughout the United States, including Connecticut, New Jersey, Washington, Pennsylvania, Louisiana, Northern Asia, and beginning in 2019 Niagara Falls, Canada. MGE owns and operates Connecticut Sun, a professional basketball team in the WNBA and New England Black Wolves, a professional lacrosse team in the National Lacrosse League. For more information on MGE and our properties, visit www.mohegangaming.com.

Special Note Regarding Forward-Looking Statements

Some information included in this press release may contain 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. These statements can sometimes be identified by the use of forward-looking words such as “may,” “will,” “anticipate,” “estimate,” “expect” or “intend” and similar expressions. Such forward-looking information may involve important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ materially from those expressed in any forward-looking statements made by or on behalf of MGE. Information concerning potential factors that could affect MGE’s financial results is included in its Annual Report on Form 10-K for the fiscal year ended September 30, 2018, as well as in MGE’s other reports and filings with the Securities and Exchange Commission. Any forward-looking statements included in this press release are made only as of the date of this release. MGE does not undertake any obligation to update or supplement any forward-looking statements to reflect subsequent events or circumstances. MGE cannot assure that projected results or events will be achieved or will occur.

MOHEGAN GAMING & ENTERTAINMENT

CONSOLIDATED STATEMENTS OF INCOME

(in thousands)

(unaudited)

	For the			For the			For the			For the
	Three Months Ended			Three Months Ended			Fiscal Year Ended			Fiscal Year Ended
	September 30, 2018			September 30, 2017			September 30, 2018			September 30, 2017
Revenues:
Gaming	$	291,142		$	307,099		$	1,162,300		$	1,179,865
Food and beverage		22,871			22,514			88,247			90,310
Hotel		16,803			17,000			62,378			63,518
Retail, entertainment and other		45,280			45,009			144,055			151,657
Gross revenues		376,096			391,622			1,456,980			1,485,350
Less - Promotional allowances		(28,868	)		(29,590	)		(101,348	)		(105,347	)
Net revenues		347,228			362,032			1,355,632			1,380,003
Operating costs and expenses:
Gaming		165,732			176,038			655,956			670,692
Food and beverage		10,181			9,817			41,102			41,041
Hotel		7,159			6,853			27,756			27,713
Retail, entertainment and other		16,666			15,552			50,402			57,978
Advertising, general and administrative		51,721			53,573			200,786			203,922
Corporate		836			846			40,087			44,749
Depreciation and amortization		21,090			19,086			81,789			74,443
Other, net		4,285			1,840			13,220			2,230
Total operating costs and expenses		277,670			283,605			1,111,098			1,122,768
Income from operations		69,558			78,427			244,534			257,235
Other income (expense):
Interest income		3,844			5,370			15,468			13,732
Interest expense		(34,405	)		(28,000	)		(126,653	)		(114,319	)
Gain (loss) on modification and early extinguishment of debt		—			2			—			(74,888	)
Other, net		687			(2,213	)		(1,741	)		(5,343	)
Total other expense		(29,874	)		(24,841	)		(112,926	)		(180,818	)
Net income		39,684			53,586			131,608			76,417
Income attributable to non-controlling interests		(1,955	)		(1,769	)		(1,054	)		(972	)
Net income attributable to Mohegan Gaming & Entertainment	$	37,729		$	51,817		$	130,554		$	75,445

MOHEGAN GAMING & ENTERTAINMENT

ADJUSTED EBITDA RECONCILIATIONS

Reconciliations of Net Income to Adjusted EBITDA:

Reconciliations of net income, a financial measure determined in accordance with accounting principles generally accepted in the United States of America, or GAAP, to Adjusted EBITDA are shown below (in thousands, unaudited):

	For the Three Months Ended						For the Fiscal Year Ended
	September 30,			September 30,			September 30,			September 30,
	2018			2017			2018			2017
Net income	$	39,684		$	53,586		$	131,608		$	76,417
Other, net		(4,531	)		(3,157	)		(13,727	)		(8,389	)
(Gain) loss on modification and early extinguishment of debt		—			(2	)		—			74,888
Interest expense		34,405			28,000			126,653			114,319
Income from operations		69,558			78,427			244,534			257,235
Adjusted EBITDA attributable to non-controlling interests		(2,411	)		(2,270	)		(2,942	)		(727	)
Other, net		6,285			6,766			15,220			14,725
Depreciation and amortization		21,090			19,086			81,789			74,443
Adjusted EBITDA	$	94,522		$	102,009		$	338,601		$	345,676

Reconciliations of Income (Loss) from Operations to Adjusted EBITDA:

Reconciliations of income (loss) from operations, a financial measure determined in accordance with GAAP, to Adjusted EBITDA, are shown below (in thousands, unaudited):

	For the Three Months Ended September 30, 2018
	Income (Loss) from Operations			Depreciation and Amortization		Other, net		Adjusted EBITDA Attributable to Non-Controlling Interests			Adjusted EBITDA
Mohegan Sun	$	54,940		$	17,566	$	2,404	$	261		$	75,171
Mohegan Sun Pocono		10,778			3,486		1		—			14,265
Corporate		3,840			38		3,880		(2,672	)		5,086
Total	$	69,558		$	21,090	$	6,285	$	(2,411	)	$	94,522
	For the Three Months Ended September 30, 2017
	Income (Loss) from Operations			Depreciation and Amortization		Other, net		Adjusted EBITDA Attributable to Non-Controlling Interests			Adjusted EBITDA
Mohegan Sun	$	70,939		$	15,856	$	238	$	273		$	87,306
Mohegan Sun Pocono		3,268			3,196		4,927		—			11,391
Corporate		4,220			34		1,601		(2,543	)		3,312
Total	$	78,427		$	19,086	$	6,766	$	(2,270	)	$	102,009
	For the Fiscal Year Ended September 30, 2018
	Income (Loss) from Operations			Depreciation and Amortization		Other, net		Adjusted EBITDA Attributable to Non-Controlling Interests			Adjusted EBITDA
Mohegan Sun	$	230,890		$	67,997	$	8,199	$	1,147		$	308,233
Mohegan Sun Pocono		37,541			13,640		314		—			51,495
Corporate		(23,897	)		152		6,707		(4,089	)		(21,127	)
Total	$	244,534		$	81,789	$	15,220	$	(2,942	)	$	338,601
	For the Fiscal Year Ended September 30, 2017
	Income (Loss) from Operations			Depreciation and Amortization		Other, net		Adjusted EBITDA Attributable to Non-Controlling Interests			Adjusted EBITDA
Mohegan Sun	$	249,403		$	61,985	$	632	$	1,257		$	313,277
Mohegan Sun Pocono		33,145			12,350		4,923		—			50,418
Corporate		(25,313	)		108		9,170		(1,984	)		(18,019	)
Total	$	257,235		$	74,443	$	14,725	$	(727	)	$	345,676

Adjusted EBITDA Explanation:

Net income before interest, income taxes, depreciation and amortization, or EBITDA, is a commonly used measure of performance in the casino and hospitality industry. EBITDA is not a measure of performance calculated in accordance with GAAP. MGE historically has evaluated its operating performance with the non-GAAP measure, Adjusted EBITDA, which as used in this press release, represents net income before interest, depreciation and amortization, share-based compensation, loss on disposition of assets, workforce reduction severance, pre-opening costs and expenses, impairment charges, accretion of discounts, gain or loss on modification and early extinguishment of debt, income or loss from unconsolidated affiliates, property charges, other non-operating income and expense and Adjusted EBITDA attributable to non-controlling interests.

Adjusted EBITDA provides an additional way to evaluate MGE’s operations and, when viewed with both MGE’s GAAP results and the reconciliations provided, MGE believes that it provides a more complete understanding of its business than could be otherwise obtained absent this disclosure. Adjusted EBITDA is presented solely as a supplemental disclosure because: (1) MGE believes it enhances an overall understanding of MGE’s past and current financial performance; (2) MGE believes it is a useful tool for investors to assess the operating performance of the business in comparison to other operators within the casino and hospitality industry since Adjusted EBITDA excludes certain items that may not be indicative of MGE’s operating results; (3) measures that are comparable to Adjusted EBITDA are often used as an important basis for the valuation of casino and hospitality companies; and (4) MGE uses Adjusted EBITDA internally to evaluate the performance of its operating personnel and management and as a benchmark to evaluate its operating performance in comparison to its competitors.

The use of Adjusted EBITDA has certain limitations. Adjusted EBITDA should be considered in addition to, not as a substitute for or superior to, any GAAP financial measure including net income (as an indicator of MGE’s performance) or cash flows provided by operating activities (as an indicator of MGE’s liquidity), nor should it be considered as an indicator of MGE’s overall financial performance. MGE’s calculation of Adjusted EBITDA is likely to be different from the calculation of Adjusted EBITDA or other similarly titled measurements used by other casino and hospitality companies, and therefore, comparability may be limited. Adjusted EBITDA eliminates certain items from net income, such as interest and depreciation and amortization. Each of these items has been incurred in the past, will continue to be incurred in the future and should be considered in the overall evaluation of MGE’s results. MGE compensates for these limitations by providing relevant disclosures of items excluded in the calculation of Adjusted EBITDA, both in its reconciliations to the GAAP financial measure of net income and in its consolidated financial statements, all of which should be considered when evaluating its results. MGE strongly encourages investors to review its financial information in its entirety and not to rely on a single financial measure.

Contact:

Christopher Jones

VP Corporate Finance

Mohegan Gaming & Entertainment

(860) 862-8000