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): May 9, 2019

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 Exchange Act (17 CFR 240.14a-12)

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

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

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§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 Exchange Act.  ☐

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	None	None

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 second fiscal quarter ended March 31, 2019. 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 May 9, 2019.

Exhibit Index

Exhibit No.	Description
99.1	Press Release of Mohegan Gaming & Entertainment, dated May 9, 2019.

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: May 9, 2019	By:	/s/ Ralph James Gessner Jr.
		Ralph James Gessner Jr.
		Interim Chairman, Management Board

EX-99.1

Exhibit 99.1

MOHEGAN GAMING & ENTERTAINMENT

ANNOUNCES SECOND QUARTER FISCAL 2019 OPERATING RESULTS

Uncasville, Connecticut, May 9, 2019 – 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 second fiscal quarter ended March 31, 2019.

“Volume trends across our portfolio remain inline to better than expected as overall gaming volumes at our flagship property, Mohegan Sun, remain robust despite completing our second full quarter of increased competitive pressure in the Northeast,” said Mario Kontomerkos, President & Chief Executive Officer. “Adjusting for unusually low table hold, overall MGE EBITDA would have been largely in line with our expectations, flat with last year’s comparable period, and well ahead of recent fiscal year 1Q19 performance. At the same time, non-gaming results continue to be healthy and remain a driving factor for our growth at Mohegan Sun. These revenue enhancements have been driven, in part, by the recent adoption of our $100 million revenue and cost improvement program – a plan we remain committed to delivering over the next several years. Outside of the Northeast, cash flows from our managed portfolio grew strongly, up 86% year over year. Looking ahead, in June we expect to assume operational control of two major Niagara Falls, Canada assets which will mark the first international operations for MGE and will provide increased earnings and cash flow diversity for our stakeholders. Similarly, we have begun to mobilize construction at our development site in Incheon, South Korea, having completed our negotiations with our general contractor and following the receipt of all necessary construction permits and approvals.”

Selected consolidated operating results for the second quarter ended March 31, 2019, and prior year period (unaudited):

• Net revenues of $307.7 million vs. $332.0 million in the prior year period, a 7.3% decrease; and

• Income from operations of $22.2 million vs. $56.1 million in the prior year period, a 60.4% decrease primary driven by one time accelerated depreciation due to the closure of Casino of Wind; and

• Adjusted EBITDA of $67.2 million vs. $79.9 million in the prior year period, a 15.9% decrease.

Consolidated net revenues and Adjusted EBITDA declined during the quarter, driven by lower gaming revenues at Mohegan Sun and Mohegan Sun Pocono largely driven by unfavorable hold in the quarter at both properties. These declines were partially offset by improved non-gaming revenue growth, including entertainment and hotel revenues, at Mohegan Sun, as well as stronger Corporate Adjusted EBITDA, driven by tighter expense management and improved financial performance at ilani Casino Resort.

On October 1, 2018, the Company adopted Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), on a modified retrospective basis. As such, results for the three months and six months ended March 31, 2019 in this release are presented under this new guidance, while results for the three months and six months ended March 31, 2018 remain presented under prior guidance. For comparative results for all periods as reported under the new guidance, please see our supplemental earnings deck, available on our website (https://mohegangaming.com/financial-information/).

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Mohegan Sun

Operating results (in thousands, unaudited):

	For the Three Months Ended
	March 31,		March 31,					Percentage
	2019		2018		Variance			Variance
Net revenues	$	238,391	$	260,354	$	(21,963	)		(8.4	%)
Income from operations (1)	$	19,913	$	57,779	$	(37,866	)		(65.5	%)
Adjusted EBITDA	$	59,341	$	77,746	$	(18,405	)		(23.7	%)

(1) Includes $21.6 million in accelerated depreciation related to Casino of the Wind.                     

Net revenues and Adjusted EBITDA declined during the quarter, driven by lower overall gaming revenues and unfavorable table hold during the period, which was partially offset by stronger non-gaming results. Slot and table volumes declined 8.7% and 3.2%, respectively, in line with internal expectations. Had table hold percentage fallen into the historically normal range, net Revenues and Adjusted EBITDA would have declined less than 3.1% and 7.4%, respectively, on a 606 to 606 basis. Non-gaming revenues increased during the quarter, driven by improvement in nearly all segments of the business. The higher than normal decline in income from operations relates to the one-time accelerated depreciation expense of $21.6 million, caused by the closure of the Casino of the Wind in March, as that space will be designed and repurposed for higher and better use.

Mohegan Sun Pocono

Operating results (in thousands, unaudited):

	For the Three Months Ended
	March 31,		March 31,					Percentage
	2019		2018		Variance			Variance
Net revenues	$	61,241	$	67,130	$	(5,889	)		(8.8	%)
Income from operations	$	8,214	$	8,872	$	(658	)		(7.4	%)
Adjusted EBITDA	$	11,592	$	12,230	$	(638	)		(5.2	%)

Net revenues declined during the quarter driven by lower gaming revenues, largely reflecting the adverse impact from lower table hold. However, the year-over-year decline in Adjusted EBITDA was more muted due to a strong focus expense management, including lower payroll costs and certain casino marketing and promotional expenses. Notably, local marketing activity has started to return to more normalized levels following aggressive promotional activity from a regional competitor over the last several quarters.

Corporate

Operating results (in thousands, unaudited):

	For the Three Months Ended
	March 31,			March 31,					Percentage
	2019			2018			Variance		Variance
Net revenues	$	8,125		$	4,593		$	3,532		76.9	%
Loss from operations	$	(5,901	)	$	(10,579	)	$	4,678		44.2	%
Adjusted EBITDA	$	(3,716	)	$	(10,122	)	$	6,406		63.3	%

The increase in net revenues and Adjusted EBITDA was primarily due to higher management fees from ilani Casino Resort driven by continued improvement in performance at the property.

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MGE Property Information

	Net Revenues						Income (Loss) from Operations						Adjusted EBITDA
	For the Three Months Ended						For the Three Months Ended						For the Three Months Ended
	March 31,			March 31,			March 31,			March 31,			March 31,			March 31,
(in thousands, unaudited)	2019			2018			2019			2018			2019			2018
Mohegan Sun	$	238,391		$	260,354		$	19,913		$	57,779		$	59,341		$	77,746
Mohegan Sun Pocono		61,241			67,130			8,214			8,872			11,592			12,230
Corporate		8,125			4,593			(5,901	)		(10,579	)		(3,716	)		(10,122	)
Inter-segment revenues		(60	)		(60	)		—			—			—			—
Total	$	307,697		$	332,017		$	22,226		$	56,072		$	67,217		$	79,854

Other Information

Liquidity

As of March 31, 2019, MGE held cash and cash equivalents of $91.4 million, compared to $103.9 million as of September 30, 2018. As of March 31, 2019, $55.0 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 March 31, 2019, 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 $192.7 million of borrowing capacity under its revolving credit facility and line of credit as of March 31, 2019.

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Conference Call

MGE will host a conference call and simultaneous webcast regarding its second quarter of fiscal 2019 operating results on May 9, 2019 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: 1087099

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 May 9, 2019. This replay will run through May 23, 2019.

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

(855) 859-2056

(404) 537-3406 (International)

Conference ID: 1087099

About Mohegan Gaming & Entertainment

Mohegan Gaming & Entertainment is a master developer and operator of premier global integrated entertainment resorts, including Mohegan Sun in Uncasville, Connecticut, and Inspire in Incheon, South Korea. The Company 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 mid-2019, Niagara Falls, Canada. MGE owns and operates Connecticut Sun, a professional basketball team in the Women’s National Basketball Association, and the 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.

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MOHEGAN GAMING & ENTERTAINMENT

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(in thousands)

(unaudited)

	For the			For the			For the			For the
	Three Months Ended			Three Months Ended			Six Months Ended			Six Months Ended
	March 31, 2019			March 31, 2018			March 31, 2019			March 31, 2018
Revenues:
Gaming	$	211,819		$	288,735		$	433,754		$	575,741
Food and beverage		33,508			21,170			68,314			42,990
Hotel		22,005			14,957			44,982			29,864
Retail, entertainment and other		40,365			29,849			80,147			62,737
Gross revenues		307,697			354,711			627,197			711,332
Less - Promotional allowances		—			(22,694	)		—			(47,831	)
Net revenues		307,697			332,017			627,197			663,501
Operating costs and expenses:
Gaming		125,970			161,801			254,634			326,116
Food and beverage		26,084			10,180			52,531			20,369
Hotel		10,026			6,647			19,829			13,652
Retail, entertainment and other		19,507			9,589			40,269			21,206
Advertising, general and administrative		47,112			49,595			96,130			99,972
Corporate		12,464			14,090			24,889			26,243
Depreciation and amortization		42,782			19,828			69,872			40,035
Other, net		1,526			4,215			3,447			4,836
Total operating costs and expenses		285,471			275,945			561,601			552,429
Income from operations		22,226			56,072			65,596			111,072
Other income (expense):
Interest income		1,051			3,877			4,490			7,746
Interest expense		(35,132	)		(30,806	)		(71,142	)		(59,142	)
Other, net		(429	)		(724	)		(520	)		(2,567	)
Total other expense		(34,510	)		(27,653	)		(67,172	)		(53,963	)
Net income (loss)		(12,284	)		28,419			(1,576	)		57,109
(Income) loss attributable to non-controlling interests		(74	)		189			(160	)		708
Net income (loss) attributable to Mohegan Gaming & Entertainment	$	(12,358	)	$	28,608		$	(1,736	)	$	57,817

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MOHEGAN GAMING & ENTERTAINMENT

SUPPLEMENTAL INFORMATION

IMPACT OF ADOPTING ASC 606

(in thousands)

(unaudited)

	For the Three Months Ended March 31, 2019		Balance without ASC 606			Impact of Change Higher/ (Lower)
Revenues:
Gaming (1), (2), (3)	$	211,819	$	261,855		$	(50,036	)
Food and beverage (2), (3)		33,508		21,786			11,722
Hotel (2), (3)		22,005		15,761			6,244
Retail, entertainment and other (2), (3)		40,365		33,880			6,485
Gross revenues		307,697		333,282			(25,585	)
Less: Promotional allowances (2), (3)		—		(23,347	)		23,347
Net revenues		307,697		309,935			(2,238	)
Operating costs and expenses:
Gaming (1), (2), (3)		125,970		150,601			(24,631	)
Food and beverage (2), (3)		26,084		14,767			11,317
Hotel (2), (3)		10,026		7,467			2,559
Retail, entertainment and other (2), (3)		19,507		11,943			7,564
Advertising, general and administrative (3)		47,112		46,971			141
Corporate		12,464		12,464			—
Depreciation and amortization		42,782		42,782			—
Other, net		1,526		1,526			—
Total operating costs and expenses		285,471		288,521			(3,050	)
Income from operations	$	22,226	$	21,414		$	812
	For the Six Months Ended March 31, 2019		Balance without ASC 606			Impact of Change Higher/ (Lower)
Revenues:
Gaming (1), (2), (3)	$	433,754	$	528,183		$	(94,429	)
Food and beverage (2), (3)		68,314		45,342			22,972
Hotel (2), (3)		44,982		32,576			12,406
Retail, entertainment and other (2), (3)		80,147		73,867			6,280
Gross revenues		627,197		679,968			(52,771	)
Less: Promotional allowances (2), (3)		—		(46,084	)		46,084
Net revenues		627,197		633,884			(6,687	)
Operating costs and expenses:
Gaming (1), (2), (3)		254,634		307,627			(52,993	)
Food and beverage (2), (3)		52,531		29,834			22,697
Hotel (2), (3)		19,829		14,515			5,314
Retail, entertainment and other (2), (3)		40,269		24,350			15,919
Advertising, general and administrative (3)		96,130		95,880			250
Corporate		24,889		24,889			—
Depreciation and amortization		69,872		69,872			—
Other, net		3,447		3,447			—
Total operating costs and expenses		561,601		570,414			(8,813	)
Income from operations	$	65,596	$	63,470		$	2,126

On October 1, 2018, the Company adopted Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASC 606”), on a modified retrospective basis.

(1) ASC 606 modified the accounting related to loyalty points. The Company is now required to reduce gaming revenues by the estimated fair value of loyalty points earned by patrons and recognize the related revenues when such loyalty points are redeemed.

(2) ASC 606 modified the accounting related to promotional allowances. The Company no longer recognizes revenues for complimentary items provided to patrons, as well as for goods and services provided to patrons in connection with loyalty point redemptions, as gross revenues with a corresponding offset to promotional allowances to arrive at net revenues. The majority of such amounts previously included within promotional allowances now offset gaming revenues based on an allocation of revenues to performance obligations utilizing stand-alone selling prices. These changes resulted in the elimination of promotional allowances and the reclassification of revenues between the various revenue line items.

(3) ASC 606 modified gross versus net presentation. The Company now records mandatory service charges on food and beverage items and wide area progressive operator fees on a gross basis, with amounts received from patrons recorded as revenues with the corresponding amounts paid recorded as expenses. This change resulted in an increase in revenues with a corresponding increase in expenses.

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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
	March 31, 2019			March 31, 2018
Net income (loss)	$	(12,284	)	$	28,419
Other, net		429			724
Interest expense		35,132			30,806
Interest income		(1,051	)		(3,877	)
Income from operations		22,226			56,072
Adjusted EBITDA attributable to non-controlling interests		(114	)		(261	)
Other, net		2,323			4,215
Depreciation and amortization		42,782			19,828
Adjusted EBITDA	$	67,217		$	79,854

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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 March 31, 2019
	Income (Loss) from Operations			Depreciation and Amortization			Other, net			Adjusted EBITDA Attributable to Non-Controlling Interests			Adjusted EBITDA
Mohegan Sun	$	19,913		$	39,471		$	(43	)	$	—		$	59,341
Mohegan Sun Pocono		8,214			3,387			(9	)		—			11,592
Corporate		(5,901	)		(76	)		2,375			(114	)		(3,716	)
Total	$	22,226		$	42,782		$	2,323		$	(114	)	$	67,217
	For the Three Months Ended March 31, 2018
	Income (Loss) from Operations			Depreciation and Amortization			Other, net			Adjusted EBITDA Attributable to Non-Controlling Interests			Adjusted EBITDA
Mohegan Sun	$	57,779		$	16,424		$	3,239		$	304		$	77,746
Mohegan Sun Pocono		8,872			3,366			(8	)		—			12,230
Corporate		(10,579	)		38			984			(565	)		(10,122	)
Total	$	56,072		$	19,828		$	4,215		$	(261	)	$	79,854

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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, acquisition related costs, gain and loss on disposition of assets, workforce reduction severance, pre-opening costs and expenses, accretion of discounts, income and loss from unconsolidated affiliates, 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

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