Attached files
file | filename |
---|---|
EX-32.2 - EXHIBIT 32.2 - MOHEGAN TRIBAL GAMING AUTHORITY | dex322.htm |
EX-31.1 - EXHIBIT 31.1 - MOHEGAN TRIBAL GAMING AUTHORITY | dex311.htm |
EX-32.1 - EXHIBIT 32.1 - MOHEGAN TRIBAL GAMING AUTHORITY | dex321.htm |
EX-31.2 - EXHIBIT 31.2 - MOHEGAN TRIBAL GAMING AUTHORITY | dex312.htm |
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2011
OR
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 033-80655
MOHEGAN TRIBAL GAMING AUTHORITY
(Exact name of registrant as specified in its charter)
Not Applicable | 06-1436334 | |
(State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) | |
One Mohegan Sun Boulevard, Uncasville, CT | 06382 | |
(Address of principal executive offices) | (Zip Code) |
(860) 862-8000
(Registrants telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer | ¨ | Accelerated filer | ¨ | |||
Non-accelerated filer | x | Smaller reporting company | ¨ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ¨ No x
Table of Contents
MOHEGAN TRIBAL GAMING AUTHORITY
INDEX TO FORM 10-Q
Page Number |
||||||
PART I. |
FINANCIAL INFORMATION |
|||||
Item 1. |
Financial Statements |
|||||
Condensed Consolidated Balance Sheets as of March 31, 2011 and September 30, 2010 (unaudited) |
3 | |||||
4 | ||||||
5 | ||||||
6 | ||||||
Notes to the Condensed Consolidated Financial Statements (unaudited) |
7 | |||||
33 | ||||||
Item 2. |
Managements Discussion and Analysis of Financial Condition and Results of Operations |
34 | ||||
Item 3. |
57 | |||||
Item 4. |
58 | |||||
PART II. |
OTHER INFORMATION |
|||||
Item 1. |
59 | |||||
Item 1A. |
59 | |||||
Item 6. |
59 | |||||
Signatures. |
60 |
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. | Financial Statements |
MOHEGAN TRIBAL GAMING AUTHORITY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
March 31, 2011 |
September 30, 2010 |
|||||||
ASSETS | ||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 64,718 | $ | 63,897 | ||||
Restricted cash |
1,242 | 1,246 | ||||||
Receivables, net |
24,185 | 24,154 | ||||||
Inventories |
15,395 | 14,519 | ||||||
Other current assets |
33,263 | 26,062 | ||||||
Total current assets |
138,803 | 129,878 | ||||||
Non-current assets: |
||||||||
Property and equipment, net |
1,544,203 | 1,573,153 | ||||||
Goodwill |
39,459 | 39,459 | ||||||
Other intangible assets, net |
406,543 | 406,747 | ||||||
Other assets, net |
49,326 | 51,386 | ||||||
Total assets |
$ | 2,178,334 | $ | 2,200,623 | ||||
LIABILITIES AND CAPITAL | ||||||||
Current liabilities: |
||||||||
Current portion of long-term debt |
$ | 519,441 | $ | 25,397 | ||||
Current portion of relinquishment liability |
68,201 | 69,031 | ||||||
Due to Mohegan Tribe |
10,200 | 10,000 | ||||||
Current portion of capital leases |
693 | 681 | ||||||
Trade payables |
19,121 | 18,275 | ||||||
Construction payables |
9,017 | 14,408 | ||||||
Accrued interest payable |
27,757 | 26,849 | ||||||
Other current liabilities |
147,340 | 140,407 | ||||||
Total current liabilities |
801,770 | 305,048 | ||||||
Non-current liabilities: |
||||||||
Long-term debt, net of current portion |
1,069,209 | 1,596,122 | ||||||
Relinquishment liability, net of current portion |
140,369 | 161,692 | ||||||
Capital leases, net of current portion |
4,993 | 5,349 | ||||||
Other long-term liabilities |
334 | 368 | ||||||
Total liabilities |
2,016,675 | 2,068,579 | ||||||
Commitments and Contingencies |
||||||||
Capital: |
||||||||
Retained earnings |
158,526 | 129,476 | ||||||
Mohegan Tribal Gaming Authority capital |
158,526 | 129,476 | ||||||
Non-controlling interests |
3,133 | 2,568 | ||||||
Total capital |
161,659 | 132,044 | ||||||
Total liabilities and capital |
$ | 2,178,334 | $ | 2,200,623 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
Table of Contents
MOHEGAN TRIBAL GAMING AUTHORITY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands)
(unaudited)
For the Three Months Ended March 31, 2011 |
For the Three Months Ended March 31, 2010 |
For the Six Months Ended March 31, 2011 |
For the Six Months Ended March 31, 2010 |
|||||||||||||
Revenues: |
||||||||||||||||
Gaming |
$ | 316,444 | $ | 319,123 | $ | 624,101 | $ | 628,962 | ||||||||
Food and beverage |
21,229 | 22,838 | 43,223 | 46,153 | ||||||||||||
Hotel |
8,657 | 8,964 | 17,654 | 18,506 | ||||||||||||
Retail, entertainment and other |
26,378 | 27,788 | 48,824 | 55,226 | ||||||||||||
Gross revenues |
372,708 | 378,713 | 733,802 | 748,847 | ||||||||||||
LessPromotional allowances |
(24,764 | ) | (26,418 | ) | (50,253 | ) | (54,741 | ) | ||||||||
Net revenues |
347,944 | 352,295 | 683,549 | 694,106 | ||||||||||||
Operating costs and expenses: |
||||||||||||||||
Gaming |
194,993 | 197,933 | 388,324 | 398,751 | ||||||||||||
Food and beverage |
10,395 | 10,785 | 20,440 | 21,969 | ||||||||||||
Hotel |
3,327 | 3,467 | 6,493 | 7,077 | ||||||||||||
Retail, entertainment and other |
7,953 | 10,023 | 14,166 | 17,977 | ||||||||||||
Advertising, general and administrative |
48,128 | 49,817 | 98,422 | 100,430 | ||||||||||||
Corporate |
3,771 | 4,048 | 8,307 | 8,377 | ||||||||||||
Depreciation and amortization |
22,615 | 23,549 | 45,830 | 48,980 | ||||||||||||
Severance |
(266 | ) | | 255 | | |||||||||||
Pre-opening |
| 486 | | 528 | ||||||||||||
Total operating costs and expenses |
290,916 | 300,108 | 582,237 | 604,089 | ||||||||||||
Income from operations |
57,028 | 52,187 | 101,312 | 90,017 | ||||||||||||
Other income (expense): |
||||||||||||||||
Accretion of discount to the relinquishment liability |
(2,841 | ) | (3,857 | ) | (5,683 | ) | (7,713 | ) | ||||||||
Interest income |
618 | 620 | 1,398 | 1,352 | ||||||||||||
Interest expense, net of capitalized interest |
(29,713 | ) | (29,319 | ) | (59,459 | ) | (57,868 | ) | ||||||||
Loss on early extinguishment of debt |
| | | (1,584 | ) | |||||||||||
Write-off of debt issuance costs |
| | | (338 | ) | |||||||||||
Other expense, net |
(349 | ) | (147 | ) | (344 | ) | (491 | ) | ||||||||
Total other expense |
(32,285 | ) | (32,703 | ) | (64,088 | ) | (66,642 | ) | ||||||||
Net income |
24,743 | 19,484 | 37,224 | 23,375 | ||||||||||||
Loss attributable to non-controlling interests |
465 | 543 | 914 | 1,056 | ||||||||||||
Net income attributable to Mohegan Tribal Gaming Authority |
$ | 25,208 | $ | 20,027 | $ | 38,138 | $ | 24,431 | ||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Table of Contents
MOHEGAN TRIBAL GAMING AUTHORITY
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL
(in thousands)
(unaudited)
Total | Mohegan Tribal Gaming Authority |
Non-controlling Interests |
||||||||||
Balance, December 31, 2010 |
$ | 141,319 | $ | 137,899 | $ | 3,420 | ||||||
Contributions from members |
178 | | 178 | |||||||||
Net income (loss) |
24,743 | 25,208 | (465 | ) | ||||||||
Distributions to Tribe |
(4,581 | ) | (4,581 | ) | | |||||||
Balance, March 31, 2011 |
$ | 161,659 | $ | 158,526 | $ | 3,133 | ||||||
Balance, September 30, 2010 |
$ | 132,044 | $ | 129,476 | $ | 2,568 | ||||||
Contributions from members |
1,479 | | 1,479 | |||||||||
Net income (loss) |
37,224 | 38,138 | (914 | ) | ||||||||
Distributions to Tribe |
(9,088 | ) | (9,088 | ) | | |||||||
Balance, March 31, 2011 |
$ | 161,659 | $ | 158,526 | $ | 3,133 | ||||||
Balance, December 31, 2009 |
$ | 156,538 | $ | 152,966 | $ | 3,572 | ||||||
Contributions from members |
255 | | 255 | |||||||||
Net income (loss) |
19,484 | 20,027 | (543 | ) | ||||||||
Distributions to Tribe |
(11,157 | ) | (11,157 | ) | | |||||||
Balance, March 31, 2010 |
$ | 165,120 | $ | 161,836 | $ | 3,284 | ||||||
Balance, September 30, 2009 |
$ | 179,685 | $ | 175,855 | $ | 3,830 | ||||||
Contributions from members |
510 | | 510 | |||||||||
Net income (loss) |
23,375 | 24,431 | (1,056 | ) | ||||||||
Distributions to Tribe |
(38,450 | ) | (38,450 | ) | | |||||||
Balance, March 31, 2010 |
$ | 165,120 | $ | 161,836 | $ | 3,284 | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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MOHEGAN TRIBAL GAMING AUTHORITY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
For the Six Months Ended March 31, 2011 |
For the Six Months Ended March 31, 2010 |
|||||||
Cash flows provided by (used in) operating activities: |
||||||||
Net income |
$ | 37,224 | $ | 23,375 | ||||
Adjustments to reconcile net income to net cash flows provided by operating activities: |
||||||||
Depreciation and amortization |
45,830 | 48,980 | ||||||
Accretion of discount to the relinquishment liability |
5,683 | 7,713 | ||||||
Cash paid for accretion of discount to the relinquishment liability |
(6,698 | ) | (8,963 | ) | ||||
Amortization of debt issuance costs |
3,578 | 3,628 | ||||||
Accretion of bond discount |
320 | 244 | ||||||
Amortization of net deferred gain on settlement of derivative instruments |
(234 | ) | (235 | ) | ||||
Provision for losses on receivables |
979 | 1,648 | ||||||
Net loss on disposition of assets |
360 | 310 | ||||||
Loss on early extinguishment of debt |
| 1,584 | ||||||
Write-off of debt issuance costs |
| 338 | ||||||
Changes in operating assets and liabilities: |
||||||||
Increase in receivables |
(604 | ) | (907 | ) | ||||
Increase in inventories |
(876 | ) | (128 | ) | ||||
Increase in other assets |
(8,457 | ) | (2,338 | ) | ||||
Increase (decrease) in trade payables |
846 | (2,005 | ) | |||||
Increase in other liabilities |
8,180 | 20,481 | ||||||
Net cash flows provided by operating activities |
86,131 | 93,725 | ||||||
Cash flows provided by (used in) investing activities: |
||||||||
Purchases of property and equipment, net of decrease in construction payables of $5,391 and $11,519, respectively |
(22,533 | ) | (25,822 | ) | ||||
Proceeds from Commonwealth of Pennsylvanias facility improvement grant |
| 1,000 | ||||||
Issuance of third-party loans and advances |
(317 | ) | (655 | ) | ||||
Payments received on third-party loans |
123 | 104 | ||||||
Increase in restricted cash, net |
(828 | ) | (856 | ) | ||||
Proceeds from asset sales |
99 | 3 | ||||||
Net cash flows used in investing activities |
(23,456 | ) | (26,226 | ) | ||||
Cash flows provided by (used in) financing activities: |
||||||||
Bank Credit Facility borrowingsrevolving loan |
178,000 | 184,000 | ||||||
Bank Credit Facility repaymentsrevolving loan |
(212,000 | ) | (218,000 | ) | ||||
Bank Credit Facility repaymentsterm loan |
| (147,000 | ) | |||||
Salishan Credit Facility borrowingsrevolving loan |
250 | 1,000 | ||||||
Line of Credit borrowings |
277,694 | 226,011 | ||||||
Line of Credit repayments |
(275,899 | ) | (235,515 | ) | ||||
Borrowings from the Mohegan Tribe |
200 | | ||||||
Proceeds from issuance of Second Lien Senior Secured Notes, net of discount |
| 192,468 | ||||||
Payments on long-term debt |
(1,000 | ) | (1,000 | ) | ||||
Principal portion of relinquishment liability payments |
(21,138 | ) | (19,548 | ) | ||||
Distributions to Tribe |
(9,088 | ) | (38,450 | ) | ||||
Capitalized debt issuance costs |
(8 | ) | (8,178 | ) | ||||
Payments on capital lease obligations |
(344 | ) | (499 | ) | ||||
Non-controlling interest contributions |
1,479 | 510 | ||||||
Net cash flows used in financing activities |
(61,854 | ) | (64,201 | ) | ||||
Net increase in cash and cash equivalents |
821 | 3,298 | ||||||
Cash and cash equivalents at beginning of period |
63,897 | 64,664 | ||||||
Cash and cash equivalents at end of period |
$ | 64,718 | $ | 67,962 | ||||
Supplemental disclosure: |
||||||||
Cash paid during the period for interest |
$ | 54,886 | $ | 43,743 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
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MOHEGAN TRIBAL GAMING AUTHORITY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 1ORGANIZATION:
The Mohegan Tribe of Indians of Connecticut (the Mohegan Tribe or the Tribe) established the Mohegan Tribal Gaming Authority (the Authority) in July 1995 with the exclusive authority to conduct and regulate gaming activities for the Tribe on Tribal lands and the non-exclusive authority to conduct such activities elsewhere. The Tribe is a federally-recognized Indian tribe with an approximately 507-acre reservation situated in Southeastern Connecticut, adjacent to Uncasville, Connecticut. Under the Indian Gaming Regulatory Act of 1988 (IGRA), federally-recognized Indian tribes are permitted to conduct full-scale casino gaming operations on tribal land, subject to, among other things, the negotiation of a compact with the affected state. The Tribe and the State of Connecticut entered into a compact (the Mohegan Compact), which was approved by the United States Secretary of the Interior. The Authority is primarily engaged in the ownership, operation and development of gaming facilities. In October 1996, the Authority opened Mohegan Sun, a gaming and entertainment complex situated on a 185-acre site on the Tribes reservation. The Authority is governed by a nine-member Management Board, whose members also comprise the Mohegan Tribal Council, the governing body of the Tribe. Any change in the composition of the Mohegan Tribal Council results in a corresponding change in the Authoritys Management Board.
As of March 31, 2011, the following subsidiaries were wholly-owned by the Authority: Mohegan Basketball Club, LLC (MBC), Mohegan Golf, LLC (Mohegan Golf), Mohegan Commercial Ventures-PA, LLC (MCV-PA), Mohegan Ventures-Northwest, LLC (Mohegan Ventures-NW), Mohegan Ventures Wisconsin, LLC (MVW) and MTGA Gaming, LLC (MTGA Gaming). MBC owns and operates the Connecticut Sun, a professional basketball team in the Womens National Basketball Association (the WNBA). MBC currently owns a 3.8% membership interest in WNBA, LLC. Mohegan Golf owns and operates the Mohegan Sun Country Club at Pautipaug golf course in Southeastern Connecticut (Mohegan Sun Country Club).
MCV-PA holds a 0.01% general partnership interest in Downs Racing, L.P., Backside, L.P., Mill Creek Land, L.P. and Northeast Concessions, L.P., while the Authority holds the remaining 99.99% limited partnership interest in each entity. Downs Racing, L.P. (Downs Racing) owns and operates Mohegan Sun at Pocono Downs, a gaming and entertainment facility situated on a 400-acre site in Plains Township, Pennsylvania, and several off-track wagering facilities located elsewhere in Pennsylvania (collectively, the Pennsylvania Entities). The Authority views Mohegan Sun and the Pennsylvania Entities as two separate operating segments.
Mohegan Ventures-NW and the Tribe hold 49.15% and 7.85% membership interests in Salishan-Mohegan, LLC (Salishan-Mohegan), respectively, which was formed with an unrelated third-party to participate in the development and management of a proposed casino to be owned by the federally-recognized Cowlitz Indian Tribe of Washington (the Cowlitz Tribe) and to be located in Clark County, Washington (the Cowlitz Project).
MVW holds a 100% membership interest in Wisconsin Tribal Gaming, LLC (WTG), which was formed to participate in the development of a proposed casino to be owned by the federally-recognized Menominee Indian Tribe of Wisconsin (the Menominee Tribe) and to be located in Kenosha, Wisconsin (the Menominee Project).
MTGA Gaming and the Tribe hold 49% and 51% membership interests in Mohegan Gaming & Hospitality, LLC (MG&H), respectively. MG&H holds a 100% membership interest in Mohegan Resorts, LLC (Mohegan Resorts). Certain of the Authoritys and the Tribes diversification efforts are conducted, either directly or indirectly, through MG&H and Mohegan Resorts. Mohegan Resorts holds a 100% membership interest in Mohegan Resorts Mass, LLC, which was formed to pursue potential gaming opportunities in the Commonwealth of Massachusetts.
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In April 2011, the Authority formed Mohegan Resorts New York, LLC and Mohegan Gaming New York, LLC (the Mohegan New York Entities). Mohegan Resorts holds a 100% membership interest in the Mohegan New York Entities, which were formed to pursue potential gaming opportunities in the state of New York. The Mohegan New York Entities have agreed in principle to enter into a joint venture arrangement with unrelated third-party investors and developers to manage a proposed gaming facility to be located in Thompson, New York.
NOTE 2LIQUIDITY AND FINANCIAL POSITION
The Authority has significant outstanding indebtedness and financial commitments. As of March 31, 2011, the Authoritys debt totaled $1.6 billion, of which $529.6 million was classified as current, including $493.0 million outstanding under the Authoritys Bank Credit Facility which matures on March 9, 2012. In addition, the Authoritys $250.0 million 2002 8% Senior Subordinated Notes mature on April 1, 2012, and a substantial amount of the Authoritys other outstanding indebtedness matures over the following three fiscal years. Please refer to Note 4 Long-term Debt for further details regarding the Authoritys debt maturities. The Authority estimates, but can provide no assurance, that cash flows from operations, combined with existing cash balances and available borrowings under the Bank Credit Facility, including any extensions or replacements thereof, will be sufficient to fund its cash requirements for scheduled interest payments on its outstanding indebtedness, relinquishment payments, planned capital expenditures, distributions to the Tribe and projected working capital needs over the next twelve months. However, the Authority does not anticipate that these funding sources will be sufficient to repay amounts outstanding under the Bank Credit Facility or the $250.0 million 2002 8% Senior Subordinated Notes at maturity. Accordingly, the Authority intends to refinance such outstanding indebtedness or otherwise access the debt capital markets to replace such outstanding indebtedness prior to their maturity in order to maintain sufficient resources for its operations. In this regard, the Authority has engaged Blackstone Advisory Partners, L.P. and Credit Suisse Securities (USA) LLC to assist in its strategic planning relating to its debt maturities and evaluation and implementation of refinancing alternatives. The Authority can provide no assurance that it will be able to refinance or replace its Bank Credit Facility or that financing options available to it, if any, will be on favorable or acceptable terms. If the Authority is unable to refinance or replace the Bank Credit Facility, it would be in default thereof, which may result in cross-defaults under its other outstanding indebtedness. If such defaults or cross-defaults were to occur, it would allow the Authoritys lenders and creditors to exercise their rights and remedies as defined under their respective agreements, including their right to accelerate the repayment of outstanding indebtedness. As discussed herein, the Authority does not have sufficient funds to repay its outstanding indebtedness and its ability to otherwise refinance or replace its outstanding indebtedness is limited. If such acceleration were to occur, the Authority can provide no assurance that it would be able to obtain the financing necessary for such repayment, which would have a material adverse effect on the Authoritys financial position, results of operations and cash flows.
The Authority continues to monitor revenues, expenditures and borrowings under its Bank Credit Facility to ensure continued compliance with its financial covenant requirements. While the Authority anticipates that it will remain in compliance with all covenant requirements under the Bank Credit Facility, it may need to increase revenues or offset any future declines in revenues by implementing further cost containment and other initiatives in order to maintain compliance with its financial covenant requirements. If the Authority is unable to satisfy its financial covenant requirements, it would need to obtain waivers or amendments under the Bank Credit Facility; however, the Authority can provide no assurance that it would be able to obtain such waivers or amendments. If the Authority is unable to obtain such waivers or amendments, it would be in default under the Bank Credit Facility, which may result in cross-defaults under its other outstanding indebtedness as discussed above.
As of March 31, 2011, the Authoritys fixed charge coverage ratio, as defined under its senior and senior subordinated note indentures, was below 2.0 to 1.0. While the Authoritys fixed charge coverage ratio remains below 2.0 to 1.0, it is unable to refinance its outstanding subordinated indebtedness with senior indebtedness without waivers or consents from certain of its creditors, thus limiting the options available to the Authority to
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refinance or replace its outstanding indebtedness. The Authority can provide no assurance that it will be able to obtain such waivers or consents or that it will be able to refinance or replace its outstanding indebtedness or that financing options available to it, if any, will be on favorable or acceptable terms.
NOTE 3BASIS 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 managements opinion, all adjustments, including normal recurring accruals and adjustments, necessary for a fair statement of the Authoritys operating results for the interim period, have been included. The Authoritys operating results for the three months and six months ended March 31, 2011 are not necessarily indicative of results for the fiscal year ending September 30, 2011.
The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Authoritys Annual Report on Form 10-K for the fiscal year ended September 30, 2010. In addition, certain amounts in the accompanying 2010 condensed consolidated financial statements have been reclassified to conform to 2011 presentation.
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, and the accounts of MG&H, Mohegan Resorts and its subsidiaries are consolidated into the accounts of MTGA Gaming, as Mohegan Ventures-NW and MTGA Gaming are deemed to be the primary beneficiaries. In consolidation, all intercompany balances and transactions were eliminated.
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 1Quoted prices for identical assets or liabilities in active markets; |
| Level 2Quoted 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 3Valuations based on models where the significant inputs are unobservable. The unobservable inputs reflect the Authoritys estimates or assumptions that market participants would utilize in pricing such assets or liabilities. |
The Authoritys 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.
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The carrying amount of cash and cash equivalents, receivables, trade payables and promissory notes approximates fair value. The estimated fair value of the Authoritys financing facilities and notes were as follows (in thousands):
March 31, 2011 | ||||||||
Carrying Value | Fair Value | |||||||
Bank Credit Facility |
$ | 493,000 | $ | 475,745 | ||||
2009 11 1/2% Second Lien Senior Secured Notes |
$ | 193,335 | $ | 202,626 | ||||
2005 6 1/8% Senior Unsecured Notes |
$ | 250,000 | $ | 226,408 | ||||
2001 8 3/8% Senior Subordinated Notes |
$ | 2,010 | $ | 1,823 | ||||
2002 8% Senior Subordinated Notes |
$ | 250,000 | $ | 226,720 | ||||
2004 7 1/8% Senior Subordinated Notes |
$ | 225,000 | $ | 171,704 | ||||
2005 6 7/8% Senior Subordinated Notes |
$ | 150,000 | $ | 110,345 |
The estimated fair values of the Authoritys financing facilities and notes were based on quoted market prices or prices of similar instruments on or about March 31, 2011.
Severance
In September 2010, the Authority implemented cost containment initiatives in an effort to better align operating costs with market and business conditions, including a workforce reduction in Uncasville, Connecticut. The costs associated with related post-employment severance benefits were expensed at the time the termination was communicated to the employees. Severance for the three months and six months ended March 31, 2011 resulted from adjustments to the initial estimates utilized under the workforce reduction plan. Cash payments commenced in September 2010 and are anticipated to be completed in March 2012. 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 by business segment (in thousands):
Mohegan Sun | Corporate | Total | ||||||||||
Balance, December 31, 2010 |
$ | 5,024 | $ | 27 | $ | 5,051 | ||||||
Adjustments |
(267 | ) | 1 | (266 | ) | |||||||
Cash payments |
(3,139 | ) | (19 | ) | (3,158 | ) | ||||||
Balance, March 31, 2011 |
$ | 1,618 | $ | 9 | $ | 1,627 | ||||||
Balance, September 30, 2010 |
$ | 9,801 | $ | 35 | $ | 9,836 | ||||||
Adjustments |
253 | 2 | 255 | |||||||||
Cash payments |
(8,436 | ) | (28 | ) | (8,464 | ) | ||||||
Balance, March 31, 2011 |
$ | 1,618 | $ | 9 | $ | 1,627 | ||||||
Long-Term Receivables
Long-term receivables consist primarily of receivables from affiliates and tenants.
Receivables from affiliates, which are included in other assets, net, in the accompanying condensed consolidated balance sheets, consist primarily of reimbursable costs and expenses advanced by Salishan-Mohegan on behalf of the Cowlitz Tribe for the Cowlitz Project and WTG on behalf of the Menominee Tribe for the Menominee Project. The Salishan-Mohegan receivables are payable upon: (1) the receipt of necessary financing for the development of the proposed casino, and (2) the related property being taken into trust by the United States Department of the Interior. Due to the uncertainty in the development of the Cowlitz Project, the Authority maintains a reserve for doubtful collection of the Salishan-Mohegan receivables, which is based on the Authoritys estimate of the probability that the receivables will be collected. The Authority assesses the reserve for doubtful collection of the Salishan-Mohegan receivables on a quarterly basis. Future developments in the
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receipt of financing, the relevant land being taken into trust or other matters affecting the Cowlitz Project could affect the collectability of the Salishan-Mohegan receivables. In fiscal 2008, the WTG receivables were fully reserved, and, in fiscal 2010, WTG ceased advancing development expenses on behalf of the Menominee Tribe for the Menominee Project. A portion of the WTG receivables is payable upon the receipt of necessary financing for the development of the proposed casino, subject to certain conditions.
Receivables from tenants, which are primarily included in other assets, net, in the accompanying condensed consolidated balance sheets, consist primarily of funds loaned to various tenants at Mohegan Sun and Mohegan Sun at Pocono Downs. Loan terms range between three and ten years. The Authority maintains a reserve for doubtful collection of receivables from tenants, which is based on the Authoritys estimate of the amount expected to be uncollectible considering historical experience, creditworthiness of the related tenant and all other available information.
The following table presents a reconciliation of long-term receivables and the related reserves for doubtful collection of these long-term receivables (in thousands):
Long-Term Receivables | ||||||||||||
Affiliates (1) | Tenants | Total | ||||||||||
Balance, December 31, 2010 |
$ | 44,106 | $ | 1,474 | $ | 45,580 | ||||||
Additions: |
||||||||||||
Issuance of affiliate advances and tenant loans |
797 | | 797 | |||||||||
Deductions: |
||||||||||||
Payments received |
| (62 | ) | (62 | ) | |||||||
Balance, March 31, 2011 |
$ | 44,903 | $ | 1,412 | $ | 46,315 | ||||||
Balance, September 30, 2010 |
$ | 43,205 | $ | 2,468 | $ | 45,673 | ||||||
Additions: |
||||||||||||
Issuance of affiliate advances and tenant loans |
1,698 | | 1,698 | |||||||||
Deductions: |
||||||||||||
Payments received |
| (123 | ) | (123 | ) | |||||||
Other |
| (933 | ) | (933 | ) | |||||||
Balance, March 31, 2011 |
$ | 44,903 | $ | 1,412 | $ | 46,315 | ||||||
(1) | Includes interest receivable of $17.2 million, $16.5 million and $15.8 million as of March 31, 2011, December 31, 2010 and September 30, 2010, 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 | Total | ||||||||||
Balance, December 31, 2010 |
$ | 19,481 | $ | 95 | $ | 19,576 | ||||||
Additions: |
||||||||||||
Charges to bad debt expense |
235 | | 235 | |||||||||
Deductions: |
||||||||||||
Adjustments |
| (10 | ) | (10 | ) | |||||||
Balance, March 31, 2011 |
$ | 19,716 | $ | 85 | $ | 19,801 | ||||||
Balance, September 30, 2010 |
$ | 19,215 | $ | 149 | $ | 19,364 | ||||||
Additions: |
||||||||||||
Charges to bad debt expense |
501 | | 501 | |||||||||
Deductions: |
||||||||||||
Adjustments |
| (64 | ) | (64 | ) | |||||||
Balance, March 31, 2011 |
$ | 19,716 | $ | 85 | $ | 19,801 | ||||||
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New Accounting Standards
In July 2010, the FASB issued guidance pertaining to disclosures about the credit quality of financing receivables and allowance for credit losses. The new guidance is effective for interim and annual periods ending on or after December 15, 2010. The Authority adopted this guidance in its first quarter of fiscal 2011, and its adoption did not impact the Authoritys financial position, results of operations or cash flows.
In June 2009, the FASB issued guidance pertaining to the elimination of the concept of a qualifying special purpose entity. The new guidance also replaces the quantitative-based risks and rewards calculation for determining which enterprise has a controlling financial interest in a variable interest entity with an approach focused on identifying the enterprise that has the power to direct the activities of the variable interest entity and the obligation to absorb losses or the right to receive benefits of the variable interest entity. Additionally, the new guidance provides more timely and useful information about an enterprises involvement with a variable interest entity. The new guidance is effective for annual periods beginning on or after November 15, 2009. The Authority adopted this guidance in its first quarter of fiscal 2011, and its adoption did not impact the Authoritys financial position, results of operations or cash flows.
In April 2010, the FASB issued guidance pertaining to accruals for casino jackpot liabilities. The new guidance clarifies that an entity should not accrue jackpot liabilities (or portions thereof) before a jackpot is won if the entity can avoid paying such jackpot. The new guidance specifies that jackpots should be accrued and charged to revenue when the entity has the obligation to pay such jackpot and applies to both base and progressive jackpots and requires a cumulative-effect adjustment to opening retained earnings in the period of adoption. The new guidance is effective for annual periods, and interim periods within those annual periods, beginning on or after December 15, 2010. The Authority does not expect this adoption to materially impact its financial position, results of operations or cash flows.
In January 2010, the FASB issued amended guidance pertaining to fair value measurements and disclosures. The amended guidance requires additional disclosures about significant unobservable inputs and transfers within Level 1 and 2 measurements. This guidance is effective for interim and annual periods beginning on or after December 15, 2009. The Authority adopted this guidance in its first quarter of fiscal 2010, and its adoption did not impact the Authoritys financial position, results of operations or cash flows. The amended guidance also requires enhanced disclosure of activities within Level 3 fair value measurements. Those disclosures are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2010. The Authority does not expect this adoption to impact its financial position, results of operations or cash flows.
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NOTE 4LONG-TERM DEBT:
Long-term debt consisted of the following (in thousands):
March 31, 2011 |
September 30, 2010 |
|||||||
Bank Credit Facility, due March 2012 |
$ | 493,000 | $ | 527,000 | ||||
2009 11 1/2% Second Lien Senior Secured Notes, due November 2017, net of discount of $6,665 and $6,986, respectively |
193,335 | 193,014 | ||||||
2005 6 1/8% Senior Unsecured Notes, due February 2013 |
250,000 | 250,000 | ||||||
2001 8 3/8% Senior Subordinated Notes, due July 2011 |
2,010 | 2,010 | ||||||
2002 8% Senior Subordinated Notes, due April 2012 |
250,000 | 250,000 | ||||||
2004 7 1/8% Senior Subordinated Notes, due August 2014 |
225,000 | 225,000 | ||||||
2005 6 7/8% Senior Subordinated Notes, due February 2015 |
150,000 | 150,000 | ||||||
Line of Credit, due June 2011 |
9,181 | 7,387 | ||||||
Salishan Credit Facility, due July 2011 |
15,250 | 15,000 | ||||||
Mohegan Tribe Promissory Note, due July 2011 |
10,000 | 10,000 | ||||||
Mohegan Tribe Credit Facility, due July 2011 |
200 | | ||||||
WNBA Promissory Note |
| 1,000 | ||||||
Subtotal |
1,597,976 | 1,630,411 | ||||||
Plus: net deferred gain on derivative instruments sold |
874 | 1,108 | ||||||
Long-term debt, excluding capital leases |
1,598,850 | 1,631,519 | ||||||
Less: current portion of long-term debt |
(529,641 | ) | (35,397 | ) | ||||
Long-term debt, net of current portion |
$ | 1,069,209 | $ | 1,596,122 | ||||
Bank Credit Facility
In October 2009, the Authority entered into an amendment to the terms of its Bank Credit Facility. The Bank Credit Facility provides for a revolving loan and letter of credit borrowing capacity of up to $675.0 million from a syndicate of financial institutions and commercial banks, with Bank of America, N.A., serving as Administrative Agent. The Bank Credit Facility has no mandatory amortization provision and is payable in full on the maturity date, March 9, 2012. As of March 31, 2011, $493.0 million was drawn on the Bank Credit Facility. As of March 31, 2011, letters of credit issued under the Bank Credit Facility totaled $3.2 million, of which no amount was drawn. Inclusive of letters of credit, which reduce borrowing availability under the Bank Credit Facility, and after taking into account restrictive financial covenant requirements under the Bank Credit Facility and the Authoritys Line of Credit and note indentures, the Authority had approximately $47.0 million of borrowing capacity under the Bank Credit Facility as of March 31, 2011.
Under the Bank Credit Facility, at the Authoritys option, each advance of loan proceeds accrues interest on the basis of a Base Rate or on the basis of a one-month, two-month, three-month, six-month or twelve-month Eurodollar Rate, plus in either case, an Applicable Rate based on the Authoritys total leverage ratio, as each term is defined under the Bank Credit Facility. The Authority also pays commitment fees for the unused portion of borrowing capacity under the Bank Credit Facility on a quarterly basis equal to the product obtained by multiplying the Applicable Rate for commitment fees by the average daily unused borrowing capacity for that calendar quarter. The Applicable Rate for Base Rate loans is between 1.25% and 2.75%. The Applicable Rate for Eurodollar Rate loans is between 2.50% and 4.00%. The Applicable Rate for commitment fees is between 0.20% and 0.50%. The Base Rate is the higher of Bank of Americas announced Prime Rate, the Eurodollar Rate for one-month contracts plus 1.25% or the Federal Funds Rate plus 0.50%. Interest on Base Rate loans is payable quarterly in arrears. Interest on Eurodollar Rate loans is payable at the end of each applicable interest period or quarterly in arrears, if earlier. As of March 31, 2011, the Authority had $5.0 million in Base Rate loans and $488.0 million in Eurodollar Rate loans outstanding. The Base Rate loans outstanding at March 31, 2011 were
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based on Bank of Americas Prime Rate of 3.25% plus an Applicable Rate of 2.75%. The Eurodollar Rate loans outstanding at March 31, 2011 were based on a one-month Eurodollar Rate of 0.25% plus an Applicable Rate of 4.0%. The Applicable Rate for commitment fees was 0.50% as of March 31, 2011. As of March 31, 2011 and September 30, 2010, accrued interest, including commitment fees, on the Bank Credit Facility was $977,000 and $780,000, respectively.
The Bank Credit Facility is collateralized by a first priority lien on substantially all of the Authoritys assets, including the assets that comprise Mohegan Sun at Pocono Downs and a leasehold mortgage on the land and improvements that comprise Mohegan Sun. The Authority also is required to pledge additional assets as collateral for the Bank Credit Facility as it or its existing and future guarantor subsidiaries acquire them. The Authoritys obligations under the Bank Credit Facility are fully and unconditionally guaranteed, jointly and severally, by MBC, Mohegan Ventures-NW, MCV-PA, the Pennsylvania Entities, Mohegan Golf, MVW, WTG and MTGA Gaming. The Bank Credit Facility includes non-financial covenant requirements of the types customarily found in loan agreements for similar transactions. The Bank Credit Facility also subjects the Authority to a number of restrictive financial covenant requirements. These financial covenant requirements relate to, among other things, a minimum fixed charge coverage ratio, maximum total leverage and senior leverage ratios and maximum capital expenditures.
The Authority continues to monitor revenues, expenditures and borrowings under its Bank Credit Facility to ensure continued compliance with its financial covenant requirements. While the Authority anticipates that it will remain in compliance with all covenant requirements under the Bank Credit Facility, it may need to increase revenues or offset any future declines in revenues by implementing further cost containment and other initiatives in order to maintain compliance with its financial covenant requirements. If the Authority is unable to satisfy its financial covenant requirements, it would need to obtain waivers or amendments under the Bank Credit Facility; however, the Authority can provide no assurance that it would be able to obtain such waivers or amendments. If the Authority is unable to obtain such waivers or amendments, it would be in default under the Bank Credit Facility, which may result in cross-defaults under its other outstanding indebtedness. If such defaults or cross-defaults were to occur, it would allow the Authoritys lenders and creditors to exercise their rights and remedies as defined under their respective agreements, including their right to accelerate the repayment of outstanding indebtedness. The Authority does not have sufficient funds to repay its outstanding indebtedness and its ability to otherwise refinance or replace its outstanding indebtedness is limited. As a result, if such acceleration were to occur, the Authority can provide no assurance that it would be able to obtain the financing necessary for such repayment.
As of March 31, 2011, the Authority and the Tribe were in compliance with all respective covenant requirements under the Bank Credit Facility.
Senior Notes
2009 11 1/2% Second Lien Senior Secured Notes
In October 2009, the Authority issued $200.0 million Second Lien Senior Secured Notes with fixed interest payable at a rate of 11.50% per annum (the 2009 Second Lien Senior Secured Notes). The 2009 Second Lien Senior Secured Notes were issued at a price of 96.234% of par, to yield an effective interest rate of 12.25% per annum. The net proceeds from this financing were used to repay a then-existing term loan and revolving loans under the Bank Credit Facility, as well as to pay related transaction costs and expenses associated with the issuance. The 2009 Second Lien Senior Secured Notes mature on November 1, 2017. The first call date for the 2009 Second Lien Senior Secured Notes is November 1, 2013. Interest on the 2009 Second Lien Senior Secured Notes is payable semi-annually on May 1st and November 1st. The 2009 Second Lien Senior Secured Notes are collateralized by a second priority lien on substantially all of the Authoritys and its existing and future guarantor subsidiaries properties and assets, and are effectively subordinated to all of the Authoritys and its existing and future guarantor subsidiaries first priority lien secured indebtedness, including borrowings under the Bank
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Credit Facility, to the extent of the value of the collateral securing such indebtedness. The 2009 Second Lien Senior Secured Notes rank equally in right of payment with all of the Authoritys and its existing and future guarantor subsidiaries senior indebtedness and Senior Relinquishment Payment obligations under the Relinquishment Agreement that are then due and owing, but, to the extent of the value of the collateral securing such indebtedness, rank effectively senior to all of the Authoritys and its existing and future guarantor subsidiaries unsecured senior indebtedness, including the 2005 6 1/8% Senior Unsecured Notes and Senior and Junior Relinquishment Payment obligations under the Relinquishment Agreement that are then due and owing. The 2009 Second Lien Senior Secured Notes rank senior to all of the Authoritys and its existing and future guarantor subsidiaries subordinated indebtedness, including the 2001 8 3/8% Senior Subordinated Notes, 2002 8% Senior Subordinated Notes, 2004 7 1/8% Senior Subordinated Notes and 2005 6 7/8% Senior Subordinated Notes. As of March 31, 2011 and September 30, 2010, accrued interest on the 2009 Second Lien Senior Secured Notes was $9.6 million.
The 2009 Second Lien Senior Secured Notes are fully and unconditionally guaranteed, jointly and severally, on a second priority lien senior secured basis, by MBC, Mohegan Ventures-NW, MCV-PA, the Pennsylvania Entities, Mohegan Golf, MVW, WTG and MTGA Gaming. Refer to Note 9 for condensed consolidating financial information of the Authority and its guarantor subsidiaries and non-guarantor entities.
The 2009 Second Lien Senior Secured Notes and guarantees have not been and will not be registered under the Securities Act of 1933 or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements.
2005 6 1/8% Senior Unsecured Notes
In February 2005, the Authority issued $250.0 million Senior Unsecured Notes with fixed interest payable at a rate of 6.125% per annum (the 2005 Senior Unsecured Notes). The 2005 Senior Unsecured Notes mature on February 15, 2013. The first call date for the 2005 Senior Unsecured Notes was February 15, 2009. Interest on the 2005 Senior Unsecured Notes is payable semi-annually on February 15th and August 15th. The 2005 Senior Unsecured Notes are uncollateralized general obligations of the Authority, and are effectively subordinated to all of the Authoritys and its existing and future guarantor subsidiaries senior secured indebtedness, including borrowings under the Bank Credit Facility and 2009 Second Lien Senior Secured Notes, to the extent of the value of the collateral securing such debt. The 2005 Senior Unsecured Notes rank equally in right of payment with the 2009 Second Lien Senior Secured Notes and Senior Relinquishment Payment obligations under the Relinquishment Agreement that are then due and owing. The 2005 Senior Unsecured Notes rank senior to Junior Relinquishment Payment obligations under the Relinquishment Agreement that are then due and owing and all of the Authoritys and its existing and future guarantor subsidiaries subordinated indebtedness, including the 2001 8 3/8% Senior Subordinated Notes, 2002 8% Senior Subordinated Notes, 2004 7 1/8% Senior Subordinated Notes and 2005 6 7/8% Senior Subordinated Notes. As of March 31, 2011 and September 30, 2010, accrued interest on the 2005 Senior Unsecured Notes was $1.9 million.
The 2005 Senior Unsecured Notes are fully and unconditionally guaranteed, jointly and severally, by MBC, Mohegan Ventures-NW, MCV-PA, the Pennsylvania Entities, Mohegan Golf, MVW, WTG and MTGA Gaming. Refer to Note 9 for condensed consolidating financial information of the Authority and its guarantor subsidiaries and non-guarantor entities.
Senior Subordinated Notes
2001 8 3/8% Senior Subordinated Notes
In July 2001, the Authority issued $150.0 million Senior Subordinated Notes with fixed interest payable at a rate of 8.375% per annum (the 2001 Senior Subordinated Notes). The 2001 Senior Subordinated Notes mature on July 1, 2011. The first call date for the 2001 Senior Subordinated Notes was July 1, 2006. Interest on the 2001 Senior Subordinated Notes is payable semi-annually on January 1st and July 1st.
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In August 2004, the Authority completed a cash tender offer and consent solicitation and repurchase of $133.7 million aggregate principal amount of the 2001 Senior Subordinated Notes. In connection with this tender offer, the Authority solicited and received requisite consents, which substantially eliminated all of the covenant requirements thereunder.
In March 2009, the Authority repurchased an additional $14.3 million aggregate principal amount of the 2001 Senior Subordinated Notes. An aggregate principal amount of approximately $2.0 million of the 2001 Senior Subordinated Notes remains outstanding as of March 31, 2011. As of March 31, 2011 and September 30, 2010, accrued interest on the 2001 Senior Subordinated Notes was $42,000.
The Authority or its affiliates may, from time to time, seek to purchase or otherwise retire the outstanding 2001 Senior Subordinated Notes or other indebtedness for cash in open market purchases, privately negotiated transactions or otherwise, to reduce the amount of the Authoritys outstanding indebtedness. Any such transaction will depend on prevailing market conditions and the Authoritys liquidity and covenant requirement restrictions, among other factors.
2002 8% Senior Subordinated Notes
In February 2002, the Authority issued $250.0 million Senior Subordinated Notes with fixed interest payable at a rate of 8.000% per annum (the 2002 Senior Subordinated Notes). The 2002 Senior Subordinated Notes mature on April 1, 2012. The first call date for the 2002 Senior Subordinated Notes was April 1, 2007. Interest on the 2002 Senior Subordinated Notes is payable semi-annually on April 1st and October 1st. As of March 31, 2011 and September 30, 2010, accrued interest on the 2002 Senior Subordinated Notes was $10.0 million.
2004 7 1/8% Senior Subordinated Notes
In August 2004, the Authority issued $225.0 million Senior Subordinated Notes with fixed interest payable at a rate of 7.125% per annum (the 2004 Senior Subordinated Notes). The 2004 Senior Subordinated Notes mature on August 15, 2014. The first call date for the 2004 Senior Subordinated Notes was August 15, 2009. Interest on the 2004 Senior Subordinated Notes is payable semi-annually on February 15th and August 15th. As of March 31, 2011 and September 30, 2010, accrued interest on the 2004 Senior Subordinated Notes was $2.0 million.
2005 6 7/8% Senior Subordinated Notes
In February 2005, the Authority issued $150.0 million Senior Subordinated Notes with fixed interest payable at a rate of 6.875% per annum (the 2005 Senior Subordinated Notes). The 2005 Senior Subordinated Notes mature on February 15, 2015. The first call date for the 2005 Senior Subordinated Notes was February 15, 2010. Interest on the 2005 Senior Subordinated Notes is payable semi-annually on February 15th and August 15th. As of March 31, 2011 and September 30, 2010, accrued interest on the 2005 Senior Subordinated Notes was $1.3 million.
The Authoritys senior subordinated notes are uncollateralized general obligations of the Authority, and are subordinated to borrowings under the Bank Credit Facility, 2009 Second Lien Senior Secured Notes, 2005 Senior Unsecured Notes and Senior Relinquishment Payment obligations under the Relinquishment Agreement that are then due and owing. The senior subordinated notes rank equally in right of payment with each other and Junior Relinquishment Payment obligations under the Relinquishment Agreement that are then due and owing. The senior subordinated notes are fully and unconditionally guaranteed, jointly and severally, by MBC, Mohegan Ventures-NW, MCV-PA, the Pennsylvania Entities, Mohegan Golf, MVW, WTG and MTGA Gaming, except for the 2001 Senior Subordinated Notes, which are fully and unconditionally guaranteed solely by MBC. Refer to Note 9 for condensed consolidating financial information of the Authority and its guarantor subsidiaries and non-guarantor entities.
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The senior and senior subordinated note indentures contain certain non-financial and financial covenant requirements with which the Authority and the Tribe must comply. The non-financial covenant requirements include, among other things, reporting obligations, compliance with laws and regulations, maintenance of licenses and insurances and continued existence of the Authority. The financial covenant requirements include, among other things, limitations on the Authoritys ability to make restricted payments, as defined under the note indentures, and incur additional indebtedness. Under these financial covenant requirements, the Authority is generally able to make restricted payments, including distributions to the Tribe, and incur additional indebtedness that otherwise may be restricted, provided the Authoritys fixed charge coverage ratio is at least 2.0 to 1.0. At any time the Authoritys fixed charge coverage ratio falls below 2.0 to 1.0, its ability to make restricted payments and incur additional indebtedness is limited and subject to other applicable exceptions under the note indentures. As of March 31, 2011, the Authoritys fixed charge coverage ratio was below 2.0 to 1.0. Accordingly, the Authoritys ability to make restricted payments, including distributions to the Tribe, is limited. Additionally, while the Authority may continue to borrow under the Bank Credit Facility pursuant to exceptions contained in the note indentures, its ability to incur other additional indebtedness to raise capital also is limited. Further, while the Authoritys fixed charge coverage ratio remains below 2.0 to 1.0, the Authority is unable to refinance or replace its outstanding subordinated indebtedness with senior indebtedness without waivers or consents from certain of its creditors, thus limiting the options available to the Authority to refinance or replace its outstanding indebtedness. The Authority can provide no assurance that it will be able to obtain such waivers or consents or that it will be able to refinance or replace its outstanding indebtedness or that financing options available to it, if any, will be on favorable or acceptable terms.
As of March 31, 2011, the Authority and the Tribe were in compliance with all respective covenant requirements under the senior and senior subordinated note indentures.
Line of Credit
As of March 31, 2011, the Authority had an $18.0 million revolving loan agreement with Bank of America, N.A. (the Line of Credit). The Line of Credit matures on June 10, 2011. Under the Line of Credit, at the Authoritys option, each advance accrues interest on the basis of a one-month Eurodollar Rate or Prime Rate, plus in either case, an Applicable Rate based on the Authoritys total leverage ratio, as each term is defined under the Line of Credit. Borrowings under the Line of Credit are uncollateralized obligations. As of March 31, 2011, the Authority had $9.2 million in Eurodollar Rate loans outstanding, which were based on a one-month Eurodollar Rate of 0.26% plus an Applicable Rate of 3.5%. The Line of Credit subjects the Authority to certain covenants, including a covenant to maintain at least the Line of Credit commitment amount available for borrowing under the Bank Credit Facility. As of March 31, 2011, the Authority was in compliance with all covenant requirements under the Line of Credit and had $8.8 million of borrowing capacity thereunder. The Authority has commenced discussions with Bank of America, N.A. to extend the maturity date of the Line of Credit; however, it can provide no assurance of the terms of such extension or whether such extension will be granted.
Salishan-Mohegan Bank Credit Facility
As of March 31, 2011, Salishan-Mohegan had a fully drawn $15.25 million revolving loan agreement with Bank of America, N.A. (the Salishan Credit Facility). In April 2011, Salishan-Mohegan entered into an amendment to the terms of the Salishan Credit Facility to extend the maturity date to July 18, 2011. Under the Salishan Credit Facility, at the option of Salishan-Mohegan, each advance of loan proceeds accrues interest on the basis of a Base Rate or on the basis of a one-month, two-month, three-month or six-month Eurodollar Rate, plus in either case, an Applicable Rate, as defined under the Salishan Credit Facility. The Applicable Rate is 2.50% for Base Rate loans and 3.50% for Eurodollar Rate loans. The Base Rate is the higher of Bank of Americas announced Prime Rate or the Federal Funds Rate plus 0.50%. The Salishan Credit Facility has no mandatory amortization provision and is payable in full at maturity. The Salishan Credit Facility is collateralized by a lien on substantially all of the existing and future assets of Salishan-Mohegan. The obligations of Salishan-Mohegan under the Salishan Credit Facility also are guaranteed by the Tribe. The Salishan Credit Facility
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subjects Salishan-Mohegan to certain non-financial and financial covenant requirements customarily found in loan agreements for similar transactions. As of March 31, 2011, Salishan-Mohegan was in compliance with all respective covenant requirements under the Salishan Credit Facility. The Authority has commenced discussions with Bank of America, N.A. to extend the maturity date of the Salishan Credit Facility; however, it can provide no assurance of the terms of such extension or whether such extension will be granted.
As of March 31, 2011, Salishan-Mohegan had $15.25 million in Eurodollar Rate loans and no Base Rate loan outstanding. The Eurodollar Rate loans outstanding at March 31, 2011 were based on a one-month Eurodollar Rate of 0.25% plus an Applicable Rate of 3.50%. As of March 31, 2011 and September 30, 2010, accrued interest on the Salishan Credit Facility was $22,000 and $2,000, respectively.
Mohegan Tribe Promissory Note
In September 2009, the Tribe made a $10.0 million loan to Salishan-Mohegan (the Mohegan Tribe Promissory Note), which was used to repay revolving loans under the Salishan Credit Facility. In April 2011, Salishan-Mohegan entered into an amendment to the terms of the Mohegan Tribe Promissory Note to extend the maturity date thereof to July 18, 2011. The Mohegan Tribe Promissory Note accrues interest at an annual rate of 15.0%. Under the terms of the Mohegan Tribe Promissory Note, as amended, accrued interest from November 2009 through October 2010 was paid at a monthly rate of 3.0%, with the remaining 12.0% due at maturity; and from November 2010 through maturity, all accrued interest under the Mohegan Tribe Promissory Note is payable at maturity. The Authority has commenced discussions with the Tribe to extend the maturity date of the Mohegan Tribe Promissory Note; however, it can provide no assurance of the terms of such extension or whether such extension will be granted. As of March 31, 2011 and September 30, 2010, accrued interest on the Mohegan Tribe Promissory Note was $1.9 million and $1.2 million, respectively.
Mohegan Tribe Credit Facility
On February 16, 2011, the Tribe agreed to lend Salishan-Mohegan up to $300,000 to fund its working capital requirements pursuant to a revolving commercial promissory note (the Mohegan Tribe Credit Facility). In April 2011, Salishan-Mohegan entered into an amendment to the terms of the Mohegan Tribe Credit Facility to increase the borrowing capacity to $1.0 million and extend the maturity date thereof to July 18, 2011. The Mohegan Tribe Credit Facility accrues interest at an annual rate of 15.0% payable at maturity. The Authority has commenced discussions with the Tribe to extend the maturity date of the Mohegan Tribe Credit Facility; however, it can provide no assurance of the terms of such extension or whether such extension will be granted. As of March 31, 2011, Salishan-Mohegan had $200,000 drawn on the Mohegan Tribe Credit Facility. As of March 31, 2011, accrued interest on the Mohegan Tribe Credit Facility was $3,000.
NOTE 5RELATED PARTY TRANSACTIONS:
Distributions to the Tribe totaled $4.6 million and $11.2 million for the three months ended March 31, 2011 and 2010, respectively, and $9.1 million and $38.5 million for the six months ended March 31, 2011 and 2010, respectively.
The Tribe provides governmental and certain administrative services to the Authority in connection with the operation of Mohegan Sun. The Authority incurred expenses for such services of $6.8 million and $7.0 million for the three months ended March 31, 2011 and 2010, respectively, and $13.7 million and $14.0 million for the six months ended March 31, 2011 and 2010, respectively.
The Authority purchases the majority of its utilities, including electricity, gas, water and waste water services, from an instrumentality of the Tribe, the Mohegan Tribal Utility Authority. The Authority incurred costs for such utilities of $5.8 million and $6.2 million for the three months ended March 31, 2011 and 2010, respectively, and $11.0 million and $12.6 million for the six months ended March 31, 2011 and 2010, respectively.
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In September 2009, the Tribe made a $10.0 million loan to Salishan-Mohegan, which was used to repay revolving loans under the Salishan Credit Facility. In April 2010, Salishan-Mohegan entered into an amendment to the terms of the Mohegan Tribe Promissory Note to extend the maturity date thereof to July 18, 2011. The Mohegan Tribe Promissory Note accrues interest at an annual rate of 15.0%. Under the terms of the Mohegan Tribe Promissory Note, as amended, accrued interest from November 2009 through October 2010 was paid at a monthly rate of 3.0%, with the remaining 12.0% due at maturity; and from November 2010 through maturity, all accrued interest under the Mohegan Tribe Promissory Note is payable at maturity. The Authority incurred interest expense associated with the Mohegan Tribe Promissory Note of $370,000 for each of the three months ended March 31, 2011 and 2010 and $748,000 and $744,000 for the six months ended March 31, 2011 and 2010, respectively.
On February 16, 2011, the Tribe agreed to lend Salishan-Mohegan up to $300,000 to fund its working capital requirements pursuant to a revolving commercial promissory note. In April 2011, Salishan-Mohegan entered into an amendment to the terms of the Mohegan Tribe credit facility to increase the borrowing capacity to $1.0 million and extend the maturity date thereof to July 18, 2011. The Mohegan Tribe credit facility accrues interest at an annual rate of 15.0% payable at maturity. As of March 31, 2011, Salishan-Mohegan had $200,000 drawn on the Mohegan Tribe Credit Facility. The Authority incurred interest expense associated with the Mohegan Tribe Credit Facility of $3,000 for the three months ended March 31, 2011.
The Authority leases the land on which Mohegan Sun is located from the Tribe under a long-term lease agreement. The agreement requires the Authority to make a nominal annual rental payment. This lease has an initial term of 25 years and is renewable for an additional 25-year term upon expiration.
In addition, in July 2008, the Authority entered into a land lease agreement with the Tribe, replacing a prior land lease agreement, relating to property located adjacent to the Tribes reservation that is utilized by Mohegan Sun for employee parking. This agreement requires the Authority to make monthly payments equaling $75,000 until maturity on June 30, 2018. The Authority classified this lease as a capital lease for financial reporting purposes due to the existence of a bargain purchase option at the expiration of the lease.
The Authority previously leased a building located adjacent to Mohegan Sun from the Tribe. In September 2010, The Tribe contributed the building to the Authority. The Authority expensed $12,000 and $24,000 relating to this lease for the three months and six months ended March 31, 2010.
In September 1995, the Tribe adopted the Mohegan Tribal Employment Rights Ordinance, as amended from time to time (the TERO), which sets forth hiring and contracting preference requirements for employers and entities conducting business on Tribal lands on or adjacent to the Mohegan Reservation. Pursuant to the TERO, the Authority and other covered employers are required to give hiring, promotion, training, retention and other employment-related preferences to Native Americans who meet the minimum qualifications for the applicable employment position. However, this preference requirement does not apply to key employees as such persons are defined under the TERO.
Similarly, any entity awarding a contract or subcontract valued up to $200,000 to be performed on Tribal lands must give preference, first, to certified Mohegan entities submitting commercially responsible bids, and second, to other certified Native American entities. This contracting preference is conditioned upon the bid by the preferred certified entity being within 5% of the lowest bid by a non-certified entity. Contracts in excess of $200,000 are awarded to the lowest commercially responsible bidder, on a competitive basis, with preference to certified Mohegan entities and then other certified Native American entities in the event of a matching bid. The TERO establishes procedures and requirements for certifying Mohegan entities and other Native American entities. Certification is based largely on the level of ownership and control exercised by the members of the Tribe or other Native American tribes, as the case may be, over the entity bidding on a contract.
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NOTE 6COMMITMENTS AND CONTINGENCIES:
Slot Win and Free Promotional Slot Play Contributions
In May 1994, the Tribe and the State of Connecticut entered into a Memorandum of Understanding (MOU), which sets forth certain matters regarding implementation of the Mohegan Compact. The MOU stipulates that a portion of revenues from slot machines must be paid to the State of Connecticut (Slot Win Contribution). Slot Win Contribution payments are not required if the State of Connecticut legalizes any other gaming operation with slot machines, video facsimiles of games of chance or other commercial casino games within the State of Connecticut, except those consented to by the Tribe and the Mashantucket Pequot Tribe (the MPT). For each 12-month period commencing July 1, 1995, Slot Win Contribution payments shall be the lesser of: (1) 30% of gross revenues from slot machines, or (2) the greater of (a) 25% of gross revenues from slot machines or (b) $80.0 million.
In September 2009, the Authority entered into a settlement agreement with the State of Connecticut regarding contribution payments on the Authoritys free promotional slot play program and the distribution of previously escrowed payments, following litigation between the State of Connecticut and the MPT concerning similar issues. Under the terms of the settlement agreement, effective July 1, 2009, the State of Connecticut agreed that no value shall be attributed to free promotional slot plays utilized by patrons at Mohegan Sun for purposes of calculating monthly contribution payments, provided that the aggregate amount of free promotional slot plays during any month does not exceed 5.5% of gross revenues from slot machines for such month. In the event free promotional slot plays exceed 5.5% of monthly gross revenues from slot machines, contribution payments are required on such excess face amount of free promotional slot plays at the same rate as Slot Win Contribution payments, or 25%.
The Authority reflected expenses associated with the combined Slot Win Contribution and free promotional slot play contribution totaling $45.5 million and $46.8 million for the three months ended March 31, 2011 and 2010, respectively, and $88.6 million and $92.1 million for the six months ended March 31, 2011 and 2010, respectively. As of March 31, 2011 and September 30, 2010, the combined outstanding Slot Win Contribution and free promotional slot play contribution totaled $16.1 million and $14.8 million, respectively.
Pennsylvania Slot Machine Tax
Downs Racing holds a Category One slot machine license issued by the Pennsylvania Gaming Control Board (the PGCB) for the operation of slot machines at Mohegan Sun at Pocono Downs. This license permits Downs Racing to install and operate up to 3,000 slot machines at Mohegan Sun at Pocono Downs, expandable to up to a total of 5,000 slot machines upon request and approval of the PGCB.
The Pennsylvania Race Horse Development and Gaming Act stipulates that holders of Category One slot machine licenses must pay a portion of revenues from slot machines to the PGCB on a daily basis (Pennsylvania Slot Machine Tax), which includes local share assessments to be paid to the cities and municipalities hosting Mohegan Sun at Pocono Downs and amounts to be paid to the Pennsylvania Harness Horsemens Association, Inc. (the PHHA). The Pennsylvania Slot Machine Tax is currently 55% of gross revenues from slot machines, 2% of which is subject to a $10.0 million minimum annual threshold to ensure that the host cities and municipalities receive an annual minimum of $10.0 million in local share assessments. Downs Racing maintains a $1.5 million escrow deposit in the name of the Commonwealth of Pennsylvania for Pennsylvania Slot Machine Tax payments, which was included in other assets, net, in the accompanying condensed consolidated balance sheets.
The Authority reflected expenses associated with the Pennsylvania Slot Machine Tax totaling $32.3 million and $31.6 million for the three months ended March 31, 2011 and 2010, respectively, and $63.1 million and $61.9 million for the six months ended March 31, 2011 and 2010, respectively. As of March 31, 2011 and September 30, 2010, outstanding Pennsylvania Slot Machine Tax payments totaled $1.9 million and $4.6 million, respectively.
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Pennsylvania Table Game Tax
In January 2010, the Commonwealth of Pennsylvania amended the Pennsylvania Race Horse Development and Gaming Act to allow slot machine operators in the Commonwealth of Pennsylvania to obtain a table game operation certificate and operate certain table games, including poker. On July 13, 2010, Downs Racing opened its table game and poker operations at Mohegan Sun at Pocono Downs. Under the amended law, holders of table game operation certificates must pay a portion of revenues from table games to the PGCB on a weekly basis (Pennsylvania Table Game Tax). During the initial two years of operation, the Pennsylvania Table Game Tax is 14%, plus 2% in local share assessments. Following the initial two years of operation, the Pennsylvania Table Game Tax will be reduced to 12%, plus the 2% local share assessments.
The Authority reflected expenses associated with the Pennsylvania Table Game Tax totaling $1.6 million and $3.2 million for the three months and six months ended March 31, 2011, respectively. As of March 31, 2011 and September 30, 2010, outstanding Pennsylvania Table Game Tax payments totaled $196,000 and $167,000, respectively.
Pennsylvania Regulatory Fee
Slot machine licensees in the Commonwealth of Pennsylvania are required to reimburse state gaming regulatory agencies for various administrative and operating expenses (Pennsylvania Regulatory Fee). The assessment rate of the Pennsylvania Regulatory Fee is yet to be finalized by the PGCB. Downs Racing is currently recording expenses associated with the Pennsylvania Regulatory Fee at a rate of 1.5% of gross revenues from slot machines and table games. This rate has been approved by the PGCB for its fiscal year ending June 30, 2011.
The Authority reflected expenses associated with the Pennsylvania Regulatory Fee totaling $1.2 million and $1.0 million for the three months ended March 31, 2011 and 2010, respectively, and $2.4 million and $1.9 million for the six months ended March 31, 2011 and 2010, respectively. As of March 31, 2011 and September 30, 2010, outstanding Pennsylvania Regulatory Fee payments to the PGCB totaled $94,000 and $87,000, respectively.
In addition, the PGCB was initially granted $36.1 million in loans to fund start-up costs for gaming in Pennsylvania, which are to be repaid by future slot machine licensees. The PGCB was subsequently granted an additional $63.8 million in loans to fund ongoing gaming oversight costs, which also are to be repaid by licensees. Repayment of the initial loans will commence when all 14 approved gaming facilities are opened in Pennsylvania, and repayment of the subsequent loans will commence when at least 11 approved gaming facilities are opened. Each licensees share of these loans will be proportionally allocated based on its respective share of gross revenues from slot machines. Currently, 10 of the 14 approved gaming facilities have commenced operations. The PGCB is required by statute to establish a repayment schedule for the subsequent loans no later than June 30, 2011. This repayment schedule will establish a methodology to determine each licensees share of the subsequent loans, as well as the commencement date for repayment, repayment period and frequency of payments. As of March 31, 2011, the Authority has concluded that these loan repayment contingencies are probable but not reasonably estimable since the PGCB has not yet established a repayment schedule for either the initial loans or the subsequent loans and, as such, the Authority has not recorded related reserves for these repayments.
Horsemens Agreement
Downs Racing and the PHHA are parties to an agreement that governs all live harness racing and simulcasting and account wagering at the Pennsylvania Entities through December 31, 2014. As of March 31, 2011 and September 30, 2010, outstanding payments to the PHHA for purses earned by horsemen, but not yet paid, and other fees totaled $9.7 million and $9.1 million, respectively.
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Priority Distribution Agreement
In August 2001, the Authority and the Tribe entered into an agreement (the Priority Distribution Agreement), which stipulates that the Authority must make monthly payments to the Tribe to the extent of the Authoritys Net Cash Flow, as defined under the Priority Distribution Agreement. The Priority Distribution Agreement, which has a perpetual term, limits the maximum aggregate priority distribution payments in each calendar year to $14.0 million, as adjusted annually in accordance with a formula specified in the Priority Distribution Agreement to reflect the effects of inflation. Payments under the Priority Distribution Agreement: (1) do not reduce the Authoritys obligations to reimburse the Tribe for governmental and administrative services provided by the Tribe or to make payments under any other agreements with the Tribe; (2) are limited obligations of the Authority and are payable only to the extent of the Authoritys Net Cash Flow, as defined under the Priority Distribution Agreement; and (3) are not secured by a lien or encumbrance on any of the Authoritys assets or properties.
The Authority reflected payments associated with the Priority Distribution Agreement totaling $4.6 million and $4.5 million for the three months ended March 31, 2011 and 2010, respectively, and $9.1 million and $9.0 million for the six months ended March 31, 2011 and 2010, respectively.
Litigation
The Authority is a defendant in various litigation matters resulting from its normal course of business. In the opinion of management, the aggregate liability, if any, arising from such litigations will not have a material impact on the Authoritys financial position, results of operations or cash flows.
NOTE 7RELINQUISHMENT AGREEMENT:
In February 1998, the Authority and Trading Cove Associates (TCA) entered into a relinquishment agreement (the Relinquishment Agreement). Effective January 1, 2000 (the Relinquishment Date), the Relinquishment Agreement superseded a then-existing management agreement with TCA. The Relinquishment Agreement provides, among other things, that the Authority make certain payments to TCA out of, and determined as a percentage of, Revenues, as defined under the Relinquishment Agreement, generated by Mohegan Sun over a 15-year period commencing on the Relinquishment Date. The payments (Senior Relinquishment Payments and Junior Relinquishment Payments) have separate schedules and priorities. Senior Relinquishment Payments commenced on April 25, 2000, 25 days following the end of the first three-month period after the Relinquishment Date, and continue at the end of each three-month period thereafter until January 25, 2015. Junior Relinquishment Payments commenced on July 25, 2000, 25 days following the end of the first six-month period after the Relinquishment Date, and continue at the end of each six-month period thereafter until January 25, 2015. Each Senior and Junior Relinquishment Payment is 2.5% of Revenues generated by Mohegan Sun over the immediate preceding three-month or six-month payment period, as the case may be. Revenues are defined under the Relinquishment Agreement as gross gaming revenues, other than Class II Gaming revenues, and all other revenues, as defined, including, without limitation, hotel revenues, room service revenues, food and beverage revenues, ticket revenues, fees or receipts from the convention/events center and all rental revenues or other receipts from lessees and concessionaires, but not the gross receipts of such lessees, licenses and concessionaires, derived directly or indirectly from the facilities, as defined. Revenues under the Relinquishment Agreement exclude revenues generated from certain expansion areas of Mohegan Sun, such as Casino of the Wind, as such areas do not constitute facilities as defined under the Relinquishment Agreement.
In the event of any bankruptcy, liquidation, reorganization or similar proceeding relating to the Authority, the Relinquishment Agreement provides that Senior and Junior Relinquishment Payments then due and owing are subordinated in right of payment to the Authoritys senior secured obligations, which include the Bank Credit Facility, the 2009 Second Lien Senior Secured Notes and capital lease obligations, and that Junior Relinquishment Payments then due and owing are further subordinated in right of payment to all of the
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Authoritys other senior obligations, including the 2005 Senior Unsecured Notes. The Relinquishment Agreement also provides that all relinquishment payments are subordinated in right of payment to the minimum priority distribution payments, which are required monthly payments made by the Authority to the Tribe under the Priority Distribution Agreement, to the extent then due. The Authority, in accordance with authoritative guidance issued by the FASB pertaining to the accounting for contingencies, recorded a $549.1 million relinquishment liability at September 30, 1998 based on the estimated present value of its obligations under the Relinquishment Agreement.
As of March 31, 2011 and September 30, 2010, the carrying amount of the relinquishment liability was $208.6 million and $230.7 million, respectively. The decrease in the relinquishment liability during the six months ended March 31, 2011 was due to $27.8 million in relinquishment payments. This reduction in the liability was offset by $5.7 million representing the accretion of discount to the relinquishment liability.
Relinquishment payments consisted of the following (in millions):
For the Six Months Ended March 31, |
||||||||
2011 | 2010 | |||||||
Principal |
$ | 21.1 | $ | 19.5 | ||||
Accretion of discount |
6.7 | 9.0 | ||||||
Total |
$ | 27.8 | $ | 28.5 | ||||
The accretion of discount to the relinquishment liability reflects the accretion of the discount to the present value of the relinquishment liability for the impact of the time value of money. As of March 31, 2011 and September 30, 2010, relinquishment payments earned but unpaid were $13.3 million and $14.9 million, respectively.
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NOTE 8SEGMENT REPORTING:
As of March 31, 2011, the Authority owns and operates Mohegan Sun, the Connecticut Sun WNBA franchise and the Mohegan Sun Country Club (collectively, the Connecticut Entities), and the Pennsylvania Entities. All of the Authoritys revenues are derived from these operations. The Connecticut Sun WNBA franchise and the Mohegan Sun Country Club are aggregated with the Mohegan Sun operating segment because these operations all share similar economic characteristics, which is to generate gaming and entertainment revenues by attracting patrons to Mohegan Sun. The Authoritys executive officers review and assess the performance and operating results and determine the proper allocation of resources to the Connecticut Entities and the Pennsylvania Entities on a separate basis. The Authority, therefore, believes that it has two separate reportable segments: (1) Mohegan Sun, which includes the operations of the Connecticut Entities, and (2) Mohegan Sun at Pocono Downs, which includes the operations of the Pennsylvania Entities. The following tables provide financial information related to each segment (in thousands):
For the Three Months Ended March 31, |
For the Six Months Ended March 31, |
|||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net revenues: |
||||||||||||||||
Mohegan Sun |
$ | 274,165 | $ | 290,079 | $ | 537,995 | $ | 572,170 | ||||||||
Mohegan Sun at Pocono Downs |
73,779 | 62,216 | 145,554 | 121,936 | ||||||||||||
Total |
347,944 | 352,295 | 683,549 | 694,106 | ||||||||||||
Income (loss) from operations: |
||||||||||||||||
Mohegan Sun |
53,247 | 52,364 | 95,791 | 92,286 | ||||||||||||
Mohegan Sun at Pocono Downs |
7,594 | 3,891 | 13,913 | 6,148 | ||||||||||||
Corporate |
(3,813 | ) | (4,068 | ) | (8,392 | ) | (8,417 | ) | ||||||||
Total |
57,028 | 52,187 | 101,312 | 90,017 | ||||||||||||
Accretion of discount to the relinquishment liability |
(2,841 | ) | (3,857 | ) | (5,683 | ) | (7,713 | ) | ||||||||
Interest income |
618 | 620 | 1,398 | 1,352 | ||||||||||||
Interest expense, net of capitalized interest |
(29,713 | ) | (29,319 | ) | (59,459 | ) | (57,868 | ) | ||||||||
Loss on early extinguishment of debt |
| | | (1,584 | ) | |||||||||||
Write-off of debt issuance costs |
| | | (338 | ) | |||||||||||
Other expense, net |
(349 | ) | (147 | ) | (344 | ) | (491 | ) | ||||||||
Net income |
24,743 | 19,484 | 37,224 | 23,375 | ||||||||||||
Loss attributable to non-controlling interests |
465 | 543 | 914 | 1,056 | ||||||||||||
Net income attributable to Mohegan Tribal Gaming Authority |
$ | 25,208 | $ | 20,027 | $ | 38,138 | $ | 24,431 | ||||||||
For the Six Months Ended March 31, |
||||||||
2011 | 2010 | |||||||
Capital expenditures incurred: |
||||||||
Mohegan Sun |
$ | 14,096 | $ | 11,514 | ||||
Mohegan Sun at Pocono Downs |
3,046 | 2,789 | ||||||
Total |
$ | 17,142 | $ | 14,303 | ||||
March 31, 2011 |
September 30, 2010 |
|||||||
Total assets: |
||||||||
Mohegan Sun |
$ | 1,512,569 | $ | 1,532,842 | ||||
Mohegan Sun at Pocono Downs |
591,609 | 599,702 | ||||||
Corporate |
74,156 | 68,079 | ||||||
Total |
$ | 2,178,334 | $ | 2,200,623 | ||||
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NOTE 9SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENT INFORMATION:
As of March 31, 2011, substantially all of the Authoritys outstanding debt, including its Bank Credit Facility, 2009 Second Lien Senior Secured Notes, 2005 Senior Unsecured Notes, 2002 Senior Subordinated Notes, 2004 Senior Subordinated Notes and 2005 Senior Subordinated Notes, is fully and unconditionally guaranteed, on a joint and several basis, by the following 100% owned subsidiaries of the Authority: MBC, Mohegan Ventures-NW, MCV-PA, the Pennsylvania Entities, Mohegan Golf, MVW, MTGA Gaming and WTG. The 2001 Senior Subordinated Notes are fully and unconditionally guaranteed by MBC. In September 2010, Mohegan Ventures, LLC, a subsidiary of the Tribe, surrendered its membership interest in WTG to MVW. Accordingly, MVW now holds 100% membership interest in WTG. Separate financial statements and other disclosures concerning MBC, Mohegan Ventures-NW, MCV-PA, the Pennsylvania Entities, Mohegan Golf, MVW, MTGA Gaming and WTG are not presented below because the Authority believes that the summarized financial information provided below and in Note 8 are adequate for investor analysis of these subsidiaries. Condensed consolidating financial statement information for the Authority, its 100% owned guarantor subsidiaries and its non-guarantor entities as of March 31, 2011 and September 30, 2010 and for the three months and six months ended March 31, 2011 and 2010 is as follows (in thousands):
CONDENSED CONSOLIDATING BALANCE SHEETS
March 31, 2011 | ||||||||||||||||||||||||||||
Authority | 100% Owned Guarantor Subsidiary-MBC |
Other 100% Owned Guarantor Subsidiaries (1) |
Total Guarantor Subsidiaries |
Total Non-Guarantor Entities (2) |
Consolidating/ Eliminating Adjustments |
Consolidated | ||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||
Property and equipment, net |
$ | 1,274,260 | $ | 78 | $ | 249,914 | $ | 249,992 | $ | 19,951 | $ | | $ | 1,544,203 | ||||||||||||||
Intercompany receivables |
503,477 | | 12,575 | 12,575 | | (516,052 | ) | | ||||||||||||||||||||
Investment in subsidiaries |
87,952 | | 3,009 | 3,009 | | (90,961 | ) | | ||||||||||||||||||||
Other intangible assets, net |
120,793 | 3,995 | 281,755 | 285,750 | | | 406,543 | |||||||||||||||||||||
Other assets, net |
129,166 | 231 | 71,786 | 72,017 | 26,405 | | 227,588 | |||||||||||||||||||||
Total assets |
$ | 2,115,648 | $ | 4,304 | $ | 619,039 | $ | 623,343 | $ | 46,356 | $ | (607,013 | ) | $ | 2,178,334 | |||||||||||||
LIABILITIES AND CAPITAL | ||||||||||||||||||||||||||||
Current liabilities |
$ | 741,901 | $ | 1,322 | $ | 30,906 | $ | 32,228 | $ | 17,441 | $ | | $ | 791,570 | ||||||||||||||
Due to Mohegan Tribe |
| | | | 10,200 | | 10,200 | |||||||||||||||||||||
Long-term debt and capital leases, net of current portions |
1,074,202 | | | | | | 1,074,202 | |||||||||||||||||||||
Relinquishment liability, net of current portion |
140,369 | | | | | | 140,369 | |||||||||||||||||||||
Intercompany payables |
| | 503,477 | 503,477 | 12,575 | (516,052 | ) | | ||||||||||||||||||||
Other long-term liabilities |
334 | | | | | | 334 | |||||||||||||||||||||
Total liabilities |
1,956,806 | 1,322 | 534,383 | 535,705 | 40,216 | (516,052 | ) | 2,016,675 | ||||||||||||||||||||
Mohegan Tribal Gaming Authority capital |
158,842 | 2,982 | 84,656 | 87,638 | 6,140 | (94,094 | ) | 158,526 | ||||||||||||||||||||
Non-controlling interests |
| | | | | 3,133 | 3,133 | |||||||||||||||||||||
Total liabilities and capital |
$ | 2,115,648 | $ | 4,304 | $ | 619,039 | $ | 623,343 | $ | 46,356 | $ | (607,013 | ) | $ | 2,178,334 | |||||||||||||
(1) | Includes Mohegan Ventures-NW, MCV-PA, the Pennsylvania Entities, Mohegan Golf, MVW, MTGA Gaming and WTG. |
(2) | Includes Salishan-Mohegan, MG&H and Mohegan Resorts and subsidiaries. |
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September 30, 2010 | ||||||||||||||||||||||||||||
Authority | 100% Owned Guarantor Subsidiary-MBC |
Other 100% Owned Guarantor Subsidiaries (1) |
Total Guarantor Subsidiaries |
Total Non-Guarantor Entities (2) |
Consolidating/ Eliminating Adjustments |
Consolidated | ||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||
Property and equipment, net |
$ | 1,298,112 | $ | 65 | $ | 255,025 | $ | 255,090 | $ | 19,951 | $ | | $ | 1,573,153 | ||||||||||||||
Intercompany receivables |
492,653 | | 12,238 | 12,238 | | (504,891 | ) | | ||||||||||||||||||||
Investment in subsidiaries |
101,966 | | 2,473 | 2,473 | | (104,439 | ) | | ||||||||||||||||||||
Other intangible assets, net |
120,850 | 4,086 | 281,811 | 285,897 | | | 406,747 | |||||||||||||||||||||
Other assets, net |
124,333 | 321 | 72,109 | 72,430 | 23,960 | | 220,723 | |||||||||||||||||||||
Total assets |
$ | 2,137,914 | $ | 4,472 | $ | 623,656 | $ | 628,128 | $ | 43,911 | $ | (609,330 | ) | $ | 2,200,623 | |||||||||||||
LIABILITIES AND CAPITAL | ||||||||||||||||||||||||||||
Current liabilities |
$ | 244,591 | $ | 1,731 | $ | 32,093 | $ | 33,824 | $ | 16,633 | $ | | $ | 295,048 | ||||||||||||||
Due to Mohegan Tribe |
| | | | 10,000 | | 10,000 | |||||||||||||||||||||
Long-term debt and capital leases, net of current portions |
1,601,471 | | | | | | 1,601,471 | |||||||||||||||||||||
Relinquishment liability, net of current portion |
161,692 | | | | | | 161,692 | |||||||||||||||||||||
Intercompany payables |
| | 492,653 | 492,653 | 12,238 | (504,891 | ) | | ||||||||||||||||||||
Other long-term liabilities |
368 | | | | | | 368 | |||||||||||||||||||||
Total liabilities |
2,008,122 | 1,731 | 524,746 | 526,477 | 38,871 | (504,891 | ) | 2,068,579 | ||||||||||||||||||||
Mohegan Tribal Gaming Authority capital |
129,792 | 2,741 | 98,910 | 101,651 | 5,040 | (107,007 | ) | 129,476 | ||||||||||||||||||||
Non-controlling interests |
| | | | | 2,568 | 2,568 | |||||||||||||||||||||
Total liabilities and capital |
$ | 2,137,914 | $ | 4,472 | $ | 623,656 | $ | 628,128 | $ | 43,911 | $ | (609,330 | ) | $ | 2,200,623 | |||||||||||||
(1) | Includes Mohegan Ventures-NW, MCV-PA, the Pennsylvania Entities, Mohegan Golf, MVW, MTGA Gaming and WTG. |
(2) | Includes Salishan-Mohegan, MG&H and Mohegan Resorts and subsidiaries. |
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CONDENSED CONSOLIDATING STATEMENTS OF INCOME (LOSS)
For the Three Months Ended March 31, 2011 | ||||||||||||||||||||||||||||
Authority | 100% Owned Guarantor Subsidiary-MBC |
Other 100% Owned Guarantor Subsidiaries (1) |
Total Guarantor Subsidiaries |
Total Non-Guarantor Entities (2) |
Consolidating/ Eliminating Adjustments |
Consolidated | ||||||||||||||||||||||
Net revenues |
$ | 274,165 | $ | 2 | $ | 73,779 | $ | 73,781 | $ | | $ | (2 | ) | $ | 347,944 | |||||||||||||
Operating costs and expenses: |
||||||||||||||||||||||||||||
Gaming and other operations |
162,558 | 397 | 53,715 | 54,112 | | (2 | ) | 216,668 | ||||||||||||||||||||
Advertising, general and administrative |
43,548 | 212 | 7,307 | 7,519 | 832 | | 51,899 | |||||||||||||||||||||
Depreciation and amortization |
17,221 | 48 | 5,346 | 5,394 | | | 22,615 | |||||||||||||||||||||
Severance |
(266 | ) | | | | | | (266 | ) | |||||||||||||||||||
Total operating costs and expenses |
223,061 | 657 | 66,368 | 67,025 | 832 | (2 | ) | 290,916 | ||||||||||||||||||||
Income (loss) from operations |
51,104 | (655 | ) | 7,411 | 6,756 | (832 | ) | | 57,028 | |||||||||||||||||||
Accretion of discount to the relinquishment liability |
(2,841 | ) | | | | | | (2,841 | ) | |||||||||||||||||||
Interest expense, net of capitalized interest |
(15,495 | ) | (1 | ) | (13,699 | ) | (13,700 | ) | (681 | ) | 163 | (29,713 | ) | |||||||||||||||
Loss on interests in subsidiaries |
(7,228 | ) | | (454 | ) | (454 | ) | | 7,682 | | ||||||||||||||||||
Other income (expense), net |
(332 | ) | | 170 | 170 | 594 | (163 | ) | 269 | |||||||||||||||||||
Net income (loss) |
25,208 | (656 | ) | (6,572 | ) | (7,228 | ) | (919 | ) | 7,682 | 24,743 | |||||||||||||||||
Loss attributable to non-controlling interests |
| | | | | 465 | 465 | |||||||||||||||||||||
Net income (loss) attributable to Mohegan Tribal Gaming Authority |
$ | 25,208 | $ | (656 | ) | $ | (6,572 | ) | $ | (7,228 | ) | $ | (919 | ) | $ | 8,147 | $ | 25,208 | ||||||||||
(1) | Includes Mohegan Ventures-NW, MCV-PA, the Pennsylvania Entities, Mohegan Golf, MVW, MTGA Gaming and WTG. |
(2) | Includes Salishan-Mohegan, MG&H and Mohegan Resorts and subsidiaries. |
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For the Three Months Ended March 31, 2010 | ||||||||||||||||||||||||||||||||
Authority | 100% Owned Guarantor Subsidiary-MBC |
Other 100% Owned Guarantor Subsidiaries (1) |
Non 100% Owned Guarantor Subsidiary-WTG |
Total Guarantor Subsidiaries |
Total Non-Guarantor Entities (2) |
Consolidating/ Eliminating Adjustments |
Consolidated | |||||||||||||||||||||||||
Net revenues |
$ | 290,076 | $ | 6 | $ | 62,217 | $ | | $ | 62,223 | $ | | $ | (4 | ) | $ | 352,295 | |||||||||||||||
Operating costs and expenses: |
||||||||||||||||||||||||||||||||
Gaming and other operations |
175,715 | 324 | 46,173 | | 46,497 | | (4 | ) | 222,208 | |||||||||||||||||||||||
Advertising, general and administrative |
45,999 | 280 | 6,680 | 3 | 6,963 | 903 | | 53,865 | ||||||||||||||||||||||||
Depreciation and amortization |
18,065 | 63 | 5,421 | | 5,484 | | | 23,549 | ||||||||||||||||||||||||
Pre-opening |
| | 486 | | 486 | | | 486 | ||||||||||||||||||||||||
Total operating costs and expenses |
239,779 | 667 | 58,760 | 3 | 59,430 | 903 | (4 | ) | 300,108 | |||||||||||||||||||||||
Income (loss) from operations |
50,297 | (661 | ) | 3,457 | (3 | ) | 2,793 | (903 | ) | | 52,187 | |||||||||||||||||||||
Accretion of discount to the relinquishment liability |
(3,857 | ) | | | | | | | (3,857 | ) | ||||||||||||||||||||||
Interest expense, net of capitalized interest |
(16,295 | ) | (6 | ) | (12,509 | ) | (206 | ) | (12,721 | ) | (664 | ) | 361 | (29,319 | ) | |||||||||||||||||
Loss on interests in subsidiaries |
(10,020 | ) | | (494 | ) | | (494 | ) | | 10,514 | | |||||||||||||||||||||
Other income (expense), net |
(98 | ) | | 371 | | 371 | 561 | (361 | ) | 473 | ||||||||||||||||||||||
Net income (loss) |
20,027 | (667 | ) | (9,175 | ) | (209 | ) | (10,051 | ) | (1,006 | ) | 10,514 | 19,484 | |||||||||||||||||||
Loss attributable to non-controlling interests |
| | 31 | | 31 | | 512 | 543 | ||||||||||||||||||||||||
Net income (loss) attributable to Mohegan Tribal Gaming Authority |
$ | 20,027 | $ | (667 | ) | $ | (9,144 | ) | $ | (209 | ) | $ | (10,020 | ) | $ | (1,006 | ) | $ | 11,026 | $ | 20,027 | |||||||||||
(1) | Includes Mohegan Ventures-NW, MCV-PA, the Pennsylvania Entities, Mohegan Golf, MVW and MTGA Gaming. |
(2) | Includes Salishan-Mohegan, MG&H and Mohegan Resorts and subsidiaries. |
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For the Six Months Ended March 31, 2011 | ||||||||||||||||||||||||||||
Authority | 100% Owned Guarantor Subsidiary-MBC |
Other 100% Owned Guarantor Subsidiaries (1) |
Total Guarantor Subsidiaries |
Total Non-Guarantor Entities (2) |
Consolidating/ Eliminating Adjustments |
Consolidated | ||||||||||||||||||||||
Net revenues |
$ | 537,986 | $ | 12 | $ | 145,554 | $ | 145,566 | $ | | $ | (3 | ) | $ | 683,549 | |||||||||||||
Operating costs and expenses: |
||||||||||||||||||||||||||||
Gaming and other operations |
322,619 | 721 | 106,086 | 106,807 | | (3 | ) | 429,423 | ||||||||||||||||||||
Advertising, general and administrative |
89,391 | 398 | 15,195 | 15,593 | 1,745 | | 106,729 | |||||||||||||||||||||
Depreciation and amortization |
34,979 | 95 | 10,756 | 10,851 | | | 45,830 | |||||||||||||||||||||
Severance |
255 | | | | | | 255 | |||||||||||||||||||||
Total operating costs and expenses |
447,244 | 1,214 | 132,037 | 133,251 | 1,745 | (3 | ) | 582,237 | ||||||||||||||||||||
Income (loss) from operations |
90,742 | (1,202 | ) | 13,517 | 12,315 | (1,745 | ) | | 101,312 | |||||||||||||||||||
Accretion of discount to the relinquishment liability |
(5,683 | ) | | | | | | (5,683 | ) | |||||||||||||||||||
Interest expense, net of capitalized interest |
(31,179 | ) | (6 | ) | (27,225 | ) | (27,231 | ) | (1,374 | ) | 325 | (59,459 | ) | |||||||||||||||
Loss on interests in subsidiaries |
(15,462 | ) | | (886 | ) | (886 | ) | | 16,348 | | ||||||||||||||||||
Other income (expense), net |
(280 | ) | | 340 | 340 | 1,319 | (325 | ) | 1,054 | |||||||||||||||||||
Net income (loss) |
38,138 | (1,208 | ) | (14,254 | ) | (15,462 | ) | (1,800 | ) | 16,348 | 37,224 | |||||||||||||||||
Loss attributable to non-controlling interests |
| | | | | 914 | 914 | |||||||||||||||||||||
Net income (loss) attributable to Mohegan Tribal Gaming Authority |
$ | 38,138 | $ | (1,208 | ) | $ | (14,254 | ) | $ | (15,462 | ) | $ | (1,800 | ) | $ | 17,262 | $ | 38,138 | ||||||||||
(1) | Includes Mohegan Ventures-NW, MCV-PA, the Pennsylvania Entities, Mohegan Golf, MVW, MTGA Gaming and WTG. |
(2) | Includes Salishan-Mohegan, MG&H and Mohegan Resorts and subsidiaries. |
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For the Six Months Ended March 31, 2010 | ||||||||||||||||||||||||||||||||
Authority | 100% Owned Guarantor Subsidiary-MBC |
Other 100% Owned Guarantor Subsidiaries (1) |
Non 100% Owned Guarantor Subsidiary-WTG |
Total Guarantor Subsidiaries |
Total Non-Guarantor Entities (2) |
Consolidating/ Eliminating Adjustments |
Consolidated | |||||||||||||||||||||||||
Net revenues |
$ | 571,987 | $ | 27 | $ | 122,098 | $ | | $ | 122,125 | $ | (1 | ) | $ | (5 | ) | $ | 694,106 | ||||||||||||||
Operating costs and expenses: |
||||||||||||||||||||||||||||||||
Gaming and other operations |
353,462 | 630 | 91,687 | | 92,317 | | (5 | ) | 445,774 | |||||||||||||||||||||||
Advertising, general and administrative |
92,982 | 496 | 13,404 | 98 | 13,998 | 1,827 | | 108,807 | ||||||||||||||||||||||||
Depreciation and amortization |
37,485 | 152 | 11,343 | | 11,495 | | | 48,980 | ||||||||||||||||||||||||
Pre-opening |
42 | | 486 | | 486 | | | 528 | ||||||||||||||||||||||||
Total operating costs and expenses |
483,971 | 1,278 | 116,920 | 98 | 118,296 | 1,827 | (5 | ) | 604,089 | |||||||||||||||||||||||
Income (loss) from operations |
88,016 | (1,251 | ) | 5,178 | (98 | ) | 3,829 | (1,828 | ) | | 90,017 | |||||||||||||||||||||
Accretion of discount to the relinquishment liability |
(7,713 | ) | | | | | | | (7,713 | ) | ||||||||||||||||||||||
Interest expense, net of capitalized interest |
(32,166 | ) | (15 | ) | (24,663 | ) | (400 | ) | (25,078 | ) | (1,332 | ) | 708 | (57,868 | ) | |||||||||||||||||
Loss on early extinguishment of debt |
(1,584 | ) | | | | | | | (1,584 | ) | ||||||||||||||||||||||
Loss on interests in subsidiaries |
(21,418 | ) | | (947 | ) | | (947 | ) | | 22,365 | | |||||||||||||||||||||
Other income (expense), net |
(704 | ) | | 705 | | 705 | 1,230 | (708 | ) | 523 | ||||||||||||||||||||||
Net income (loss) |
24,431 | (1,266 | ) | (19,727 | ) | (498 | ) | (21,491 | ) | (1,930 | ) | 22,365 | 23,375 | |||||||||||||||||||
Loss attributable to non-controlling interests |
| | 73 | | 73 | | 983 | 1,056 | ||||||||||||||||||||||||
Net income (loss) attributable to Mohegan Tribal Gaming Authority |
$ | 24,431 | $ | (1,266 | ) | $ | (19,654 | ) | $ | (498 | ) | $ | (21,418 | ) | $ | (1,930 | ) | $ | 23,348 | $ | 24,431 | |||||||||||
(1) | Includes Mohegan Ventures-NW, MCV-PA, the Pennsylvania Entities, Mohegan Golf, MVW and MTGA Gaming. |
(2) | Includes Salishan-Mohegan, MG&H and Mohegan Resorts and subsidiaries. |
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CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the Six Months Ended March 31, 2011 | ||||||||||||||||||||||||||||
Authority | 100% Owned Guarantor Subsidiary-MBC |
Other 100% Owned Guarantor Subsidiaries (1) |
Total Guarantor Subsidiaries |
Total Non-Guarantor Entities (2) |
Consolidating/ Eliminating Adjustments |
Consolidated | ||||||||||||||||||||||
Net cash flows provided by (used in) operating activities |
$ | 66,036 | $ | (325 | ) | $ | 23,778 | $ | 23,453 | $ | (3,358 | ) | $ | | $ | 86,131 | ||||||||||||
Cash flows provided by (used in) investing activities: |
||||||||||||||||||||||||||||
Purchases of property and equipment |
(14,335 | ) | (16 | ) | (8,182 | ) | (8,198 | ) | | | (22,533 | ) | ||||||||||||||||
Other cash flows provided by (used in) investing activities |
13,724 | | (891 | ) | (891 | ) | (267 | ) | (13,489 | ) | (923 | ) | ||||||||||||||||
Net cash flows used in investing activities |
(611 | ) | (16 | ) | (9,073 | ) | (9,089 | ) | (267 | ) | (13,489 | ) | (23,456 | ) | ||||||||||||||
Cash flows provided by (used in) financing activities: |
||||||||||||||||||||||||||||
Bank Credit Facility borrowingsrevolving loan |
178,000 | | | | | | 178,000 | |||||||||||||||||||||
Bank Credit Facility repaymentsrevolving loan |
(212,000 | ) | | | | | | (212,000 | ) | |||||||||||||||||||
Line of Credit borrowings |
277,694 | | | | | | 277,694 | |||||||||||||||||||||
Line of Credit repayments |
(275,899 | ) | | | | | | (275,899 | ) | |||||||||||||||||||
Principal portion of relinquishment liability payments |
(21,138 | ) | | | | | | (21,138 | ) | |||||||||||||||||||
Distributions to Tribe |
(9,088 | ) | | | | | | (9,088 | ) | |||||||||||||||||||
Other cash flows provided by (used in) financing activities |
(1,791 | ) | 449 | (14,925 | ) | (14,476 | ) | 3,355 | 13,489 | 577 | ||||||||||||||||||
Net cash flows provided by (used in) financing activities |
(64,222 | ) | 449 | (14,925 | ) | (14,476 | ) | 3,355 | 13,489 | (61,854 | ) | |||||||||||||||||
Net increase (decrease) in cash and cash equivalents |
1,203 | 108 | (220 | ) | (112 | ) | (270 | ) | | 821 | ||||||||||||||||||
Cash and cash equivalents at beginning of period |
39,146 | (49 | ) | 24,366 | 24,317 | 434 | | 63,897 | ||||||||||||||||||||
Cash and cash equivalents at end of period |
$ | 40,349 | $ | 59 | $ | 24,146 | $ | 24,205 | $ | 164 | $ | | $ | 64,718 | ||||||||||||||
(1) | Includes Mohegan Ventures-NW, MCV-PA, the Pennsylvania Entities, Mohegan Golf, MVW, MTGA Gaming and WTG. |
(2) | Includes Salishan-Mohegan, MG&H and Mohegan Resorts and subsidiaries. |
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For the Six Months Ended March 31, 2010 | ||||||||||||||||||||||||||||||||
Authority | 100% Owned Guarantor Subsidiary-MBC |
Other 100% Owned Guarantor Subsidiaries (1) |
Non 100% Owned Guarantor Subsidiary-WTG |
Total Guarantor Subsidiaries |
Total Non-Guarantor Entities (2) |
Consolidating/ Eliminating Adjustments |
Consolidated | |||||||||||||||||||||||||
Net cash flows provided by (used in) operating activities |
$ | 75,820 | $ | (538 | ) | $ | 19,804 | $ | (41 | ) | $ | 19,225 | $ | (1,320 | ) | $ | | $ | 93,725 | |||||||||||||
Cash flows provided by (used in) investing activities: |
||||||||||||||||||||||||||||||||
Purchases of property and equipment |
(22,362 | ) | (2 | ) | (3,458 | ) | | (3,460 | ) | | | (25,822 | ) | |||||||||||||||||||
Other cash flows provided by (used in) investing activities |
14,506 | | (390 | ) | (132 | ) | (522 | ) | (524 | ) | (13,864 | ) | (404 | ) | ||||||||||||||||||
Net cash flows used in investing activities |
(7,856 | ) | (2 | ) | (3,848 | ) | (132 | ) | (3,982 | ) | (524 | ) | (13,864 | ) | (26,226 | ) | ||||||||||||||||
Cash flows provided by (used in) financing activities: |
||||||||||||||||||||||||||||||||
Bank Credit Facility borrowingsrevolving loan |
184,000 | | | | | | | 184,000 | ||||||||||||||||||||||||
Bank Credit Facility repaymentsrevolving loan |
(218,000 | ) | | | | | | | (218,000 | ) | ||||||||||||||||||||||
Bank Credit Facility repaymentsterm loan |
(147,000 | ) | | | | | | | (147,000 | ) | ||||||||||||||||||||||
Line of Credit borrowings |
226,011 | | | | | | | 226,011 | ||||||||||||||||||||||||
Line of Credit repayments |
(235,515 | ) | | | | | | | (235,515 | ) | ||||||||||||||||||||||
Proceeds from issuance of Second Lien Senior Secured Notes, net of discount |
192,468 | | | | | | | 192,468 | ||||||||||||||||||||||||
Principal portion of relinquishment liability payments |
(19,548 | ) | | | | | | | (19,548 | ) | ||||||||||||||||||||||
Distributions to Tribe |
(38,450 | ) | | | | | | | (38,450 | ) | ||||||||||||||||||||||
Capitalized debt issuance costs |
(8,178 | ) | | | | | | | (8,178 | ) | ||||||||||||||||||||||
Other cash flows provided by (used in) financing activities |
(1,657 | ) | 602 | (14,932 | ) | 168 | (14,162 | ) | 1,966 | 13,864 | 11 | |||||||||||||||||||||
Net cash flows provided by (used in) financing activities |
(65,869 | ) | 602 | (14,932 | ) | 168 | (14,162 | ) | 1,966 | 13,864 | (64,201 | ) | ||||||||||||||||||||
Net increase (decrease) in cash and cash equivalents |
2,095 | 62 | 1,024 | (5 | ) | 1,081 | 122 | | 3,298 | |||||||||||||||||||||||
Cash and cash equivalents at beginning of period |
45,302 | (75 | ) | 18,680 | 196 | 18,801 | 561 | | 64,664 | |||||||||||||||||||||||
Cash and cash equivalents at end of period |
$ | 47,397 | $ | (13 | ) | $ | 19,704 | $ | 191 | $ | 19,882 | $ | 683 | $ | | $ | 67,962 | |||||||||||||||
(1) | Includes Mohegan Ventures-NW, MCV-PA, the Pennsylvania Entities, Mohegan Golf, MVW and MTGA Gaming. |
(2) | Includes Salishan-Mohegan, MG&H and Mohegan Resorts and subsidiaries. |
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Management Board of
Mohegan Tribal Gaming Authority:
We have reviewed the accompanying condensed consolidated balance sheet of the Mohegan Tribal Gaming Authority and its subsidiaries (the Authority) as of March 31, 2011, and the related condensed consolidated statements of income and of changes in capital for each of the three-month and six-month periods ended March 31, 2011 and 2010 and the condensed consolidated statement of cash flows for the six-month periods ended March 31, 2011 and 2010. These interim financial statements are the responsibility of the Authoritys management.
We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made to the accompanying condensed consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.
We previously audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of September 30, 2010, and the related consolidated statements of income, of changes in capital and of cash flows for the year then ended (not presented herein), and in our report dated December 29, 2010, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of September 30, 2010, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived.
As more fully described within note 2, the Authority will have a significant amount of debt maturing in the next twelve months. Managements plans to address this issue are included within note 2.
/s/ PricewaterhouseCoopers LLP
May 16, 2011
Hartford, CT
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Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations |
Some information included in this Quarterly Report on Form 10-Q and other materials filed by us with the Securities and Exchange Commission, or the SEC, contains 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, or the Exchange Act. Such statements include information relating to business development activities, as well as capital spending, financing sources and the effects of regulation, including gaming and tax regulation, and increased competition. These statements can sometimes be identified by our use of forward-looking words such as may, will, anticipate, estimate, expect or intend and similar expressions. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated future results, and accordingly, such results may differ materially from those expressed in any forward-looking statements made by or on our behalf. These risks and uncertainties include, but are not limited to, those relating to the following:
| the financial performance of Mohegan Sun and Mohegan Sun at Pocono Downs and the Pennsylvania off-track wagering facilities; |
| the local, regional, national or global economic climate, including the lingering effects of the economic recession, which has affected our revenues and earnings; |
| increased competition, including the legalization or expansion of gaming in New England, New York, New Jersey or Pennsylvania; |
| our leverage and ability to meet our debt service obligations and maintain compliance with financial debt covenants; |
| the continued availability of financing; |
| our dependence on existing management; |
| our suspension of the hotel, retail and new parking garage elements of Project Horizon; |
| our ability to integrate new amenities from expansions to our facilities into our current operations and manage the expanded facilities; |
| changes in federal or state tax laws or the administration of such laws; |
| changes in gaming laws or regulations, including the limitation, denial or suspension of licenses required under gaming laws and regulations; |
| changes in applicable laws pertaining to the service of alcohol, smoking or other amenities offered at Mohegan Sun and Mohegan Sun at Pocono Downs; |
| our ability to implement successfully our diversification strategy; and |
| an act of terrorism on the United States. |
Additional information concerning potential factors that could affect our financial results is included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2010, as well as our other reports and filings with the SEC. The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date of this report. We do not undertake any obligation to update or supplement any forward-looking statements to reflect subsequent events or circumstances, except as required by law. We cannot assure you that projected results or events will be achieved or will occur.
The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and the related notes beginning on page 3 of this Quarterly Report on Form 10-Q.
Overview
The Tribe and the Authority
The Mohegan Tribe of Indians of Connecticut, or the Mohegan Tribe or the Tribe, is a federally-recognized Indian tribe with an approximately 507-acre reservation situated in Southeastern Connecticut, adjacent to
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Uncasville, Connecticut. Under the Indian Gaming Regulatory Act of 1988, or IGRA, federally-recognized Indian tribes are permitted to conduct full-scale casino gaming operations on tribal land, subject to, among other things, the negotiation of a compact with the affected state. The Tribe and the State of Connecticut entered into a compact, the Mohegan Compact, which was approved by the United States Secretary of the Interior. We were established as an instrumentality of the Tribe, with the exclusive authority to conduct and regulate gaming activities for the Tribe on Tribal lands and the non-exclusive authority to conduct such activities elsewhere. Our gaming operation at Mohegan Sun is one of only two legally authorized gaming operations in New England offering traditional slot machines and table games. Through our subsidiary, Downs Racing, L.P., or Downs Racing, we also own and operate Mohegan Sun at Pocono Downs, a gaming and entertainment facility located in Plains Township, Pennsylvania, and several off-track wagering facilities, or OTW facilities, located elsewhere in Pennsylvania, collectively the Pennsylvania entities. We are governed by a nine-member Management Board, whose members also comprise the Mohegan Tribal Council, the governing body of the Tribe. Any change in the composition of the Mohegan Tribal Council results in a corresponding change in our Management Board.
Mohegan Sun
In October 1996, we opened a gaming and entertainment complex known as Mohegan Sun. Mohegan Sun is located on a 185-acre site on the Tribes reservation overlooking the Thames River with direct access from Interstate 395 and Connecticut Route 2A. Mohegan Sun is approximately 125 miles from New York City, New York, and approximately 100 miles from Boston, Massachusetts. In 2002, we completed a major expansion of Mohegan Sun known as Project Sunburst, which included increased gaming, restaurant and retail space, an entertainment arena, an approximately 1,200-room luxury Sky Hotel Tower and approximately 100,000 square feet of convention space. In 2007, we opened Sunrise Square, and, in 2008, we opened Casino of the Wind.
Mohegan Sun currently operates in an approximately 3.1 million square-foot facility, which includes the following:
Casino of the Earth
As of March 31, 2011, Casino of the Earth offered:
| approximately 188,000 square feet of gaming space; |
| approximately 3,450 slot machines and 190 table games, including blackjack, roulette, craps and baccarat; |
| Sunrise Square, a 9,800-square-foot Asian-themed gaming area, including 50 table games; |
| an approximately 9,000-square-foot simulcasting Racebook facility; |
| food and beverage amenities, including: Birches Bar & Grill, an approximately 200-seat full-service restaurant, a Hong Kong-style food outlet offering authentic Southeast Asian cuisine, an 87-seat Bobby Flays Bobbys Burger Palace and multiple service bars, all operated by us, as well as Frank Pepe Pizzeria Napoletana and Fidelias Market, an approximately 200-seat multi-station food court, operated by third-parties, for a total seating of approximately 800; |
| four Mohegan Sun-owned retail shops, offering products ranging from Mohegan Sun logo souvenirs to cigars; and |
| the Wolf Den, an approximately 10,000-square-foot, 400-seat lounge featuring live entertainment seven days a week. |
Casino of the Sky
As of March 31, 2011, Casino of the Sky offered:
| approximately 119,000 square feet of gaming space; |
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| approximately 2,175 slot machines and 110 table games, including blackjack, roulette and craps; |
| food and beverage amenities, including: two full-service restaurants (Todd Englishs Tuscany and Bobby Flays Bar Americain), a 330-seat buffet, a 24-hour coffee shop and four lounges and bars, all operated by us, as well as five full-service restaurants, three quick-service restaurants and a multi-station food court operated by third-parties, for a total seating of approximately 2,700; |
| The Shops at Mohegan Sun containing 30 retail shops, six of which we own; |
| the Mohegan Sun Arena with seating for up to 10,000; |
| an approximately 1,200-room luxury Sky Hotel Tower, including a private high-limit table games suite; |
| Mohegan After Dark, consisting of Ultra 88, a nightclub, Luckys Lounge and Dubliner, an Irish pub, all operated by a third-party; |
| an approximately 20,000-square-foot spa operated by a third-party; |
| approximately 100,000 square feet of convention space; and |
| a child care facility and an arcade-style entertainment area operated by a third-party. |
Casino of the Wind
As of March 31, 2011, Casino of the Wind offered:
| approximately 45,000 square feet of gaming space; |
| approximately 725 slot machines, 30 table games, including blackjack, roulette and craps, and a 42-table themed poker room; |
| food and beverage amenities, including: a two-level, 16,000-square-foot Jimmy Buffetts Margaritaville Restaurant, operated by a third-party, and Chiefs Deli, a casual dining restaurant, and a bar, both operated by us, for a total seating of approximately 500; and |
| a retail shop operated by a third-party. |
Mohegan Sun offers parking for approximately 13,000 patrons and 3,900 employees. In addition, we operate a gasoline and convenience center, an approximately 3,600-square-foot, 20-pump facility located adjacent to Mohegan Sun.
Mohegan Basketball Club
We formed Mohegan Basketball Club, LLC, or MBC, to own and operate a professional basketball team in the Womens National Basketball Association, or the WNBA. In January 2003, MBC entered into a membership agreement with the WNBA permitting it to operate the Connecticut Sun basketball team. The team plays its home games in the Mohegan Sun Arena.
Mohegan Golf
We formed Mohegan Golf, LLC, or Mohegan Golf, to purchase and operate a golf course in Southeastern Connecticut. In May 2007, Mohegan Golf acquired substantially all of the assets of Pautipaug Country Club Inc., which included a golf course in Sprague and Franklin, Connecticut. The golf course was renamed Mohegan Sun Country Club at Pautipaug and reopened under the ownership of Mohegan Golf in June 2007. In August 2010, the golf course and related facilities were temporarily closed for renovations and are scheduled to re-open in the spring of 2012.
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Mohegan Sun at Pocono Downs
Through Downs Racing, we own and operate a gaming and entertainment facility known as Mohegan Sun at Pocono Downs located on a 400-acre site in Plains Township, Pennsylvania, and OTW facilities located in Carbondale, East Stroudsburg, Hazleton and Lehigh Valley, Pennsylvania. In November 2006, Mohegan Sun at Pocono Downs became the first location to offer slot machine gaming in the Commonwealth of Pennsylvania when Phase I of its gaming and entertainment facility opened. In July 2008, we completed a major expansion of Mohegan Sun at Pocono Downs known as Project Sunrise, which included increased gaming, restaurant and retail space. In July 2010, Mohegan Sun at Pocono Downs opened its table game and poker operations, including additional non-smoking sections and a high-limit gaming area.
As of March 31, 2011, Mohegan Sun at Pocono Downs operates in an approximately 400,000-square-foot facility, which includes the following:
| approximately 82,000 square feet of gaming space; |
| approximately 2,325 slot machines, 66 table games, including blackjack, roulette and craps, and an 18-table poker room; |
| food and beverage amenities, including: Ruths Chris Steakhouse, Rustic Kitchen Bistro and Bar, which features dining and a live cooking show, Bar Louie, a casual bar and restaurant, Timbers Buffet, a 300-seat Mohegan Indian cultural heritage themed buffet, and a food court, including: Johnny Rockets, Hot Dog Hall of Fame, Puck Express by Wolfgang Puck and Ben & Jerrys Ice Cream, for a total seating of approximately 1,800; |
| five retail shops, one of which we own, offering products ranging from Mohegan Sun at Pocono Downs logo souvenirs to fine apparel; and |
| three bars/lounges: Sunburst Bar, featured in the center of the gaming floor, Breakers Night Club and Pearl Sushi Bar. |
Market and Competition from Other Gaming Operations
Our gaming operation at Mohegan Sun is one of only two legally authorized gaming operations in New England offering traditional slot machines and table games, with the other operation being our sole gaming competitor in Connecticut, Foxwoods Resort Casino, including the MGM Grand at Foxwoods, collectively Foxwoods, owned by the Mashantucket Pequot Tribe, or the MPT, and located approximately 10 miles from Mohegan Sun. We also currently face competition from casinos in Atlantic City, New Jersey, several casinos and gaming facilities located on Indian tribal lands in the State of New York and video lottery terminal facilities, or VLT facilities, in the states of New York and Rhode Island. In addition, we face competition in and from the Northeastern Pennsylvania gaming market, both in the immediate market for Mohegan Sun at Pocono Downs, and for Mohegan Sun, in marketing and attracting patrons from the New York City metropolitan region. Please refer to Part I. Item 1. BusinessMarket and Competition from Other Gaming Operations in our Annual Report on Form 10-K for the fiscal year ended September 30, 2010 and our other reports and filings with the SEC for further details regarding current and potential competition from other gaming operations.
The following is a summary of developments that have occurred since December 31, 2010:
In the State of New York, in March 2011, Genting New York, the developer of a new VLT facility at Aqueduct Raceway in Queens announced that the opening of the VLT facility, initially scheduled to open in the spring of 2011 with 1,600 VLTs, will be delayed until the summer of 2011. Genting New York also announced that phase I of the facility will now include 2,500 VLTs and a 2,500-bay parking garage. Phase II of the facility is expected to open in the fall of 2011 with an additional 2,025 VLTs. In addition, in March 2011, the governor of New York announced a budget deal with the state legislature that reportedly authorizes the State Lottery to institute a free play allowance program for all VLT operators in the state. According to published reports, the free
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play allowance program will allow VLT facilities to offer free play credits in amounts up to 10 percent of net machine income.
In the Commonwealth of Pennsylvania, in April 2011, the Pennsylvania Gaming Control Board, or PGCB, awarded a Category Three gaming license to the Nemacolin Woodlands Resort located in Wharton Township, approximately 275 miles from Mohegan Sun at Pocono Downs. Also in the Commonwealth of Pennsylvania, it has been reported that Sands Casino Resort Bethlehem plans to open its new 302-room hotel on May 27, 2011.
Explanation of Key Financial Statement Captions
There has been no material change from the explanation of key financial statement captions previously disclosed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2010.
Results of Operations
Summary Operating Results
As of March 31, 2011, we own and operate Mohegan Sun, the Connecticut Sun WNBA franchise and the Mohegan Sun Country Club, or collectively, the Connecticut entities, and the Pennsylvania entities. All of our revenues are derived from these operations. The Connecticut Sun WNBA franchise and the Mohegan Sun Country Club are aggregated with the Mohegan Sun operating segment because these operations all share similar economic characteristics, which is to generate gaming and entertainment revenues by attracting patrons to Mohegan Sun. Our executive officers review and assess the performance and operating results and determine the proper allocation of resources to the Connecticut entities and the Pennsylvania entities on a separate basis. We, therefore, believe that we have two separate reportable segments: (1) Mohegan Sun, which includes the operations of the Connecticut entities, and (2) Mohegan Sun at Pocono Downs, which includes the operations of the Pennsylvania entities.
The following table summarizes our results on a property basis (in thousands, except where noted):
For the Three Months Ended March 31, | For the Six Months Ended March 31, | |||||||||||||||||||||||||||||||
2011 | 2010 | Variance | Percentage Variance |
2011 | 2010 | Variance | Percentage Variance |
|||||||||||||||||||||||||
Net revenues: |
||||||||||||||||||||||||||||||||
Mohegan Sun |
$ | 274,165 | $ | 290,079 | $ | (15,914 | ) | (5.5 | %) | $ | 537,995 | $ | 572,170 | $ | (34,175 | ) | (6.0 | %) | ||||||||||||||
Mohegan Sun at Pocono Downs |
73,779 | 62,216 | 11,563 | 18.6 | % | 145,554 | 121,936 | 23,618 | 19.4 | % | ||||||||||||||||||||||
Total |
$ | 347,944 | $ | 352,295 | $ | (4,351 | ) | (1.2 | %) | $ | 683,549 | $ | 694,106 | $ | (10,557 | ) | (1.5 | %) | ||||||||||||||
Income (loss) from operations: |
||||||||||||||||||||||||||||||||
Mohegan Sun |
$ | 53,247 | $ | 52,364 | $ | 883 | 1.7 | % | $ | 95,791 | $ | 92,286 | $ | 3,505 | 3.8 | % | ||||||||||||||||
Mohegan Sun at Pocono Downs |
7,594 | 3,891 | 3,703 | 95.2 | % | 13,913 | 6,148 | 7,765 | 126.3 | % | ||||||||||||||||||||||
Corporate |
(3,813 | ) | (4,068 | ) | 255 | (6.3 | %) | (8,392 | ) | (8,417 | ) | 25 | (0.3 | %) | ||||||||||||||||||
Total |
$ | 57,028 | $ | 52,187 | $ | 4,841 | 9.3 | % | $ | 101,312 | $ | 90,017 | $ | 11,295 | 12.5 | % | ||||||||||||||||
Net income attributable to Mohegan Tribal Gaming Authority |
$ | 25,208 | $ | 20,027 | $ | 5,181 | 25.9 | % | $ | 38,138 | $ | 24,431 | $ | 13,707 | 56.1 | % | ||||||||||||||||
Operating margin: |
||||||||||||||||||||||||||||||||
Mohegan Sun |
19.4 | % | 18.1 | % | 1.3 | % | 7.2 | % | 17.8 | % | 16.1 | % | 1.7 | % | 10.6 | % | ||||||||||||||||
Mohegan Sun at Pocono Downs |
10.3 | % | 6.3 | % | 4.0 | % | 63.5 | % | 9.6 | % | 5.0 | % | 4.6 | % | 92.0 | % | ||||||||||||||||
Total |
16.4 | % | 14.8 | % | 1.6 | % | 10.8 | % | 14.8 | % | 13.0 | % | 1.8 | % | 13.8 | % |
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The most significant factors and trends that we believe impacted our financial performance were as follows:
| cost containment initiatives implemented in September 2010 at Mohegan Sun; |
| the continued weakness in discretionary consumer spending; |
| an increasingly competitive promotional environment, including increased use of free promotional slot plays; |
| the July 2010 addition of table game and poker operations at Mohegan Sun at Pocono Downs; and |
| record snowfall in the Northeast region during January 2011. |
Net revenues for the three months and six months ended March 31, 2011 compared to the same periods in the prior year decreased primarily as a result of declines in gaming and non-gaming revenues at Mohegan Sun. These results were partially offset by the addition of table game and poker revenues from the July 2010 opening of table game and poker operations at Mohegan Sun at Pocono Downs.
Income from operations for the three months and six months ended March 31, 2011 compared to the same periods in the prior year increased primarily due to the addition of table game and poker operations at Mohegan Sun at Pocono Downs. The increases in income from operations also were attributable to lower operating costs and expenses at Mohegan Sun reflecting, in part, cost containment initiatives implemented in September 2010.
Net income attributable to the Authority for the three months and six months ended March 31, 2011 compared to the same periods in the prior year increased primarily as a result of the increases in income from operations.
Mohegan Sun
Gross Revenues
Gross revenues consisted of the following (in thousands):
For the Three Months Ended March 31, | For the Six Months Ended March 31, | |||||||||||||||||||||||||||||||
2011 | 2010 | Variance | Percentage Variance |
2011 | 2010 | Variance | Percentage Variance |
|||||||||||||||||||||||||
Gaming |
$ | 246,442 | $ | 259,728 | $ | (13,286 | ) | (5.1 | %) | $ | 486,166 | $ | 512,722 | $ | (26,556 | ) | (5.2 | %) | ||||||||||||||
Food and beverage |
15,746 | 18,920 | (3,174 | ) | (16.8 | %) | 31,893 | 38,318 | (6,425 | ) | (16.8 | %) | ||||||||||||||||||||
Hotel |
8,657 | 8,964 | (307 | ) | (3.4 | %) | 17,654 | 18,506 | (852 | ) | (4.6 | %) | ||||||||||||||||||||
Retail, entertainment and other |
24,760 | 26,438 | (1,678 | ) | (6.3 | %) | 45,604 | 52,547 | (6,943 | ) | (13.2 | %) | ||||||||||||||||||||
Total |
$ | 295,605 | $ | 314,050 | $ | (18,445 | ) | (5.9 | %) | $ | 581,317 | $ | 622,093 | $ | (40,776 | ) | (6.6 | %) | ||||||||||||||
The following table summarizes the percentage of gross revenues from each of the four revenue sources:
For the Three Months Ended March 31, |
For the Six Months Ended March 31, |
|||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Gaming |
83.4 | % | 82.7 | % | 83.6 | % | 82.4 | % | ||||||||
Food and beverage |
5.3 | % | 6.0 | % | 5.5 | % | 6.2 | % | ||||||||
Hotel |
2.9 | % | 2.9 | % | 3.0 | % | 3.0 | % | ||||||||
Retail, entertainment and other |
8.4 | % | 8.4 | % | 7.9 | % | 8.4 | % | ||||||||
Total |
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
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The following table presents data related to gaming operations (in thousands, except where noted):
For the Three Months Ended March 31, | For the Six Months Ended March& |