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 ~~December 31, 2019~~

June 30, 2020


☐
o	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

~~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

(Registrant’s telephone number, including area code)

~~___________________________________________~~

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



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

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 ☐¨ No ☒x*



*	The registrant is a voluntary filer of reports required to be filed by certain companies under Sections 13 or 15(d) of the Securities Exchange Act of 1934 and has filed all reports that would have been required during the preceding 12 months had it been subject to such filing requirements.

* The registrant is a voluntary filer of reports required to be filed by certain companies under Sections 13 or 15(d) of the Securities Exchange Act of 1934 and has filed all reports that would have been required during the preceding 12 months had it been subject to such filing requirements.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒x No ☐¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filero	☐	Accelerated filero	☐

Non-accelerated filerx	☒	Smaller reporting companyo	☐

Emerging growth companyo	☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐¨ No ☒x

MOHEGAN TRIBAL GAMING AUTHORITY

INDEX TO FORM 10-Q

		Page Number

		~~Page~~ ~~Number~~
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets as of ~~December 31, 2019~~June 30, 2020 and September 30, 2019 (unaudited)	3

	Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the Three Months and Nine Months Ended ~~December 31,~~June 30, 2020 and 2019 ~~and 2018~~ (unaudited)	4

	Condensed Consolidated Statements of Changes in Capital for the Three Months and Nine Months Ended ~~December 31,~~June 30, 2020 and 2019 ~~and 2018~~ (unaudited)	5

	Condensed Consolidated Statements of Cash Flows for the ~~Three~~Nine Months Ended ~~December 31,~~June 30, 2020 and 2019 ~~and 2018~~ (unaudited)	6

	Notes to Condensed Consolidated Financial Statements (unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18 21

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	24 31

Item 4.	Controls and Procedures	24 31

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	25 32

Item 1A.	Risk Factors	25 32

Item 6.5.	~~Exhibits~~Other Information	26 32

~~Signatures.~~ Item 6.	Exhibits	33

Signatures.	Mohegan Tribal Gaming Authority	27 34

PART I. ~~FINANCIAL~~FINANCIAL INFORMATION


~~Item 1.~~	~~Financial Statements~~

Item 1. Financial Statements

MOHEGAN TRIBAL GAMING AUTHORITY

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands) (unaudited)

	June 30, 2020			September 30, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	149,435		$	130,138
Restricted cash and cash equivalents		1,698			4,960
Accounts receivable, net of allowance for doubtful accounts of $15,041 and $11,715, respectively		48,499			52,764
Inventories		17,431			18,248
Due from Ontario Lottery and Gaming Corporation		4,806			10,946
Casino Operating and Services Agreement customer contract asset		8,902			3,004
Other current assets		45,989			47,276
Total current assets		276,760			267,336
Restricted cash and cash equivalents		61,148			145,631
Property and equipment, net		1,480,397			1,520,687
Right-of-use operating lease assets		341,533			—
Other intangible assets, net		327,078			455,265
Casino Operating and Services Agreement customer contract asset, net of current portion		118,841			50,192
Notes receivable		2,514			2,514
Other assets, net		80,899			69,971
Total assets	$	2,689,170		$	2,511,596
LIABILITIES AND CAPITAL
Current liabilities:
Current portion of long-term debt	$	77,829		$	76,909
Current portion of finance lease obligations		2,291			1,133
Current portion of right-of-use operating lease obligations		14,019			—
Trade payables		23,634			16,672
Accrued payroll		32,387			53,225
Construction payables		46,236			11,888
Accrued interest payable		14,395			19,804
Due to Ontario Lottery and Gaming Corporation		30,353			30,662
Other current liabilities		155,505			174,231
Total current liabilities		396,649			384,524
Long-term debt, net of current portion		1,963,011			1,832,248
Finance lease obligations, net of current portion		28,067			28,561
Right-of-use operating lease obligations, net of current portion		344,100			—
Accrued payroll		868			—
Build-to-suit liability		—			90,292
Other long-term liabilities		33,648			38,538
Total liabilities		2,766,343			2,374,163
Commitments and Contingencies
Capital:
Retained earnings (deficit)		(76,615	)		137,124
Accumulated other comprehensive loss		(7,730	)		(6,633	)
Total capital attributable to Mohegan Tribal Gaming Authority		(84,345	)		130,491
Non-controlling interests		7,172			6,942
Total capital		(77,173	)		137,433
Total liabilities and capital	$	2,689,170		$	2,511,596

December 31,
2019 September 30,
2019
ASSETS
Current assets:
Cash and cash equivalents $ 139,164
$ 130,138
Restricted cash and cash equivalents 6,706
4,960
Accounts receivable, net of allowance for doubtful accounts of $12,007 and $11,715, respectively 55,388
52,764
Inventories 17,794
18,248
Due from Ontario Lottery and Gaming Corporation 11,905
10,946
Casino Operating and Services Agreement customer contract asset 471
3,004
Other current assets 57,319
47,276
Total current assets 288,747
267,336
Restricted cash and cash equivalents 136,014
145,631
Property and equipment, net 1,444,019
1,520,687
Right-of-use operating lease assets 361,036
—
Other intangible assets, net 456,672
455,265
Casino Operating and Services Agreement customer contract asset, net of current portion 95,208
50,192
Notes receivable 2,514
2,514
Other assets, net 71,314
69,971
Total assets $ 2,855,524
$ 2,511,596
LIABILITIES AND CAPITAL
Current liabilities:
Current portion of long-term debt $ 74,266
$ 76,909
Current portion of finance lease obligations 1,794
1,133
Current portion of right-of-use operating lease obligations 9,894
—
Trade payables 20,811
16,672
Accrued payroll 48,853
53,225
Construction payables 24,040
11,888
Accrued interest payable 10,070
19,804
Due to Ontario Lottery and Gaming Corporation 38,413
30,662
Other current liabilities 171,585
174,231
Total current liabilities 399,726
384,524
Long-term debt, net of current portion 1,885,752
1,832,248
Finance lease obligations, net of current portion 30,043
28,561
Right-of-use operating lease obligations, net of current portion 359,848
—
Build-to-suit liability —
90,292
Other long-term liabilities 34,194
38,538
Total liabilities 2,709,563
2,374,163
Commitments and Contingencies

Capital:
Retained earnings 134,205
137,124
Accumulated other comprehensive income (loss) 4,253
(6,633 )
Total capital attributable to Mohegan Tribal Gaming Authority 138,458
130,491
Non-controlling interests 7,503
6,942
Total capital 145,961
137,433
Total liabilities and capital $ 2,855,524
$ 2,511,596

The accompanying notes are an integral part of these condensed consolidated financial statements.

MOHEGAN TRIBAL GAMING AUTHORITY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME

(LOSS)

(in thousands) (unaudited)

	For the			For the			For the			For the
	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
	June 30, 2020			June 30, 2019			June 30, 2020			June 30, 2019
Revenues:
Gaming	$	89,379		$	235,418		$	569,642		$	669,172
Food and beverage		3,009			37,171			91,098			105,485
Hotel		2,589			23,794			50,293			68,776
Retail, entertainment and other		12,222			51,224			109,919			131,371
Net revenues		107,199			347,607			820,952			974,804
Operating costs and expenses:
Gaming, including related party transactions of $755, $703, $2,265 and $2,107, respectively		41,834			135,238			330,200			389,872
Food and beverage		5,075			29,080			79,160			81,611
Hotel, including related party transactions of $2,161, $2,161, $6,483 and $6,483, respectively		4,296			12,052			26,611			31,881
Retail, entertainment and other		4,026			22,934			45,178			63,203
Advertising, general and administrative, including related party transactions of $4,517, $10,601, $23,129 and $33,417, respectively		35,672			53,534			172,768			149,664
Corporate, including related party transactions of $1,679, $1,821, $6,060 and $4,655, respectively		7,700			13,839			31,959			38,728
Depreciation and amortization		26,477			22,810			82,847			92,682
Impairment of Mohegan Sun Pocono's intangible assets		—			—			126,596			—
Other, net		2,656			2,910			9,000			6,357
Total operating costs and expenses		127,736			292,397			904,319			853,998
Income (loss) from operations		(20,537	)		55,210			(83,367	)		120,806
Other income (expense):
Interest income		270			1,149			1,549			5,639
Interest expense, net of capitalized interest		(32,478	)		(35,690	)		(98,830	)		(106,832	)
Other, net		120			(254	)		(2,904	)		(582	)
Total other expense		(32,088	)		(34,795	)		(100,185	)		(101,775	)
Income (loss) before income tax		(52,625	)		20,415			(183,552	)		19,031
Income tax benefit (provision)		2,696			(538	)		3,016			(730	)
Net income (loss)		(49,929	)		19,877			(180,536	)		18,301
Income attributable to non-controlling interests		(116	)		(38	)		(209	)		(198	)
Net income (loss) attributable to Mohegan Tribal Gaming Authority		(50,045	)		19,839			(180,745	)		18,103
Comprehensive income (loss):
Foreign currency translation adjustment		6,088			(4,041	)		(1,076	)		(8,346	)
Other		—			—			—			44
Other comprehensive income (loss)		6,088			(4,041	)		(1,076	)		(8,302	)
Other comprehensive (income) loss attributable to non-controlling interests		(229	)		231			(21	)		446
Other comprehensive income (loss) attributable to Mohegan Tribal Gaming Authority		5,859			(3,810	)		(1,097	)		(7,856	)
Comprehensive income (loss) attributable to Mohegan Tribal Gaming Authority	$	(44,186	)	$	16,029		$	(181,842	)	$	10,247

For the For the
Three Months Ended Three Months Ended
December 31, 2019 December 31, 2018
Revenues:
Gaming $ 264,269
$ 221,935
Food and beverage 50,532
34,806
Hotel 27,589
22,977
Retail, entertainment and other 56,662
39,782
Net revenues 399,052
319,500
Operating costs and expenses:
Gaming, including related party transactions of $755 and $702, respectively 157,188
128,664
Food and beverage 41,693
26,447
Hotel, including related party transactions of $2,161 and $2,161, respectively 11,842
9,803
Retail, entertainment and other 24,986
20,762
Advertising, general and administrative, including related party transactions of $9,566 and $11,332, respectively 74,214
49,018
Corporate, including related party transactions of $2,253 and $1,397, respectively 14,090
12,425
Depreciation and amortization 28,544
27,090
Other, net 3,070
1,921
Total operating costs and expenses 355,627
276,130
Income from operations 43,425
43,370
Other income (expense):
Interest income 751
3,439
Interest expense (35,356 ) (36,010 )
Other, net (592 ) (30 )
Total other expense (35,197 ) (32,601 )
Income before income tax 8,228
10,769
Income tax benefit (provision) 1,196
(61 )
Net income 9,424
10,708
Income attributable to non-controlling interests (30 ) (86 )
Net income attributable to Mohegan Tribal Gaming Authority 9,394
10,622
Comprehensive income:
Foreign currency translation adjustment 11,417
1,899
Other comprehensive income 11,417
1,899
Other comprehensive income attributable to non-controlling interests (531 ) (95 )
Other comprehensive income attributable to Mohegan Tribal Gaming Authority 10,886
1,804
Comprehensive income attributable to Mohegan Tribal Gaming Authority $ 20,280
$ 12,426

The accompanying notes are an integral part of these condensed consolidated financial statements.

MOHEGAN TRIBAL GAMING AUTHORITY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL

(in thousands) (unaudited)

	Retained Earnings (Deficit)			Accumulated Other Comprehensive Income (Loss)			Total Capital Attributable to Mohegan Tribal Gaming Authority			Non- controlling Interests			Total Capital
Balance, March 31, 2020	$	(17,989	)	$	(13,589	)	$	(31,578	)	$	6,827		$	(24,751	)
Net income (loss)		(50,045	)		—			(50,045	)		116			(49,929	)
Foreign currency translation adjustment		—			5,859			5,859			229			6,088
Distributions to Mohegan Tribe		(8,333	)		—			(8,333	)		—			(8,333	)
Distributions to Salishan Company, LLC related to the Cowlitz Project		(248	)		—			(248	)		—			(248	)
Balance, June 30, 2020	$	(76,615	)	$	(7,730	)	$	(84,345	)	$	7,172		$	(77,173	)

Balance, September 30, 2019	$	137,124		$	(6,633	)	$	130,491		$	6,942		$	137,433
Net income (loss)		(180,745	)		—			(180,745	)		209			(180,536	)
Foreign currency translation adjustment		—			(1,097	)		(1,097	)		21			(1,076	)
Distributions to Mohegan Tribe		(32,333	)		—			(32,333	)		—			(32,333	)
Distributions to Salishan Company, LLC related to the Cowlitz Project		(661	)		—			(661	)		—			(661	)
Balance, June 30, 2020	$	(76,615	)	$	(7,730	)	$	(84,345	)	$	7,172		$	(77,173	)

Balance, March 31, 2019	$	174,053		$	7,016		$	181,069		$	7,658		$	188,727
Net income		19,839			—			19,839			38			19,877
Foreign currency translation adjustment		—			(3,810	)		(3,810	)		(231	)		(4,041	)
Distributions to Mohegan Tribe		(15,000	)		—			(15,000	)		—			(15,000	)
Balance, June 30, 2019	$	178,892		$	3,206		$	182,098		$	7,465		$	189,563

Balance, September 30, 2018	$	250,707		$	11,062		$	261,769		$	9,025		$	270,794
Cumulative-effect adjustment for the adoption of ASC 606 "Revenue from Contracts with Customers"		(41,575	)		—			(41,575	)		—			(41,575	)
Net income		18,103			—			18,103			198			18,301
Foreign currency translation adjustment		—			(7,900	)		(7,900	)		(446	)		(8,346	)
Distributions to Mohegan Tribe		(39,000	)		—			(39,000	)		—			(39,000	)
Distributions to Mohegan Tribe related to the Cowlitz Project		(730	)		—			(730	)		—			(730	)
Redemption of Mohegan Tribe membership interest in the Cowlitz Project		(4,114	)		—			(4,114	)		(5,886	)		(10,000	)
Redemption of membership interest related to the New England Black Wolves franchise		(4,499	)		—			(4,499	)		4,574			75
Other		—			44			44			—			44
Balance, June 30, 2019	$	178,892		$	3,206		$	182,098		$	7,465		$	189,563

Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Capital Attributable to Mohegan Tribal Gaming Authority
Non-controlling
Interests
Total Capital
Balance, September 30, 2019 $ 137,124
$ (6,633 ) $ 130,491
$ 6,942
$ 137,433
Net income 9,394
—
9,394
30
9,424
Foreign currency translation adjustment —
10,886
10,886
531
11,417
Distributions to Mohegan Tribe (12,000 ) —
(12,000 ) —
(12,000 )
Distributions to Salishan Company, LLC related to the Cowlitz Project (313 ) —
(313 ) —
(313 )
Balance, December 31, 2019 $ 134,205
$ 4,253
$ 138,458
$ 7,503
$ 145,961

Balance, September 30, 2018 $ 250,707
$ 11,062
$ 261,769
$ 9,025
$ 270,794
Cumulative-effect adjustment for the adoption of ASC 606 "Revenue from Contracts with Customers" (41,575 ) —
(41,575 ) —
(41,575 )
Net income 10,622
—
10,622
86
10,708
Foreign currency translation adjustment —
1,804
1,804
95
1,899
Distributions to Mohegan Tribe (12,000 ) —
(12,000 ) —
(12,000 )
Redemption of membership interest related to the New England Black Wolves franchise (4,499 ) —
(4,499 ) 4,574
75
Balance, December 31, 2018 $ 203,255
$ 12,866
$ 216,121
$ 13,780
$ 229,901

The accompanying notes are an integral part of these condensed consolidated financial statements.

MOHEGAN TRIBAL GAMING AUTHORITY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) (unaudited)

	For the			For the
	Nine Months Ended			Nine Months Ended
	June 30, 2020			June 30, 2019
Cash flows provided by (used in) operating activities:
Net income (loss)	$	(180,536	)	$	18,301
Adjustments to reconcile net income (loss) to net cash flows provided by (used in) operating activities:
Depreciation and amortization		82,847			92,682
Non-cash operating lease expense		9,364			—
Accretion of discounts		857			864
Amortization of discounts and debt issuance costs		13,977			14,619
Provision for losses on receivables		2,676			962
Impairment of Mohegan Sun Pocono's intangible assets		126,596			—
Deferred income tax provision		(3,262	)		—
Other, net		2,255			(26	)
Changes in operating assets and liabilities, net of effect of the MGE Niagara Resorts acquisition:
Accounts receivable		1,237			(9,023	)
Accrued interest on notes receivable related to the Cowlitz Project		—			71,696
Inventories		714			(269	)
Due from Ontario Lottery and Gaming Corporation		5,482			—
Casino Operating and Services Agreement customer contract asset		(78,210	)		—
Other assets		398			(6,901	)
Trade payables		6,672			965
Accrued interest		(5,402	)		(9,189	)
Due to Ontario Lottery and Gaming Corporation		3,598			—
Operating lease liabilities		(162	)		—
Other liabilities		(22,713	)		(1,712	)
Net cash flows provided by (used in) operating activities		(33,612	)		172,969
Cash flows used in investing activities:
Purchases of property and equipment		(104,384	)		(52,289	)
Acquisition of the MGE Niagara Resorts, net of cash acquired		(1,666	)		(72,287	)
Proceeds from notes receivable related to the Cowlitz Project		—			32,026
Investment in Mohegan Hotel Holding, LLC		(10,750	)		—
Other, net		(1,171	)		(12,698	)
Net cash flows used in investing activities		(117,971	)		(105,248	)
Cash flows provided by financing activities:
Senior secured credit facility borrowings - revolving and line of credit		807,525			1,014,972
Senior secured credit facility repayments - revolving and line of credit		(662,525	)		(966,972	)
Senior secured credit facility repayments - term loans A and B		(37,104	)		(51,011	)
MGE Niagara Resorts credit facility borrowings - revolving and line of credit		77,537			—
MGE Niagara Resorts credit facility repayments - revolving and line of credit		(51,110	)		—
MGE Niagara Resorts credit facility borrowings - term loan		—			75,220
MGE Niagara Resorts credit facility repayments - term loan		(2,770	)		—
Proceeds from MGE Niagara Resorts convertible debenture		—			30,088
Other borrowings		2,845			11,335
Other repayments		(14,230	)		(6,938	)
Payments on finance lease obligations		(1,034	)		—
Distributions to Mohegan Tribe		(32,333	)		(39,000	)
Distributions to Salishan Company, LLC related to the Cowlitz Project		(661	)		(730	)
Redemption of Mohegan Tribe membership interest in the Cowlitz Project		—			(10,000	)
Payments of financing fees		(34	)		(3,256	)
Other, net		(1,527	)		(1,527	)
Net cash flows provided by financing activities		84,579			52,181
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents		(67,004	)		119,902
Effect of exchange rate on cash, cash equivalents, restricted cash and restricted cash equivalents		(1,444	)		(6,155	)
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period		280,729			234,626
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period	$	212,281		$	348,373
Reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents to the condensed consolidated balance sheets:
Cash and cash equivalents	$	149,435		$	162,066
Restricted cash and cash equivalents, current		1,698			9,321
Restricted cash and cash equivalents, non-current		61,148			176,986
Cash, cash equivalents, restricted cash and restricted cash equivalents	$	212,281		$	348,373
Supplemental disclosures:
Cash paid for interest	$	95,211		$	101,393
Non-cash transactions:
Right-of-use operating lease assets	$	360,933		$	—
Right-of-use operating lease obligations	$	361,078		$	—
Finance lease assets and obligations	$	2,511		$	29,140
Construction payables	$	46,236		$	15,739
Senior secured credit facility reductions	$	10,514		$	13,296
MGE Niagara Resorts - recognition (derecognition) of build-to-suit asset and liability	$	(90,675)		$	77,403
MGE Niagara Resorts – recognition of parking license asset and liability		—			5,222
Payment by third-party for interactive gaming license	$	—		$	8,000

For the For the
Three Months Ended Three Months Ended
December 31, 2019 December 31, 2018
Cash flows provided by (used in) operating activities:
Net income $ 9,424
$ 10,708
Adjustments to reconcile net income to net cash flows provided by (used in) operating activities:
Depreciation and amortization 28,544
27,090
Non-cash operating lease expense 3,273
—
Accretion of discounts 317
194
Amortization of discounts and debt issuance costs 4,550
4,845
Provision for losses on receivables 321
369
Deferred income tax provision (1,316 ) —
Other, net 244
(247 )
Changes in operating assets and liabilities, net of effect of the MGE Niagara Resorts acquisition:
Accounts receivable (2,657 ) (5,594 )
Accrued interest on notes receivable related to the Cowlitz Project —
72,166
Inventories 510
476
Due from Ontario Lottery and Gaming Corporation (761 ) —
Casino Operating and Services Agreement customer contract asset (40,976 ) —
Other assets (9,033 ) (2,189 )
Trade payables 4,058
(655 )
Accrued interest (9,743 ) (10,025 )
Due to Ontario Lottery and Gaming Corporation 8,591
—
Operating lease liabilities (2,057 ) —
Other liabilities (4,247 ) (16,087 )
Net cash flows provided by (used in) operating activities (10,958 ) 81,051
Cash flows provided by (used in) investing activities:
Purchases of property and equipment (22,218 ) (14,064 )
Acquisition of the MGE Niagara Resorts, net of cash acquired (1,666 ) —
Proceeds from notes receivable related to the Cowlitz Project —
32,026
Other, net (1,390 ) (1,364 )
Net cash flows provided by (used in) investing activities (25,274 ) 16,598
Cash flows provided by (used in) financing activities:
Senior secured credit facility borrowings - revolving and line of credit 326,222
360,712
Senior secured credit facility repayments - revolving and line of credit (291,147 ) (350,712 )
Senior secured credit facility repayments - term loans A and B (13,295 ) (18,858 )
MGE Niagara Resorts credit facility borrowings - revolving and line of credit 41,864
—
MGE Niagara Resorts credit facility repayments - line of credit (11,596 ) —
MGE Niagara Resorts credit facility repayments - term loan (960 ) —
Other borrowings —
11,335
Other repayments (6,458 ) (1,450 )
Payments on finance lease obligations (404 ) —
Distributions to Mohegan Tribe (12,000 ) (12,000 )
Distributions to Salishan Company, LLC related to the Cowlitz Project (313 ) —
Other, net (1,527 ) (6,776 )
Net cash flows provided by (used in) financing activities 30,386
(17,749 )
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents (5,846 ) 79,900
Effect of exchange rate on cash, cash equivalents, restricted cash and restricted cash equivalents 7,001
641
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period 280,729
234,626
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period $ 281,884
$ 315,167
Reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents to the condensed consolidated balance sheets:
Cash and cash equivalents $ 139,164
$ 101,584
Restricted cash and cash equivalents, current 6,706
414
Restricted cash and cash equivalents, non-current 136,014
213,169
Cash, cash equivalents, restricted cash and restricted cash equivalents $ 281,884
$ 315,167
Supplemental disclosures:
Cash paid for interest $ 40,388
$ 41,190
Non-cash transactions:
Right-of-use operating lease assets $ 359,909
$ —
Right-of-use operating lease obligations $ 360,054
$ —
Construction payables $ 24,040
$ 9,732
Senior secured credit facility reductions $ 13,295
$ 28,858

The accompanying notes are an integral part of these condensed consolidated financial statements.

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1—ORGANIZATION AND BASIS OF PRESENTATION:

Organization

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

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

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

Impact of the COVID-19 Pandemic and Company Response

The following properties subsequently reopened as follows: (i) Paragon Casino Resort on May 20, 2020, (ii) ilani Casino Resort on May 28, 2020, (iii) Mohegan Sun on June 1, 2020, (iv) Mohegan Sun Pocono on June 22, 2020 and (v) Resorts Casino Hotel on July 2, 2020. As of the date of the filing of this Quarterly Report on Form 10-Q, the MGE Niagara Resorts remain temporarily closed. Like other integrated resort operators, these business disruptions have had a material adverse impact on the Company’s financial condition, results of operations and cash flows.

While some of the Company's properties have reopened, it cannot predict when its remaining closed properties will be able to reopen or the conditions upon which additional reopenings may occur. In addition, while the Company has experienced some level of continued business disruption since the reopening of its properties, it expects this disruption to gradually

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(unaudited)

dissipate, and remains confident in its ability to mitigate the impact of any such disruption through expense management. The impact of COVID-19 on the Company's operations through the date of the filing of this Quarterly Report on Form 10-Q has been significant, though the full extent of the impact will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of COVID-19 or a resurgence, the manner in which the Company’s guests, suppliers and other third parties respond to COVID-19, including perception of safety and health measures taken by the Company, new information which may emerge concerning its severity and the actions to contain it or treat its impact, as well as general economic conditions and consumer confidence. Accordingly, the Company cannot reasonably estimate the extent to which COVID-19 will further impact its future financial condition, results of operations and cash flows.

In response to COVID-19, the Company completed a series of transactions to ensure maximum financial flexibility, including (i) on March 13, 2020, it drew the remaining balance of its senior secured revolving credit facility, in the amount of approximately $125 million and (ii) on August 28, 2020, it entered into an amendment to its Senior Secured Credit Facilities which, among other things, waived non-compliance with certain of its financial covenants through June 30, 2020 and modified the financial covenants applicable to periods subsequent to June 30, 2020 (refer to Note 8).

The Company also took various actions to reduce costs in an effort to mitigate the operating and financial impact of COVID-19, including (i) furloughing approximately 98% of its workforce immediately following the closure of its properties, of which approximately 50% remain furloughed as of the date of the filing of this Quarterly Report on Form 10-Q; (ii) enacting meaningful compensation reductions to its remaining property and corporate personnel, including executive leadership, during the closure period; (iii) obtaining relief from certain threshold payments otherwise due to the OLG for the duration of the closure of the MGE Niagara Resorts, to be followed by a phased-in approach to such payments thereafter; (iv) obtaining a three month forbearance of gaming tax payments due to Connecticut and Pennsylvania; (v) deferring rental payments due under certain of MGE Niagara's lease agreements; and (vi) executing other substantial reductions in operating expenses, capital expenditures and overall costs.

The Company could experience other potential adverse impacts as a result of COVID-19, including, but not limited to, charges from further adjustments to the carrying value of its intangible assets, as well as other long-lived asset impairment charges. Actual results may differ materially from the Company’s current estimates as the scope of COVID-19 evolves, depending largely, but not exclusively, on the duration and extent of the Company’s business disruptions.

If the Company is unable to (i) execute its business plan (ii) sufficiently offset declines in revenues with appropriate cost reductions or (iii) execute certain cost containment initiatives, it may not have sufficient liquidity to meet its existing debt obligations, distributions to the Mohegan Tribe, capital expenditures and working capital requirements. In addition, the Company may not be able to satisfy its financial covenants under the senior secured credit facilities. In such event, the Company would need to seek additional sources of liquidity and obtain waivers or amendments under the senior secured credit facilities; however, it can provide no assurance that it would be able to obtain such liquidity and waivers or amendments. If the Company is unable to obtain such liquidity and waivers or amendments, it would be in default under the senior secured credit facilities, which may result in cross-defaults under its other outstanding indebtedness. If such defaults or cross-defaults were to occur, it would allow the Company's lenders to exercise their rights and remedies as defined under their respective agreements, including their right to accelerate the repayment of outstanding indebtedness. If such acceleration were to occur, the Company can provide no assurance that it would be able to obtain the financing necessary to repay such accelerated indebtedness.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information and with instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In accordance with Rule 10-01, the accompanying unaudited condensed consolidated financial statements do not include all of the information and footnotes required by US GAAP for complete consolidated financial statements. The accompanying year-end condensed consolidated balance sheet was

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(unaudited)

derived from audited financial statements, but does not include all disclosures required by US GAAP. All adjustments, including normal recurring accruals and adjustments, necessary for a fair statement of the Company's operating results for the interim period, have been included.

The Company’s results for the three months and nine months ended June 30, 2020 are not indicative of operating results expected for the entire fiscal year, particularly given the impact of COVID-19 as discussed above.

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

Revenue Disaggregation

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

~~MOHEGAN TRIBAL GAMING AUTHORITY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(unaudited)~~

Revenue disaggregation by geographic location and revenue type for the three months ended ~~December 31, 2019~~June 30, 2020 was as follows (in thousands):

	Connecticut		Pennsylvania		Canada
	(Mohegan Sun)		(Mohegan Sun Pocono)		(MGE Niagara Resorts)		Other
Gaming	$	67,966	$	10,112	$	11,301	$	—
Food and beverage		2,779		231		—		(1	)
Hotel		2,568		21		—		—
Retail, entertainment and other		4,926		148		45		211
Management and development		—		—		—		6,546
Net revenues	$	78,239	$	10,512	$	11,346	$	6,756

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

Revenue disaggregation by geographic location and revenue type for the three months ended ~~December 31, 2018~~June 30, 2019 was as follows (in thousands):

	Connecticut		Pennsylvania		Canada
	(Mohegan Sun)		(Mohegan Sun Pocono)		(MGE Niagara Resorts)		Other
Gaming	$	165,968	$	55,199	$	14,251	$	—
Food and beverage		27,941		5,929		3,391		(90	)
Hotel		20,885		2,163		747		(1	)
Retail, entertainment and other		36,251		2,102		2,899		406
Management and development		—		—		—		9,626
Net revenues	$	251,045	$	65,393	$	21,288	$	9,941

Revenue disaggregation by geographic location and revenue type for the nine months ended June 30, 2020 was as follows (in thousands):

	Connecticut		Pennsylvania		Canada
	(Mohegan Sun)		(Mohegan Sun Pocono)		(MGE Niagara Resorts)		Other
Gaming	$	352,946	$	107,499	$	109,197	$	—
Food and beverage		52,734		10,899		27,544		(79	)
Hotel		40,491		3,485		6,319		(2	)
Retail, entertainment and other		57,689		3,685		24,542		519
Management and development		—		—		—		24,012
Net revenues	$	503,860	$	125,568	$	167,602	$	24,450

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(unaudited)

Revenue disaggregation by geographic location and revenue type for the nine months ended June 30, 2019 was as follows (in thousands):

	Connecticut		Pennsylvania		Canada
	(Mohegan Sun)		(Mohegan Sun Pocono)		(MGE Niagara Resorts)		Other
Gaming	$	496,281	$	158,640	$	14,251	$	—
Food and beverage		85,156		17,121		3,391		(183	)
Hotel		62,094		5,938		747		(3	)
Retail, entertainment and other		98,584		5,726		2,899		1,165
Management and development		—		—		—		23,177
Net revenues	$	742,115	$	187,425	$	21,288	$	24,156

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

Contract and Contract-related Assets

As of ~~December 31, 2019~~June 30, 2020 and September 30, 2019, contract assets related to the COSA totaled ~~$95.7~~$127.7 million and $53.2 million, respectively.

Contract and Contract-related Liabilities

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

The following table summarizes these liabilities (in thousands):

	June 30, 2020		September 30, 2019
Outstanding gaming chips and slot tickets liability	$	6,856	$	7,968
Loyalty points deferred revenue liability		35,390		40,968
Patron advances and other liability		18,040		22,312
Total	$	60,286	$	71,248

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

As of ~~December 31, 2019~~June 30, 2020 and September 30, 2019, customer contract liabilities related to Mohegan Sun Pocono's revenue sharing agreement with Unibet Interactive Inc. totaled ~~$17.7~~$17.1 million and $18.0 million, respectively, and ~~are~~were primarily recorded within other long-term liabilities.

Other Intangible Assets

Other intangible assets consist primarily of Mohegan Sun's trademark and Mohegan Sun Pocono's various gaming licenses. These intangible assets all have indefinite lives. Intangible assets with indefinite lives are assessed at least annually for impairment by comparing their fair value to their carrying value. However, these intangible assets may be assessed more frequently for impairment if events or changes in circumstances, such as declines in revenues, earnings and cash flows, or material adverse changes in business climate, indicate that their carrying value may be impaired.

During the second quarter of its fiscal 2020, the Company identified an indicator of impairment on Mohegan Sun Pocono's intangible assets due to COVID-19. As a result, the Company revised its cash flow projections to reflect the current business climate, including the uncertainty surrounding the nature, timing and extent of reopening Mohegan Sun Pocono. The estimated fair value of these intangible assets was determined by using discounted cash flow models, which utilized Level 3 inputs. The primary unobservable input utilized in estimating the fair value of these intangible assets was the discount rate, which was 10.5%. As a result of this interim assessment, the Company recorded an impairment charge related to Mohegan Sun Pocono’s intangible assets of $126.6 million in the second quarter of its fiscal 2020.

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(unaudited)

The evaluation of intangible assets for impairment requires the use of estimates about future cash flows. Such estimates are, by their nature, subjective. Actual results may differ materially from the Company’s estimates and could result in impairment charges in the future.

Other intangible assets, net, consisted of the following (in thousands):

	June 30, 2020			September 30, 2019
Mohegan Sun trademark	$	119,692		$	119,692
Mohegan Sun Pocono slot machine, table game, interactive gaming and sports wagering licenses		171,904			298,500
MGE Niagara Resorts Casino Operating and Services Agreement rights		16,263			16,753
Other		24,981			25,889
Subtotal		332,840			460,834
Less: accumulated amortization		(5,762	)		(5,569	)
Other intangible assets, net	$	327,078		$	455,265

~~(unaudited)~~

Fair Value of Financial Instruments

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

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

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

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

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

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

	June 30, 2020
	Carrying Value		Fair Value
Senior secured credit facility - revolving (1)	$	247,000	$	202,540
Senior secured credit facility - term loan A (1)		237,664		201,812
Senior secured credit facility - term loan B (1)		801,752		665,904
2016 7 7/8% senior unsecured notes (1)		491,618		416,250
MGE Niagara Resorts credit facility - revolving (1)		25,655		25,655
MGE Niagara Resorts credit facility - term loan (1)		68,822		69,635
MGE Niagara Resorts convertible debenture (2)		29,320		29,320
Mohegan Expo credit facility (3)		28,368		29,033
Guaranteed credit facility (3)		30,108		31,063
Redemption note payable (3)		76,629		76,629
Other (3)		3,904		3,904
Long-term debt	$	2,040,840	$	1,751,745

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

~~________~~


(1)	Estimated fair values were based on Level 2 inputs (quoted market prices or prices of similar instruments) as of ~~December 31, 2019.~~June 30, 2020.


(2)	Estimated fair value was based on Level 3 inputs (changes in market conditions) from date of issuance (June 11, 2019) to ~~December 31, 2019.~~June 30, 2020.


(3)	Estimated fair values were based on Level 3 inputs (present value of future payments discounted to carrying value) as of ~~December 31, 2019.~~June 30, 2020.

Earth Hotel Tower

On January 21, 2020, the Company, through a wholly-owned subsidiary, purchased a 45% interest in Mohegan Hotel Holding, LLC, the indirect owner of the Earth Hotel Tower, in exchange for $15.8 million, which the Company believes represented the fair market value of the investment. A portion of the consideration paid, totaling $5.0 million, was advanced to Mohegan Hotel Holding, LLC in fiscal 2019.

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(unaudited)

NOTE 2—NEW ACCOUNTING STANDARDS:

The following accounting standard was adopted during the three months and nine months ended ~~December 31, 2019:~~

June 30, 2020:

ASU 2016-02

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which requires, among other things, lessees to recognize a right-of-use (“ROU”) asset and a lease liability for leases with terms in excess of 12 months and the disclosure of information about leasing arrangements. In July 2018, the FASB issued ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements” and ASU No. 2018-10, “Codification Improvements to Topic 842, Leases”, which clarify various aspects of ASU 2016-02.

Effective October 1, 2019, the Company adopted ASU 2016-02 under a modified retrospective transition approach. Accordingly, comparative information as of September 30, 2019 and for the three months and nine months ended ~~December 31, 2018~~June 30, 2019 has not been restated and continues to be reported under accounting standards in effect for those periods. The Company elected the package of practical expedients included in ASU 2016-02, which allowed it to: (i) not reassess whether any expired or existing contracts contain leases, (ii) not reassess the lease classification for any expired or existing leases and (iii) not reassess the initial direct costs for existing leases. The Company also made an accounting policy election to not recognize leases with an initial term of 12 months or less on its balance sheet. In addition, the Company elected to not separate lease and non-lease components for all significant classes of underlying assets for which the Company is the lessee. For instances in which the Company is the lessor, and the class of underlying asset represents retail space, the Company accounts for both the lease and non-lease components as a single lease

~~MOHEGAN TRIBAL GAMING AUTHORITY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(unaudited)~~

component. In all other instances, non-lease components are accounted for separately in accordance with applicable guidance, most commonly ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”.

As of October 1, 2019, the adoption of ASU 2016-02 resulted in the recognition of ROU operating lease assets of $359.2 million and related ROU operating lease liabilities of $366.8 million, as well as the derecognition of a previously recognized build-to-suit asset and related liability of $90.3 million. The difference between the ROU operating lease assets and liabilities reflects the reclassification of historical prepaid and deferred rent balances. The adoption of ASU 2016-02 did not impact the Company's retained earnings or the Company’s compliance with its financial covenants under its current debt agreements.

The following accounting standards will be adopted in a future reporting ~~period:~~

periods:

ASU 2016-13

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurements of Credit Losses on Financial Instruments” (“ASU 2016-13”), which sets forth a current expected credit loss model which requires a company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. This model replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. ASU 2016-13 is effective for annual reporting periods beginning after December 15, 2019, including interim periods within those annual reporting periods, and must be applied through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Company is currently evaluating the impact ASU 2016-13 will have on its financial statements, but does not expect its adoption to have a material impact.

ASU 2018-13

In August 2018, the FASB issued ASU 2018-13,~~“Fair~~ “Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”), which adds, amends and removes certain disclosure requirements related to fair value measurements. ASU 2018-13 requires enhanced disclosures on valuation techniques and inputs that a reporting entity uses to determine its measures of fair value, including judgments and assumptions that the entity makes and the uncertainties in the fair value measurements as of the reporting date. ASU 2018-13 is effective for annual reporting periods beginning after December 15, 2019. Certain amended or eliminated disclosure requirements may be adopted earlier, while certain additional disclosure requirements can be adopted on its effective date. In addition, certain changes required by this new standard require retrospective adoption, while other changes must be adopted prospectively. The Company is currently evaluating the impact ASU 2018-13 will have on its financial statement disclosures.

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(unaudited)

ASU 2019-12

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU 2019-12”), which simplifies various aspects related to the accounting for income taxes. This new standard removes certain exceptions to the general principles in ASU 2019-12 and clarifies and amends existing guidance to improve consistent application. ASU 2019-12 is effective for ~~fiscal years~~annual reporting periods beginning after December 15, 2020. The Company is currently evaluating the impact ASU 2019-12 will have on its financial statements, but does not expect its adoption to have a material impact.

NOTE 3—LEASES:

The Company determines if a contract is, or contains, a lease at its inception or at the time of any modification. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control over the use of the identified asset requires that the lessee has both: (i) the right to obtain substantially all of the economic benefits from the use of the asset and (ii) the right to direct the use of the asset.

ROU operating and finance lease assets and liabilities are recognized on the respective lease commencement date based on the present value of future lease payments over the expected lease term. An expected lease term includes any option to extend or terminate the lease if it is reasonably certain that the Company will exercise such option. The Company utilizes the incremental borrowing rate (“IBR”) applicable to the lease as determined at the lease commencement date to calculate the present value of future lease payments. The applicable IBR is determined based on the treasury group to which the leasing entity belongs and that group’s estimated interest rate for collateralized borrowings over a similar term as the future lease payments. Upon adoption of ASU 2016-02, the Company utilized IBRs as of October 1, 2019 to determine the present value of the remaining lease payments for operating leases that commenced prior to that date. Operating lease expense for fixed lease payments is recognized on a straight-line basis over the expected lease term. ROU finance lease assets are recorded within property and equipment, net and are amortized on a straight-line basis over the related lease term. As of ~~December 31, 2019,~~June 30, 2020, ROU finance lease assets totaled ~~$31.4~~$29.1 million.

Lessee

The Company leases real estate and equipment under various operating and finance lease agreements. Lease terms range from approximately one month to 50 years and do not contain any material residual value guarantees or restrictive covenants. Rental payments under these lease agreements are fixed and/or variable based on periodic adjustments for inflation, performance, usage or appraised land values. Variable components of lease payments are not included in the calculation of ROU assets and liabilities.

The Company’s lease arrangements contain both lease and non-lease components. For instances in which the Company is a lessee, the Company accounts for both lease and non-lease components as a single lease component for substantially all classes of underlying assets (primarily real estate and equipment). Leases with an expected or initial term of 12 months or less are not

~~MOHEGAN TRIBAL GAMING AUTHORITY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(unaudited)~~

recorded on the Company’s balance sheet and the related lease expenses are recognized on a straight-line basis over the expected lease term.

Information related to weighted average lease terms and discount rates is as follows:

		June 30, 2020

	~~December 31, 2019~~
Weighted average remaining lease terms (years):
Operating leases	23		23
Finance leases	18		18
Weighted average discount rates:
Operating leases (1)	~~7.98~~		8.02	%
Finance leases	~~5.01~~		5.00	%

~~_________~~


(1)	The weighted average discount rates for existing operating leases were established upon the adoption of ASU 2016-02 on October 1, 2019.

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(unaudited)

The components of lease expense are as follows (in thousands):

	For the			For the
	Three Months Ended			Nine Months Ended
	June 30, 2020			June 30, 2020
Operating lease expense	$	9,046		$	28,022
Short-term lease expense		2,747			20,297
Variable lease expense		2,354			9,161
Finance lease expense:
Amortization of ROU assets		593			1,806
Interest on lease liabilities		373			1,161
Less: sublease income (1)		(69	)		(16,794	)
Total	$	15,044		$	43,653

For the
Three Months Ended
December 31, 2019
Operating lease expense $ 9,601
Short-term lease expense 9,956
Variable lease expense 3,609
Finance lease expense:
Amortization of ROU assets 607
Interest on lease liabilities 397
Less: sublease income (1) (9,604 )
Total $ 14,566

~~_________~~


(1)	Represents income earned by the Company from the rental of hotel, convention or retail space at the MGE Niagara Resorts and the Earth Hotel Tower at Mohegan Sun, both of which are leased properties.

Supplemental cash flow information related to lease liabilities is as follows (in thousands):

	For the
	Nine Months Ended
	June 30, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Payments on operating lease obligations	$	18,820
Payments for interest on finance lease obligations		853
Payments on finance lease obligations		1,034
Total	$	20,707

For the
Three Months Ended
December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Payments on operating lease obligations $ 8,385
Payments for interest on finance lease obligations 397
Payments on finance lease obligations 404
Total $ 9,186

~~MOHEGAN TRIBAL GAMING AUTHORITY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(unaudited)~~

Maturities of ROU ~~operating~~ lease obligations are as follows (in thousands):

	Operating Leases			Finance Leases
Fiscal years:
2020 (1)	$	8,301		$	1,452
2021		34,768			3,058
2022		30,481			3,053
2023		29,978			2,862
2024		30,046			2,497
Thereafter		709,346			31,921
Total future lease payments		842,920			44,843
Less: amounts representing interest		(484,801	)		(14,812	)
Plus: residual values		—			327
Present value of future lease payments		358,119			30,358
Less: current portion of lease obligations		(14,019	)		(2,291	)
Lease obligations, net of current portion	$	344,100		$	28,067

Operating Leases Finance Leases
Fiscal years:
2020 (1) $ 24,415
$ 2,502
2021 30,922
3,131
2022 31,282
3,130
2023 31,047
2,934
2024 31,115
2,568
Thereafter 734,067
33,442
Total future lease payments 882,848
47,707
Less: amounts representing interest (513,106 ) (16,197 )
Plus: residual values —
327
Present value of future lease payments 369,742
31,837
Less: current portion of lease obligations (9,894 ) (1,794 )
Lease obligations, net of current portion $ 359,848
$ 30,043

~~_________~~


(1)	Represents payment obligations from ~~January~~July 1, 2020 to September 30, 2020.

In connection with the acquisition of the MGE Niagara Resorts, the Company committed to enter into a lease agreement with a third-party to lease the Niagara Falls Entertainment ~~Centre following the completion of its construction.~~Centre. Prior to the adoption of ASU 2016-02, the Company was deemed, for accounting purposes only, to be the owner of this construction project, despite not being the legal owner. Accordingly, the Company capitalized $90.3 million as of September 30, 2019 ~~for amounts paid~~ as a build-to-suit asset within property and equipment, net and recorded a corresponding build-to-suit liability. In connection with the adoption of ASU 2016-02, the Company derecognized the build-to-suit asset and liability in their entirety.

Lessor

The Company leases space at its facilities to third parties. Lease terms for these non-cancelable operating leases range from approximately one month to 17 years. Rental income under these lease agreements ~~are~~is fixed and/or variable based on percentage of tenant sales or periodic adjustments for inflation. Rental income is recorded within hotel and retail, entertainment and other revenues. For instances in which the Company is the lessor, and the class of underlying asset represents retail space, the Company accounts for both the lease and non-lease components, such as common area maintenance and tenant services, as a single lease component. In all other instances, non-lease components are accounted for separately in accordance with applicable guidance, most commonly ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”.

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(unaudited)

Lease income consists of the following (in thousands):

	For the Three Months Ended June 30, 2020					For the Nine Months Ended June 30, 2020
	Hotel		Retail, Entertainment and Other			Hotel		Retail, Entertainment and Other
Fixed rent	$	2,444	$	1,299		$	29,542	$	5,964
Variable rent		—		(96	)		—		3,035
Total	$	2,444	$	1,203		$	29,542	$	8,999

For the Three Months Ended December 31, 2019
Hotel Retail, Entertainment and Other
Fixed rent $ 15,743
$ 3,075
Variable rent —
1,388
Total $ 15,743
$ 4,463

~~MOHEGAN TRIBAL GAMING AUTHORITY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(unaudited)~~

Future fixed rental income that the Company expects to earn under non-cancelable operating leases, exclusive of amounts under contingent escalated rent clauses, ~~are~~is as follows (in thousands):

Fiscal years:	Operating Leases Fixed Rental Income
2020 (1)	$	2,114
2021		7,368
2022		4,926
2023		4,371
2024		3,870
Thereafter		9,498
Total	$	32,147

Fiscal years:
2020 (1) $ 7,120
2021 8,211
2022 5,375
2023 4,748
2024 4,180
Thereafter 9,440
Total $ 39,074

~~_________~~


(1)	Represents future fixed rental income from ~~January~~July 1, 2020 to September 30, 2020.

Due to the evolving nature of COVID-19 and the related economic uncertainties, the Company cannot be certain that the contractual future fixed rental income presented above will be realized in their entirety.

The portions of Mohegan Sun, including the Sky Hotel Tower and the Earth Expo & Convention Center, and Mohegan Sun Pocono that are leased to third parties under operating leases are recorded within property and equipment, net as follows (in thousands):

	June 30, 2020
Property and equipment, at cost	$	486,479
Less: accumulated depreciation		(194,734	)
Property and equipment, net	$	291,745

December 31, 2019
Property and equipment, at cost $ 492,612
Less: accumulated depreciation (197,212 )
Property and equipment, net $ 295,400

As of September 30, 2019, information pertaining to the Company’s leases, as accounted for under prior accounting standards, was as follows:

Capital Leases

Minimum future capital lease payments were as follows (in thousands):

Fiscal years:	Capital Leases
2020	$	2,571
2021		2,598
2022		2,598
2023		2,548
2024		2,251
Thereafter		32,832
Total minimum future capital lease payments		45,398
Less: amounts representing interest		(16,031	)
Plus: residual values		327
Present value of capital lease obligations		29,694
Less: current portion of capital lease obligations		(1,133	)
Capital lease obligations, net of current portion	$	28,561

Fiscal years:
2020 $ 2,571
2021 2,598
2022 2,598
2023 2,548
2024 2,251
Thereafter 32,832
Total minimum future capital lease payments 45,398
Less: amounts representing interest (16,031 )
Plus: residual values 327
Present value of capital lease obligations 29,694
Less: current portion of capital lease obligations (1,133 )
Capital lease obligations, net of current portion $ 28,561

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(unaudited)

Operating Leases

Minimum future rental income that the Company expected to earn under non-cancelable leases was as follows (in thousands):

Fiscal years:	Operating Leases
2020	$	4,808
2021		4,038
2022		2,485
2023		2,092
2024		2,011
Thereafter		5,734
Total	$	21,168

Fiscal years:
2020 $ 4,808
2021 4,038
2022 2,485
2023 2,092
2024 2,011
Thereafter 5,734
Total $ 21,168

Minimum future rental payments that the Company expected to incur under non-cancelable leases and subleases was as follows (in thousands):

	Operating Leases
Fiscal years:	Minimum Future Rental Payments		Minimum Future Sublease Income			Total
2020	$	32,504	$	(1,709	)	$	30,795
2021		30,376		(1,428	)		28,948
2022		30,651		(1,114	)		29,537
2023		30,473		(987	)		29,486
2024		30,602		(1,025	)		29,577
Thereafter		715,910		(843	)		715,067
Total	$	870,516	$	(7,106	)	$	863,410

Fiscal years: Minimum Future Rental Payments Minimum Future Sublease Income Total
2020 $ 32,504
$ (1,709 ) $ 30,795
2021 30,376
(1,428 ) 28,948
2022 30,651
(1,114 ) 29,537
2023 30,473
(987 ) 29,486
2024 30,602
(1,025 ) 29,577
Thereafter 715,910
(843 ) 715,067
Total $ 870,516
$ (7,106 ) $ 863,410

NOTE 4—MGE NIAGARA RESORTS:

In September 2018, MGE Niagara was selected by the OLG to be the service provider for the MGE Niagara Resorts. Following its selection, MGE Niagara entered into a Transition and Asset Purchase Agreement with the OLG and the Ontario Gaming Assets Corporation. Pursuant to the terms of this agreement, MGE Niagara agreed to acquire certain assets associated with the MGE Niagara Resorts and to perform certain transition activities in order to facilitate the transition of the operational responsibilities from the previous operator to MGE Niagara.

On the Closing Date, MGE Niagara completed the Acquisition, assumed the day-to-day operations of the properties under the terms of the COSA and engaged in a series of transactions related thereto, including: (i) a lease agreement with the OLG to lease the Fallsview Casino Resort and related administrative office space, (ii) a lease agreement with a third-party investor to lease Casino Niagara and related license agreements to operate an adjacent parking lot and the right for patrons to use an adjacent parking garage and (iii) ~~committed~~a commitment to enter into a lease agreement with a third-party to lease the Niagara Falls Entertainment Centre ~~following~~on a date after the completion of its construction.

On June 5, 2020, MGE Niagara received notice from the landlord of the Niagara Falls Entertainment Centre that construction ~~both~~ of ~~which are~~the facility had reached substantial completion. Accordingly, pursuant to the terms of the acquisition of the MGE Niagara Resorts, MGE Niagara entered into a lease agreement to lease the facility commencing on August 19, 2020. The lease agreement requires MGE Niagara to make monthly payments of approximately 0.9 million Canadian dollars (approximately $0.7 million as of June 30, 2020) until the end of the lease term on March 31, 2040. This lease is expected to ~~occur in 2020.~~

be classified as an operating lease.

As of the Closing Date, the purchase price of the Acquisition was approximately 96 million Canadian dollars (approximately $72 million), net of cash acquired of approximately 57 million Canadian dollars (approximately $43 million). During the ~~three~~nine months ended ~~December 31, 2019,~~June 30, 2020, the Company recorded adjustments to the purchase price of the Acquisition totaling 2.2 million Canadian dollars ($1.7 million), net of cash acquired of approximately 518,000 Canadian dollars (approximately $390,000). ~~While no additional material adjustments are expected, the purchase price allocation is not final.~~

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(unaudited)

~~The below unaudited pro forma financial information was prepared~~

As a result of the temporary suspension of operations that stemmed from Regulation 82/20, the Emergency Management and Civil Protection Act mandated the closure of all places of non-essential business in Ontario. In collaboration with the OLG, the following has been temporarily agreed to for a defined period, subject to further extension(s) on mutual agreement: (i) the continuation of the service provider base fixed fee payments as ifrequired by the ~~Acquisition,~~COSA and (ii) the ~~financing~~temporary suspension of the payment of the portion of gaming revenues that represents the threshold, such that threshold payments do not apply during the casino closure period while there are no gaming revenues. MGE Niagara has also agreed with the OLG to ~~fund~~work on a graduated and commercially reasonable phase-in of threshold payments to accommodate the ~~Acquisition~~extended business ramp up periods once health concerns are curtailed and approvals are obtained to reopen the ~~lease transactions had occurred~~MGE Niagara Resorts. In addition, in collaboration and cooperation with the OLG, MGE Niagara will work on ~~October 1, 2018. Unaudited pro forma financial information does not necessarily represent results that may occur in~~a casino restart plan to effect the ~~future. The following unaudited pro forma financial information includes historical financial results~~safe, orderly, efficient and commercially reasonable restart of the MGE Niagara ~~Resorts prior to~~Resorts’ operations at the ~~Acquisition, adjusted to include~~end of the ~~Company's share~~extended casino closure periods. Additionally, MGE Niagara was granted a deferral of ~~revenues earned~~rental payments due under ~~the COSA which are recorded on a net basis, along with other adjustments directly attributable to the Acquisition, including interest expense and depreciation (in thousands, unaudited):~~

For the
Three Months Ended
December 31, 2018
Net revenues $ 405,802
Net income attributable to Mohegan Tribal Gaming Authority $ 8,554

certain of its lease agreements.

NOTE 5—LONG-TERM DEBT:

Long-term debt consisted of the following (in thousands):

	June 30, 2020			September 30, 2019
Senior Secured Credit Facility - Revolving	$	247,000		$	102,000
Senior Secured Credit Facility - Term Loan A, net of discount and debt issuance costs of $2,588 and $4,236, respectively		237,664			263,829
Senior Secured Credit Facility - Term Loan B, net of discount and debt issuance costs of $14,057 and $16,925, respectively		801,752			805,394
2016 7 7/8% Senior Unsecured Notes, net of discount and debt issuance costs of $8,382 and $9,565, respectively		491,618			490,435
MGE Niagara Resorts Credit Facility - Revolving		25,655			—
MGE Niagara Resorts Credit Facility - Term Loan, net of debt issuance costs of $813 and $1,002, respectively		68,822			73,564
MGE Niagara Resorts Convertible Debenture		29,320			30,204
Mohegan Expo Credit Facility, net of debt issuance costs of $665 and $925, respectively		28,368			29,357
Guaranteed Credit Facility, net of debt issuance costs of $955 and $1,191, respectively		30,108			31,840
Redemption Note Payable, net of discount of $17,738 and $23,905, respectively		76,629			81,329
Other		3,904			1,205
Long-term debt		2,040,840			1,909,157
Less: current portion of long-term debt		(77,829	)		(76,909	)
Long-term debt, net of current portion	$	1,963,011		$	1,832,248

December 31,
2019 September 30,
2019
Senior Secured Credit Facility - Revolving $ 137,000
$ 102,000
Senior Secured Credit Facility - Term Loan A, net of discount and debt issuance costs of $3,668 and $4,236, respectively 253,272
263,829
Senior Secured Credit Facility - Term Loan B, net of discount and debt issuance costs of $15,975 and $16,925, respectively 804,174
805,394
2016 7 7/8% Senior Unsecured Notes, net of discount and debt issuance costs of $9,179 and $9,565, respectively 490,821
490,435
Line of Credit 75
—
MGE Niagara Resorts Credit Facility - Revolving 30,728
—
MGE Niagara Resorts Credit Facility - Term Loan, net of debt issuance costs of $963 and $1,002, respectively 73,936
73,564
MGE Niagara Resorts Convertible Debenture 30,728
30,204
Mohegan Expo Credit Facility, net of debt issuance costs of $827 and $925, respectively 28,831
29,357
Guaranteed Credit Facility, net of debt issuance costs of $1,111 and $1,191, respectively 31,264
31,840
Redemption Note Payable, net of discount of $22,072 and $23,905, respectively 78,035
81,329
Other 1,154
1,205
Long-term debt 1,960,018
1,909,157
Less: current portion of long-term debt (74,266 ) (76,909 )
Long-term debt, net of current portion $ 1,885,752
$ 1,832,248

Senior Secured Credit Facilities - Non-cash Transactions

On ~~December 31,~~June 30, 2020 and 2019, ~~and 2018,~~ the bank that administers the Company's debt service payments for its Senior Secured Credit Facilities made required principal payments on behalf of the Company totaling ~~$13.3~~$10.5 million and ~~$28.9~~$13.3 million, respectively, but did not accordingly debit the Company's bank account for these payments. As of ~~December 31,~~June 30, 2020 and 2019, ~~and 2018,~~ the Company reflected these non-cash transactions as reductions to current portion of long-term debt and corresponding increases to other current liabilities. On the respective following banking days, the bank withdrew the payments from the Company's bank account, resulting in reductions to the Company's cash and cash equivalents and other current liabilities.

Debt Covenant Compliance

~~As of December 31, 2019,~~

On August 28, 2020, the Company entered into an amendment to its Senior Secured Credit Facilities which, among other things, waived non-compliance with certain of its financial covenants through June 30, 2020 and modified the financial covenants applicable to periods subsequent to June 30, 2020 (refer to Note 8).

MGE Niagara ~~were in compliance~~has entered into a series of amendments to the MGE Niagara Resorts Credit Facilities which, among other things, provided MGE Niagara with ~~all financial covenants.~~

relief from certain covenants relating to the closure of its facilities due to COVID-19 (refer to Note 8).

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(unaudited)

NOTE 6—SEGMENT REPORTING:

The Company, either directly or through subsidiaries, operates Mohegan Sun, along with its other Connecticut operations (the “Connecticut Facilities”), Mohegan Sun Pocono, along with its other Pennsylvania operations (the “Pennsylvania Facilities”) and the MGE Niagara Resorts. The Company assumed the day-to-day operations of the MGE Niagara Resorts on June 11, 2019. Certain other properties that are managed or under development by the Company, which were previously included within the Company's corporate functions, are now identified as the management, development and other reportable segment.

The Company's chief operating decision maker currently reviews and assesses the performance and operating results and determines the proper allocation of resources to the Connecticut Facilities, the Pennsylvania Facilities, the MGE Niagara Resorts and the properties managed or under development on a separate basis. Accordingly, the Company now has four separate reportable segments: (i) Mohegan Sun, which includes the operations of the Connecticut Facilities, (ii) Mohegan Sun Pocono, which includes the operations of the Pennsylvania Facilities, (iii) the MGE Niagara Resorts and (iv) management, development and other. The Company's corporate functions, along with any inter-segment activities are disclosed separately in the following segment disclosures to reconcile to consolidated results. The following management, development and other and corporate segment disclosures for the three months and nine months ended ~~December 31, 2018~~June 30, 2019 have been restated to conform to fiscal 2020 presentation.

	For the Three Months Ended						For the Nine Months Ended
(in thousands)	June 30, 2020			June 30, 2019			June 30, 2020			June 30, 2019
Net revenues:
Mohegan Sun	$	78,239		$	251,045		$	503,860		$	742,115
Mohegan Sun Pocono		10,512			65,393			125,568			187,425
MGE Niagara Resorts		11,346			21,288			167,602			21,288
Management, development and other		6,546			9,839			24,012			23,388
Corporate		210			315			438			981
Inter-segment		346			(273	)		(528	)		(393	)
Total	$	107,199		$	347,607		$	820,952		$	974,804
Income (loss) from operations:
Mohegan Sun	$	1,692		$	48,812		$	65,951		$	112,788
Mohegan Sun Pocono		(8,888	)		10,604			(122,635	)		26,010
MGE Niagara Resorts		(9,778	)		2,584			(10,163	)		2,584
Management, development and other		2,200			(9	)		1,871			332
Corporate		(5,749	)		(6,566	)		(18,360	)		(20,693	)
Inter-segment		(14	)		(215	)		(31	)		(215	)
Total	$	(20,537	)	$	55,210		$	(83,367	)	$	120,806

	For the Nine Months Ended
(in thousands)	June 30, 2020		June 30, 2019
Capital expenditures incurred:
Mohegan Sun	$	9,839	$	27,344
Mohegan Sun Pocono		3,108		3,892
MGE Niagara Resorts		15,330		1,520
Management, development and other		112,161		25,515
Corporate		483		40
Total	$	140,921	$	58,311

(in thousands)	June 30, 2020			September 30, 2019
Total assets:
Mohegan Sun	$	1,303,857		$	1,282,384
Mohegan Sun Pocono		407,536			548,424
MGE Niagara Resorts		520,330			342,821
Management, development and other		429,453			313,458
Corporate		999,508			912,712
Inter-segment		(971,514	)		(888,203	)
Total	$	2,689,170		$	2,511,596

For the Three Months Ended
(in thousands) December 31, 2019 December 31, 2018
Net revenues:
Mohegan Sun $ 243,335
$ 252,679
Mohegan Sun Pocono 61,954
60,791
MGE Niagara Resorts 84,974
—
Management, development and other 9,012
5,712
Corporate 108
378
Inter-segment (331 ) (60 )
Total $ 399,052
$ 319,500

Income (loss) from operations:
Mohegan Sun $ 45,065
$ 44,063
Mohegan Sun Pocono 7,794
7,192
MGE Niagara Resorts (1,333 ) —
Management, development and other (918 ) (413 )
Corporate (7,164 ) (7,472 )
Inter-segment (19 ) —
Total $ 43,425
$ 43,370

For the Three Months Ended
(in thousands) December 31, 2019 December 31, 2018
Capital expenditures incurred:
Mohegan Sun $ 4,631
$ 5,123
Mohegan Sun Pocono 999
377
MGE Niagara Resorts 7,851
—
Management, development and other 22,868
7,542
Corporate 8
7
Total $ 36,357
$ 13,049

(in thousands) December 31, 2019 September 30, 2019
Total assets:
Mohegan Sun $ 1,355,934
$ 1,282,384
Mohegan Sun Pocono 545,220
548,424
MGE Niagara Resorts 575,771
342,821
Management, development and other 358,366
313,458
Corporate 915,650
912,712
Inter-segment (895,417 ) (888,203 )
Total $ 2,855,524
$ 2,511,596

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(unaudited)

NOTE 7—COMMITMENTS AND CONTINGENCIES:

The Company is a defendant in various claims and legal actions resulting from its normal course of business, primarily relating to personal injuries to patrons and damages to patrons' personal assets. The Company estimates litigation claims expense and accrues for such liabilities based upon historical experience. In management's opinion, the aggregate liability, if any, arising from such legal actions will not have a material impact on the Company's financial position, results of operations or cash flows.

NOTE 8—SUBSEQUENT ~~EVENT:~~

EVENTS:

Amendment to Senior Secured Credit Facilities

On ~~January 21,~~August 28, 2020, the Company ~~through~~entered into a ~~wholly-owned subsidiary, purchased~~fourth amendment to its Credit Agreement with certain of its lenders (the “Fourth Amendment”). Pursuant to the Fourth Amendment, the Company will, during the period beginning on August 28, 2020, and ending upon achievement of certain financial ratios specified in the Fourth Amendment (such period, the “Financial Covenant Restricted Period”), be subject to, among other things, (i) a ~~45% interest in Mohegan Hotel Holdings, LLC, the indirect owner~~minimum liquidity covenant that requires cash and cash equivalents and availability under its revolving credit facility to be at least $70 million as of the ~~Earth Hotel Tower,~~last day of each calendar month, (ii) a covenant that requires the Company be in pro forma compliance with such liquidity covenant in order to make any interest payment on the Company’s 7.875% Senior Notes due 2024, and (iii) certain additional reporting covenants.

The Fourth Amendment also waives the Company’s obligation to comply with its financial covenants for the fiscal quarters ending March 31, 2020, and June 30, 2020, and modifies the financial covenants applicable during the Financial Covenant Restricted Period to provide the Company with greater flexibility in light of the impact of the COVID-19 pandemic on its business, in particular during the March 2020 through May 2020 period, all as set forth in the Fourth Amendment.

In addition, the Fourth Amendment provides that, commencing on August 24, 2020: (i) loans under the term loan A facility will bear interest at either an adjusted LIBOR rate or a base rate, in each case, plus an applicable margin equal to 6.125% per annum for adjusted LIBOR rate loans and 5.125% per annum for base rate loans, and (ii) loans under the term loan B facility will bear interest at either an adjusted LIBOR rate or a base rate, in each case, plus an applicable margin equal to 6.375% per annum for adjusted LIBOR rate loans and 5.375% per annum for base rate loans, provided that the applicable rate for loans under the term loan B facility are subject to certain ratings-based step downs and “most-favored-nation” protections as set forth in the Fourth Amendment. The Fourth Amendment also provides for a 1.00% per annum LIBOR floor applicable to adjusted LIBOR rate loans under the term loan A facility and 0.75% per annum LIBOR floor applicable to adjusted LIBOR rate loans under the revolving credit facility. Lastly, the Fourth Amendment (i) carves out COVID-19 related effects from certain terms of the Credit Agreement, and (ii) makes certain other changes to the covenants and other provisions of the Credit Agreement.

Substantially concurrently with the entry into the Fourth Amendment, Mohegan Tribe made a $20 million cash contribution to the Company, consisting of (i) a $15 million contribution and (ii) a $5 million subordinated loan maturing on October 16, 2024 and bearing interest in-kind at 10% per annum.

The summary of certain terms of the Fourth Amendment set forth above is qualified by reference to the full text of the Fourth Amendment, which is filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020 filed with the Securities and Exchange Commission on August 28, 2020 and incorporated herein by reference. Reference is also made to the full text of the Credit Agreement, which is filed as Exhibit 10.11 to MGE’s Annual Report on Form 10-K for the fiscal year ended September 30, 2019 filed with the Securities and Exchange Commission on December 20, 2019 and incorporated herein by reference.

Amendments and Waivers with Respect to MGE Niagara Resorts Credit Facilities

On March 16, 2020, the OLG directed the MGE Niagara Resorts to close due to the ongoing COVID-19 pandemic. On May 15, 2020, MGE Niagara entered into a Limited Waiver (the “Limited Waiver”) with respect to the MGE Niagara Resorts Credit Facilities. The Limited Waiver, among other things, (a) waived the occurrence of an event of default that would have been caused under the MGE Niagara Resorts Credit Facilities due to the closure of the MGE Niagara Resorts for a period

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(unaudited)

of 60 consecutive days or more, and (b) extended the waiver period through June 15, 2020 (the “Initial Waiver Period”). In exchange for ~~$15.8 million,~~the waivers granted under the Limited Waiver, MGE Niagara agreed not to make any request for advances under the MGE Niagara Resorts Credit Facilities during the Initial Waiver Period.

Because the MGE Niagara Resorts were required to continue to remain closed as directed by the OLG through the Initial Waiver Period, MGE Niagara entered into an Amended and Restated Limited Waiver (the “Amended and Restated Limited Waiver”) on June 15, 2020 which, among other things, extended the ~~Company believes represented~~Initial Waiver Period to July 15, 2020 (the “Extended Waiver Period”).

closure of the MGE Niagara Resorts until July 31, 2020 (the “Covenant Waiver”), (b) waived the requirement for MGE Niagara to deliver a compliance certificate under the MGE Niagara Resorts Credit Facilities for the fiscal quarter ending June 30, 2020 (the “Certificate Waiver”) and (c) extended the Extended Waiver Period to July 31, 2020 (the “Second Extended Waiver Period”). In connection with the Second Waiver, MGE Niagara agreed, among other things, during the Second Extended Waiver Period, to: (a) continue not to make any request for advances under the MGE Niagara Resorts Credit Facilities; (b) an increase in the Applicable Margin (as defined in the MGE Niagara Resorts Credit Facilities) to pricing level 4, a 50 basis point increase over pricing level 3; and (c) not make certain Distributions (as defined in the MGE Niagara Resorts Credit Facilities).

On July 31, 2020, MGE Niagara entered a Third Amended and Restated Limited Waiver (the “Third Waiver”) which, among other things, extended (a) the Covenant Waiver, (b) the Certificate Waiver and (c) the Second Extended Waiver Period to September 30, 2020 (the “Third Extended Waiver Period”). In connection with the Third Waiver, MGE Niagara agreed, among other things, during the Third Extended Waiver Period, to: (a) continue not to make any request for advances under the MGE Niagara Resorts Credit Facilities; (b) replace the Applicable Margin schedule in the MGE Niagara Resorts Credit Facilities, which replacement schedule adds a new pricing level 5 increasing the Applicable Margin by 100 basis points over pricing level 4, and apply pricing level 5 as the current Applicable Margin; (c) require MGE Niagara to maintain minimum liquidity of $15 million; (d) deliver to the Administrative Agent a weekly liquidity report; and (e) refrain from making certain Distributions. MGE also agreed to pay to the lenders an extension fee equal to 10 basis points.

The summary of certain terms of each of the Limited Waiver, the Amended and Restated Limited Waiver, the Second Waiver, and the Third Waiver set forth above is qualified by reference to the full text of each of the Limited Waiver, the Amended and Restated Limited Waiver, the Second Waiver and the Third Waiver, which are filed as Exhibit 10.4, 10.5, 10.6, and 10.7, respectively, to MGE’s Form 10-Q filed with the Securities and Exchange Commission on August 28, 2020 and incorporated herein by reference. Reference is also made to the full text of the Credit Agreement, dated June 10, 2019, among MGE Niagara Entertainment Inc., the lenders named therein, Bank of Montreal, as administrative agent, and the other parties thereto, which is filed as Exhibit 10.1 to MGE’s Form 8-K filed with the Securities and Exchange Commission on June 14, 2019 and incorporated herein by reference.

Item 2.Management’s 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, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include information relating to business development activities, as well as capital spending, financing sources, 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 us or on our behalf. These risks and uncertainties include, but are not limited to, those relating to the following:

the COVID-19 pandemic and the related social and economic disruption, including “stay at home” orders and similar regulations, or decreased interest in attendance at our facilities, and any plans or expectations around the reopening or resumption of operations at any of our facilities;

the financial performance of our various operations;

the local, regional, national or global economic climate;

increased competition, including the expansion of gaming in jurisdictions in which we own or operate gaming facilities;

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 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;

cyber security risks relating to our information technology and other systems, including misappropriation of patron information or other breaches of information security;

changes in applicable laws pertaining to the service of alcohol, smoking or other amenities offered at our facilities;

our ability to successfully implement our diversification strategy;

an act of terrorism;

our customers' access to inexpensive transportation to our facilities and changes in oil, fuel or other transportation-related expenses;

unfavorable weather conditions;

risks associated with operations in foreign jurisdictions;

failure by our employees, agents, affiliates, vendors or businesses to comply with applicable laws, rules and regulations, including state gaming laws and regulations and anti-bribery laws such as the United States Foreign Corrupt Practices Act, and similar anti-bribery laws in other jurisdictions; and

fluctuations in foreign currency exchange rates.

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, 2019, 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

Our Company

We were established in July 1995 by the Mohegan Tribe, a federally-recognized Indian tribe with an approximately 595-acre reservation situated in southeastern Connecticut, adjacent to Uncasville, Connecticut. Under the Indian Gaming Regulatory Act of 1988, federally-recognized Indian tribes are permitted to conduct full-scale casino gaming operations on tribal lands, subject to, among other things, the negotiation of a compact with the affected state. The Mohegan Tribe and the State of Connecticut entered into such a compact, the Mohegan Compact, which was approved by the United States Secretary of the Interior. We were established as an instrumentality of the Mohegan Tribe, with the exclusive authority to conduct and regulate gaming activities for the Mohegan Tribe on tribal lands and the non-exclusive authority to conduct such activities elsewhere. We are governed and overseen by a nine-member Management Board, whose members also comprise the Mohegan Tribal Council, the governing body of the Mohegan Tribe. Any change in the composition of the Mohegan Tribal Council results in a corresponding change in our Management Board.

We are primarily engaged in the ownership, operation and development of integrated entertainment facilities, both domestically and internationally, including: (i) Mohegan Sun in Uncasville, Connecticut, (ii) Mohegan Sun Pocono in Plains Township, Pennsylvania, (iii) Niagara Fallsview Casino Resort, Casino Niagara and the ~~future~~ 5,000-seat Niagara Falls Entertainment Centre, all in Niagara Falls, Canada (collectively, the “MGE Niagara Resorts”), (iv) Resorts Casino Hotel in Atlantic City, New Jersey, (v) ilani Casino Resort in Clark County, Washington, (vi) Paragon Casino Resort in Marksville, Louisiana and (vii) Project Inspire, a first-of-its-kind, multi-billion dollar integrated resort and casino under construction at Incheon International Airport in South Korea.

Impact of the COVID-19 Pandemic and Our Response

While some of our properties have reopened, we cannot predict when our remaining closed properties will be able to reopen or the conditions upon which additional reopenings may occur. In addition, while we have experienced some level of business disruption, we expect that this disruption will gradually dissipate, and we remain confident in our ability to mitigate the impact of any such disruption through expense management. The impact of COVID-19 on our operations through the date of the filing of this Quarterly Report on Form 10-Q has been significant, though the full extent of the impact will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of COVID-19 or a resurgence, the manner in which our guests, suppliers and other third parties respond to COVID-19, including perception of safety and health measures taken by us, new information which may emerge concerning its severity and the actions to contain it or treat its impact, as well as general economic condition and consumer confidence. Accordingly, we cannot reasonably estimate the extent to which COVID-19 will further impact our future financial condition, results of operations and cash flows.

In response to COVID-19, we completed a series of transactions to ensure maximum financial flexibility, including (i) on March 13, 2020, we drew the remaining balance of our senior secured revolving credit facility, in the amount of approximately $125 million and (ii) on August 28, 2020, we entered into an amendment to our Senior Secured Credit Facilities which, among other things, waived non-compliance with certain of our financial covenants through June 30, 2020 (refer to Note 8).

We also took various actions to reduce costs in an effort to mitigate the operating and financial impact of COVID-19, including (i) furloughing approximately 98% of our workforce immediately following the closure of our properties, of which approximately 50% remain furloughed as of the date of the filing of this Quarterly Report on Form 10-Q; (ii) enacting meaningful compensation reductions to our remaining property and corporate personnel, including executive leadership, during the closure period; (iii) obtaining relief from certain threshold payments otherwise due to the OLG for the duration of the closure of the MGE Niagara Resorts, to be followed by a phased-in approach to such payments thereafter; (iv) obtaining a three month forbearance of gaming tax payments due to Connecticut and Pennsylvania; (v) deferring rental payments due under certain of MGE Niagara's lease agreements; and (vi) executing other substantial reductions in operating expenses, capital expenditures and overall costs.

We could experience other potential adverse impacts as a result of COVID-19, including, but not limited to, charges from further adjustments to the carrying value of our intangible assets, as well as other long-lived asset impairment charges. Actual results may differ materially from our current estimates as the scope of COVID-19 evolves, depending largely, but not exclusively, on the duration and extent of our business disruptions.

If we are unable to (i) execute our business plan (ii) sufficiently offset declines in revenues with appropriate cost reductions or (iii) execute certain cost containment initiatives, we may not have sufficient liquidity to meet our existing debt obligations, distributions to the Mohegan Tribe, capital expenditures and working capital requirements. In addition, we may not be able to satisfy our financial covenants under the senior secured credit facilities. In such event, we would need to seek additional sources of liquidity and obtain waivers or amendments under the senior secured credit facilities; however, we can provide no assurance that we would be able to obtain such liquidity and waivers or amendments. If we were unable to obtain such liquidity and waivers or amendments, we would be in default under the senior secured credit facilities, which may result in cross-defaults under our other outstanding indebtedness. If such defaults or cross-defaults were to occur, it would allow our lenders to exercise their rights and remedies as defined under their respective agreements, including their right to accelerate the repayment of outstanding indebtedness. If such acceleration were to occur, we can provide no assurance that we would be able to obtain the financing necessary to repay such accelerated indebtedness.

Results of Operations

We, either directly or through subsidiaries, operate Mohegan Sun, along with our other Connecticut operations (the “Connecticut Facilities”), Mohegan Sun Pocono, along with our other Pennsylvania operations (the “Pennsylvania Facilities”) and the MGE Niagara Resorts. We assumed the day-to-day operations of the MGE Niagara Resorts on June 11, 2019. ~~In addition, certain~~Certain other properties that are managed or under development, which were previously included within our corporate functions, are now identified as the management, development and other reportable segment.

Our chief operating decision maker currently reviews and assesses the performance and operating results and determines the proper allocation of resources to the Connecticut Facilities, the Pennsylvania Facilities, the MGE Niagara Resorts and the properties managed or under development on a separate basis. Accordingly, we now have four separate reportable segments: (i) Mohegan Sun, which includes the operations of the Connecticut Facilities, (ii) Mohegan Sun Pocono, which includes the operations of the Pennsylvania Facilities, (iii) the MGE Niagara Resorts and (iv) management, development and other. Our corporate functions, along with any inter-segment activities are disclosed separately in the following segment disclosures to reconcile to consolidated results. The following management, development and other and corporate segment disclosures for the three months and nine months ended ~~December 31, 2018~~June 30, 2019 have been restated to conform to fiscal 2020 presentation.

	For the Three Months Ended June 30,						For the Nine Months Ended June 30,
(in thousands)	2020			2019			2020			2019
Net revenues:
Mohegan Sun	$	78,239		$	251,045		$	503,860		$	742,115
Mohegan Sun Pocono		10,512			65,393			125,568			187,425
MGE Niagara Resorts		11,346			21,288			167,602			21,288
Management, development and other		6,546			9,839			24,012			23,388
Corporate	210			315			438			981
Inter-segment	346				(273	)		(528	)		(393	)
Total	$	107,199		$	347,607		$	820,952		$	974,804
Income (loss) from operations:
Mohegan Sun	$	1,692		$	48,812		$	65,951		$	112,788
Mohegan Sun Pocono	(8888)				10,604			(122,635	)		26,010
MGE Niagara Resorts		(9,778	)		2,584			(10,163	)		2,584
Management, development and other		2,200			(9	)		1,871		332
Corporate		(5,749	)		(6,566	)		(18,360	)		(20,693	)
Inter-segment		(14	)		(215	)		(31	)		(215	)
Total	$	(20,537	)	$	55,210		$	(83,367	)	$	120,806
Net income (loss) attributable to Mohegan Tribal Gaming Authority	$	(50,045	)	$	19,839		$	(180,745	)	$	18,103

For the Three Months Ended December 31,
(in thousands) 2019 2018 Variance
Percentage
Variance
Net revenues:
Mohegan Sun $ 243,335
$ 252,679
$ (9,344 ) (3.7 )%
Mohegan Sun Pocono 61,954
60,791
1,163
1.9 %
MGE Niagara Resorts (1) 84,974
—
84,974
100.0 %
Management, development and other 9,012
5,712
3,300
57.8 %
Corporate 108
378
(270 ) (71.4 )%
Inter-segment (331 ) (60 ) (271 ) (451.7 )
Total $ 399,052
$ 319,500
$ 79,552
24.9 %
Income (loss) from operations:
Mohegan Sun $ 45,065
$ 44,063
$ 1,002
2.3 %
Mohegan Sun Pocono 7,794
7,192
602
8.4 %
MGE Niagara Resorts (1) (1,333 ) —
(1,333 ) (100.0 )%
Management, development and other (918 ) (413 ) (505 ) (122.3 )%
Corporate (7,164 ) (7,472 ) 308
4.1 %
Inter-segment (19 ) —
(19 ) (100.0 )%
Total $ 43,425
$ 43,370
$ 55
0.1 %
Net income attributable to Mohegan Tribal Gaming Authority $ 9,394
$ 10,622
$ (1,228 ) (11.6 )%

~~_________~~


~~(1)~~	~~We assumed the day-to-day operations of the MGE Niagara Resorts on June 11, 2019.~~

The most significant factors and trends that impacted our operating and financial performance were as follows:

the outbreak of COVID-19 and the resulting temporary closures of our owned, operated and managed properties;

~~increasingly competitive gaming markets;~~

cost saving and expense management initiatives to mitigate the operating and financial impact of COVID-19;

~~lower gaming volumes and table game hold percentage at Mohegan Sun;~~

~~improved overall business volumes and additional revenues generated by our new sports wagering and interactive gaming operations at Mohegan Sun Pocono;~~

~~higher management fees earned;~~

the acquisition of the MGE Niagara ~~Resorts, which contributed $85.0~~Resorts;

competitive gaming markets; and

a $126.6 million impairment charge related to ~~net revenues and increased operating costs and expenses by $86.3 million; and~~

~~lower than anticipated table game hold percentage at the MGE Niagara Resorts.~~

Mohegan Sun Pocono's intangible assets.

Mohegan Sun

Revenues

Net revenues declined by ~~$9.4~~$172.8 million, or ~~3.7%~~68.8%, to ~~$243.3~~$78.2 million for the three months ended ~~December 31, 2019~~June 30, 2020 compared to ~~$252.7~~$251.0 million in the same period in the prior year. Net revenues declined by $238.2 million, or 32.1%, to $503.9 million for the nine months ended June 30, 2020 compared to $742.1 million in the same period in the prior year. The declines in net revenues were principally due to the temporary closure of Mohegan Sun, effective March 18, 2020, following the outbreak of COVID-19. Mohegan Sun reopened to the public on June 1, 2020.

Operating Costs and Expenses

Operating costs and expenses decreased by $125.7 million, or 62.2%, to $76.5 million for the three months ended June 30, 2020 compared to $202.2 million in the same period in the prior year. Operating costs and expenses decreased by $191.4 million, or 30.4%, to $437.9 million for the nine months ended June 30, 2020 compared to $629.3 million in the same period in the prior year. These ~~results were driven by lower gaming revenues, partially offset by higher non-gaming revenues. The decline in gaming revenues~~reductions primarily reflected lower ~~slot and table game revenues primarily driven by~~

~~lower~~ overall gaming volumes. In addition, table game revenues were modestly impacted by lower year-over-year hold percentage. The increase in non-gaming revenues was primarily driven by higher hotel and entertainment revenues, both of which benefited from a strong entertainment calendar.

~~Operating Costs and Expenses~~

~~Operating~~operating costs and expenses ~~decreased~~commensurate with the declines in net revenues, combined with various cost saving and expense management initiatives to mitigate the operating and financial impact of COVID-19.

Mohegan Sun Pocono

Revenues

Net revenues declined by ~~$10.3~~$54.9 million, or ~~4.9%~~83.9%, to ~~$198.3~~$10.5 million for the three months ended ~~December 31, 2019~~June 30, 2020 compared to ~~$208.6~~$65.4 million in the same period in the prior year. Net revenues declined by $61.8 million, or 33.0%, to $125.6 million for the nine months ended June 30, 2020 compared to $187.4 million in the same period in the prior year. The ~~decrease~~declines in ~~operating~~net revenues were principally due to the temporary closure of Mohegan Sun Pocono, effective March 18, 2020, following the outbreak of COVID-19. Mohegan Sun Pocono reopened to the public on June 22, 2020.

Operating Costs and Expenses

Operating costs and expenses ~~was primarily driven~~decreased by ~~lower payroll, governmental services and utility costs, along with reduced slot machine tax expenses commensurate with~~$35.4 million, or 64.6%, to $19.4 million for the ~~decline in slot revenues. The decrease in operating costs and expenses also reflected lower depreciation expense due~~three months ended June 30, 2020 compared to ~~the impact of an out-of-period correction which increased depreciation expense by $6.3~~$54.8 million in the same period in the prior year.

~~Mohegan Sun Pocono~~

~~Revenues~~

~~Net revenues~~ Operating costs and expenses increased by ~~$1.2~~$86.8 million, or ~~2.0%~~53.8%, to ~~$62.0~~$248.2 million for the ~~three~~nine months ended ~~December 31, 2019~~June 30, 2020 compared to ~~$60.8~~$161.4 million in the same period in the prior year. The ~~growth~~reduction in operating costs and expenses for the three months ended June 30, 2020 primarily reflected lower overall operating costs and expenses commensurate with the decline in net revenues, ~~reflected increases in both gaming~~combined with various cost saving and ~~non-gaming revenues driven, in part, by strong overall business volumes.~~expense management initiatives to mitigate the operating and financial impact of COVID-19. The increase in gaming revenues reflected higher table game revenues and additional revenues generated by our new sports wagering and interactive gaming operations, while the increase in non-gaming revenues reflected higher food and beverage and hotel revenues. These results were partially offset by lower slot revenues.

~~Operating Costs and Expenses~~

~~Operating~~operating costs and expenses ~~were $54.2~~for the nine months ended June 30, 2020 was driven by a $126.6 million impairment charge related to Mohegan Sun Pocono’s various gaming licenses. These intangible assets are not subject to amortization, but are assessed at least annually for impairment by comparing their fair value to their carrying value. However, these intangible assets may be assessed more frequently for impairment if events or changes in circumstances, such as declines in revenues, earnings and cash flows, or material adverse changes in business climate, indicate that their carrying value may be impaired. During our second quarter of fiscal 2020, we identified an indicator of impairment on Mohegan Sun Pocono's intangible assets due to COVID-19. As a result, we revised our cash flow projections to reflect the current business climate, including the uncertainty surrounding the nature, timing and extent of reopening Mohegan Sun Pocono. The estimated fair value of these intangible assets was determined by using discounted cash flow models, which utilized Level 3 inputs. The primary unobservable input utilized in estimating the fair value of these intangible assets was the discount rate, which was 10.5%. As a result of this interim assessment, we recorded the impairment charge.

MGE Niagara Resorts

Revenues

Net revenues totaled $11.3 million for the three months ended ~~December 31, 2019~~June 30, 2020 compared to ~~$53.6~~$21.3 million in the same period in the prior ~~year, relatively flat.~~

~~MGE Niagara Resorts~~

~~Revenues~~

year. Net revenues totaled ~~$85.0~~$167.6 million for the ~~three~~nine months ended ~~December 31, 2019.~~June 30, 2020 compared to $21.3 million in the same period in the prior year. We assumed the day-to-day operations of the MGE Niagara Resorts on June 11, 2019. ~~Net revenues for~~These results also reflect the ~~three months ended December 31, 2019 reflect lower than anticipated table game hold percentage and unfavorable weather conditions.~~

temporary closure of the MGE Niagara Resorts, effective March 18, 2020, following the outbreak of COVID-19. As of the date of the filing of this Quarterly Report on Form 10-Q, the MGE Niagara Resorts remain temporarily closed.

Operating Costs and Expenses

Operating costs and expenses totaled ~~$86.3~~$21.1 million for the three months ended ~~December 31, 2019.~~June 30, 2020 compared to $18.7 million in the same period in the prior year. Operating costs and expenses totaled $177.8 million for the nine months ended June 30, 2020 compared to $18.7 million in the same period in the prior year. We assumed the day-to-day operations of the MGE Niagara Resorts on June 11, 2019.

These results also reflect reduced overall operating costs and expenses due to the temporary closure of the MGE Niagara Resorts, combined with various cost saving and expense management initiatives to mitigate the operating and financial impact of COVID-19.

Management, Development and Other

Revenues

Net revenues ~~increased~~declined by $3.3 million, or ~~57.9%~~33.7%, to ~~$9.0~~$6.5 million for the three months ended ~~December 31, 2019~~June 30, 2020 compared to ~~$5.7~~$9.8 million in the same period in the prior year. ~~These results primarily reflected higher management fees from ilani Casino Resort driven principally by continued improvement in performance at the property.~~

~~Operating Costs and Expenses~~

~~Operating costs and expenses~~Net revenues increased by ~~$3.8~~$0.6 million, or ~~62.3%~~2.6%, to ~~$9.9~~$24.0 million for the ~~three~~nine months ended ~~December 31, 2019~~June 30, 2020 compared to ~~$6.1~~$23.4 million in the same period in the prior year. The decline in net revenues

for the three months ended June 30, 2020 was principally due to the temporary closure of ilani Casino Resort, our managed property, following the outbreak of COVID-19. ilani Casino Resort reopened to the public on May 28, 2020. The increase in net revenues for the nine months ended June 30, 2020 was due to higher management fees from ilani Casino Resort driven by strong performance at the property prior to its temporary closure and subsequent to its reopening.

Operating Costs and Expenses

Operating costs and expenses decreased by $5.5 million, or 56.1%, to $4.3 million for the three months ended June 30, 2020 compared to $9.8 million in the same period in the prior year. Operating costs and expenses decreased by $1.0 million, or 4.3%, to $22.1 million for the nine months ended June 30, 2020 compared to $23.1 million in the same period in the prior year. The decreases in operating costs and expenses ~~was~~were driven by various cost saving and expense management initiatives to mitigate the operating and financial impact of COVID-19. Operating costs and expenses for the nine months ended June 30, 2020 reflect higher pre-opening costs and expenses associated with Project ~~Inspire and higher development costs and expenses associated with our other domestic and international diversification initiatives.~~

Inspire.

Corporate

Revenues

Net revenues declined by ~~$270,000,~~$0.1 million, or ~~71.4%~~33.3%, to ~~$108,000~~$0.2 million for the three months ended ~~December 31, 2019~~June 30, 2020 compared to ~~$378,000~~$0.3 million in the same period in the prior year. Net revenues declined by $0.6 million, or 60.0%, to $0.4 million for the nine months ended June 30, 2020 compared to $1.0 million in the same period in the prior year. These results were primarily driven by lower revenues generated by our “Play 4 Fun” on-line gaming platform.

Operating Costs and Expenses

Operating costs and expenses declined by ~~$600,000,~~$0.9 million, or ~~7.6%~~13.0%, to ~~$7.3~~$6.0 million for the three months ended ~~December 31, 2019~~June 30, 2020 compared to ~~$7.9~~$6.9 million in the same period in the prior year. Operating costs and expenses declined by $2.9 million, or 13.4%, to $18.8 million for the nine months ended June 30, 2020 compared to $21.7 million in the same period in the prior year. These reductions primarily reflected various cost saving and expense management initiatives to mitigate the operating and financial impact of COVID-19.

Other Expenses

Other expenses declined by $2.7 million, or 7.8%, to $32.1 million for the three months ended June 30, 2020 compared to $34.8 million in the same period in the prior year. Other expenses declined by $1.6 million, or 1.6%, to $100.2 million for the nine months ended June 30, 2020 compared to $101.8 million in the same period in the prior year. Other expenses are comprised primarily of interest expense, net of capitalized interest. Interest expense, net of capitalized interest declined by $3.2 million, or 9.0%, to $32.5 million for the three months ended June 30, 2020 compared to $35.7 million in the same period in the prior year. Interest expense, net of capitalized interest declined by $8.0 million, or 7.5%, to $98.8 million for the nine months ended June 30, 2020 compared to $106.8 million in the same period in the prior year. The ~~decrease~~reductions in ~~operating costs and expenses was primarily~~interest expense, net of capitalized interest were due to ~~a reduction in payroll costs, partially offset by higher costs~~the capitalization of interest related to ~~certain governmental services.~~

~~Other Expenses~~

~~Other expenses increased by $2.6 million, or 8.0%, to $35.2 million~~Project Inspire and lower weighted average interest rate. Weighted average interest rate was 6.4% and 6.9% for the three months and nine months ended ~~December 31, 2019~~June 30, 2020, respectively, compared to ~~$32.6 million in the same period in the prior year, primarily due to the impact of lower interest income. Interest expense was $35.4 million~~7.5% and 7.4% for the three months and nine months ended ~~December 31,~~June 30, 2019, ~~compared to $36.0 million in the same period in the prior year.~~respectively. Weighted average outstanding debt was ~~$2.03~~$2.12 billion and $2.07 billion for the three months and nine months ended ~~December 31, 2019~~June 30, 2020, respectively, compared to ~~$1.96~~$1.91 billion ~~in the same period in the prior year. Weighted average cost of borrowing was 7.0%~~and $1.92 billion for the three months and nine months ended ~~December 31,~~June 30, 2019, ~~compared to 7.4% in the same period in the prior year.~~

respectively.

Seasonality

The gaming markets in the Northeastern United States and Niagara Falls, Canada, are seasonal in nature, with peak gaming activities often occurring during the months of May through August. Accordingly, our operating results for the three months and nine months ended ~~December 31, 2019~~June 30, 2020 are not necessarily indicative of operating results for other interim periods or an entire fiscal year.

Liquidity and Capital Resources

Impact of the COVID-19 Pandemic and Our Response

On March 18, 2020, we announced the temporary suspension of operations at our owned, operated and managed properties to ensure the health and safety of our employees, guests and the surrounding communities in which we operate. The following properties subsequently reopened as follows: (i) Paragon Casino Resort on May 20, 2020, (ii) ilani Casino Resort on May 28, 2020, (iii) Mohegan Sun on June 1, 2020, (iv) Mohegan Sun Pocono on June 22, 2020 and (v) Resorts Casino Hotel on July 2, 2020. As of ~~December 31, 2019~~the date of the filing of this Quarterly Report on Form 10-Q, the MGE Niagara Resorts remain temporarily closed. These business disruptions have had a material adverse impact on our financial condition, results of operations and cash flows.

Liquidity

As of June 30, 2020 and September 30, 2019, we held cash and cash equivalents of ~~$139.2~~$149.4 million and $130.1 million, respectively, of which the MGE Niagara Resorts held $22.7 million and $53.5 million, respectively. Inclusive of letters of credit, which reduce borrowing availability, we had ~~$110.7~~$0.8 million of borrowing capacity under our senior secured revolving facility and line of credit as of December 31, 2019. In addition, inclusive of letters of credit, which reduce borrowing availability, MGE Niagara Entertainment Inc. had $96.0 million of borrowing capacity under the MGE Niagara Resorts revolving facility and line of credit as of December 31, 2019. Borrowing capacities under these facilities may be further impacted by restrictive financial covenant requirements.June 30, 2020. As a result of the cash based nature of our business, operating cash flow levels tend to follow trends in our operating income, excluding the effects of non-cash charges, such as depreciation and ~~amortization.~~

amortization and impairment charges.

Cash used in operating activities totaled ~~$11.0~~$33.6 million for the ~~three~~nine months ended ~~December 31, 2019~~June 30, 2020 compared to cash provided by operating activities of ~~$81.1~~$173.0 million in the same period in the prior year. ~~These results primarily reflected~~The increase in cash used in operating activities was driven by a significant reduction in net income after factoring in non-cash items resulting from the temporary closure of our properties due to COVID-19 and additional working capital requirements associated with the MGE Niagara Resorts, combined with the impact of ~~a $72.2~~an approximately $72 million payment received in the same period in the prior year from the Cowlitz Tribal Gaming Authority related to accrued interest on funds previously advanced for the Cowlitz ~~Project, combined with additional working capital requirements associated with the MGE Niagara Resorts.~~

Project.

Cash used in investing activities totaled ~~$25.3~~$118.0 million for the ~~three~~nine months ended ~~December 31, 2019~~June 30, 2020 compared to ~~cash provided by investing activities of $16.6~~$105.2 million in the same period in the prior year. The increase in cash used in investing activities ~~for the three months ended December 31, 2019~~ primarily reflected higher capital expenditures and the impact of ~~a $32.0~~an approximately $32 million payment received in the same period in the prior year from the Cowlitz Tribal Gaming Authority related to funds previously advanced for the Cowlitz ~~Project. The increase~~Project, partially offset by the acquisition of the MGE Niagara Resorts for $72.3 million in ~~cash used~~the same period in ~~investing activities for~~ the three months ended December 31, 2019 also reflected higher capital expenditures. Capital expenditures totaled $34.3 million for the three months ended December 31, 2019, of which $22.9 million related to Project Inspire.

prior year.

Cash provided by financing activities totaled ~~$30.4~~$84.6 million for the ~~three~~nine months ended ~~December 31, 2019~~June 30, 2020 compared to ~~cash used in financing activities of $17.7~~$52.2 million in the same period in the prior year. The increase in cash provided by financing activities ~~for the three months ended December 31, 2019~~ was primarily driven by ~~a $43.6 million increase~~increased borrowings to ensure maximum financial flexibility in response to COVID-19, partially offset by the impact of borrowings ~~for general corporate purposes, including working capital requirements associated with~~in the same period in the prior year to fund the acquisition of the MGE Niagara Resorts. The increase in cash

provided by financing activities also reflected lower distributions to the Mohegan Tribe, combined with the impact of a $10 million membership interest redemption in the same period in the prior year relating to the Cowlitz Project.

Amendment to Senior Secured Credit Facilities

On August 28, 2020, the Company entered into an amendment to its Senior Secured Credit Facilities, which, among other things waived non-compliance with certain of its financial covenants through June 30, 2020 and modified the financial covenants applicable to periods subsequent to June 30, 2020 (refer to Note 8), as described in the tables below.

The Company shall not permit the minimum Fixed Charge Coverage Ratio (as defined under the Senior Secured Credit Facilities) to be less than:

Fiscal Quarters Ending:		During the Financial Covenant Restricted Period
September 30, 2020 and thereafter		1.05:1.00

Fiscal Quarters Ending:		From and after the Financial Covenant Restricted Period
September 30, 2020 and thereafter		1.05:1.00

The Company shall not permit the maximum Total Leverage Ratio (as defined under the Senior Secured Credit Facilities) to be greater than:

Fiscal Quarters Ending:		During the Financial Covenant Restricted Period
September 30, 2020 through March 31, 2021		7.00:1.00
June 30, 2021		6.75:1.00
September 30, 2021		6.50:1.00
December 31, 2021		6.25:1.00
March 31, 2022 and June 30, 2022		5.75:1.00
September 30, 2022 through June 30, 2023		5.50:1.00
September 30, 2023 and each fiscal quarter ending thereafter		5.25:1.00

Fiscal Quarters Ending:		From and after the Financial Covenant Restricted Period
September 30, 2020 through June 30, 2021		6.00:1.00
September 30, 2021 through June 30, 2022		5.75:1.00
September 30, 2022 through June 30, 2023		5.50:1.00
September 30, 2023 and each fiscal quarter ending thereafter		5.25:1.00

The Company shall not permit the maximum Senior Secured Leverage Ratio covenant (as defined under the Senior Secured Credit Facilities) to be greater than:

Fiscal Quarters Ending:		During the Financial Covenant Restricted Period
September 30, 2020 through March 31, 2021		4.75:1.00
June 30, 2021		4.25:1.00
September 30, 2021 through June 30, 2022		4.00:1.00
September 30, 2022 and each fiscal quarter ending thereafter		3.75:1.00

Fiscal Quarters Ending:		From and after the Financial Covenant Restricted Period
September 30, 2020 through June 30, 2021		4.25:1.00
September 30, 2021 through June 30, 2022		4.00:1.00
September 30, 2022 and each fiscal quarter ending thereafter		3.75:1.00

Amendments and Waivers with Respect to MGE Niagara Resorts Credit Facilities

On March 16, 2020, the OLG directed the MGE Niagara Resorts to close due to the ongoing COVID-19 pandemic. On May 15, 2020, MGE Niagara entered into a Limited Waiver with respect to the MGE Niagara Resorts Credit Facilities. The Limited Waiver, among other things, (a) waived the occurrence of an event of default that would have been caused under the MGE Niagara Resorts Credit Facilities due to the closure of the MGE Niagara Resorts for a period of 60 consecutive days or

more, and (b) extended the waiver period through June 15, 2020 (the “Initial Waiver Period”). In exchange for the waivers granted under the Limited Waiver, MGE Niagara agreed not to make any request for advances under the MGE Niagara Resorts Credit Facilities during the Initial Waiver Period.

Because the MGE Niagara Resorts were required to continue to remain closed as directed by the OLG through the Initial Waiver Period, MGE Niagara entered into an Amended and Restated Limited Waiver on June 15, 2020 which, among other things, extended the Initial Waiver Period to July 15, 2020 (the “Extended Waiver Period”).

On June 30, 2020, MGE Niagara entered a Second Amended and Restated Limited Waiver (the “Second Waiver”) which, among other things, (a) waived anticipated breaches of certain financial covenants under the MGE Niagara Resorts Credit Facilities as a result of the closure of the MGE Niagara Resorts until July 31, 2020 (the “Covenant Waiver”), (b) waived the requirement for MGE Niagara to deliver a compliance certificate under the MGE Niagara Resorts Credit Facilities for the fiscal quarter ending June 30, 2020 (the “Certificate Waiver”) and (c) extended the Extended Waiver Period to July 31, 2020 (the “Second Extended Waiver Period”). In connection with the Second Waiver, MGE Niagara agreed, among other things, during the Second Extended Waiver Period, to: (a) continue not to make any request for advances under the MGE Niagara Resorts Credit Facilities; (b) an increase in the Applicable Margin (as defined in the MGE Niagara Resorts Credit Facilities) to pricing level 4, a 50 basis point increase over pricing level 3; and (c) not make certain Distributions (as defined in the MGE Niagara Resorts Credit Facilities).

Sufficiency of Resources

We believe that existing cash balances, financing arrangements, the Mohegan Tribe’s recent investment in connection with the Fourth Amendment (refer to Note 8), and operating cash flows, which should benefit from our various actions to reduce costs and encouraging business trends at our reopened properties, will provide us with sufficient resources to meet our existing debt obligations, distributions to the Mohegan Tribe, capital expenditures and working capital requirements, including threshold payments relating to the MGE Niagara Resorts, for at least the next twelve months; however, we can provide no assurance in this regard.

Critical Accounting Policies and Estimates

There has been no material change from the critical accounting policies and estimates previously disclosed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2019.

Other Intangible Assets

Other intangible assets include Mohegan Sun Pocono's various gaming licenses. These intangible assets all have indefinite lives. Intangible assets with indefinite lives are assessed at least annually for impairment by comparing their fair value to their carrying value. However, these intangible assets may be assessed more frequently for impairment if events or changes in circumstances, such as declines in revenues, earnings and cash flows, or material adverse changes in the business climate, indicate that their carrying value may be impaired.

During our second quarter of fiscal 2020, we identified an indicator of impairment on Mohegan Sun Pocono's intangible assets due to COVID-19.

As a result, we revised our cash flow projections to reflect the current business climate, including the uncertainty surrounding the nature, timing and extent of reopening Mohegan Sun Pocono. The estimated fair value of these intangible assets was determined by using discounted cash flow models, which utilized Level 3 inputs. The primary unobservable input utilized in estimating the fair value of these intangible assets was the discount rate, which was 10.5%. As a result of this interim assessment, we recorded an impairment charge related to Mohegan Sun Pocono’s intangible assets of $126.6 million in our second quarter of fiscal 2020.

The evaluation of intangible assets for impairment requires the use of estimates about future cash flows. Such estimates are, by their nature, subjective. Actual results may differ materially from our estimates and could result in impairment charges in the future.

As of June 30, 2020, following the aforementioned impairment charge, Mohegan Sun Pocono's intangible assets totaled $171.9 million, which we believe reflects their estimated fair value. The decline in gaming revenues, a higher weighted average cost of capital utilized for the cash flow valuation and lower operating income growth rates have all lowered the estimated fair value of these intangible assets. Further deterioration in these assumptions could result in the carrying value of these intangible assets exceeding their estimated fair value in the future. In the event that the carrying value of these intangible assets exceeds their fair value in a future period, these intangible assets would be impaired and subject to additional non-cash write-downs, which could have a material adverse impact on our financial condition.

A 1% reduction in the estimated revenue growth rate would decrease the fair value of Mohegan Sun Pocono’s intangible assets by approximately $19.9 million and a 1% increase in the discount rate would decrease the fair value of Mohegan Sun Pocono’s intangible assets by approximately $19.6 million.

Item 3. Quantitative and ~~Qualitative~~Qualitative Disclosures about Market Risk.

Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. As of ~~December 31, 2019,~~June 30, 2020, our primary exposure to market risk was interest rate risk associated with our credit facilities which accrued interest on the basis of base rate, Eurodollar rate and Bankers’ Acceptance rate formulas, plus applicable rates, as defined under the credit facilities. Based on our variable rate outstanding debt as of ~~December 31, 2019,~~June 30, 2020, a 100 basis point change in average interest rate would impact annual interest expense by approximately ~~$13.8~~$14.9 million.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of ~~December 31, 2019.~~June 30, 2020. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosures. Management recognizes that controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on an evaluation of our disclosure controls and procedures as of September 30, 2019, and due to a material weakness in our internal control over financial reporting relating to our goodwill and other intangible assets impairment analysis review control, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were not effective.

Notwithstanding this material weakness, our management, including our Chief Executive Officer and Chief Financial Officer, has concluded that our financial statements included in this Quarterly Report on Form 10-Q present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in accordance with accounting principles generally accepted in the United States of America.

Changes in Internal Control Over Financial Reporting

There have been no other changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, that occurred during the quarter ended ~~December 31, 2019,~~June 30, 2020, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting, other than the material weakness discussed above. In making our assessment of changes in internal control over financial reporting, we have excluded the MGE Niagara Resorts, which was acquired on June 11, 2019.

PART II. ~~OTHER~~OTHER INFORMATION

Item 1. Legal Proceedings

There has been no material change from the legal proceedings previously disclosed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2019.

Item 1A. Risk Factors

There has been no material change from the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended September 30, ~~2019.~~

2019, except for the following:

The effect of the COVID-19 pandemic on our operations has had a material adverse impact on our businesses, results of operations, liquidity and financial condition, and we expect that it will continue to do so.

In March 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic and the United States federal government declared it a national emergency. The spread of COVID-19 has affected most segments of the global economy, including our operations. On March 18, 2020, we announced the temporary suspension of operations at our North American owned, operated and managed properties to ensure the health and safety of our employees, guests and the surrounding communities in which we operate, consistent with directives from various government bodies. While almost all of our properties have reopened, we cannot predict when our remaining closed properties will be able to reopen or the conditions upon which additional reopenings may occur, and we expect that business disruptions relating to COVID-19 will continue even after all of our owned, operated and managed properties are reopened. The extent to which COVID-19 further impacts our operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of COVID-19 or a resurgence, the manner in which our guests, suppliers and other third parties respond to COVID-19, including perception of safety and health measures taken by us, new information which may emerge concerning its severity and the actions to contain it or treat its impact, as well as general economic conditions and consumer confidence.

COVID-19 is a widespread health crisis that could continue to adversely affect our results of operations. Given the uncertainty around the extent and timing of the potential future spread or mitigation of COVID-19 and around the imposition or relaxation of protective measures, we cannot reasonably estimate the extent to which COVID-19 will impact our future financial condition, results of operations and cash flows.

Item 5. Other Information

(a) The information set forth under the caption “Amendment to Senior Secured Credit Facilities” within Note 8 to the Company’s condensed consolidated financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q is incorporated herein by reference.

Item 6. ~~Exhibits~~

Exhibits

Exhibit No.		Description
10.1		Waiver, dated as of June 11, 2020, by and among The Mohegan Tribal Gaming Authority, The Mohegan Tribe of Indians of Connecticut, and U.S. Bank National Association, as trustee (filed as Exhibit 4.1 to the Company’s Form 8-K, filed with the SEC on June 18, 2020 and incorporated by reference herein).
~~Exhibit No.~~		~~Description~~
~~31.1~~ 10.2		[Amendment to MGE Niagara Resorts Credit Facilities (filed herewith).]Third Amendment to Credit Agreement, dated as of August 13, 2020, by and among the Company, the Tribe, and the other parties signatory thereto (filed as Exhibit [10.23] to the Mohegan Tribal Gaming Authority’s Form 10-Q, filed with the SEC on August [28], 2020) and incorporated by reference herein.

10.3		Fourth Amendment to Credit Agreement, dated as of August [28], 2020, by and among the Company, the Tribe, and the other parties signatory thereto (filed as Exhibit [10.43] to the Mohegan Tribal Gaming Authority’s Form 10-Q, filed with the SEC on August [28], 2020).

10.4		Limited Waiver, dated as of May 15, 2020, granted by Bank of Montreal, as administrative agent, on behalf of and at the direction of the Required Lenders in favor of MGE Niagara Entertainment Inc. (filed as Exhibit 10.45 to the Mohegan Tribal Gaming Authority’s Form 10-Q, filed with the SEC on August 28, 2020) and incorporated by reference herein.

10.5		Amended and Restated Limited Waiver, dated as of June 15, 2020, granted by Bank of Montreal, as administrative agent, on behalf of and at the direction of the Required Lenders in favor of MGE Niagara Entertainment Inc. (filed as Exhibit 10.56 to the Mohegan Tribal Gaming Authority’s Form 10-Q, filed with the SEC on August 28, 2020).

10.6		Second Amended and Restated Limited Waiver, dated as of June 30, 2020, granted by Bank of Montreal, as administrative agent, on behalf of and at the direction of the Required Lenders in favor of MGE Niagara Entertainment Inc. (filed as Exhibit 10.7 to the Mohegan Tribal Gaming Authority’s Form 10-Q, filed with the SEC on August 28, 2020) and incorporated by reference herein.

10.7		Third Amended and Restated Limited Waiver, dated as of July 31, 2020, granted by Bank of Montreal, as administrative agent, on behalf of and at the direction of the Required Lenders in favor of MGE Niagara Entertainment Inc. (filed as Exhibit 10.78 to the Mohegan Tribal Gaming Authority’s Form 10-Q, filed with the SEC on August 28, 2020) and incorporated by reference herein.

31.1		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer ~~(filed herewith).~~

~~31.2~~		~~Rule 13a-14(a)/15d-14(a) Certification of Chief~~and Acting Principal Financial Officer (filed herewith).

32.1		Section 1350 Certification of Chief Executive Officer ~~(furnished herewith).~~

~~32.2~~		~~Section 1350 Certification of Chief~~and Acting Principal Financial Officer (furnished herewith).

101.INS		XBRL Instance Document (filed herewith).

101.SCH		XBRL Taxonomy Extension Schema (filed herewith).

101.CAL		XBRL Taxonomy Calculation Linkbase (filed herewith).

101.DEF		XBRL Taxonomy Extension Definition Linkbase (filed herewith).

101.LAB		XBRL Taxonomy Extension Label Linkbase (filed herewith).

101.PRE		XBRL Taxonomy Extension Presentation Linkbase (filed herewith).

~~SIGNATURES~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Mohegan Tribal Gaming Authority has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.



		MOHEGAN TRIBAL GAMING AUTHORITY

Date:	~~February 12,~~ August 28, 2020	By:	/S/S/ RALPH JAMES GESSNER JR.
			Ralph James Gessner Jr. Chairman and Member, Management Board

Date:	~~February 12,~~ August 28, 2020	By:	/S/S/ MARIO C. KONTOMERKOS
			Mario C. Kontomerkos Chief Executive Officer, Mohegan Tribal Gaming Authority (Principal Executive, ~~Officer)~~

~~Date:~~	~~February 12, 2020~~	~~By:~~	/S~~/ DREW M. KELLEY~~
			~~Drew M. Kelley~~ ~~Chief Financial Officer,~~ ~~Mohegan Tribal Gaming Authority~~ ~~(Principal~~ Financial and Accounting Officer)



	December 31, 2019		September 30, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	139,164	$	130,138
Restricted cash and cash equivalents	6,706		4,960
Accounts receivable, net of allowance for doubtful accounts of $12,007 and $11,715, respectively	55,388		52,764
Inventories	17,794		18,248
Due from Ontario Lottery and Gaming Corporation	11,905		10,946
Casino Operating and Services Agreement customer contract asset	471		3,004
Other current assets	57,319		47,276
Total current assets	288,747		267,336
Restricted cash and cash equivalents	136,014		145,631
Property and equipment, net	1,444,019		1,520,687
Right-of-use operating lease assets	361,036		—
Other intangible assets, net	456,672		455,265
Casino Operating and Services Agreement customer contract asset, net of current portion	95,208		50,192
Notes receivable	2,514		2,514
Other assets, net	71,314		69,971
Total assets	$	2,855,524	$	2,511,596
LIABILITIES AND CAPITAL
Current liabilities:
Current portion of long-term debt	$	74,266	$	76,909
Current portion of finance lease obligations	1,794		1,133
Current portion of right-of-use operating lease obligations	9,894		—
Trade payables	20,811		16,672
Accrued payroll	48,853		53,225
Construction payables	24,040		11,888
Accrued interest payable	10,070		19,804
Due to Ontario Lottery and Gaming Corporation	38,413		30,662
Other current liabilities	171,585		174,231
Total current liabilities	399,726		384,524
Long-term debt, net of current portion	1,885,752		1,832,248
Finance lease obligations, net of current portion	30,043		28,561
Right-of-use operating lease obligations, net of current portion	359,848		—
Build-to-suit liability	—		90,292
Other long-term liabilities	34,194		38,538
Total liabilities	2,709,563		2,374,163
Commitments and Contingencies
Capital:
Retained earnings	134,205		137,124
Accumulated other comprehensive income (loss)	4,253		(6,633		)
Total capital attributable to Mohegan Tribal Gaming Authority	138,458		130,491
Non-controlling interests	7,503		6,942
Total capital	145,961		137,433
Total liabilities and capital	$	2,855,524	$	2,511,596



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



Fiscal years:
2020 (1)	$	7,120
2021	8,211
2022	5,375
2023	4,748
2024	4,180
Thereafter	9,440
Total	$	39,074



	December 31, 2019
Property and equipment, at cost	$	492,612
Less: accumulated depreciation	(197,212		)
Property and equipment, net	$	295,400



Fiscal years:	Minimum Future Rental Payments		Minimum Future Sublease Income			Total
2020	$	32,504	$	(1,709	)	$	30,795
2021	30,376		(1,428		)	28,948
2022	30,651		(1,114		)	29,537
2023	30,473		(987		)	29,486
2024	30,602		(1,025		)	29,577
Thereafter	715,910		(843		)	715,067
Total	$	870,516	$	(7,106	)	$	863,410



	For the
	Three Months Ended
	December 31, 2018
Net revenues	$	405,802
Net income attributable to Mohegan Tribal Gaming Authority	$	8,554



	For the Three Months Ended December 31,
(in thousands)	2019			2018			Variance			Percentage Variance
Net revenues:
Mohegan Sun	$	243,335		$	252,679		$	(9,344	)	(3.7	)%
Mohegan Sun Pocono	61,954			60,791			1,163			1.9	%
MGE Niagara Resorts (1)	84,974			—			84,974			100.0	%
Management, development and other	9,012			5,712			3,300			57.8	%
Corporate	108			378			(270		)	(71.4	)%
Inter-segment	(331		)	(60		)	(271		)	(451.7	)
Total	$	399,052		$	319,500		$	79,552		24.9	%
Income (loss) from operations:
Mohegan Sun	$	45,065		$	44,063		$	1,002		2.3	%
Mohegan Sun Pocono	7,794			7,192			602			8.4	%
MGE Niagara Resorts (1)	(1,333		)	—			(1,333		)	(100.0	)%
Management, development and other	(918		)	(413		)	(505		)	(122.3	)%
Corporate	(7,164		)	(7,472		)	308			4.1	%
Inter-segment	(19		)	—			(19		)	(100.0	)%
Total	$	43,425		$	43,370		$	55		0.1	%
Net income attributable to Mohegan Tribal Gaming Authority	$	9,394		$	10,622		$	(1,228	)	(11.6	)%