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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, 2001

[_] 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)

Connecticut 06-1436334
(State or other
jurisdiction of
incorporation or (IRS employer
organization) Identification No.)
One Mohegan Sun
Boulevard, Uncasville, CT 06382
(Address of principal
executive offices) (Zip Code)

Registrant's telephone number, including area code (860) 862-8000

Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on which Registered
------------- -------------
------------- -------------
None

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

(Title of Class)
-------------
-------------
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 [X] No [_]

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MOHEGAN TRIBAL GAMING AUTHORITY

INDEX TO FORM 10-Q

Page
Number
------

PART I -- FINANCIAL INFORMATION
Item 1--Financial Statements
Review Report of Independent Public Accountants............................................. 1
Balance Sheets of Mohegan Tribal Gaming Authority as of December 31, 2001 (unaudited) and
September 30, 2001........................................................................ 2
Statements of Income of Mohegan Tribal Gaming Authority for the Quarter Ended December 31,
2001 and 2000 (unaudited)................................................................. 3
Statements of Capital of Mohegan Tribal Gaming Authority for the Quarter Ended December 31,
2001 and 2000 (unaudited)................................................................. 4
Statements of Cash Flows of Mohegan Tribal Gaming Authority for the Quarter Ended
December 31, 2001 and 2000 (unaudited).................................................... 5
Notes to Financial Statements of Mohegan Tribal Gaming Authority............................ 6-13
Item 2--Management's Discussion and Analysis of Financial Condition and Results of Operations.. 14-22
Item 3--Quantitative and Qualitative Disclosure of Market Risk................................. 22-23
PART II -- OTHER INFORMATION
Item 1--Legal Proceedings...................................................................... 24
Item 2--Changes in Securities.................................................................. 24
Item 3--Defaults upon Senior Securities........................................................ 24
Item 4--Submission of Matters to a Vote of Security Holders.................................... 24
Item 5--Other Information...................................................................... 24
Item 6--Exhibits and Reports on Form 8-K....................................................... 24
Signatures--Mohegan Tribal Gaming Authority.................................................... 25

REVIEW REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Mohegan Tribal Gaming Authority:

We have reviewed the accompanying balance sheet of the Mohegan Tribal Gaming
Authority (the "Authority") as of December 31, 2001, and the related statements
of income, capital and cash flows for the three month periods ended December
31, 2001 and 2000. These financial statements are the responsibility of the
Authority's management.

We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with auditing standards generally accepted in the United States,
the objective of which is the expression of an opinion regarding the financial
statements as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that
should be made to the financial statements referred to above for them to be in
conformity with accounting principles generally accepted in the United States.

We have previously audited, in accordance with auditing standards generally
accepted in the United States, the balance sheet of the Mohegan Tribal Gaming
Authority as of September 30, 2001, and the related statements of income
(loss), capital and cash flows for the year then ended (not presented
separately herein) and in our report dated December 14, 2001, we expressed an
unqualified opinion on those financial statements. In our opinion, the
information set forth in the accompanying balance sheet of the Mohegan Tribal
Gaming Authority as of September 30, 2001, is fairly stated, in all material
respects, in relation to the balance sheet from which it has been derived.

ARTHUR ANDERSEN LLP

Hartford, Connecticut
February 6, 2002

December 31, September 30,
2001 2001
------------ -------------
(unaudited)

ASSETS
Current assets:
Cash and cash equivalents.................... $ 81,287 $ 74,284
Receivables, net............................. 9,192 7,163
Inventories.................................. 12,506 11,455
Other current assets......................... 17,034 12,706
---------- ----------
Total current assets..................... 120,019 105,608
Non-current assets:
Property and equipment, net.................. 983,973 935,016
Construction in process...................... 318,490 267,653
Trademark, net............................... 119,692 119,692
Other assets, net............................ 25,189 24,766
---------- ----------
Total assets............................. $1,567,363 $1,452,735
========== ==========
LIABILITIES AND CAPITAL
Current liabilities:
Current portion of capital lease obligations. $ -- $ 1,514
Current portion of relinquishment liability.. 75,436 68,272
Accounts payable and accrued expenses........ 155,646 139,316
Accrued interest payable..................... 26,859 13,062
---------- ----------
Total current liabilities................ 257,941 222,164
Non-current liabilities:
Long-term debt............................... 990,000 908,000
Relinquishment liability..................... 519,890 523,736
Other long-term liabilities.................. 5,088 5,232
---------- ----------
Total liabilities........................ 1,772,919 1,659,132
---------- ----------
Commitments and contingencies (Note 7)
Capital:
Retained Deficit............................. (200,626) (201,270)
Accumulated other comprehensive loss......... (4,930) (5,127)
---------- ----------
Total capital............................ (205,556) (206,397)
---------- ----------
Total liabilities and capital............ $1,567,363 $1,452,735
========== ==========

The accompanying accountants' review report and notes to financial statements
should be read in conjunction with the financial statements.

MOHEGAN TRIBAL GAMING AUTHORITY

BALANCE SHEETS
(in thousands)

MOHEGAN TRIBAL GAMING AUTHORITY

STATEMENTS OF INCOME
(in thousands)

For the For the
Quarter Ended Quarter Ended
December 31, 2001 December 31, 2000
----------------- -----------------
(unaudited) (unaudited)

Revenues:
Gaming................................................. $226,867 $174,958
Food and beverage...................................... 17,091 10,724
Retail, entertainment and other........................ 14,645 16,595
-------- --------
Gross revenues....................................... 258,603 202,277
Less--Promotional allowances........................... (17,127) (19,187)
-------- --------
Net revenues............................................ 241,476 183,090
-------- --------
Cost and expenses:
Gaming................................................. 133,290 93,301
Food and beverage...................................... 11,091 6,077
Retail, entertainment and other........................ 8,910 4,809
General and administration............................. 37,838 27,620
Pre-opening costs...................................... 1,657 1,389
Depreciation and amortization.......................... 17,263 6,579
-------- --------
Total costs and expenses........................... 210,049 139,775
-------- --------
Income from operations.................................. 31,427 43,315
-------- --------
Other income (expense):
Relinquishment liability reassessment (Note 7)......... (9,083) (8,958)
Interest and other income.............................. 123 1,164
Interest expense, net.................................. (14,799) (5,925)
Other non-operating expense............................ (37) --
Change in fair value of derivative instruments (Note 3) (16) (2,142)
-------- --------
(23,812) (15,861)
-------- --------
Income from continuing operations....................... 7,615 27,454
Loss from discontinued operations...................... -- (192)
-------- --------
Net income.............................................. $ 7,615 $ 27,262
======== ========

The accompanying accountants' review report and notes to financial statements
should be read in conjunction with the financial statements

MOHEGAN TRIBAL GAMING AUTHORITY

STATEMENTS OF CAPITAL
(in thousands)

For the For the
Quarter Ended Quarter Ended
December 31, 2001 December 31, 2000
----------------- -----------------
(unaudited) (unaudited)

Beginning balance..................... $(206,397) $(362,118)
Net income............................ 7,615 27,262
Accumulated other comprehensive income 197 --
Distributions to Tribe................ (6,971) (10,000)
--------- ---------
Ending balance........................ $(205,556) $(344,856)
========= =========

The accompanying accountants' review report and notes to financial statements
should be read in conjunction with the financial statements.

MOHEGAN TRIBAL GAMING AUTHORITY

STATEMENTS OF CASH FLOWS
(in thousands)

For the Quarter Ended For the Quarter Ended
December 31, 2001 December 31, 2000
--------------------- ---------------------
(unaudited) (unaudited)

Cash flows provided by operating activities:
Net income........................................................ $ 7,615 $ 27,262
Adjustments to reconcile net income to
net cash flow provided by operating activities:
Depreciation and amortization................................. 17,263 6,579
Loss on early extinguishment of debt, net..................... 6 --
Loss on asset disposal........................................ 30 --
Provision for losses on receivables........................... 253 117
Relinquishment liability reassessment......................... 9,083 8,958
Changes in operating assets and liabilities:
Increase in current assets.................................... (7,661) (5,100)
Increase in other assets...................................... (494) 2,757
Decrease in current liabilities............................... 30,127 12,355
Decrease in other liabilities................................. 53 --
--------- --------
Net cash flows provided by operating activities............... 56,275 52,928
--------- --------
Cash flows used in investing activities:
Purchase of property and equipment................................ (64,983) (4,630)
Increase in construction in process............................... (50,837) (76,589)
Proceeds from asset sale.......................................... 33 --
--------- --------
Net cash flows used in investing activities................... (115,787) (81,219)
--------- --------
Cash flows provided by (used in) financing activities:
Proceeds from issuance of long-term debt.......................... 82,000 --
Distributions to Tribe............................................ (6,971) (10,000)
Relinquishment liability payments................................. (5,765) (5,457)
Payment on capital lease obligations.............................. (1,520) (2,071)
Capitalized financing fees........................................ (1,229) (1,368)
--------- --------
Net cash flows provided by (used in) financing activities..... 66,515 (18,896)
--------- --------
Net increase (decrease) in cash and cash equivalents.......... 7,003 (47,187)
Cash and cash equivalents at beginning of period..................... 74,284 115,731
--------- --------
Cash and cash equivalents at end of period........................... $ 81,287 $ 68,544
========= ========
Supplemental disclosures:
Cash paid during the period for interest.......................... $ 4,230 $ 112

The accompanying accountants' review report and notes to financial statements
should be read in conjunction with the financial statements

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO FINANCIAL STATEMENTS

1. Organization and Basis of Presentation

The Mohegan Tribe of Indians of Connecticut (the "Tribe") established the
Mohegan Tribal Gaming Authority (the "Authority") in July 1995 with the
exclusive power to conduct and regulate gaming activities for the Tribe on
Tribal lands. The Authority is governed by a nine-member Management Board,
consisting of the same nine members as those of the Tribal Council (the
governing body of the Tribe). Any change in the composition of the Tribal
Council results in a corresponding change in the Authority's Management Board.
The General Manager and other senior officers of Mohegan Sun are hired by the
Management Board.

2. Summary of Significant Accounting Policies

The accompanying unaudited financial statements have been prepared in
accordance with the generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals and adjustments to previously established loss
provisions) considered necessary for a fair presentation have been included.
Operating results for the quarter ending December 31, 2001 are not necessarily
indicative of the results that may be expected for the year ending September
30, 2002. For further information, refer to the financial statements and
footnotes thereto included in the Authority's annual report on Form 10-K for
the year ended September 30, 2001.

New Accounting Pronouncements

In August 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for
the Impairment of Disposal of Long-Lived Assets." SFAS No. 144 modifies the
rules for accounting for the impairment or disposal of long-lived assets. The
new rules become effective for fiscal years beginning after December 15, 2001,
with earlier application encouraged. The Authority has not adopted SFAS No.
144, and has not yet quantified the impact of implementing SFAS No. 144 on the
Authority's financial statements, but does not anticipate a negative effect on
the Authority's operating income upon adoption of the standard.

On June 30, 2001, the FASB issued SFAS No. 142 "Goodwill and Other
Intangible Assets" to be effective for fiscal years beginning after December
15, 2001. The Authority adopted SFAS No. 142 on October 1, 2001. Under SFAS No.
142, the trademark is no longer subject to amortization over its estimated
useful life as it has been deemed to have an indefinite useful life. However,
SFAS No. 142 requires the trademark to be evaluated at least annually for
impairment by applying a fair-value based test and, if impairment occurs, the
amount of impaired trademark must be written off immediately. With the adoption
of SFAS No. 142, the Authority no longer records amortization of the trademark.
For the quarter ended December 31, 2000, the Authority recorded $859,000
related to the amortization of the trademark. The Authority is required to
apply the initial fair value test by March 31, 2002. The Authority has not yet
determined whether the initial fair value test will result in any impairment
changes, but does not anticipate a negative effect on its operating income upon
completing the fair value assessment.

Reclassifications

Certain amounts in the 2001 financial statements have been reclassified to
conform with the 2002 presentation. These reclassifications represent movement
between categories and do not change the Authority's overall financial
statements.

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO FINANCIAL STATEMENTS--(Continued)

3. Financing Facilities:

Financing facilities, as described below, consisted of the following (in
thousands):

December 31, September 30,
2001 2001
------------ -------------

Bank Credit Facility........... $340,000 $258,000
$200M Senior Notes............. 200,000 200,000
$300M Senior Subordinated Notes 300,000 300,000
$150M Senior Subordinated Notes 150,000 150,000
-------- --------
$990,000 $908,000
======== ========

Bank Credit Facility

As of December 31, 2001, the Authority had $340.0 million outstanding under
a $500.0 million reducing, revolving, secured credit facility (the "Bank Credit
Facility") with a syndicate of lenders led by Bank of America N.A. (formerly
known as Bank of America National Trust and Savings Association). The Authority
draws on the Bank Credit Facility in connection with Project Sunburst and other
capital expenditure projects. The Bank Credit Facility is secured by a lien on
substantially all of the Authority's assets, by a leasehold mortgage on the
land and improvements which comprise Mohegan Sun and by each of the Authority's
cash operating accounts.

At the Authority's option, each advance of loan proceeds accrues interest on
the basis of a base rate or on the basis of a one-month, two-month, three-month
or six-month London Inter-Bank Offered Rate ("LIBOR") plus, in either case, the
applicable spread (based on the Authority's Total Leverage Ratio as defined in
the Bank Credit Facility). One-month LIBOR at December 31, 2001 was 1.87% and
the applicable spread on a LIBOR loan was 2.375%. Interest on each LIBOR loan
that is for a term of a quarter or less is due and payable on the last day of
the related interest period. Interest on each base rate loan is due and payable
quarterly in arrears. Accrued interest on the Bank Credit Facility was $200,000
as of December 31, 2001.

Pursuant to the terms of the Bank Credit Facility, the commitment (or the
maximum amount that may be borrowed under the Bank Credit Facility) will be
automatically reduced on the earlier of March 31, 2002 or the last day of the
first full fiscal quarter following the completion date of Project Sunburst,
and on the last day of each fiscal quarter thereafter. The amount of such
reduction must equal 10% of the commitment as in effect immediately prior to
the first such reduction.

The Authority's debt agreements require, among other restrictions, the
maintenance of various financial covenants and terms including a fixed charge
coverage ratio, and certain debt leverage ratios. As of December 31, 2001, the
Authority was in compliance with all financial covenant requirements.

Due to delays in the construction schedule of the Project Sunburst hotel,
the Authority has initiated discussions with its lenders regarding possible
amendments to its financial covenants under the Bank Credit Facility. These
amendments would be intended to address the impact of the extended construction
borrowing period and the delay in achieving the full cash flows anticipated
from the fully completed hotel. The administrative agent has advised the
Authority that preliminary approval of the principal terms of these amendments
have been received from the requisite lenders. An amendment is being prepared
to finalize these terms. The Authority also is considering the issuance of
additional senior subordinated notes in 2002 in order to curtail a portion of
the outstanding balance of the Bank Credit Facility.

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO FINANCIAL STATEMENTS--(Continued)

interest rate caps, collars, and swaps in its strategy to manage interest rate
risk associated with the variable interest rates applicable to advances under
the Bank Credit Facility. The Authority's objective in managing interest rate
risk is to ensure appropriate income and sufficient liquidity to meet its
obligations. The Authority does not believe that there is any material risk
exposure with respect to derivative or other financial instruments which it
currently holds. The Authority continually monitors these exposures and makes
the appropriate adjustments to manage these risks within management's
established limits.

The Authority is considered an "end user" of derivative instruments and
engages in derivative transactions for risk management purposes only. On
October 1, 2000, the Authority adopted SFAS No. 133 "Accounting for Derivative
Instruments and Hedging Activities," designated all derivative instruments as
cash flow hedging instruments and marked them to market. The impact of the
adoption of SFAS 133 was not material to the financial position of the
Authority taken as a whole. The Authority excludes the change in time value
when assessing the effectiveness of the hedging relationships. All derivatives
are evaluated quarterly and were deemed to be effective at December 31, 2001.

Derivative instruments held by the Authority at December 31, 2001 are as
follows:

Notional Cost Market
------------ -------- -----------

Interest Rate Cap
Strike Rate -- 8%............. $ 62,399,200 $410,000 $ 600
Interest Rate Collar
Ceiling Strike Rate -- 8%
Floor Strike Rate -- 6%...... 67,143,400 295,000 (3,212,839)
Interest Rate Swap
Pay fixed -- 6.35%
Receive Variable............. 33,571,700 221,000 (1,756,283)
Total............................ $163,114,300 $926,000 $(4,968,522)
============ ======== ===========

All derivative instruments are based on one-month LIBOR. One-month LIBOR was
1.87% on December 31, 2001.

For the quarter ended December 31, 2001 and 2000, the Authority recognized a
net loss of $16,000 and $2.1 million respectively, relating to the change in
time value of its derivative instruments, as reflected in the statements of
income.

Senior Notes

On March 3, 1999, the Authority issued $200.0 million Senior Notes with
fixed interest payable at a rate of 8.125% per annum (the "Senior Notes").
Interest on the Senior Notes is payable semi-annually on January 1 and July 1.
The Senior Notes mature on January 1, 2006. The Senior Notes are unsecured
general obligations of the Authority and rank pari passu in right of payment
with all current and future unsecured senior indebtedness of the Authority.
However, borrowings under the syndicated $500.0 million Bank Credit Facility
and other capital lease obligations are secured by first priority liens on
substantially all of the assets of the Authority. As a result, upon any
distribution to creditors in a bankruptcy, liquidation or reorganization or
similar proceeding relating to the Authority or the Tribe, the holders of
secured debt may be paid in full in cash before any payment may be made with
respect to the Senior Notes. The Senior Notes rank equally in right of payment
with 50% of the Authority's payment obligations under the Relinquishment
Agreement (see Note 7) and rank senior to the remaining 50% of the Authority's
payment obligations under the Relinquishment Agreement. As of December 31,
2001, accrued interest on the Senior Notes was $8.1 million.

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO FINANCIAL STATEMENTS--(Continued)

1999 Senior Subordinated Notes

On March 3, 1999, the Authority issued $300.0 million Senior Subordinated
Notes with fixed interest payable at a rate of 8.75% per annum (the "1999
Senior Subordinated Notes"). Interest on the 1999 Senior Subordinated Notes is
payable semi-annually on January 1 and July 1. The 1999 Senior Subordinated
Notes mature on January 1, 2009. The 1999 Senior Subordinated Notes are
unsecured general obligations of the Authority and are subordinated to the Bank
Credit Facility, the Senior Notes and 50% of the Authority's payment
obligations under the Relinquishment Agreement. The 1999 Senior Subordinated
Notes rank equally with the remaining 50% of the Authority's payment
obligations under the Relinquishment Agreement. As of December 31, 2001,
accrued interest on the 1999 Senior Subordinated Notes was $13.1 million.

2001 Senior Subordinated Notes

On July 26, 2001, the Authority issued $150.0 million Senior Subordinated
Notes with fixed interest payable at a rate of 8.375% per annum (the "2001
Senior Subordinated Notes"). Interest on the 2001 Senior Subordinated Notes is
payable semi-annually on January 1 and July 1. The 2001 Senior Subordinated
Notes mature on July 1, 2011. The 2001 Senior Subordinated Notes are unsecured
general obligations of the Authority and are subordinated to the Bank Credit
Facility, the Senior Notes and 50% of the Authority's payment obligations under
the Relinquishment Agreement. The 2001 Senior Subordinated Notes rank equally
with the 1999 Senior Subordinated Notes and the remaining 50% of the
Authority's payment obligations under the Relinquishment Agreement. As of
December 31, 2001, accrued interest on the 2001 Senior Subordinated Notes was
$5.4 million.

Letters of Credit

The Authority has available a $250,000 unsecured letter of credit that will
expire in August 2002 and a $550,000 letter of credit that expires in April
2002. The $550,000 letter of credit was reduced from $1.0 million on April 13,
2001. As of December 31, 2001, no amounts were drawn on the letters of credit.

4. Related Party Transactions

The Tribe provides governmental and administrative services to the Authority
in conjunction with the operation of Mohegan Sun. During the quarters ended
December 31, 2001 and 2000, the Authority incurred $2.9 million and $2.7
million, respectively, of expenses for such services.

The Tribe, through one of its limited liability companies, has entered into
various land lease agreements with the Authority for access, parking and
related purposes for Mohegan Sun. The Authority expended $97,000 for both the
quarters ended December 31, 2001 and 2000, respectively, relating to these land
lease agreements.

5. Employee Benefit Plans

The Authority maintains a retirement savings plan for its employees under
Section 401(k) of the Internal Revenue Code ("401(k) Plan"). The plan allows
employees of the Authority to defer up to the lesser of the maximum amount
prescribed by the Internal Revenue Code or 15% of their income on a pre-tax
basis, through contributions to the 401(k) Plan. The Authority matches 100% of
the eligible employees' contributions up to a maximum of 3% of their individual
earnings. The Authority recorded matching contributions of approximately
$829,000 and $777,000, respectively, to this plan for the quarters ended
December 31, 2001 and December 31, 2000, respectively.

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO FINANCIAL STATEMENTS--(Continued)

The Authority, together with the Tribe, maintains a Non-Qualified Deferred
Compensation Plan (the "Deferred Compensation Plan") for certain key employees.
This plan allows participants to defer up to 100% of their pre-tax income to
the plan. For the quarters ended December 31, 2001 and December 31, 2000,
contributions, net of withdrawals, totaled $645,000 and $313,000, respectively.

The Authority maintains a Deferred Retirement Plan (the "Retirement Plan")
for all employees sponsored by the Authority. The Retirement Plan was effective
July 2, 2001 and contributions by the Authority are based on hours worked.
Employees become eligible after 90 days of employment and will be fully vested
at the completion of seven years of employment. For the quarter ended December
31, 2001, the Authority has contributed $202,000, net of forfeitures, to the
Retirement Plan.

6. Commitments and Contingencies

Project Sunburst

The Authority has received authorization from the Tribe to expend up to
$960.0 million, excluding capitalized interest, for completion of Project
Sunburst. As of December 31, 2001, the Authority has spent $885.1 million,
excluding capitalized interest, on Project Sunburst. The remaining $74.9
million is anticipated to be spent during the remainder of fiscal year 2002.

The Mohegan Compact

The Mohegan Compact stipulates that a portion of the revenues earned on slot
machines must be paid to the State of Connecticut ("Slot Win Contribution").
The Slot Win Contribution payments will not be required if the State of
Connecticut legalizes any other gaming operations with slot machines or other
commercial casino table games within Connecticut, except those consented to by
the Tribe and the Mashantucket Pequot Tribe. For each 12-month period
commencing July 1, 1995, the Slot Win Contribution shall be the lesser of (a)
30% of gross revenues from slot machines, or (b) the greater of (i) 25% of
gross revenues from slot machines or (ii) $80.0 million. The Authority
reflected expenses associated with the Slot Win Contribution totaling
$43.0 million and $33.0 million, respectively for the quarters ended December
31, 2001 and December 31, 2000.

Land Lease from the Tribe to the Authority

The land upon which Mohegan Sun is situated is held in trust for the Tribe
by the United States. The Tribe and the Authority have entered into a land
lease under which the Tribe leases to the Authority the property and all
buildings, improvements and related facilities constructed or installed on the
property. The lease was approved by the Secretary of the Interior on September
29, 1995. Summarized below are several key provisions of this lease.

Term

The term of the lease is 25 years with an option, exercisable by the
Authority, to extend the term for one additional 25-year period. Upon the
termination of the lease, the Authority will be required to surrender to the
Tribe possession of the property and improvements, excluding any equipment,
furniture, trade fixtures or other personal property.

Rent and Other Operating Expenses

The Authority is required to pay to the Tribe a nominal annual rental fee.
For any period when the Tribe or another agency or instrumentality of the Tribe
is not the tenant under the lease, the rent will be 8% of the tenant's

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO FINANCIAL STATEMENTS--(Continued)

gross revenues from the premises. The Authority is responsible for the payment
of all expenses of owning, operating, constructing, maintaining, repairing,
replacing and insuring the leased property.

Use of Leased Property

The Authority may use the leased property and improvements solely for the
construction and operation of Mohegan Sun, unless prior approval is obtained
from the Tribe for any proposed alternative use. Similarly, no construction or
alteration of any building or improvement located on the leased property by the
Authority may be made unless complete and final plans and specifications have
been approved by the Tribe. Following foreclosure of any mortgage on the
Authority's interest under the lease or any transfer of such interest to the
holder of such mortgage in lieu of foreclosure, the leased property and
improvements may be used for any lawful purpose, subject only to applicable
codes and governmental regulations; provided, however, that a non-Indian holder
of the leased property may in no event conduct gaming operations on the
property.

Permitted Mortgages and Rights of Permitted Mortgagees

The Authority may not mortgage, pledge or otherwise encumber its leasehold
estate in the leased property except to a holder of a permitted mortgage. Under
the lease, a "permitted mortgage" includes the leasehold mortgage securing the
Authority's obligations under the Bank Credit Facility granted by the Authority
that provides, among other things, that (1) the Tribe will have the right to
notice of, and to cure, any default of the Authority, (2) the Tribe will have
the right to prior notice of an intention by the holder to foreclose on the
permitted mortgage and the right to purchase the mortgage in lieu of any
foreclosure, and (3) the permitted mortgage is subject and subordinated to any
and all access and utility easements granted by the Tribe under the lease. As
provided in the lease, each holder of a permitted mortgage has the right to
notice of any default of the Authority under the lease and the opportunity to
cure such default within any applicable cure period.

Default Remedies

The Authority will be in default under the lease if, subject to the notice
provisions, it fails to make lease payments or to comply with its covenants
under the lease or if it pledges, encumbers or conveys its interest in the
lease in violation of the terms of the lease. Following a default, the Tribe
may, with approval from the Secretary of the Interior, terminate the lease
unless a permitted mortgage remains outstanding with respect to the leased
property. In that case, the Tribe may not (1) terminate the lease or the
Authority's right to possession of the leased property, (2) exercise any right
of re-entry, (3) take possession of and/or relet the leased property or any
portion thereof, or (4) enforce any other right or remedy which may materially
and adversely affect the rights of the holder of the permitted mortgage, unless
the default triggering such rights was a monetary default which such holder
failed to cure after notice.

Expansion Construction Management Agreement with Perini Building Company, Inc.

The Authority engaged Perini Building Company, Inc. ("Perini") as
construction manager to provide construction management services for Project
Sunburst. As construction manager, Perini is receiving a fee of $25.5 million
for services including, but not limited to, pre-construction review and
construction phase contract administration. In addition, the Authority has
agreed to pay Perini $1.3 million in construction management fees relating to
the Indian Summer Garage and $500,000 relating to the Thames Garage. As of
December 31, 2001, Perini has received $20.9 million of the $27.3 million fee
which has been included in "construction in process" in the accompanying
balance sheets.

Radio Station Guarantee

The Authority entered into an agreement with AAA Entertainment, LLC ("AAA")
to operate the radio station WMOS on the premises of Mohegan Sun. In the event
WMOS's annual net revenue is less than $600,000,

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO FINANCIAL STATEMENTS--(Continued)

the Authority agrees to reimburse AAA $600,000 less the actual net revenue. AAA
will retain 100% of WMOS's annual net revenues between $600,000 and $750,000
and the Authority will share one-half of annual net revenues that exceed
$750,000.

Litigation

The Authority is a defendant in certain litigation incurred in the normal
course of business. In the opinion of management, based on the advice of
counsel, the aggregate liability, if any, arising from such litigation will not
have a materially adverse effect on the Authority's financial position or
results of operations.

7. TCA Agreements

Relinquishment Agreement

In February 1998, the Authority and Trading Cove Associates ("TCA") entered
into an agreement (the "Relinquishment Agreement"). Effective January 1, 2000
(the "Relinquishment Date"), the Relinquishment Agreement superseded the
September 30, 1995 Amended and Restated Gaming Facility Management Agreement
("the Management Agreement") and provides that the Authority is to make certain
payments to TCA out of, and determined as a percentage of, the gross revenues
generated by the Mohegan Sun over a 15-year period commencing on the
Relinquishment Date. The payments ("Senior Relinquishment Payments" and "Junior
Relinquishment Payments"), each of which are calculated as 2.5% of revenues, as
defined, have separate payment schedules and priority. Payment of Senior
Relinquishment Payments commenced on April 25, 2000, twenty-five days following
the end of the first three-month period following the Relinquishment Date, and
continue at the end of each three-month period occurring thereafter until
December 31, 2014. Junior Relinquishment Payments commenced on July 25, 2000,
twenty-five days following the end of the first six-month period following the
Relinquishment Date, and continue at the end of each six-month period occurring
thereafter until December 31, 2014. Each Senior Relinquishment Payment and
Junior Relinquishment Payment is an amount equal to 2.5% of the Revenues
generated by Mohegan Sun over the immediately preceding three-month or
six-month payment period, as the case may be. "Revenues" are defined as gross
gaming revenues (other than Class II gaming revenue) and all other facility
revenues (including, without limitation, hotel revenues, room service, food and
beverage sales, ticket revenues, fees or receipts from convention/events center
and all rental or other receipts from lessees and concessionaires but not the
gross receipts of such lessees, licenses and concessionaires).

The Authority, in accordance with Financial Accounting Standards Board
Statement No. 5 ("SFAS No. 5"), "Accounting for Contingencies", has recorded a
relinquishment liability of the estimated present value of its obligations
under the Relinquishment Agreement. A relinquishment liability of $549.1
million was established at September 30, 1998 based on the present value of the
estimated future Mohegan Sun revenues utilizing the Authority's risk free
investment rate. At December 31, 2001, the relinquishment liability was
reassessed to be $595.3 million from $592.0 million at September 30, 2001. The
increase is due to $9.1 million in relinquishment liability reassessment
expense less payment of $5.8 million under the Senior Relinquishment Payments.
This reassessment resulted from the impact on the time value of money due to
the passage of time. As of December 31, 2001, relinquishment payments earned
but unpaid were $18.7 million.

Development Agreement

On February 7, 1998, the Authority and TCA entered into a development
services agreement (the "Development Agreement"). Under the Development
Agreement, TCA is responsible for the administration and supervision of the
construction manager and the entire construction process of Project Sunburst.
TCA is acting as the Authority's representative in connection with construction
contracts that are approved by the Authority. Specifically, TCA is responsible
for overseeing all persons performing work on the expansion site, inspecting
the progress of construction, determining completion dates and reviewing
contractor payment requests submitted to the Authority.

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO FINANCIAL STATEMENTS--(Continued)

Payment of the Development Fee

Under the Development Agreement, the Authority is required to pay to TCA a
development fee of $14.0 million. Pursuant to the payment schedule described in
the Development Agreement, on January 15, 2000, the Authority began paying the
development fee to TCA on a quarterly basis, based upon the incremental
completion as of each payment date. As of December 31, 2001, the Authority has
incurred $12.5 million related to the TCA development fee, of which $11.3
million has been paid.

Termination and Disputes

The Development Agreement terminates upon the earlier of (a) completion of
Project Sunburst or (b) February 7, 2008. In addition, each party has the right
to terminate the Development Agreement if there is a material default or
failure to perform a material duty or obligation by the other party. The
parties must submit disputes arising under the Development Agreement to
arbitration and have agreed that punitive damages may not be awarded to either
party by an arbitrator. The Authority has also waived sovereign immunity for
the purpose of permitting, compelling or enforcing arbitration and has agreed
to be sued by TCA in any court of competent jurisdiction for the purposes of
compelling arbitration or enforcing any arbitration or judicial award arising
out of the Development Agreement.

8. Comprehensive Income

SFAS No. 130 "Reporting Comprehensive Income", requires that the Authority
disclose comprehensive income and its components. The objective of SFAS No. 130
is to report a measure of all changes in the equity of a company that result
from transactions and other economic events of the period other than
transactions with stockholders. Comprehensive income is the total of net income
and all other non-stockholder changes in equity ("Other Comprehensive Income").

The Authority has recognized the intrinsic value associated with its
derivative instruments in accordance with SFAS No. 133 upon becoming effective
as of January 1, 2001.

For the
Quarter Ended
December 31, 2001
(in thousands) -----------------

Net Income........................ $7,615
Derivative instruments adjustment. 197
------
Comprehensive Income.............. $7,812
======

Item 2--Management's Discussion and Analysis of Financial Condition and Results
of Operations

The following discussion and analysis should be read in conjunction with the
Authority's financial statements and the related notes beginning on page 2 of
this Form 10-Q.

The Authority's sole business is the operation of Mohegan Sun, which opened
in October 1996. In order to capitalize on the strong demand for gaming
opportunities in the northeastern United States and Mohegan Sun's popularity,
the Authority decided in 1998 to expand the casino significantly and to add a
hotel, convention facilities, an entertainment arena and additional retail
establishments. We refer to this expansion as Project Sunburst. The first phase
of Project Sunburst, the Casino of the Sky, opened on September 25, 2001. The
remaining components, including the majority of a 1,200 room luxury hotel and
approximately 100,000 square feet of convention space, are expected to open in
April 2002 with full completion of construction expected in June 2002.

Slot gaming market. The Connecticut slot gaming market has expanded from
$907.9 million in calendar year 1997 to $1.4 billion in calendar year 2001
while Mohegan Sun's share of this market has grown from $320.7 million or 35.3%
in 1997 to $578.4 million or 41.3% in 2001.

Gross revenues. The Authority derives most of its revenue from:

. Gaming revenues (including revenues from slot machines and table games)

. Food and beverage sales

. Retail, entertainment and other revenues (including revenues from the
Mohegan Sun gasoline and convenience center which opened in December
1998 and the Mohegan Sun Arena which opened in September 2001)

The table below summarizes our percentage of gross revenues from each of
these sources:

Quarter ended December 31,
-------------------------
2001 2000
---- ----

Gaming revenues.......................... 88% 86%
Food and beverage........................ 6% 6%
Retail, entertainment and other revenues. 6% 8%
--- ---
Total............................. 100% 100%

Slot win. Gross slot win represents all amounts played in the slot machines
reduced by both (1) the winnings paid out and (2) all amounts deposited by the
Authority into the slot machines to ensure sufficient coins in each machine to
pay out the winnings. Progressive slot machines retain some of each amount
wagered and aggregate these amounts with similar amounts from other slot
machines in order to create one-time winnings that are substantially larger
than those paid in the ordinary course. We refer to such aggregated amounts as
progressive jackpots. Progressive jackpots are accrued by the Authority until
paid and thus are deducted from gross slot win to arrive at net slot win.

Promotional allowances. The Authority operates the Mohegan Sun complimentary
program in which food, beverage, retail, entertainment and other services are
furnished by the Authority to guests for Mohegan Sun Player's Club points (see
below). The retail value of these complimentary items is included in gross
revenue and then deducted as promotional allowances to arrive at net revenues.

Mohegan Sun Player's Club. The Mohegan Sun Player's Club is a voluntary
program, without membership fees, which awards points to members based on their
gaming activities. These points may be used to purchase items at Mohegan Sun
restaurants, retail stores and the Mohegan Sun gasoline and convenience center,
as well as to purchase tickets to entertainment events held at the Mohegan Sun
facilities. The Authority includes the retail value of these purchases in gross
revenues and deducts the value as promotional allowances to arrive at net
revenues. These points may also be used to purchase items at the Shops at
Mohegan Sun. Points redeemed at the Shops at Mohegan Sun are recorded as
outside marketing costs included in gaming expenses.

EBITDAR. EBITDAR represents earnings before interest, taxes, depreciation,
amortization, pre-opening expenses and fees earned by TCA pursuant to the
Relinquishment Agreement. Under the Relinquishment Agreement, the Authority and
TCA agreed to terminate the Management Agreement with TCA on January 1, 2000.
To compensate TCA for terminating its management rights, the Authority agreed
to pay to TCA 5% of the revenues, as defined in the Relinquishment Agreement,
generated by Mohegan Sun and Project Sunburst during the 15-year period
commencing on January 1, 2000 and ending on December 31, 2014. EBITDAR should
not be considered as an alternative to any measure of performance as
promulgated under accounting principles generally accepted in the United States
of America (such as operating income or net income), nor should it be
considered as an indicator of our overall financial performance. Our
calculation of EBITDAR is likely to be different from the calculation of EBITDA
or similar measurements used by other companies and therefore comparability may
be limited.

Relinquishment liability and reassessment expense. The Authority has
recorded a relinquishment liability of the estimated present value of its
obligations under the Relinquishment Agreement. The relinquishment liability is
reassessed periodically to account for increases or decreases in projected
revenues as well as the effect of the passage of time on the present value of
the future payments to be made pursuant to the Relinquishment Agreement.

Results of Operations

Comparison of Operating Results for the Quarter Ended December 31, 2001 and
2000:

Net revenues for the quarter ended December 31, 2001 were $241.5 million
compared to $183.1 million reported for the same period of the prior year. This
31.9% increase was primarily attributable to an increase in gaming revenues due
to the opening of the Casino of the Sky on September 25, 2001. The earnings
before interest, taxes, depreciation, amortization, pre-opening expenses and
relinquishment fees earned by TCA, or EBITDAR, for the quarter ended December
31, 2001 decreased $936,000 or 1.8% to $50.3 million compared to $51.3 million
for the quarter ended December 31, 2000. Mohegan Sun achieved a 20.8% EBITDAR
margin for the quarter ended December 31, 2001 compared to a 28.0% for the
quarter ended December 31, 2000. The decline in the margin was attributable to
increased labor, marketing and operating expenses related to Project Sunburst.
Additionally, the unfavorable variance can be attributed to the impact of the
economic slowdown and the events of the September 11, 2001 tragedy.

The Connecticut slot market continued to grow as did Mohegan Sun's market
share. The Connecticut slot market grew at a rate of 15.7% from the quarter
ending December 31, 2000 to the quarter ending December 31, 2001. The State of
Connecticut reported a gross slot win of $358.3 million and $309.6 million for
the quarters ending December 31, 2001 and 2000, respectively. Mohegan Sun
exceeded the market's growth in slot win as it experienced an increase in gross
slot revenues of 30.2% in the quarter ending December 31, 2001 over the quarter
ending in December 31, 2000. Gross slot revenues were $171.9 million and $132.0
million for the quarters ending December 31, 2001 and 2000, respectively. Gross
slot win per unit per day was $300 and $473 for the respective periods. The
decrease in gross slot win per unit was due to an increase in the weighted
average number of slot machines year over year from 3,034 to 6,219, in the
quarter ending December 31, 2001.

Gaming revenues totaled $226.9 million for the quarter ended December 31,
2001 compared to $175.0 million for the quarter ended December 31, 2000. The
increase of 29.7% in gaming revenues was due to a 30.3% growth in slot machine
revenues and a 29.9% increase in table game revenues.

For the quarter ended December 31, 2001, food and beverage revenues were
$17.1 million compared to $10.7 million for the quarter ended December 31,
2000. The 59.4% increase in food and beverage revenues is attributable to a
38.6% increase in food covers for the quarter ended December 31, 2001 as
compared to the same period in the prior year and a higher average sale per
check primarily associated with the new Project Sunburst restaurants which
include the 350-seat Sunburst Buffet, the Rising Moon Gallery of Eateries,
Rain, a gourmet restaurant and Todd English's Tuscany Restaurant.

Retail, entertainment and other revenues were $14.6 million and $16.6
million for the quarter ended December 31, 2001 and December 31, 2000,
respectively. This represented a decrease of $2.0 million, or 11.8%, for the
quarter ended December 31, 2001 over the same period in the prior year. Retail
revenue decreased $3.0 million due to a shift in patronage from Mohegan Sun
operated outlets to the tenant outlets in the Shops at Mohegan Sun. The
decrease was partially offset by an increase of $1.0 million in entertainment
and other revenue due to the opening of the Mohegan Sun Arena on September 25,
2001.

Promotional allowances totaled $17.1 million for the quarter ended December
31, 2001, representing a $2.1 million, or 10.7%, decrease over the same period
in the prior year. The first phase of Project Sunburst included the opening of
the Shops at Mohegan Sun. Effective with the opening of the first phase of
Project Sunburst, members of the Mohegan Sun Players Club were eligible to
redeem points at these leased outlets. The decrease is attributable to the
shift in patronage from Mohegan Sun retail outlets to the tenant outlets in the
Shops at Mohegan Sun.

Total costs and expenses were $210.0 million for the quarter ended December
31, 2001, an increase of $70.3 million or 50.3% over the costs and expenses of
$139.8 million during the quarter ended December 31, 2000. The increase in
expenses was primarily the result of a $56.3 million increase in gross revenues
and a $10.7 million increase in depreciation expense.

Gaming costs and expenses were $133.3 million for the quarter ended December
2001 compared to $93.3 million in the quarter ended December 31, 2000. The
increase of $40.0 million or 42.9% is attributable to a 95-unit increase in
table games and a 3,185-unit increase in slot machines associated with the
opening of the first phase of Project Sunburst and the Hall of the Lost Tribes.
Gaming costs and expenses as a percentage of gaming revenues were 58.8% in the
quarter ended December 31, 2001 compared to 53.3% in the same period of the
prior year, an increase of 5.5%. Additionally, the first phase of Project
Sunburst included the opening of the Shops at Mohegan Sun. The increased
traffic generated by the opening of the Shops of Mohegan Sun, coupled with the
holiday shopping season, resulted in a significant increase in Mohegan Sun's
gaming expenses as points were redeemed in these leased shops and restaurants.

Food and beverage costs and expenses were $11.1 million for the quarter
ended December 31, 2001, an increase of $5.0 million over the same period of
the prior year. The cost of sales for food decreased from 36.7% in the same
period of the prior year to 35.8% in the quarter ended December 31, 2001. Food
covers increased from 929,000 in the quarter ended December 31, 2000 to 1.3
million in the quarter ended December 31, 2001, a 38.6% increase. Mohegan Sun
opened the 350-seat Sunburst buffet, the Rising Moon Gallery of Eateries, Rain,
a gourmet restaurant, and Todd English's Tuscany during the quarter ended
December 31, 2001. The operation of these new establishments, along with the
additional beverage service in the Casino of the Sky, the arena concessions,
the Cabaret bar, Leffingwell's bar located at the base of Wombi Rock and the
Sachem's Lounge have resulted in increases in food and beverage costs, labor
costs and other operating expenses for the quarter ended December 31, 2001
compared to the same period in the prior year.

Retail, entertainment and other costs and expenses were $8.9 million and
$4.8 million for the quarter ended December 31, 2001 and December 31, 2000,
respectively. The $4.1 million increase was primarily a result of the fifteen
events that were held in the Mohegan Sun Arena in the quarter ended December
31, 2001. These events included an NBA basketball game with Michael Jordan and
the Washington Wizards, Tim McGraw, Gloria Estefan, Aerosmith, Bob Dylan, an
exhibition tennis match with Martina Navritolova and Monica Seles and ESPN
Bowling. Also contributing to the increase are expenses associated with the
Cabaret, an intimate 300-seat theater that plays host to entertainers from
singers, such as Tony Bennett and Betty Buckley, to comics, such as Phyllis
Diller and the Amazing Kreskin.

General and administrative costs and expenses totaled $37.8 million for the
quarter ended December 31, 2001, an increase of 37.0% from the $27.6 million
for the quarter ended December 31, 2000. The $10.2 million increase was
primarily associated with advertising expenses targeted to promote the Project
Sunburst expansion efforts through all major media outlets.

Pre-opening costs and expenses associated with the April 2002 opening of the
Mohegan Sun hotel were $1.7 million for the quarter ended December 31, 2001
compared to pre-opening expenses (relating to the opening of the first phase of
Project Sunburst) of $1.4 million for the quarter ended December 31, 2000.

Depreciation for the quarter ended December 31, 2001 increased by $10.7
million over the amount for the quarter ended December 31, 2000. This increase
was a result of $667.5 million of assets, including $26.5 million of
capitalized interest, placed in service with the opening of the first phase of
Project Sunburst on September 25, 2001.

Income from operations was $31.4 million for the quarter ended December 31,
2001 compared to $43.3 million for the quarter ended December 31, 2000. The
decrease of $11.9 million was attributable to increases in costs and expenses
associated with the expansion of Mohegan Sun, including increased staffing
levels. Additionally, the unfavorable variance can be attributed to the impact
of the economic slowdown and the events of the September 11, 2001 tragedy.

For the quarter ended December 31, 2001, the relinquishment liability
reassessment was $9.1 million compared to $9.0 million for the same period in
the prior year. This increase of $0.1 million, or 1.4%, is due to the
Authority's quarterly reassessment of the relinquishment liability to reflect
the impact of time on the value of money, discounted to present value using the
Authority's current risk-free rate of investment and an adjustment for the
difference between forecasted and actual revenues.

Interest and other income were $123,000 for the quarter ended December 31,
2001, a decrease of $1.0 million, or 89.4%, over the same period in the prior
year. The decrease in interest income resulted from the liquidation of
investments to fund Project Sunburst plus a decline in return on the invested
assets. The weighted average invested cash was $36.3 million and $42.1 million
for the quarter ended December 31, 2001 and December 31, 2000, respectively.
The Authority invests in investment-grade commercial paper having maturities of
not more than six months from the date of acquisition.

Interest expense of $14.8 million for the quarter ended December 31, 2001
represented an increase of $8.9 million over the same period in the prior year.
This increase was mainly attributable to higher average debt outstanding.
Capitalized interest was $3.2 million for the quarter ended December 31, 2001
compared to $4.8 million for the same period in the prior year. The weighted
average interest rate for the quarter ended December 31, 2001 was 7.14%,
compared to 8.42% for the quarter ended December 31, 2000. The weighted average
outstanding debt was $976.7 million for the quarter ended December 31, 2001,
compared to $504.8 million for the quarter ended December 31, 2000.

Loss from discontinued operations associated with the conversion of the
bingo hall into the smoke-free Hall of the Lost Tribes slot machine venue
totaled $192,000 for the quarter ended December 31, 2000. There was no loss
from discontinued operations for the quarter ended December 31, 2001.

Net income for the quarter ended December 31, 2001 was $7.6 million, a $19.6
million decrease from the $27.3 million net income in the prior year quarter.
Interest expense increased by $8.9 million during the quarter. The increase in
interest expense was mainly attributable to higher average debt outstanding.
The weighted average outstanding debt was $976.7 million for the quarter ended
December 31, 2001, compared to $504.8 million for the quarter ended December
31, 2000.

Liquidity, Capital Resources and Capital Spending

As of December 31, 2001 and September 30, 2001, the Authority held cash and
cash equivalents of $81.3 million and $74.3 million, respectively. Cash
provided by operating activities was $56.3 million for the quarter ended
December 31, 2001 compared to cash provided by operating activities of $52.9
million for the quarter ended December 31, 2000.

On March 3, 1999, the Authority entered into a syndicated $425.0 million
Bank Credit Facility maturing in March 2004. The Bank Credit Facility Agreement
allowed the Authority to increase the Bank Credit Facility to an aggregate
amount of $500.0 million within two years subsequent to the closing. In
November 2000, the Authority exercised its right to arrange for increases in
the Bank Credit Facility to an aggregate amount of $500.0 million. At the
Authority's option, each advance of loan proceeds accrues interest on the basis
of a base rate or on the basis of a one-month, two-month, three-month or
six-month London Inter-Bank Offered Rate ("LIBOR") plus, in either case, the
applicable spread (based on the Authority's Total Leverage Ratio as defined in
the Bank Credit Facility). One-month LIBOR as of December 31, 2001 was 1.87%
and the applicable spread on a LIBOR loan was 2.375%. Interest on each LIBOR
loan that is for a term of a quarter or less is due and payable on the last day
of the related interest period. Interest on each LIBOR loan that is for a term
of more than a quarter is due and payable on the date which is a quarter after
the date such LIBOR loan was made, every quarter thereafter and, in any event,
on the last day of the related interest period. Interest on each base rate loan
is due and payable quarterly in arrears.

As of December 31, 2001, the Authority had no base rate loans. Pursuant to
the terms of the Bank Credit Facility, the commitment (or the maximum amount
that may be borrowed under the Bank Credit Facility) will be automatically
reduced on the earlier of March 31, 2002 or the last day of the first full
fiscal quarter following the completion date of Project Sunburst, and on the
last day of each fiscal quarter thereafter. The amount of each such reduction
must equal 10% of the commitment as in effect immediately prior to the first
such reduction. The Authority draws on the Bank Credit Facility in connection
with Project Sunburst and other capital expenditure projects.

The Authority drew $82.0 million from the Bank Credit Facility during the
quarter ended December 31, 2001. The Authority had drawn $340.0 million from
the Bank Credit Facility as of December 31, 2001. The Authority has entered
into hedging transactions to mitigate against its exposure to interest rate
fluctuations on the Bank Credit Facility. (See "--Item 3. Quantitative and
Qualitative Disclosure of Market Risk" and Note 3 to the Authority's financial
statements.)

Capital Expenditures

The Authority's capital spending has increased significantly with the
commencement of the Project Sunburst expansion. Capital expenditures totaled
$115.8 million including capitalized interest for the quarter ended December
31, 2001, versus $81.2 million for the same period in the prior year. These
capital expenditures were an aggregate of the following:

. Project Sunburst construction expenses, including capitalized interest,
totaled $924.2 million, including $41.1 million in capitalized interest and
net of $2.0 million expensed or recorded as inventory, through December 31,
2001. During the quarter ending December 31, 2001 expenditures totaled $79.9
million, including $3.2 million in capitalized interest and net of $654,000
expensed or recorded as inventory, versus $844. 3 million expended in prior
periods.

. Property maintenance capital expenditures for furniture, fixtures and
equipment totaled $6.5 million and $4.7 million for the quarter ended
December 31, 2001 and December 31, 2000, respectively.

. Capital expenditures on the Authority's electrical and water systems
infrastructure ("Infrastructure Improvements") totaled $4.3 million and
$624,000 for the quarter ended December 31, 2001 and December 31, 2000,
respectively. Cumulative Infrastructure Improvements totaled $33.9 million
as of December 31, 2001. The total estimated cost of the Infrastructure
Improvements is $35.0 million. The infrastructure improvements will service
Mohegan Sun and other Tribal facilities and will handle the increased
utility demands of the expanded facility that are attributable to the
Project Sunburst expansion. The Infrastructure Improvements were funded by
the Authority.

. Capital expenditures for the $65.0 million Indian Summer Garage, which will
provide 2,700 additional patron parking spaces, totaled $24.1 million for
the quarter ending December 31, 2001. The Authority did not incur any
capital expenditures for the Indian Summer Garage for the quarter ending
December 31, 2000. Expenditures totaled $28.6 million as of December 31,
2001. The Indian Summer Garage is expected to open in June 2002.

. The Authority anticipates spending $25.0 million on the 1,700-space Thames
Garage expected to be completed in the spring of 2002. The Authority did not
incur any capital expenditures for the construction of the Thames Garage for
the quarter ending December 31,2001

. Capital expenditures for the construction of the Hall of the Lost Tribes,
the 637-unit smoke-free slot area which opened on April 18, 2001, were
$474,000 for the quarter ending December 31, 2001. Cumulative expenditures
for the Hall of the Lost Tribes totaled $15.4 million as of December 31,
2001. The Authority did not have any expenditures for the construction of
the Hall of the Lost Tribes for the quarter ending December 31, 2000.

. Capital expenditures for the construction of an employee day care facility
were $554,000 during the quarter ended December 31, 2001, with construction
expected to be completed in August 2002. The employee day care facility is
expected to have a total cost of $10.0 million. The Authority did not incur
any construction expenses in conjunction with the employee day care facility
for the quarter ended December 31, 2000. Cumulative expenditures on the
employee day care facility reached $1.1 million as of December 31, 2001.

. The Authority, in conjunction with the Project Sunburst expansion, commenced
construction on the employee parking center in March 1999. The employee
parking center includes 2,550 parking spaces and amenities such as a dry
cleaning service, on-site banking, an employee computer/training center and
a 15,000 square foot exercise facility. A portion of the employee parking
center opened in June 2000 with the remainder opening in January 2001. The
total cost of the Employee Parking Center was $25.0 million. The Authority
did not incur any capital expenditures for the employee parking center for
the quarter ended December 31, 2001. Capital expenditures associated with
the Employee Parking Garage were $1.2 million for the quarter ended December
31, 2000.

As a construction industry standard, the Authority retains a portion of the
construction expenditures until satisfactory completion of individual
contracts. As of December 31, 2001, construction retainage totaled $20.1
million, which has been included in accounts payable and accrued expenses in
the Authority's financial statements.

Expected future capital expenditures. During the remainder of fiscal year
2002, the Authority expects capital expenditures to total approximately $161.6
million and to be allocated as follows:

. $18.5 million on maintenance capital expenditures.
. $74.9 million on Project Sunburst construction.
. $8.9 million on the employee day care center.
. $33.0 million on the Indian Summer parking garage. The Indian Summer parking
garage is expected to have a total cost of $65.0 million and is expected to
open in June 2002. The remaining $3.4 million is anticipated to be spent in
Fiscal 2003.
. $25.0 million on the Thames Garage.
. $1.1 million on Infrastructure Improvements.

Relinquishment Agreement

Under the terms of the Relinquishment Agreement, TCA continued to manage
Mohegan Sun under the Management Agreement until December 31, 1999. On January
1, 2000, the Management Agreement terminated, and the Authority assumed
day-to-day management of Mohegan Sun. As a result of the termination of the
Management Agreement, the Authority has agreed to pay TCA 5% of gross revenues
(as defined in the Relinquishment Agreement) generated from Mohegan Sun
including Project Sunburst, beginning January 1, 2000 and ending December 31,
2014. We refer to these payments as the relinquishment payments. The present
value of this liability is estimated at $595.3 million as of December 31, 2001.
At September 30, 2001, the Authority reviewed current revenue forecasts and
reduced revenue projections for the period in which the Relinquishment
Agreement applies, due to uncertainties involving economic market conditions
and future competition from potential Native American casinos. See Note 7 to
the Authority's financial statements. The relinquishment liability is
reassessed periodically to account for increases or decreases in projected
revenues and the impact on the time value of money due to the passage of time.
The Authority has capitalized $130.0 million of the relinquishment liability
associated with the trademark value of the Mohegan Sun brand name. The
Authority paid $5.8 million in Senior Relinquishment Payments in the quarter
ending December 31, 2001. As of December 31, 2001, relinquishment payments
earned but unpaid were $18.7 million. During the quarter ending December 31,
2000, the Authority paid $5.5 million in Senior Relinquishment Payments.

Distributions to the Tribe

During the quarter ending December 31, 2001, the Authority distributed $7.0
million to the Tribe. The Authority distributed $10.0 million to the Tribe for
the quarter ended December 31, 2000.

Debt Service Costs

The Authority incurred interest expense on the $300.0 million Senior Notes
of $4.1 million for the quarter ended December 31, 2001 and December 31, 2000.
Interest expense on the 1999 Senior Subordinated Notes totaled $6.6 million for
the quarters ended December 31, 2001 and December 31, 2000. Bank Credit
Facility interest expense was $4.3 million for the quarter ended December 31,
2001. There was no interest expense on the Bank Credit Facility for the quarter
ended December 31, 2000. Interest expense on the 2001 Senior Subordinated Notes
totaled $3.1 million for the quarter ended December 31, 2001. There was no
interest expense on the 2001 Senior Subordinated Notes for the quarter ended
December 31, 2000. Capitalized interest for the quarters ended December 31,
2001 and 2000 was $3.2 million and $4.8 million, respectively.

Sufficiency of Resources

The Authority believes that existing cash balances, financing arrangements
and operating cash flow will provide the Authority with sufficient resources to
meet its existing debt obligations, relinquishment payments, distributions to
the Tribe and foreseeable capital expenditure requirements with respect to
current operations and Project Sunburst for at least the next twelve months.

Forward Looking Statements

Some information included in this Quarterly Report and other materials filed
by the Authority with the Securities and Exchange Commission contain
forward-looking statements, within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such
statements included information relating to plans for future expansion and
other business development activities, as well as other capital spending,
financing sources and the effects of regulation (including gaming and tax
regulation) and competition. Such forward-looking information involves
important risks and uncertainties that could significantly affect anticipated
results in the future and, accordingly, such results may differ from those
expressed in any forward-looking statements made by or on behalf of the
Authority. These risks and uncertainties include, but are not limited to, those
relating to development and construction activities, dependence on existing
management, leverage and debt service, domestic or global economic conditions,
pending litigation, changes in federal tax laws or the administration of such
laws and changes in gaming laws or regulations (including the legalization of
gaming in certain jurisdictions). Additional information concerning potential
factors that could affect the Authority's financial results are included in the
Authority's Form 10-K for the fiscal year ended September 30, 2001. 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 have and we do not undertake
any obligation to publicly update any forward-looking statements to reflect
subsequent events or circumstances. We can not assure you that projected
results or events will be achieved.

Impact of Inflation

Absent changes in competitive and economic conditions or in specific prices
affecting the hotel and casino industry, the Authority does not expect that
inflation will have a significant impact on its operations. Changes in specific
prices, such as fuel and transportation prices, relative to the general rate of
inflation may have a material adverse effect on the hotel and casino industry
in general.

New Accounting Pronouncements

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment
of Disposal of Long-Lived Assets." SFAS No. 144 modifies the rules for
accounting for the impairment or disposal of long-lived assets. The new rules
become effective for fiscal years beginning after December 15, 2001, with
earlier application encouraged. The Authority has not yet adopted, and has not
yet quantified the impact of implementing SFAS No. 144 on the Authority's
financial statements, but does not anticipated a negative effect on the
Authority's operating income upon adoption of the standard.

Item 3--Quantitative and Qualitative Disclosure of Market Risk

The Authority is exposed to inherent market risk on the following:

At the Authority's option, Bank Credit Facility interest accrues on the
basis of a base rate formula or a LIBOR-based formula, plus applicable spreads.
As of December 31, 2001, the Authority has drawn $340.0 million from the Bank
Credit Facility. The Authority expects to continue to draw down on the Bank
Credit Facility in fiscal year 2002 in connection with Project Sunburst and
other capital expenditures.

The Authority analyzes interest rate risk using various models that forecast
cash flows of the liabilities and their supporting assets, including derivative
instruments. The Authority uses derivative instruments, including interest rate
caps, collars and swaps as its strategy to manage interest rate risk associated
with the variable interest rates applicable to advances under the Bank Credit
Facility. The Authority's objective in managing interest rate risk is to ensure
appropriate income and sufficient liquidity to meet its obligations. The
Authority does not believe that there is any material risk exposure with
respect to derivative or other financial instruments which it currently holds.
The Authority continually monitors these exposures and makes the appropriate
adjustments to manage these risks within management's established limits.

Derivative instruments held by the Authority at December 31, 2001 are as
follows:

Effective Date Maturity Date Notional Cost Market
--------------- --------------- ------------ -------- ------------

Interest Rate Cap
Strike Rate - 8%......... October 1, 2000 October 1, 2003 $ 62,399,200 $410,000 $ 600
Interest Rate Collar
Ceiling Strike Rate - 8%.
Floor Strike Rate - 6%... January 2, 2001 March 1, 2004 67,143,400 295,000 (3,212,839)
Interest Rate Swap
Pay fixed - 6.35%........
Receive Variable......... January 2, 2001 March 1, 2004 33,571,700 221,000 (1,756,283)
------------ -------- ------------
Total................ $163,114,300 $926,000 ($ 4,968,522)
============ ======== ============

All derivative instruments are based upon one-month LIBOR, which was 1.87%
on December 31, 2001.

For the quarter ended December 31, 2001 and December 31, 2000, the Authority
recognized a net loss of $16,000 and $2.1 million respectively, relating to the
change in time value of its derivative instruments, as reflected in the
statement of income. See also Note 3 to the Authority's financial statements.

PART II - OTHER INFORMATION:

Item 1--Legal Proceedings

The Authority is a defendant in certain litigation incurred in the normal
course of business. In the opinion of management, based on the advice of
counsel, the aggregate liability, if any, arising from such litigation will not
have a material adverse effect on the Authority's financial condition or
results of operations.

Item 2--Changes in Securities

None

Item 3--Defaults Upon Senior Securities

None

Item 4--Submission of Matters to a Vote of Security Holders

None

Item 5--Other Information

None

Item 6--Exhibits and Reports on Form 8-K

None

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.

MOHEGAN TRIBAL GAMING AUTHORITY

Signature Title Date
--------- ----- ----
/s/ MARK F. BROWN Chairman, Management Board February 6, 2002
- -----------------------------
Mark F. Brown
/s/ WILLIAM J. VELRADO President and General Manager February 6, 2002
- -----------------------------
William J. Velrado
/s/ JEFFREY E. HARTMANN Executive Vice President February 6, 2002
- ----------------------------- Finance/Chief Financial
Jeffrey E. Hartmann Officer
(Principal Financial and
Accounting Officer)