Net income attributable to the Authority of $24.0 million, an 85.6% increase over the first quarter of fiscal 2011
The Mohegan Tribal Gaming Authority, or the Authority, the owner and operator of Mohegan Sun in Uncasville, Connecticut, and Mohegan Sun at Pocono Downs in Wilkes-Barre, Pennsylvania, announced today the operating results for its first quarter ended December 31, 2011.
“The increases in EBITDA and margins are quite rewarding and reflect the passion, dedication and hard work of our entire team over the past two years. We are encouraged by this momentum and confident that as the economy continues to stabilize our business volumes will improve.”
Consolidated operating results for the first quarter ended December 31, 2011 (unaudited):
The growth in net income attributable to the Authority, income from operations and Adjusted EBITDA for the quarter ended December 31, 2011 was primarily attributable to increases in gaming and non-gaming revenues at both Mohegan Sun and Mohegan Sun at Pocono Downs. These results also reflect the impact of changes in our promotional offers designed to improve profitability, as well as our continued focus on managing expenses and enhancing operating efficiencies.
“We are pleased with our results for the first quarter of fiscal 2012,” said Mitchell Grossinger Etess, Chief Executive Officer of the Authority. “The increases in EBITDA and margins are quite rewarding and reflect the passion, dedication and hard work of our entire team over the past two years. We are encouraged by this momentum and confident that as the economy continues to stabilize our business volumes will improve.”
Mohegan Sun
Operating results (in thousands, unaudited):
| For the Three Months Ended | |||||||||||||||||||||
|
December 31, 2011 |
December 31, 2010 |
Variance | Percentage Variance |
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| Income from operations | $ | 46,993 | $ | 42,545 | $ | 4,448 | 10.5 | % | |||||||||||||
| Adjusted EBITDA | $ | 63,983 | $ | 60,928 | $ | 3,055 | 5.0 | % | |||||||||||||
| Operating costs and expenses | $ | 226,905 | $ | 221,285 | $ | 5,620 | 2.5 | % | |||||||||||||
| Net revenues | $ | 273,898 | $ | 263,830 | $ | 10,068 | 3.8 | % | |||||||||||||
| Gaming revenues | $ | 243,548 | $ | 239,724 | $ | 3,824 | 1.6 | % | |||||||||||||
| Non-gaming revenues | $ | 52,055 | $ | 45,988 | $ | 6,067 | 13.2 | % | |||||||||||||
The growth in income from operations and Adjusted EBITDA was primarily attributable to increased table game revenues, combined with higher non-gaming revenues. The increase in operating costs and expenses primarily reflects additional costs related to Mohegan Sun’s 15th anniversary festivities for casino patrons. Adjusted EBITDA margin increased to 23.4% for the quarter ended December 31, 2011 from 23.1% in the first quarter of fiscal 2011.
Selected gaming data (in thousands, except where noted, unaudited):
| For the Three Months Ended | ||||||||||||||||||||
| December 31, 2011 |
December 31, 2010 |
Variance | Percentage Variance |
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| Slots: | ||||||||||||||||||||
| Handle | $ | 2,064,371 | $ | 2,120,579 | $ | (56,208 | ) | (2.7 | %) | |||||||||||
| Gross revenues | $ | 170,814 | $ | 169,356 | $ | 1,458 | 0.9 | % | ||||||||||||
| Net revenues | $ | 163,776 | $ | 163,217 | $ | 559 | 0.3 | % | ||||||||||||
| Free promotional slot plays (1) | $ | 13,807 | $ | 12,370 | $ | 1,437 | 11.6 | % | ||||||||||||
| Weighted average number of machines (in units) | 6,238 | 6,404 | (166 | ) | (2.6 | %) | ||||||||||||||
| Hold percentage (gross) | 8.3 | % | 8.0 | % | 0.3 | % | 3.8 | % | ||||||||||||
| Win per unit per day (gross) (in dollars) | $ | 298 | $ | 287 | $ | 11 | 3.8 | % | ||||||||||||
| Table games: | ||||||||||||||||||||
| Drop | $ | 505,391 | $ | 504,359 | $ | 1,032 | 0.2 | % | ||||||||||||
| Revenues | $ | 74,947 | $ | 71,542 | $ | 3,405 | 4.8 | % | ||||||||||||
| Weighted average number of games (in units) | 314 | 331 | (17 | ) | (5.1 | %) | ||||||||||||||
| Hold percentage (2) | 14.8 | % | 14.2 | % | 0.6 | % | 4.2 | % | ||||||||||||
| Win per unit per day (in dollars) | $ | 2,592 | $ | 2,351 | $ | 241 | 10.3 | % | ||||||||||||
| Poker: | ||||||||||||||||||||
| Revenues | $ | 3,016 | $ | 2,967 | $ | 49 | 1.7 | % | ||||||||||||
| Weighted average number of tables (in units) | 42 | 42 | - | - | ||||||||||||||||
| Revenue per unit per day (in dollars) | $ | 781 | $ | 768 | $ | 13 | 1.7 | % | ||||||||||||
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| (1) Free promotional slot plays are included in slot handle, but not reflected in slot revenues. | ||||||||||||||||||||
| (2) Table games hold percentage is relatively predictable over longer periods of time, but can significantly fluctuate over shorter periods. | ||||||||||||||||||||
Gaming revenues increased primarily as a result of higher table game revenues. The increase in table game revenues resulted from higher table games hold, combined with the slight increase in table games drop. Slot revenues increased slightly due to the increase in slot hold reflecting changes in our slot mix on the gaming floor during the quarter. These results also reflect the impact of changes in our promotional offers designed to improve profitability.
Non-gaming data (in thousands, except where noted, unaudited):
| For the Three Months Ended | ||||||||||||||
|
December 31, 2011 |
December 31, 2010 |
Variance | Percentage Variance |
|||||||||||
| Food and beverage: | ||||||||||||||
| Revenues | $ | 17,264 | $ | 16,147 | $ | 1,117 | 6.9 | % | ||||||
| Meals served | 819 | 846 | (27 | ) | (3.2 | %) | ||||||||
| Average price per meal served (in dollars) | $ | 16.79 | $ | 15.17 | $ | 1.62 | 10.7 | % | ||||||
| Hotel: | ||||||||||||||
| Revenues | $ | 9,118 | $ | 8,997 | $ | 121 | 1.3 | % | ||||||
| Rooms occupied | 102 | 103 | (1 | ) | (1.0 | %) | ||||||||
| Occupancy rate | 94.0 | % | 95.4 | % | (1.4 | %) | (1.5 | %) | ||||||
| Average daily room rate (in dollars) | $ | 86 | $ | 84 | $ | 2 | 2.4 | % | ||||||
| Revenue per available room (in dollars) | $ | 81 | $ | 80 | $ | 1 | 1.3 | % | ||||||
| Retail, entertainment and other: | ||||||||||||||
| Revenues | $ | 25,673 | $ | 20,844 | $ | 4,829 | 23.2 | % | ||||||
| Arena events (in events) | 27 | 23 | 4 | 17.4 | % | |||||||||
| Arena tickets | 155 | 119 | 36 | 30.3 | % | |||||||||
| Average price per Arena ticket (in dollars) | $ | 53.22 | $ | 45.79 | $ | 7.43 | 16.2 | % | ||||||
The growth in non-gaming revenues was primarily attributable to a $3.0 million increase in entertainment revenues. The growth in entertainment revenues resulted from the increases in Arena tickets sold and the average price per Arena ticket. These results reflect the increase in Arena events, including an additional headliner show held at the Mohegan Sun Arena during the quarter. The increase in food and beverage revenues was primarily attributable to the increase in the average price per meal served resulting, in part, from the July 2011 re-opening of the renovated Season’s Buffet featuring expanded offerings. The reduction in the number of meals served reflects the replacement of certain Mohegan Sun-owned outlets with third-party operators and the September 2011 opening of Ballo Italian Restaurant & Social Club, a third-party restaurant located in Casino of the Earth.
Mohegan Sun at Pocono Downs
Operating results (in thousands, unaudited):
| For the Three Months Ended | |||||||||||||||||||
| December 31, 2011 |
December 31, 2010 |
Variance | Percentage Variance |
||||||||||||||||
| Income from operations | $ | 10,032 | $ | 6,319 | $ | 3,713 | 58.8 | % | |||||||||||
| Adjusted EBITDA | $ | 14,167 | $ | 11,629 | $ | 2,538 | 21.8 | % | |||||||||||
| Operating costs and expenses | $ | 67,946 | $ | 65,456 | $ | 2,490 | 3.8 | % | |||||||||||
| Net revenues | $ | 77,978 | $ | 71,775 | $ | 6,203 | 8.6 | % | |||||||||||
| Gaming revenues | $ | 73,984 | $ | 67,933 | $ | 6,051 | 8.9 | % | |||||||||||
| Non-gaming revenues | $ | 8,032 | $ | 7,449 | $ | 583 | 7.8 | % | |||||||||||
The growth in income from operations and Adjusted EBITDA was primarily attributable to higher gaming revenues. Adjusted EBITDA margin increased to 18.2% for the quarter ended December 31, 2011 from 16.2% in the first quarter of fiscal 2011.
Selected gaming data (in thousands, except where noted, unaudited):
| For the Three Months Ended | ||||||||||||||||||||||
| December 31, 2011 |
December 31, 2010 |
Variance | Percentage Variance |
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| Slots: | ||||||||||||||||||||||
| Handle | $ | 736,959 | $ | 689,358 | $ | 47,601 | 6.9 | % | ||||||||||||||
| Gross revenues | $ | 59,159 | $ | 53,658 | $ | 5,501 | 10.3 | % | ||||||||||||||
| Net revenues | $ | 59,136 | $ | 53,652 | $ | 5,484 | 10.2 | % | ||||||||||||||
| Free promotional slot plays (1) | $ | 14,881 | $ | 15,208 | $ | (327 | ) | (2.2 | %) | |||||||||||||
| Weighted average number of machines (in units) | 2,332 | 2,466 | (134 | ) | (5.4 | %) | ||||||||||||||||
| Hold percentage (gross) | 8.0 | % | 7.8 | % | 0.2 | % | 2.6 | % | ||||||||||||||
| Win per unit per day (gross) (in dollars) | $ | 276 | $ | 237 | $ | 39 | 16.5 | % | ||||||||||||||
| Table games: | ||||||||||||||||||||||
| Drop | $ | 55,079 | $ | 49,837 | $ | 5,242 | 10.5 | % | ||||||||||||||
| Revenues | $ | 10,176 | $ | 9,197 | $ | 979 | 10.6 | % | ||||||||||||||
| Weighted average number of games (in units) | 66 | 66 | - | - | ||||||||||||||||||
| Hold percentage (2) | 18.5 | % | 18.5 | % | - | - | ||||||||||||||||
| Win per unit per day (in dollars) | $ | 1,676 | $ | 1,513 | $ | 163 | 10.8 | % | ||||||||||||||
| Poker: | ||||||||||||||||||||||
| Revenues | $ | 989 | $ | 1,070 | $ | (81 | ) | (7.6 | %) | |||||||||||||
| Weighted average number of tables (in units) | 18 | 18 | - | - | ||||||||||||||||||
|
Revenue per unit per day (in dollars) |
$ | 597 | $ | 646 | $ | (49 | ) | (7.6 | %) | |||||||||||||
|
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| (1) Free promotional slot plays are included in slot handle, but not reflected in slot revenues. | ||||||||||||||||||||||
| (2) Table games hold percentage is relatively predictable over longer periods of time, but can significantly fluctuate over shorter periods. | ||||||||||||||||||||||
Gaming revenues increased as a result of higher slot and table game revenues. The increases in slot and table game revenues reflect strong patron response to our promotional offers and favorable weather conditions during the quarter.
Non-gaming revenues (in thousands, except where noted, unaudited):
| For the Three Months Ended | |||||||||||||||||||||
|
December 31, 2011 |
December 31, 2010 |
Variance | Percentage Variance |
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| Food and beverage: | |||||||||||||||||||||
| Revenues | $ | 6,112 | $ | 5,847 | $ | 265 | 4.5 | % | |||||||||||||
| Meals served | 184 | 193 | (9 | ) | (4.7 | %) | |||||||||||||||
| Average price per meal served (in dollars) | $ | 15.40 | $ | 14.96 | $ | 0.44 | 2.9 | % | |||||||||||||
| Retail, entertainment and other: | |||||||||||||||||||||
| Revenues | $ | 1,920 | $ | 1,602 | $ | 318 | 19.9 | % | |||||||||||||
The increase in non-gaming revenues resulted from increased patron visitation to the facility during the quarter.
Corporate
Loss from operations (in thousands, unaudited):
| For the Three Months Ended | ||||||||||||||||||||||
| December 31, 2011 |
December 31, 2010 |
Variance | Percentage Variance |
|||||||||||||||||||
| Loss from operations | $ | 3,515 | $ | 4,580 | $ | (1,065 | ) | (23.3 | %) | |||||||||||||
The decrease in loss from operations primarily resulted from lower professional expenses.
Mohegan Tribal Gaming Authority Property Information
| (in thousands, unaudited) | Income (Loss) from Operations For the Three Months Ended |
Adjusted EBITDA For the Three Months Ended |
Net Revenues For the Three Months Ended |
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| December 31, 2011 |
December 31, 2010 |
December 31, 2011 |
December 31, 2010 |
December 31, 2011 |
December 31, 2010 |
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| Mohegan Sun | $ | 46,993 | $ | 42,545 | $ | 63,983 | $ | 60,928 | $ | 273,898 | $ | 263,830 | |||||||||||||||||||||||
| Mohegan Sun at Pocono Downs | 10,032 | 6,319 | 14,167 | 11,629 | 77,978 | 71,775 | |||||||||||||||||||||||||||||
| Corporate | (3,515 | ) | (4,580 | ) | (3,150 | ) | (4,088 | ) | - | - | |||||||||||||||||||||||||
| Total | $ | 53,510 | $ | 44,284 | $ | 75,000 | $ | 68,469 | $ | 351,876 | $ | 335,605 | |||||||||||||||||||||||
Other Information
Liquidity
As of December 31, 2011, the Authority held cash and cash equivalents of $91.7 million compared to $112.2 million as of September 30, 2011. As of December 31, 2011, $505.0 million was drawn on the Authority’s $675.0 million bank credit facility. As of December 31, 2011, letters of credit issued under the bank credit facility totaled $3.8 million, of which no amount was drawn. Inclusive of letters of credit, which reduce borrowing availability under the bank credit facility, and after taking into account restrictive financial covenant requirements under the bank credit facility and the Authority’s line of credit and note indentures, the Authority had approximately $62.1 million of borrowing capacity under the bank credit facility as of December 31, 2011. As of December 31, 2011, the Authority’s debt, including capital leases, totaled $1.61 billion compared to $1.64 billion as of September 30, 2011.
Interest Expense
Interest expense decreased by $937,000, or 3.2%, to $28.8 million for the quarter ended December 31, 2011 compared to $29.7 million in the first quarter of fiscal 2011. The decrease in interest expense was due to lower weighted average outstanding debt. Weighted average outstanding debt was $1.62 billion for the quarter ended December 31, 2011 compared to $1.68 billion in the first quarter of fiscal 2011. Weighted average interest rate was 7.1% for each of the quarters ended December 31, 2011 and 2010.
Capital Expenditures
The following table presents data related to capital expenditures (in millions):
| Capital Expenditures | |||||||||||||||
| Three Months Ended December 31, 2011 |
Remaining Forecasted Fiscal Year 2012 |
Total Forecasted Fiscal Year 2012 |
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| Mohegan Sun: | |||||||||||||||
| Maintenance | $ | 11.9 | $ | 21.1 | $ | 33.0 | |||||||||
| Development | 2.0 | 8.0 | 10.0 | ||||||||||||
| Expansion - Project Horizon | 0.1 | - | 0.1 | ||||||||||||
| Subtotal | 14.0 | 29.1 | 43.1 | ||||||||||||
| Mohegan Sun at Pocono Downs: | |||||||||||||||
| Maintenance | 1.2 | 2.8 | 4.0 | ||||||||||||
| Subtotal | 1.2 | 2.8 | 4.0 | ||||||||||||
| Total | $ | 15.2 | $ | 31.9 | $ | 47.1 | |||||||||
Distributions to the Tribe
Distributions to the Tribe totaled $18.0 million for the quarter ended December 31, 2011 compared to $4.5 million in the first quarter of fiscal 2011.
Recent Developments
As previously announced, on January 24, 2011, the Authority commenced a series of debt refinancing transactions designed to extend the maturity dates of the Authority’s outstanding debt, including (i) a private offer to exchange all of the Authority’s outstanding notes for new notes and a related solicitation of consents to certain amendments to the outstanding notes and indentures governing them, (ii) an amendment and restatement of the Authority’s bank credit facility to, among other things, reduce the size thereof from $675.0 million to $475.0 million and extend the maturity date thereof from March 9, 2012 to March 31, 2015 and (iii) an offering of approximately $225.0 million in principal amount of new first lien debt in a private placement transaction. Please refer to the Authority’s January 24, 2012 press release for further information regarding the proposed refinancing transactions.
The new notes being offered in the exchange offer will not be registered under the Securities Act of 1933, as amended (the “Securities Act”) or any other applicable securities laws and, unless so registered, the new notes may not be offered, sold, pledged or otherwise transferred within the United States or to or for the account of any U.S. person, except pursuant to an exemption from the registration requirements thereof. Accordingly, the new notes are being offered and issued only (i) to “qualified institutional buyers” (as defined in Rule 144A under the Securities Act), (ii) to institutional “accredited investors” (within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and (iii) outside the United States to persons other than U.S. persons in reliance upon Regulation S under the Securities Act. The exchange offers and associated new notes are being offered only by, and pursuant to, the terms set forth in the various documents prepared for the respective transactions, and the information in this press release is qualified by reference to those documents.
In addition, the new first lien debt being offered in connection with the refinancing transactions will not be registered under the Securities Act or any other applicable securities laws and, unless so registered, the new first lien debt may not be offered, sold, pledged or otherwise transferred within the United States or to or for the account of any U.S. person, except pursuant to an exemption from the registration requirements thereof.
