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: 3/31/97
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transaction period to .
Commission file number: 333-17795
WATERFORD GAMING LLC
(Exact name of Registrant as specified in its charter)
DELAWARE 06-1465402
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
914 HARTFORD TURNPIKE
P.O. BOX 715
WATERFORD, CT 06385
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (860)442-4559
Indicate by check 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
WATERFORD GAMING, L.L.C.
INDEX TO FORM 10-Q
PART I -- FINANCIAL INFORMATION Page
ITEM 1 -- Financial Statements Number
Report of Independent Accountants 1
Financial Information 2
Condensed Balance Sheets of Waterford Gaming, L.L.C. as of
March 31, 1997 (unaudited) and December 31, 1996. 3
Condensed Statement of Operations of Waterford Gaming, L.L.C.
for the three months ended March 31, 1997 (unaudited). 4
Condensed Statement of Changes in Member's Deficiency of
Waterford Gaming, L.L.C. for the three months ended
March 31, 1997 (unaudited). 5
Condensed Statement of Cash Flows of Waterford Gaming, L.L.C.
for the three months ended March 31, 1997 (unaudited). 6
Notes to Condensed Financial Statements of Waterford Gaming,
L.L.C. (unaudited). 7-8
ITEM 2 -- Management's Discussion and Analysis of Financial
Condition and Results of Operations. 9-15
PART II -- OTHER INFORMATION
ITEM 1 -- Legal Proceedings 16
ITEM 2 -- Changes in Securities 16
ITEM 3 -- Defaults upon Senior Securities 16
ITEM 4 -- Submission of Matters to a Vote of Security Holders 16
ITEM 5 -- Other Information 16
ITEM 6 -- Exhibits and Reports on Form 8-K 17
Signatures - Waterford Gaming, L.L.C. 18
REPORT OF INDEPENDENT ACCOUNTANTS
To the Members of Waterford Gaming, L.L.C.:
We have reviewed the condensed balance sheet of Waterford Gaming, L.L.C.
(the "Company") as of March 31, 1997, and the related condensed statements of
operations, changes in members' deficiency and cash flows for the
three-month period ended March 31, 1997. These financial statements
are the responsibility of the Company'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 generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the condensed financial statements referred to above for them to be
in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the balance sheet as of December 31, 1996, and the
related statements of operations, changes in members' equity (deficiency)
and cash flows for the period from September 30, 1996 (commencement of
operations) to December 31, 1996 (not presented herein); and in our report
dated April 11, 1997, we expressed an unqualified opinion on those financial
statements. In our opinion, the information set forth in the condensed
balance sheet as of December 31, 1996, is fairly stated, in all material
respects, in relation to the balance sheet from which it has been derived.
COOPERS & LYBRAND, L.L.P.
Hartford, Connecticut
May 30, 1997
1
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
The unaudited condensed financial information as of March 31,
1997, and for the three-month period ended March 31, 1997,
included in this report was reviewed by Coopers & Lybrand LLP,
independent public accountants, in accordance with the
professional standards and procedures established for such
reviews by the American Institute of Certifed Public Accountants.
2
WATERFORD GAMING, L.L.C.
CONDENSED BALANCE SHEETS
March 31, 1997 and December 31, 1996
(Unaudited)
________
ASSETS
March 31 1997 December 31, 1996
Current assets:
Cash $ 1,840,283 $ 841,512
Temporary investments 16,092,879 15,895,904
Due from Trading Cove Associates 1,350,000 ---
Total current assets 19,283,162 16,737,416
Investment in Trading Cove Associates 12,277,069 12,682,469
Investment in 15% subordinated notes receivable 24,886,511 25,965,897
Deferred financing costs, net of accumulated
amortization of $160,419 2,686,841 2,788,529
Total assets $59,133,583 $58,174,311
LIABILITIES AND MEMBERS' DEFICIENCY
Current liabilities:
Accrued expenses $42,288 $53,510
Accrued interest on senior notes payable 3,291,979 1,220,104
Total current liabilities 3,334,267 1,273,614
12-3/4% senior notes payable 65,000,000 65,000,000
Total liabilities 68,334,267 66,273,614
Members' deficiency (9,200,684) (8,099,303)
Total liabilities and
members' deficiency $59,133,583 $58,174,311
The accompanying notes are an integral part of the financial statements.
3
WATERFORD GAMING, L.L.C.
CONDENSED STATEMENT OF OPERATIONS
for the three months ended March 31, 1997
(Unaudited)
________
Revenue
Interest income $1,096,412
Financing income - Trading Cove Associates 442,340
Total revenue 1,538,752
Expenses:
Interest expense 2,071,875
Amortization of deferred financing costs 101,688
General and administrative 61,170
Total expenses 2,234,733
(695,981)
Equity in loss of Trading Cove Associates (405,400)
Net loss ($1,101,381)
The accompanying notes are an integral part of the financial statements.
4
WATERFORD GAMING, L.L.C.
CONDENSED STATEMENT OF CHANGES IN MEMBERS' DEFICIENCY
for the three months ended March 31, 1997
(Unaudited)
_______
Total
Slavik LMW Members'
Suites, Investments, Deficiency
Inc. Inc.
Balance, December 31,1996 ($5,412,165) ($2,687,138) ($8,099,303)
Net loss (746,700) (354,681) (1,101,381)
Balance, March 31, 1997 ($6,158,865) ($3,041,819) ($9,200,684)
The accompanying notes are an integral part of the financial statements.
5
WATERFORD GAMING, L.L.C.
CONDENSED STATEMENT OF CASH FLOWS
for the three months ended March 31, 1997
(Unaudited)
________
Cash flows from operating activities:
Net loss ($1,101,381)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Amortization 101,688
Equity in loss of Trading Cove Associates 405,400
Changes in operating assets and liabilities:
Accrued interest receivable 29,386
Accrued interest on temporary investments (1,107)
Due from Trading Cove Associates (442,340)
Accrued expenses (11,222)
Accrued interest on senior notes payable 2,071,875
Total adjustments 2,153,680
Net cash provided by operating
activities 1,052,299
Cash flows from investing activities:
Due from Trading Cove Associates (907,660)
Return on investment in 15% subordinated notes
receivable 1,050,000
Purchases and sales of temporary investments - net (195,868)
Net cash used in investing
activities (53,528)
Net increase in cash 998,771
Cash at beginning of period 841,512
Cash at end of period $1,840,283
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ ---
The accompanying notes are an integral part of the financial statements.
6
WATERFORD GAMING, L.L.C.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
_________
1. Basis of Presentation:
The unaudited interim financial statements should be read in
conjunction with the Company's 1996 audited financial
statements within the Company's Registration Statement on Form S-4,
as amended, initially filed with the Securities and Exchange
Commission (the "Commission") File No. 333-17795 on April 29, 1997.
The unaudited interim financial statements include normal and
recurring adjustments which are, in the opinion of
management, necessary to present a fair statement of
financial position as of March 31, 1997, and the results of
operations and cash flows for the three months ended March
31, 1997, and the statement of members' deficiency for the
three months ended March 31, 1997. The Company was formed on
September 30, 1996 and, accordingly, there are no comparative
statements for the corresponding quarter ending March 31,
1996. Results of operations for the period are not
necessarily indicative of the results to be expected for the
full year.
The following significant event has occurred subsequent to
fiscal year 1996, which requires disclosure in this interim
report per Regulation S-X, Rule 10-01, Paragraph(a)(5).
Effective as of May 15, 1997, the Company's 12-3/4% senior notes
were registered with the Commission through a Registration Statement
on Form S-4 under the Securities Exchange Act of 1933. As a result,
the Company is subject to the informational requirements of the
Securities Exchange Act of 1934.
7
2. Investment in Trading Cove Associates:
As of March 31, 1997, the following summary information
relates to Trading Cove Associates. Total revenues and net
loss are for the three months ended March 31, 1997:
Total assets $ 9,483,784
Total liabilities 2,909,125
-----------
Partners' capital $ 6,574,659
===========
Total revenues $ 5,725,782
===========
Net loss $ (44,533)
===========
Company's interest:
Investment in Trading Cove Associates,
beginning of year $12,682,469
Loss from Trading Cove Associates (22,267)
Amortization of interests purchased (383,133)
-----------
Equity in loss in Trading Cove Associates (405,400)
===========
Investment in Trading Cove Associates $12,277,069
===========
3. Notes Receivable:
On November 8, 1996, the Company invested in 15% subordinated
notes receivable from MTGA (the "Subordinated Notes") in the
principal amount of $19,150,000 from Sun International Hotels Limited
("Sun International"). The Company also purchased the related
accrued interest, deferred interest and additional amounts as
of November 8, 1996 totaling $5,922,543, of which $1,957,660
relates to additional amounts owed by Trading Cove Associates
on the original Subordinated Notes as of December 31, 1996.
During the three months ended March 31, 1997, the Company received
$1,050,000 and accrued $1,350,000, totaling $2,400,000, in
financing payments from Trading Cove Associates. These
financing payments were first applied against the $1,957,660,
which resulted in recognition of $442,340 in financing income
during the three months ended March 31, 1997.
8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following discussion should be read in conjunction
with, and is qualified in its entirety by, the Company's
financial statements and the notes thereto included elsewhere
herein.
Development and Operational Activities
The operation of the Company or its predecessors in its role
as a managing general partner of Trading Cove Associates
(the "Manager") has been to negotiate the Management
Agreement (as defined below), to assist the Mohegan Tribe of
Indians of Connecticut (the "Tribe") and the Mohegan Tribal
Gaming Authority (the "Authority") in obtaining federal
recognition, negotiate the tribal-state compact with the
State of Connecticut, obtain financing for the development
of the Mohegan Sun Casino (the "Mohegan Sun") located in
Uncasville, Connecticut, and participate in the design and
development of the Mohegan Sun which commenced operations on
October 8, 1996. Since the opening of the Mohegan Sun, the
Company has overseen the Mohegan Sun's day-to-day operations.
Overview of Current and Future Cash Flows
The Company expects to fund its operating debt service
and capital needs from cash flows from the Management
Agreement and Subordinated Notes (to the extent interest or
Additional Amounts as defined are payable in cash on the Subordinated
Notes and to the extent of principal payments on the
Subordinated Notes) and from amounts in the Company's cash collateral
account (the "Cash Collateral Account"). Based upon the Company's
anticipated future operations, management believes that available cash
flow will be sufficient for that purpose. The following is a summary
of the cash flows of the Company.
For the three month period ended March 31, 1996, the
Company received $1,050,000 in cash distributions from the
Manager and $1,350,000 was due from the Manager, which
represented its share of approximately $5,213,964 in net
management fees earned by the Manager from the Authority
pursuant to the terms of the Management Agreement for the
same period. The actual amount of management fees earned by
the Manager for any annual period are subject to year-end
adjustment, as set forth below.
Sources of Revenues. The Company has two primary sources
of revenues: distributions on its partnership interest in
the Manager and payments on the Subordinated Notes.
9
Pursuant to an agreement between the Manager and the Tribe,
the Manager manages the Mohegan Sun for a management fee under
a seven year management agreement (the "Management Agreement").
The Manager will have only one source of revenue, management
fees under the Management Agreement. The Management fees are
calculated in three tiers based upon Net Revenues of the Mohegan
Sun set forth below (in thousands):
I II III
40% of net Revenues in Revenues in
Revenues Tier I plus Tiers I & II
up to 35% of Net plus 30% of
Revenues Net Revenues
between above
Year 1........ $50,546 $50,547-$63,183 $63,183
Year 2........ $73,115 $73,116-$91,934 $91,394
Year 3........ $91,798 $91,799-$114,747 $114,747
Year 4........ $95,693 $95,694-$119,616 $119,616
Year 5........ $104,107 $104,108-$130,134 $130,134
Year 6 (subject to
Buyout Option)... $114,335 $114,336-$142,919 $142,919
Year 7 (subject to
Buyout Option)... $130,944 $130,945-$163,680 $163,680
The monthly management fee payments are calculated against
1/12th of the amounts set forth above, and then adjusted annually
within 60 days of the close of the fiscal year. This annual
adjustment might or might not have a material effect on cash
flow. As defined in the Management Agreement, "Net Revenues" of
the Mohegan Sun means the amount of the Gross Revenues of the
facility less operating expenses and certain specified categories
of revenue, such as income from any financing or refinancing,
taxes or charges received from patrons on behalf of and remitted
to a governmental entity, proceeds from the sale of capital
assets, insurance proceeds and interest on the Reserve Fund. Net
Revenues also include Net Gaming Revenues, which are equal to the
amount of the `net win" from Class III Gaming operations (i.e.,
the difference between gaming wins and losses) less all gaming-
related operational expenses (excluding the Management Fee).
Within 25 days after the end of each calendar month, the Manager
is required to calculate and report to the Tribe, the gross
revenues, operating expenses and net revenues.
In addition, the Manager is required to fund $1.2 million
per year ($100,000 per month) from its management fees into a
capital replacement reserve. The Management Agreement has a term
of seven years that commenced upon the opening of the Mohegan
Sun, subject to a right of the Authority to buy-out the
Management Agreement after the fifth year. If the Management
Agreement is bought out after the fifth year, the Company will
use its share of the proceeds to redeem Notes.
10
Upon receipt of the Management Fee, the Manager is required
to make a number of different types of payments to its subcontractors.
The subcontracts are primarily with its partners or their affiliates.
Some of these payments are one-time non-recurring payments (the
"Non-recurring Payments") and others are required on a continuing
basis (the "Continuing Payments"). The payments marked with an
asterisk below are Non-recurring Payments and the others are
Continuing Payments. One of the considerations used by the NIGC
in determining whether or not to approve a management contract
is whether the Manager is providing a portion of the capital
required. Accordingly, the Manager agreed to provide or cause to
be provided $40 million of capital in the form of the
Subordinated Notes. However, at the time that the subordinated
loan was made, the partners of the Manager, including the
Company's predecessors-in-interest, did not participate in the
loan in accordance with their economic interests in the Manager.
Therefore, the partners of the Manager agreed that those entities
who participated in funding the Subordinated Notes would be
entitled to financing fees (the "Additional Amounts") as a priority
allocation of the Management Fee to compensate those entities for the
additional risk of funding the Subordinated Notes. The
Additional Amounts represent a priority payment of available
cash by the Manager. If every partner of the Manager
participated in the Subordinated Notes to the extent of its pro
rata economic interest in the Manager, then the Additional
Amounts would have no economic effect on the partners. Such
payments by the Manager, along with the allocation of the other
Management Fees, are to compensate the recipients for the
subcontracted services provided by them to the Mohegan Sun, including
compensation for the provision of capital resources, and to
provide the initial investors in the Mohegan Sun with a return of
capital for their initial investment.
The following table sets forth the priority of the distribution
of the Management Fee from the Manager to its Partners:
* 1. Return of capital contributions made after September 24,
1995. These capital contributions aggregated $2.2 million and
are to be repaid to the partners, 50% to the Company and 50% to
Sun Cove Ltd. These capital contributions were deemed returned at
the consummation of the offering of the Notes upon the distribution
by the Manager of the $1.7 million in principal amount of Original
Subordinated Notes together with accrued interest and accrued
Additional Amounts and a cash distribution totalling $275,000,
50% to Sun Cove Ltd. and 50% to the Company.
2. Payment of an amount equal to 11 1/2% per annum on the
Original Subordinated Notes. These payments will be made semi-annually
to the holders of the Original Subordinated Notes, 50% to the Company
and 50% to Sun International.
3. Payment of an amount equal to the difference between 26
1/2% and the reference rate of Chase Manhattan Bank plus 1.0% on
the first $15.0 million advanced under the Completion Guarantee
(the "First Tranche Completion Guarantee Subordinated Notes").
This amount will be paid semi-annually pari passu with the
amounts under paragraph 4. Upon funding of the First Tranche
Completion Guarantee Subordinated Notes, this amount will be paid
to Sun International. However, these amounts become payable to
the Company as it purchases its share of the First Tranche
Completion Guarantee Subordinated Notes over three years.
4. Payment of an amount equal to the reference rate of
Chase Manhattan Bank plus 1.0% on the First Tranche Completion
Guarantee Subordinated Notes to the extent the Authority is not
permitted to pay interest thereon. This amount will be paid semi-
annually pari passu with the amount under paragraph 3. When the
Authority can pay such interest, payment under this paragraph 4
shall be reduced accordingly. In addition, to the extent the
Manager has paid amounts otherwise payable by the Authority, the
holders will be required to repay the Manager.
11
5. Payment of an amount equal to the difference between 26
1/2% and the reference rate of Chase Manhattan Bank plus 1.0% on
the amounts advanced under the Completion Guarantee in excess of
the First Tranche Completion Guarantee Subordinated Notes (which
is expected to total $35.0 million) (the "Second Tranche
Completion Guarantee Subordinated Notes"). This amount is paid
semi-annually to Sun International.
* 6. Return of capital contributions made before September 24,
1995. These capital contributions aggregated approximately $7.0
million and are repaid to the partners, 50% to the Company and
50% to Sun Cove Ltd.
* 7. Payment of a Development Services Fee to Sun
International equal to 3% of total development costs (less land
acquisition costs) of the Mohegan Sun plus $25,000 (estimated to
be $8.3 million).
8. Payment of a monthly Management Services Fee equal to
the lesser of 1% of the gross revenues of the Mohegan Sun and 25%
of the sum of the Excess Cash of the Manager (as defined in the
Partnership Agreement) plus the Organizational and Administrative
Fee (as defined) and the Marketing and Casino Operations Fee (as
defined). After deducting operating expenses (which will be the
following amounts: $2.0 million if the Mohegan Sun's EBITDA (as
defined) is $200.0 million or less, $3.0 million if the Mohegan's
Sun's EBITDA is greater than $200.0 million but less than $225.0
million, and $4.0 million if the Mohegan Sun's EBITDA is greater
than $225.0 million) the remaining amounts will be distributed in
amounts equal to 50% to Sun International and the remainder to
the Company.
* 9. Payment of a Completion Guarantee Fee to Sun
International equal to 2% of the total development costs (less
land acquisition costs) of the Mohegan Sun (approximately $5.5
million).
10. Payment of amount equal to the state and federal income
tax liability of the Manager as if it were an individual paying
federal income tax and the higher of Michigan or Connecticut
taxes. This amount will be paid 50% to Sun Cove Ltd., 45% to the
Company and 5% to a former partner.
11. All remaining fees and Excess Cash distributed 50% to
Sun Cove Ltd., 45% to the Company and 5% to a former partner.
The Company has an obligation to purchase one-half ($7.5
million) of the aggregate principal amount of the outstanding
First Tranche Completion Subordinated Guarantee Notes in three
equal annual installments beginning in October 1997.
12
Interest accrues on the Subordinated Notes semi-annually.
Interest is deferred (and compounds semi-annually) until the
Authority purchases or offers to purchase at least 50% of its
$175 million, 13 1/2% Authority Senior Secured Notes due 2002
(the "Authority Senior Secured Notes") and certain fixed charge
coverage ratios are met. The Authority is required to
offer annually to purchase the Authority Senior Secured Notes
with the sum of (i) 50% of its Excess Cash Flow (defined as an
amount equal to the cash flow of the Authority for any given
period, less (a) the Management Fees for such period, (b) interest
expense and principal payments on indebtedness of the Authority
for such period, (c) amount set aside in the Cash Maintenance
Account (as defined in the indenture for the Authority Senior
Secured Notes) for such period, (d) amounts for the payment of federal
and state taxes for such period, and (e) certain other amounts
(not to exceed $6.8 million) for such fiscal year), (ii) 100% of
the amount of Deferred Subordinated Interest (as defined in the
indenture for the Authority Senior Secured Notes) for such fiscal year
and (iii) accrued and unpaid interest, if any, to the date of
closing of such Excess Cash Purchase Offer (as defined in the
indenture for the Authority Senior Secured Notes). If the holders of
the Authority Senior Secured Notes do not accept the offer, then
such amount of the Excess Cash must be offered to purchase the
Subordinated Notes. In the event that the Company receives an
offer to purchase the Subordinated Notes, the Indenture requires
the Company to accept such offer in the same proportion as Sun
International. The Authority may make an optional redemption of
the Subordinated Notes; however, such redemption, except as
detailed above, may be made only after the Authority Senior
Secured Notes have been paid in full.
Results of Operations
Discussion of the Period from January 1, 1997 to March 31, 1997
Interest income. Interest income of $1,096,412 for the
period ended March 31, 1997 was attributable to accrued interest
on the Subordinated Notes of $878,275 and interest received and
accrued on Cash and Temporary Investments of $218,137.
Financing Income - Trading Cove Associates. Financing
Income - Trading Cove Associates of $442,340 for the three months
ended March 31, 1997 represents Additional Amounts due as provided
under point 2 of the table set forth above under "Overview of Current
and Future Cash Flows".
Interest Expense. Interest expense of $2,071,875 for the
period ended March 31, 1997 resulted from accrued and unpaid
interest on the Senior Notes, payable May 15, 1997.
Amortization on Deferred Financing Costs. Amortization on
Deferred Financing Costs for the three months ended March 31, 1997 of
$101,688 resulted from amortization of costs associated with the
issuance of the Notes.
General and Administrative Expenses. General and
Administrative Expenses for the period ended March 31, 1997 was
$61,170 which was primarily attributable to legal and accounting fees.
Equity in loss of the Manager. Equity in loss of the
Manager for the three months ended March 31, 1997 was $405,400.
13
As a result of the foregoing factors, the Company experienced
a net loss of $1,101,381 for the three months ended March 31, 1997.
Liquidity and Capital Resources
The initial capital of the Company consists of the
partnership interests in the Manager contributed by Slavik
Suites, Inc. and LMW Investments, Inc. in forming the Company.
In connection with the offering of the Notes, the Company
used approximately $25.1 million to purchase $19.2 million in
principal amount of Original Subordinated Notes of the Authority
plus accrued and unpaid interest and Additional Amounts. In
addition, the Manager distributed approximately $850,000 in
principal amount of Subordinated Notes to the Company.
If construction costs exceed the current budget or if
additional amenities or facilities are constructed, the Manager
may determine to loan the Authority funds for such purposes,
although it does not have any obligation to do so. The Company
currently believes that the completion costs of the Mohegan Sun
are within the current budget but construction costs may
increase, and no assurance can be given that the Authority will
be able to obtain sufficient funds if it is required to do so. A
portion of the proceeds of the Offering of the Notes were placed
in the Cash Collateral Account and are available to fund the
Company's share of any additional funding required by the
Manager, if any.
At this time the Company anticipates that no further
investment is required in the Manager by the Company.
Current Assets increased from $16,737,416 to $19,283,162 at
March 31, 1997. The increase was primarily the result of payments
by the Manager.
The Company has two primary sources of revenues: Distributions
on its partnership interest in the Manager and payments on the Subordinated
Notes. The Company anticipates regular payments from the Manager based on
the results of the Manager and management fee payment by the Authority.
Current Liabilities increased from $1,273,614 to $3,334,267
at March 31, 1997. The increase was primarily attributable to
accrued and unpaid interest on the Senior Notes.
The Company is required to purchase from Sun International
on each October 12, 1997, October 12, 1998 and October 12, 1999 one-sixth
of the outstanding principal amount of First Tranche Completion Guarantee
Subordinated Notes owned by Sun International. The purchase price which is
to be paid by the Company to Sun International will be equal to the
outstanding principal balance of the First Tranche Completion Guarantee
Subordinated Notes plus all accrued and unpaid interest thereon.
As of March 31, 1997, $15 million principal was outstanding as
First Tranche Completion Guarantee Subordinated Notes.
14
The Company believes that it will fund its current operating
expenses, debt service requirements and capital needs from cash
flows from the Manager and payments under the Subordinated Notes
(to the extent payments on the Subordinated Notes is payable in
cash and to the extent of principal payments on the Subordinated
Notes) and from amounts in the Cash Collateral Account. Based
upon the Company's anticipated future operations, management
believes these sources will be sufficient to meet the Company's
anticipated requirements for future operating expenses and future
scheduled payments of principal of and interest on the Senior
Notes. No assurance, however, can be given that the operating
cash flow will be sufficient for that purpose. The Mohegan Sun
has only recently begun operations and does not have a long
operating history.
15
Part II - Other Information:
Item 1 -- Legal Proceedings:
Neither the Company nor Waterford Gaming Finance Corp. is a
party to any pending material litigation.
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
16
Item 6 -- Exhibits and Reports on Form 8-K:
(a) Exhibits
Exhibit No. Description
3.1 Certificate of Formation, as amended, of
Waterford Gaming, L.L.C. (i)
3.2 Certificate of Incorporation of Waterford
Gaming Finance Corp. (i)
3.3 Bylaws of Waterford Gaming Finance Corp. (i)
4.1 Indenture, dated as of November 8, 1996, between
Waterford Gaming, L.L.C. and Waterford Gaming
Finance Corp., the issuers, and Fleet National
Bank, as trustee, relating to $65,000,000
12 3/4% Senior Notes due 2003. (i)
4.2 Registration Rights Agreement, dated as of
November 8, 1996, among, Waterford Gaming, L.L.C.,
Waterford Gaming Finance Corp., Bear, Stearns &
Co., Inc., and Merrill Lynch, Pierce, Fenner &
Smith Incorporated. (i)
4.3 Note Pledge Agreement, dated as of November 8,
1996, between Waterford Gaming, L.L.C. and Fleet
National Bank, as trustee. (i)
4.4 Cash Collateral and Disbursement Agreement, dated
as of November 8, 1996, among Fleet National Bank,
as trustee, Fleet National Bank as disbursement
agent, and Waterford Gaming, L.L.C. (i)
4.5 Specimen Form of 12 3/4% Senior Notes due 2003
(the "Private Notes") (included in Exhibit
4.1). (i)
4.6 Specimen Form of 12 3/4% Senior Notes due 2003
(the "Exchange Notes") (included in Exhibit
4.1). (i)
10.1 Omnibus Financing Agreement, dated as of
September 21, 1995, between Trading Cove
Associates and Sun International Hotels
Limited. (i)
10.2 First Amendment to the Omnibus Financing
Agreement, dated as of October 19, 1996, among
Trading Cove Associates, Sun International
Hotels Limited and Waterford Gaming, L.L.C. (i)
10.3 Amended and Restated Partnership Agreement of
Trading Cove Associates, dated as of September
21, 1994, among Sun Cove Ltd., RJH Development
Corp., Leisure Resort Technology, Inc., Slavik
Suites, Inc., and LMW Investments, Inc. (i)
10.4 First Amendment to Amended and Restated
Partnership Agreement of Trading Cove Associates,
dated as of October 22, 1996, among Sun Cove Ltd.,
Slavik Suites, Inc., RJH Development Corp., LMW
Investments, Inc. and Waterford Gaming, L.L.C. (i)
10.5 Purchase Agreement, dated as of November 5, 1996,
among Waterford Gaming, L.L.C., Waterford Gaming
Finance Corp., Bear, Stearns & Co., Inc. and
Merrill Lynch, Pierce, Fenner and Smith
Incorporated. (i)
10.6 Limited Liability Company Agreement of Waterford
Gaming, L.L.C., dated as of September 30, 1996,
among Slavik Suites, Inc., LMW Investments, Inc.
and Waterford Gaming, L.L.C. (i)
10.7 Note Purchase Agreement, dated as of October 19,
1996, among Sun International Hotels Limited,
Waterford Gaming, L.L.C. and Trading Cove
Associates. (i)
10.8 Note Purchase Agreement, dated as of September 29,
1995, between the Mohegan Tribal Gaming Authority
and Sun International Hotels Limited relating to
the Subordinated Notes. (i)
10.9 Management Agreement, dated as of July 28, 1994,
between the Mohegan Tribe of Indians of
Connecticut and Trading Cove Associates. (i)
21.1 Subsidiaries of Waterford Gaming, L.L.C. (i)
21.2 Subsidiaries of Waterford Gaming Finance Corp. (i)
27 Financial Data Schedule (ii)
99.1 Quarterly Report on Form 10-Q of the Mohegan
Tribal Gaming Authority (the "Authority") dated
May 15, 1997, incorporated by reference to the
Authority's electronic filing of such report on
Form 10-Q SEC file reference no. 033-80655.
(i) Incorporated by reference to the Registrant's Registration
Statement on Form S-4, Commission File No. 333-17795,
declared effective on May 15, 1997.
(ii) Included in Edgar filing only.
(b) NO FORM 8-K FILINGS.
17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, as amended, the Registrant has duly caused this
Report to be signed on its behalf by the undersigned
thereunto duly authorized.
Date: June 27, 1997 By:/s/Len Wolman
Len Wolman, Chief Executive Officer
Date: June 27, 1997 By:/s/Del Lauria
Del Lauria, Chief Financial Officer
18
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Waterford Gaming LLC
All amounts are unaudited.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,840,283
<SECURITIES> 16,092,879
<RECEIVABLES> 1,350,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 19,283,162
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 59,133,583
<CURRENT-LIABILITIES> 3,334,267
<BONDS> 65,000,000
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 59,133,583
<SALES> 0
<TOTAL-REVENUES> 1,538,752
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 162,858
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,071,875
<INCOME-PRETAX> (1,101,381)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,101,381)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,101,381)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
