Exhibit 14.4  FINANCIAL STATEMENTS
SCHEDULES  TRADING COVE ASSOCIATESReport of Independent AuditorsFinancial Statements:Balance
  Sheets as of December 31, 2003 and 2002Statements of Operations for the years
  ended December 31, 2003, 2002 and 2001Statements of Changes in Partners Capital
  (Deficiency) for the years ended December 31, 2003, 2002 and 2001Statements
  of Cash Flows for the years ended December 31, 2003, 2002 and 2001Notes to Financial Statements   
    REPORT
OF INDEPENDENT AUDITORS  To the Partners of Trading Cove Associates  In our opinion, the accompanying balance
sheets and the related statements of operations, changes in partners capital
(deficiency) and of cash flows present fairly, in all material respects, the
financial position of Trading Cove Associates (the Partnership) at December
31, 2003 and 2002, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 2003, in conformity
with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Partnerships
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States of
America, which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.  PricewaterhouseCoopers, LLP March 24, 2004  1 
   Trading Cove Associates  Balance Sheets  December 31, 2003 and 2002   2003
  
  2002AssetsCurrent assetsCash and cash equivalents
  
  $
  798,602
  
  $
  744,138Relinquishment fee receivable
  
  25,339,272
  
  23,669,823Development fee receivable
  
  
  
  84,000Other current assets
  
  5,531
  
  4,000Total current assets
  
  26,143,405
  
  24,501,961Deferred costs, net of accumulated amortization of $3,060,427 and $
  2,838,909 at December 31, 2003 and 2002, respectively
  
  2,438,514
  
  2,660,032Property and equipment, net of accumulated depreciation of $14,651
  and $48,473 at December 31, 2003 and 2002, respectively
  
  684
  
  4,730Total assets
  
  $
  28,582,603
  
  $
  27,166,723Liabilities and Partners CapitalCurrent liabilitiesAccounts payable and accrued expenses
  
  $
  88,972
  
  $
  114,856Subcontracted services payable
  
  474,767
  
  Development contract loss provision
  
  270,380
  
  5,639,684Amounts billed in excess of development costs and estimated losses
  
  236,600
  
  4,766,655Total current liabilities
  
  1,070,719
  
  10,521,195Commitments and contingenciesPartners capital
  
  27,511,884
  
  16,645,528Total liabilities and partners capital
  
  $
  28,582,603
  
  $
  27,166,723  The
accompanying notes are an integral part of these financial statements.   2 
    Trading Cove Associates  Statements
of Operations  For the Years Ended December 31, 2003, 2002
and 2001   2003
  
  2002
  
  2001RevenueRelinquishment fee
  
  $
  65,099,553
  
  $
  58,508,703
  
  $
  45,715,318Development services revenue
  
  4,698,055
  
  556,788
  
  1,253,827Total revenue
  
  69,797,608
  
  59,065,491
  
  46,969,145ExpensesSubcontract payments to partners and their affiliates
  
  1,840,346
  
  
  
  1,712,791Cost of development services revenue
  
  4,662,055
  
  1,756,788
  
  1,253,827Amortization and depreciation
  
  221,818
  
  221,818
  
  221,717General and administrative
  
  159,653
  
  2,017,350
  
  287,209Total expenses
  
  6,883,872
  
  3,995,956
  
  3,475,544Interest and dividend income
  
  6,041
  
  13,280
  
  33,377Net income
  
  $
  62,919,777
  
  $
  55,082,815
  
  $
  43,526,978  The
accompanying notes are an integral part of these financial statements.   3 
    Trading Cove Associates  Statements
of Changesin
Partners Capital (Deficiency)  For the Years Ended December 31, 2003, 2002
and 2001   Kerzner
  Investments 
  Connecticut Inc.
  
  Waterford
  Gaming, L.L.C.
  
  TotalPartners deficiency, January 1, 2001
  
  $
  (11,267,552
  )
  $
  (12,517,553
  )
  $
  (23,785,105
  )Net income
  
  24,263,489
  
  19,263,489
  
  43,526,978Contributions
  
  1,350,000
  
  1,350,000
  
  2,700,000Distributions
  
  (7,170,976
  )
  (2,170,975
  )
  (9,341,951
  )Partners capital, December 31, 2001
  
  7,174,961
  
  5,924,961
  
  13,099,922Net income
  
  30,041,407
  
  25,041,408
  
  55,082,815Contributions
  
  1,000,000
  
  1,000,000
  
  2,000,000Distributions
  
  (29,268,604
  )
  (24,268,605
  )
  (53,537,209
  )Partners capital, December 31, 2002
  
  8,947,764
  
  7,697,764
  
  16,645,528Net income
  
  33,959,889
  
  28,959,888
  
  62,919,777Contributions
  
  450,000
  
  450,000
  
  900,000Distributions
  
  (28,976,711
  )
  (23,976,710
  )
  (52,953,421
  )Partners capital, December 31, 2003
  
  $
  14,380,942
  
  $
  13,130,942
  
  $
  27,511,884  The
accompanying notes are an integral part of these financial statements.   4 
    Trading Cove Associates  Statements of Cash Flows  For the Years Ended December 31, 2003, 2002
and 2001   2003
  
  2002
  
  2001Cash flows from operating activitiesNet income
  
  $
  62,919,777
  
  $
  55,082,815
  
  $
  43,526,978Adjustments to reconcile net income to net cash provided by operating
  activitiesAmortization
  
  221,518
  
  221,518
  
  221,517Depreciation
  
  3,303
  
  7,641
  
  12,708Loss on disposal of property and equipment
  
  743
  
  
  
  Gain on sale of property and equipment
  
  (1,750
  )
  
  
  Change in assets and liabilitiesIncrease in relinquishment fee receivable
  
  (1,669,449
  )
  (4,983,247
  )
  (3,113,366
  )Decrease (increase) in development fee receivable
  
  84,000
  
  1,176,000
  
  (672,000
  )Decrease in development costs and estimated losses in excess of
  amounts billed
  
  
  
  
  
  1,766,730(Increase) decrease in other current assets
  
  (1,531
  )
  (4,000
  )
  1,868(Decrease) increase in accounts payable and accrued expenses
  
  (25,884
  )
  (64,237
  )
  38,911Increase (decrease) in subcontracted services payable
  
  474,767
  
  (430,791
  )
  (14,051,965
  )(Decrease) increase in amounts billed in excess of development costs
  and estimated losses
  
  (4,530,055
  )
  759,212
  
  4,007,443Decrease in accrued obligations  affiliates
  
  
  
  
  
  (23,621,754
  )Decrease in development contract loss provision
  
  (5,369,304
  )
  (165,634
  )
  (1,325,476
  )Total adjustments
  
  (10,813,642
  )
  (3,483,538
  )
  (36,735,384
  )Net cash provided by operating activities
  
  52,106,135
  
  51,599,277
  
  6,791,594Cash flows from investing activitiesProceeds from sale of property and equipment
  
  1,750
  
  
  
  Purchase of property and equipment
  
  
  
  
  
  (1,484
  )Net cash provided by (used in) investing activities
  
  1,750
  
  
  
  (1,484
  )Cash flows from financing activitiesPartners contributions
  
  900,000
  
  2,000,000
  
  2,700,000Distributions
  
  (52,953,421
  )
  (53,537,209
  )
  (9,341,951
  )Net cash used in financing activities
  
  (52,053,421
  )
  (51,537,209
  )
  (6,641,951
  )Net increase in cash and cash equivalents
  
  54,464
  
  62,068
  
  148,159Cash and cash equivalents at beginning of year
  
  744,138
  
  682,070
  
  533,911Cash and cash equivalents at end of year
  
  $
  798,602
  
  $
  744,138
  
  $
  682,070  The
accompanying notes are an integral part of these financial statements.   5 
    Trading Cove Associates  NOTES
TO FINANCIAL STATEMENTS  1. Organization,
Partnership Agreement and Other Material Agreements  i) Organization and
Partnership Agreement  Trading Cove Associates (the Partnership),
a Connecticut general partnership, was organized on July 27, 1993. The primary
purpose of the Partnership has been:  a)to
assist the Mohegan Tribe of Indians of Connecticut (the Tribe) and the
Mohegan Tribal Gaming Authority (the Authority) in obtaining federal
recognition,  b)to
negotiate the tribal-state compact with the State of Connecticut on behalf of
the Tribe,  c)to
obtain financing for the development of the Mohegan Sun Casino (the Mohegan
Sun),  d)to
negotiate the Amended and Restated Gaming Facility Management Agreement (the
Management Agreement),  e)to
oversee all operations of the Mohegan Sun pursuant to the terms of the
Management agreement until December 31, 1999, and  f)to
participate in the design and development of the Mohegan Sun.  The Mohegan Sun commenced operations on
October 12, 1996. From the opening of the Mohegan Sun, and until January 1,
2000, the Partnership oversaw the Mohegan Suns day-to-day operations.  The Partnership will terminate on December
31, 2040, or earlier, in accordance with the terms of the partnership agreement
(the Partnership Agreement).  The original partners of the Partnership were
RJH Development Corp. (RJH), a New York corporation, Leisure Resort
Technology, Inc. (Leisure), a Connecticut corporation, Slavik Suites, Inc.
(Slavik), a Michigan corporation and LMW Investments, Inc. (LMW), a
Connecticut corporation. On September 21, 1994, the Partnership Agreement was
amended and restated to admit Kerzner Investments Connecticut, Inc. (Kerzner
Investments), a Connecticut corporation, formerly Sun Cove Limited, as a
partner.  On February 3, 1995, Leisure entered into an
acknowledgement and release agreement to withdraw as a partner of the
Partnership and hold its interest in the Partnership as a beneficial interest.
On August 6, 1997, Leisure filed a lawsuit against the Partnership, Kerzner
Investments, RJH and Waterford Gaming, L.L.C. (Waterford Gaming) and its
owners, claiming breach of contract, breach of fiduciary duties and other matters
in connection with the development of the Mohegan Sun. On January 6, 1998,
pursuant to the settlement and release agreement described in Note 7 below,
Waterford Gaming paid $5,000,000 to Leisure and, among other things Leisure
gave up, (a) its beneficial interest of 5 percent of certain fees and excess
cash flows, as defined, of the Partnership and (b) any other claims it may have
had against the Partnership, Kerzner Investments, RJH, Waterford Gaming and its
owners. In connection with the settlement of all matters related to such suit,
pursuant to the settlement and release agreement, Waterford Gaming agreed to
acquire Leisures interests in the Partnership. As a result of this
acquisition, Leisure no longer has the right to 5 percent of the Organizational
and Administrative fee, as defined in the Organizational and Administrative
Services Agreement, and 5 percent of the Partnerships Excess Cash as defined
in the Partnership Agreement, and Waterford Gaming is now entitled to such fees
and cash.  During March 1999, Waterford Gamings
$65,000,000 senior notes were retired and, on March 18, 1999, Waterford Gaming
paid an additional $2,000,000 to Leisure pursuant to the settlement and release
agreement. On January 7, 2000, Leisure filed a complaint against the
Partnership and certain other defendants. For a description of the complaint,
see Note 7 to these financial statements.  On November 8, 1996, Slavik, LMW and RJH
withdrew from the Partnership and, concurrently, consented to the admission of
Waterford Gaming to the Partnership. Waterford Gaming, simultaneously,
purchased RJHs interest in the Partnership. Waterford Gaming is owned by
Waterford Group, LLC. Waterford Group, LLC is owned by Slavik and LMW.   6 
    The partners percentage interest in the
Partnership as of November 8, 1996 was as follows:  Partner
  
  Percentage
  InterestKerzner Investments
  
  50.0 percentWaterford Gaming
  
  50.0 percent  ii) Other Material Agreements  Relinquishment
Agreement  On February 7, 1998, the Partnership and the
Authority entered into the Relinquishment Agreement (the Relinquishment
Agreement). Under the terms of the Relinquishment Agreement the Partnership
continued to manage the Mohegan Sun under the Management Agreement until
midnight December 31, 1999, and on January 1, 2000, the Management Agreement
terminated and the Tribe assumed day-to-day management of the Mohegan Sun.  Under the Relinquishment Agreement, to
compensate the Partnership for terminating its rights under the Management
Agreement and the Hotel/Resort Management Agreement the Authority agreed to pay
to the Partnership a fee (the Relinquishment Fees) equal to 5 percent of
Revenues, as defined in the Relinquishment Agreement, generated by the Mohegan
Sun during the 15-year period commencing on January 1, 2000, including revenue
generated by the Project Sunburst expansion (the Project Sunburst expansion).  The Relinquishment Fees are divided into
senior relinquishment payments and junior relinquishment payments, each of
which equals 2.5 percent of Revenues. Revenues are defined as gross gaming
revenues (other than Class II gaming revenue) and all other facility revenues.
Such revenue includes hotel revenues, food and beverage sales, parking revenues,
ticket revenues and other fees or receipts from the convention/events center in
the Project Sunburst expansion and all rental or other receipts from lessees,
licensees and concessionaires operating in the facility, but not the gross
receipts of such lessees, licensees and concessionaires. Such revenues exclude
revenues generated by any other expansion of the Mohegan Sun. Senior
relinquishment payments are payable quarterly in arrears commencing on April
25, 2000, for the quarter ended March 31, 2000 and the junior relinquishment
payments are payable semi-annually in arrears commencing on July 25, 2000, for
the six months ended June 30, 2000, assuming sufficient funds are available
after satisfaction of the Authoritys senior obligations, as defined in the
Relinquishment Agreement.  Development Agreement  On February 7, 1998 the Partnership and the
Authority entered into the Development Services Agreement (the Development
Agreement), which made the Partnership the exclusive developer of the Project
Sunburst expansion. Pursuant to the Development Agreement, the Partnership
agreed to oversee the planning, design, construction, furnishing, equipping and
staffing of the Project Sunburst expansion for a $14.0 million development fee
(the Development Fee).  On May 24, 2000, the Partnership and the
Authority agreed that the Partnership had performed and completed all its
obligations relating to the staffing of the Project Sunburst expansion and that
the Partnership has no further obligations relating to the staffing of the
Project Sunburst expansion.  The first phase of the Project Sunburst
expansion, including the Casino of the Sky, The Shops at Mohegan Sun, and the
10,000-seat Mohegan Sun Arena opened in September 2001. In April 2002, 734 of
the approximately 1,200-hotel rooms in the 34-story luxury hotel as well as the
meeting and convention space and spa opened. The balance of the approximately
1,200-hotel rooms opened during June 2002. At December 31, 2003, the Project
Sunburst expansion was complete in terms of the Development Agreement.  Pursuant to the Development Agreement, the
Authority agreed to pay the Development Fee to the Partnership quarterly
beginning on January 15, 2000 based on the incremental completion of the
Project Sunburst expansion as of the previous calendar quarter and thereafter
within fifteen (15) days following the end of each calendar quarter. The last
payment of the Development Fee is to be paid on the Completion Date, as defined
in the Development Agreement, of the Project Sunburst expansion.  The Development Agreement terminates after
the earlier of the completion of the Project Sunburst expansion or ten (10)
years. In addition, each party has the right to terminate the Development
Agreement if there is a default or failure to perform by the other party.  Management Agreement  The Partnership entered into the Management
Agreement with the Tribe pursuant to which the Tribe granted to the Partnership
the exclusive right and obligation to develop, manage, operate and maintain the
Mohegan Sun. The Management Agreement was amended and restated effective
September 29, 1995 (the Effective Management Agreement Date). The
Partnerships obligations under this agreement began five days after the
Effective Management Agreement Date and were originally intended to end on
October 11, 2003, seven years from the opening of the Mohegan Sun. Pursuant to
the Management Agreement the Partnership received a management fee (the
Management Fees) that was calculated in three tiers based upon the Net Revenues,
as defined in the Management Agreement, of the Mohegan Sun. The Management
Agreement terminated at midnight on December 31, 1999. The final management fee
was received by the Partnership from the Authority on January 25, 2000.   7 
    Agreements with
Partners and/or their Affiliates  Agreement Relating to
Development Services  On February 9, 1998, the Partnership and
Kerzner International Management Limited (KIML), entered into the Agreement
Relating to Development Services (the Development Services Agreement Phase
II). Pursuant to the Development Services Agreement Phase II, the Partnership
subcontracted with KIML who agreed to perform those services assigned to KIML
by the Partnership in order to facilitate the Partnerships fulfillment of its
duties and obligations to the Authority under the Development Agreement. KIML
subsequently assigned the Development Services Agreement Phase II to Kerzner
Investments.  Pursuant to the Development Services Agreement
Phase II, the Partnership pays to Kerzner Investments a fee, as subcontractor
(the Development Services Fee Phase II), equal to 3 percent of the
development costs of the Project Sunburst expansion, excluding capitalized
interest, less all costs incurred by the Partnership in connection with the
Project Sunburst expansion. The Development Services Fee Phase II shall be paid
in installments due on December 31, 1999 and 2000 and on the Completion Date,
as defined in the Development Agreement, with a final payment being made when
the actual development costs of the Project Sunburst expansion are known. The
Partnership pays the Development Services Fee Phase II, from available cash
flow, if any, in accordance with the Amended and Restated Omnibus Termination
Agreement. At December 31, 2003, the total of the Development Services Fee
Phase II and the Partnerships costs related to the development of the Project
Sunburst expansion exceeded the development services revenue from the Authority
by approximately $15,964,000 as discussed in Note 3 to these financial
statements.  Before KIML assigned the Development Services
Agreement Phase II to Kerzner Investments, it entered into the Local
Construction Services Agreement (the Local Construction Services Agreement) with
Wolman Construction, LLC (Construction) pursuant to which Construction agreed
to provide certain of those services assigned to KIML by the Partnership
pursuant to the Development Services Agreement Phase II. KIML assigned the
Local Construction Services Agreement to Kerzner Investments. Pursuant to the
Local Construction Services Agreement, Kerzner Investments agreed to pay to
Construction a fee equal to 20.83 percent of the Development Services Fee Phase
II as and when Kerzner Investments receives payment from the Partnership in
accordance with the Development Services Agreement Phase II.  Construction has subcontracted with The
Slavik Company to provide certain services under the Local Construction
Services Agreement. In connection with this, Construction agreed that The
Slavik Company would be paid a fee equal to 14.30 percent of its fee under the
Local Construction Services Agreement.  Amended and Restated
Omnibus Termination Agreement  Effective March 18, 1999, the Amended and
Restated Omnibus Termination Agreement (the Amended and Restated Omnibus
Termination Agreement) was entered into by the Partnership, Kerzner
International Limited (Kerzner International), Waterford Gaming, KIML, LMW,
Kerzner Investments, Slavik and Construction. The Amended and Restated Omnibus
Termination Agreement (i) terminated the memorandum of understanding dated
February 7, 1998; and (ii) effective January 1, 2000, terminated a) the Amended
and Restated Omnibus Financing Agreement; b) the Completion Guarantee and Investment
Banking and Financing Arrangement Fee Agreement (the Financing Arrangement
Agreement); c) the Management Services Agreement; d) the Organizational and
Administrative Services Agreement; e) the Marketing Services Agreement; and f)
a Letter Agreement relating to expenses dated October 19, 1996.  In consideration for the termination of such
agreements, the Partnership will use its cash to pay the following obligations
in the priority set forth below:  (i)First,
to pay all unpaid amounts which may be due under the terminated Letter
Agreement and to pay to certain affiliates of Waterford Gaming and to Kerzner
Investments a percentage of an annual fee of $2.0 million less the actual
expenses incurred by the Partnership during 
such year. Such annual fee shall be payable in equal quarterly
installments beginning March 31, 2000 and ending December 31, 2014. For the
years ended December 31, 2003, 2002 and 2001, $1,840,346, $0 and $1,712,791,
respectively, had been incurred by the Partnership in  terms of the first priority;  (ii)Second,
to return all capital contributions made by the partners of the Partnership
after September 29, 1995. The Partnership does not anticipate making further
capital calls to fund expenses related to the development of the Project
Sunburst expansion. From January 1, 2000 to December 31, 2003, these
contributions aggregated $8,000,000. From January 1, 2000 to December 31, 2003,
$8,000,000 has been repaid to the partners of the Partnership.  As of December
31, 2003, $0 in capital contributions remained outstanding;   8 
    (iii)Third,
to pay any accrued amounts for obligations performed prior to January 1, 2000
under the Financing Arrangement Agreement. All such required payments were made
during 2000;  (iv)Fourth,
to make the payments set forth in the agreements relating to the Development
Services Agreement Phase II and the Local Construction Services Agreement as
detailed under the Agreement Relating to Development Services above. No such
payments are required or due at December 31, 2003. The accrued liability to
Kerzner Investments with respect to such fee at December 31, 2003 was
approximately $507,000;  (v)Fifth,
to pay Kerzner Investments an annual fee (in the form of a priority
distribution) of $5.0 million payable in equal quarterly installments of $1.25
million beginning March 31, 2000 and ending December 31, 2006. On January 27,
2004 and on January 28, 2003, $1,250,000 was distributed in terms of the fifth
priority;  (vi)Sixth,
to pay any accrued amounts for obligations performed with respect to periods
prior to January 1, 2000 under the Management Services Agreement, the
Organizational and Administrative Services Agreement and the Marketing Services
Agreement. The final required payments under this priority were made during
2001;  (vii)Seventh,
for the period beginning March 31, 2000 and ending December 31, 2014, to pay
each of Kerzner Investments and Waterford Gaming twenty-five percent (25%) of
the relinquishment payments as distributions. On January 27, 2004 and January
28, 2003, $12,669,636 ($6,334,818 to each of Kerzner Investments and Waterford
Gaming) and $22,043,000 ($11,021,500 to each of Kerzner Investments and
Waterford Gaming), respectively, was distributed by the Partnership in terms of
the seventh priority; and  (viii)Eighth, to
distribute all excess cash. On January 27, 2004, $10,926,597 ($5,463,298 to
Kerzner Investments and $5,463,299 to Waterford Gaming) was distributed as
excess cash.  In addition, the Partnership shall not make
any distributions pursuant to the Amended and Restated Omnibus Termination
Agreement until it has annually distributed to its partners, pro rata, the
amounts related to the partners tax obligations as described in Section
3.03a(1) of the Partnership Agreement less twice the amount of all other funds
paid or distributed to Waterford Gaming during such year pursuant to the
Amended and Restated Omnibus Termination Agreement.  To the extent the Partnership does not have
adequate cash to make the payments pursuant to the Amended and Restated Omnibus
Termination Agreement, such amounts due shall be deferred without the accrual
of interest until the Partnership has sufficient cash to pay them.  Amended and Restated Omnibus Financing
Agreement  Until January 1, 2000, the Partnerships
primary source of revenue and cash flow was Management Fees. Those fees were
utilized by the Partnership to make subcontract payments to partners and
affiliates pursuant to the Amended and Restated Omnibus Financing Agreement,
which was terminated effective January 1, 2000.  2. Significant
Accounting Policies  Cash and Cash
Equivalents  Cash and cash equivalents represent cash and
short-term, highly liquid investments with original maturities of three months
or less.   9 
    Relinquishment Fee  Revenue is generated in accordance with the
terms of the Relinquishment Agreement and recognized quarterly based upon the
revenues of the Authority.  Development Services
Revenue and Cost Recognition  Revenue generated from services performed in
accordance with the terms of the Development Agreement are recognized on the
percentage-of-completion basis, determined by the percentage of costs incurred
to date to estimated total costs for the contract. This method is used because
management considers cost incurred to be the best available measure of progress
on the contract.  Costs of development services revenue
performed include all direct labor costs and those indirect costs related to
services such as subcontractors, consultants, supplies, depreciation and other
costs. Changes in performance, requirements and estimated profitability may
result in revisions to costs and income and will be recognized in the period in
which the revisions are determined. Provisions for estimated losses on
uncompleted contracts are made in the period in which such losses are
determined.  The asset, development costs and estimated
losses in excess of amounts billed, represents revenues recognized in excess
of amounts billed. The liability, amounts billed in excess of costs and
estimated losses, represents billings in excess of revenues recognized.  Deferred Costs  Costs associated with acquiring the
Management Agreement were amortized on a straight-line basis over the 84-month
period of the Management Agreement through March 3, 1999. As a result of the
Relinquishment Agreement becoming effective, the remaining balance will be
amortized over 189 months beginning March 4, 1999.  Property and
Equipment  Office equipment, computer equipment and
furniture and fixtures are stated at cost. Depreciation is charged against
income over a 3-year estimated life of the office and computer equipment and
over a 5-year estimated life of furniture and fixtures. Depreciation expense
for the years ended December 31, 2003, 2002 and 2001 amounted to $3,303, $7,641
and $12,708 of which $3,003, $7,341 and $12,508 were included in cost of
development services revenue, respectively.  Income Taxes  No income tax provision or benefit is
recorded on the books of the Partnership, as the respective share of taxable
income or loss is reportable by the partners on their individual tax returns.  Concentration of
Credit Risk  Financial instruments, which potentially
subject the Partnership to a concentration of credit risk, principally consist
of cash in excess of the financial institutions insurance limits. The
Partnership invests available cash with high credit quality institutions.  Use of Estimates  The preparation of financial statements in
conformity with accounting principles generally accepted in the United States
of America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements, as well as the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.  Payments to Partners
and their Affiliates  Payments are made to the partners and/or
their affiliates in accordance with the terms of the Amended and Restated
Omnibus Termination Agreement for certain subcontracted services rendered and
are accounted for as expenses of the Partnership.   10 
    3. Development
Contract  The Partnership entered into a Development
Agreement with the Authority, which entitles the Partnership to receive a
development fee totaling $14 million. A summary of the quarterly Development
Fee payments received by the Partnership in accordance with the terms of the
Development Agreement is as follows:   Date of
  Payment
  
  AmountJanuary 15, 2000
  
  $
  1,372,000April 20, 2000
  
  896,000July 17, 2000
  
  1,260,000October 13, 2000
  
  1,372,000January 23, 2001
  
  588,000April 16, 2001
  
  1,582,000July 20, 2001
  
  2,212,000October 17, 2001
  
  1,974,000January 25, 2002
  
  1,260,000April 22, 2002
  
  413,000July 19, 2002
  
  581,000October 18, 2002
  
  238,000January 24, 2003
  
  84,000April 15, 2003
  
  112,000October 30, 2003
  
  56,000$
  14,000,000  Information relative to the development
contract in progress is as follows:   2003
  
  2002Development costs incurred
  
  $
  29,727,400
  
  $
  25,065,345Estimated losses
  
  (15,964,000
  )
  (16,000,000
  )13,763,400
  
  9,065,345Less: billings to date
  
  (14,000,000
  )
  (13,832,000
  )Amounts billed in excess of development costs and estimated losses
  
  $
  (236,600
  )
  $
  (4,766,655
  )  The balance sheets include a related loss
provision of $270,380 and $5,639,684 representing an accrual for additional
contract costs exceeding cumulative revenues earned and cumulative costs
incurred at December 31, 2003 and 2002, respectively.  4. Deferred Costs  Certain costs incurred by the Partnership in
connection with obtaining the Management Agreement and the opening of the
Mohegan Sun totaling $5,498,941 were capitalized. Amortization commenced upon
the opening of the Mohegan Sun. Amortization expense for the years ended
December 31, 2003, 2002 and 2001 was $221,518, $221,518 and $221,517,
respectively.   11 
    5. Relinquishment Fee  The Partnership entered into a Relinquishment
Agreement with the Authority, which entitles the Partnership to receive a
relinquishment fee of 5 percent of the Revenues generated by the Mohegan Sun
including revenue generated by the Project Sunburst expansion.  For the years ended December 31, 2003, 2002
and 2001, Relinquishment Fees earned were $65,099,553, $58,508,703 and
$45,715,318, respectively. The amount of Relinquishment Fees reported in these
financial statements are based upon Revenues reported to the Partnership by the
Authority. These amounts were paid by the Authority as follows:  Date
  received by the Partnership
  
  AmountApril 25, 2003
  
  $
  7,433,160July 25, 2003
  
  23,635,310October 27, 2003
  
  8,691,811January 26, 2004
  
  25,339,272Relinquishment Fees earned 2003
  
  $
  65,099,553April 25, 2002
  
  $
  6,228,559July 25, 2002
  
  20,438,439October 25, 2002
  
  8,171,882January 27, 2003
  
  23,669,823Relinquishment Fees earned 2002
  
  $
  58,508,703April 25, 2001
  
  $
  5,090,622July 25, 2001
  
  16,036,421September 7, 2001
  
  136,467October 25, 2001
  
  5,765,232January 25, 2002
  
  18,686,576Relinquishment Fees earned 2001
  
  $
  45,715,318  6. Reconciliation of
Financial Statements and Tax Information   2003
  
  2002
  
  2001Financial statement net income
  
  $
  62,919,777
  
  $
  55,082,815
  
  $
  43,526,978Guaranteed payments to partners
  
  (39,941,567
  )
  (55,765,000
  )
  (36,268,038
  )Subcontract payments to affiliates previously recorded  for financial statement purposes
  
  
  
  
  
  (11,810,876
  )Financial statement depreciation 
  and amortization (greater than) less than tax basis depreciation  and amortization
  
  (3,028
  )
  1,560
  
  4,172Conversion from accrual basis to 
  cash basis method of accounting
  
  
  
  
  
  14,660Percentage of completion accounting difference
  
  (9,236,479
  )
  991,712
  
  (923,794
  )Other
  
  (4,865
  )
  50,093
  
  34,156Federal income tax basis net income (loss)
  
  $
  13,733,838
  
  $
  361,180
  
  $
  (5,422,742
  )  For the year ended December 31, 1998, the
Partnership was required to change its method of accounting for tax purposes
from the cash method to the accrual method, in accordance with Internal Revenue
Code Section 448. The cumulative difference of $58,640 is amortized equally
over four years at $14,660 per year.   12 
    7. Commitments and
Contingencies  Litigation  On January 6, 1998, Leisure and defendants
Waterford Gaming, the Partnership, LMW and Slavik settled a prior lawsuit
brought by Leisure. In connection with this settlement, Leisure, the
Partnership, Waterford Gaming, LMW and Slavik entered into a settlement and
release agreement. Pursuant to this settlement and release agreement, Waterford
Gaming bought out Leisures beneficial interest in the Partnership.  By complaint dated January 7, 2000, as
amended February 4, 2000, Leisure filed a four count complaint naming as
defendants Waterford Gaming, the Partnership, LMW, Slavik, Waterford Group,
LLC, Len Wolman and Mark Wolman (collectively, the Defendants). The matter
has been transferred to the complex litigation docket and is pending in
Waterbury, Connecticut. The complaint alleged breach of fiduciary duties,
fraudulent non-disclosure, violation of Connecticut Statutes Section 42-110a,
et seq. and unjust enrichment in connection with the negotiation by certain of
the Defendants of the settlement and release agreement. The complaint also
brought a claim for an accounting. The complaint seeks unspecified legal and
equitable damages. On February 29, 2000 Defendants filed a Motion to Strike and
a Motion for Summary Judgement, each with respect to all claims. The Court
granted Defendants Motion to Strike in part and denied Defendants Motion for
Summary Judgement, on October 13, 2000. The Courts order dismissed the claim
for an accounting and the claim under Connecticut Statutes Section 42-110a, et
seq. The Court also struck the alter ego allegations in the complaint against
LMW, Slavik, Len Woman, and Mark Wolman. In a decision dated August 6, 2001,
the Court dismissed all claims against LMW, Slavik, Len Wolman and Mark Wolman.  On November 15, 2000, the Partnership and its
co-defendants answered the complaint. In addition, the Partnership and
Waterford Gaming asserted counterclaims for breach of the settlement and
release agreement and breach of the implied covenant of good faith against
Leisure and its president, Lee Tyrol. In a decision dated June 6, 2001, the
Court dismissed the counterclaims against Lee Tyrol. Leisure moved for summary
judgment seeking dismissal of the counterclaims in full, which motion was denied
on April 14, 2003.  Discovery has commenced and is ongoing. Jury
selection is scheduled to commence on October 19, 2004 with presentation of
evidence to begin on October 26, 2004.  The Partnership believes that it has
meritorious defenses and intends to vigorously contest the claims in this
action and to assert all available defenses. At the present time, the
Partnership is unable to express an opinion on the likelihood of an unfavorable
outcome or to give an estimate of the amount or range of possible loss to the
Partnership as a result of this litigation due to the disputed issues of law
and/or facts on which the outcome of this litigation depends.  In addition, the Partnership is a defendant
in certain litigation incurred in the normal course of business. In the opinion
of the Partnerships 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 Partnerships financial condition or results of
operations.  13