##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-QT
 o
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 PERIOD ENDED
 OR
 þ
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE TRANSITION PERIOD FROM May 1, 2009 TO September 30, 2009
 Commission file number 333-113140
 INN OF THE MOUNTAIN GODS RESORT AND CASINO
  Not Applicable
    
    75-3158926(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or organization)
    
    Identification Number)287 Carrizo Canyon RoadMescalero, New Mexico
    
    88340(Address of principal executive offices)
    
    (Zip Code)
 575-464-7777
  þ o
 o o
  Large accelerated filer o
Accelerated filer o
Non-accelerated filer þ(Do not check if a smaller reporting company)
Smaller reporting company o o þ




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##### 



INN OF THE MOUNTAIN GODS RESORT AND CASINO
FORM 10-QT
FOR THE TRANSITION PERIOD FROM MAY 1, 2009 TO SEPTEMBER 30, 2009
INDEX
 PagesPART I. FINANCIAL INFORMATIONItem 1. Consolidated Financial Statements:
    
    
    3Consolidated Balance Sheets as of April 30, 2009 and September 30, 2009 (unaudited)
    
    
    3Consolidated Income Statements for the Five Month Periods Ended September 30, 2008 (unaudited) and
2009 (unaudited)
    
    
    4Consolidated Statements of Cash Flows for the Five Month Periods Ended September 30, 2008 (unaudited)
and 2009 (unaudited)
    
    
    5Notes to Consolidated Financial Statements (unaudited)
    
    
    6Item 2. Managements Discussion and Analysis
of Financial Condition and Results of Operations
    
    
    26Item 3. Quantitative and Qualitative Disclosures
about Market Risk
    
    
    33Item 4T. Controls and Procedures
    
    
    33PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    33Item 1A. Risk Factors
    
    
    33Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    33Item 3. Defaults Upon Senior
Securities.
    
    
    33Item 4. Submission of Matters to a Vote of Security Holders
    
    
    33Item 5. Other Information
    
    
    34Item 6. Exhibits
    
    
    35Signatures
    
    
    36EX-31.1EX-32.1EX-31.1EX-31.2EX-32.1
  2




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 As of April 30,
    
    
    As of September 30,2009
    
    
    2009 (unaudited)Current assetsCash and cash equivalents
    
    $
    7,556,735
    
    
    $
    5,629,436Accounts receivable, net of allowance for doubtful accounts
    
    
    380,936
    
    
    
    617,433Inventories, net
    
    
    789,564
    
    
    
    862,251Prepaid expenses and other assets
    
    
    559,368
    
    
    
    1,321,812Total current assets
    
    
    9,286,603
    
    
    
    8,430,932Non-current assetsProperty, plant and equipment
    
    
    307,605,269
    
    
    
    308,443,306Accumulated depreciation
    
    
    (114,666,272
    )
    
    
    (119,376,921
    )Property, plant and equipment, net
    
    
    192,938,997
    
    
    
    189,066,385Other assets
    
    
    51,000
    
    
    
    51,000Deferred financing cost
    
    
    2,820,165
    
    
    
    2,078,017Total assets
    
    $
    205,096,765
    
    
    $
    199,626,334Liabilites and deficitCurrent liabilitiesAccounts payable
    
    $
    2,122,703
    
    
    $
    1,422,304Accrued expenses
    
    
    3,744,079
    
    
    
    5,469,293Accrued payroll and benefits
    
    
    1,378,300
    
    
    
    1,941,522Accrued interest
    
    
    11,200,000
    
    
    
    22,386,667Advance deposits
    
    
    347,995
    
    
    
    413,046Current portion of long-term debt
    
    
    203,931,091
    
    
    
    202,924,922Total current liabilities
    
    
    222,724,168
    
    
    
    234,557,754Non-current liabilitiesLong-term debt, net of current portion
    
    
    990,786
    
    
    
    395,634Total liabilities
    
    
    223,714,954
    
    
    
    234,953,388DeficitContributed capital
    
    
    13,644,939
    
    
    
    (5,389,062
    )Accumulated deficit
    
    
    (32,263,128
    )
    
    
    (29,937,992
    )Total deficit
    
    
    (18,618,189
    )
    
    
    (35,327,054
    )Total liabilities and deficit
    
    $
    205,096,765
    
    
    $
    199,626,334
  3




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(unaudited)
 Five months ended
    
    
    Five months endedSeptember 30, 2008
    
    
    September 30, 2009Revenues:Gaming
    
    $
    34,986,709
    
    
    $
    35,069,897Hotel
    
    
    6,679,258
    
    
    
    5,992,150Food and beverage
    
    
    6,573,494
    
    
    
    6,050,638Recreation and other
    
    
    8,163,464
    
    
    
    5,651,371Gross revenue
    
    
    56,402,925
    
    
    
    52,764,056Less-promotional allowances
    
    
    418,598
    
    
    
    339,630Net revenue
    
    
    55,984,327
    
    
    
    52,424,426Operating expensesGaming
    
    
    12,101,024
    
    
    
    10,832,233Hotel expenses
    
    
    2,305,626
    
    
    
    1,556,422Food and beverage
    
    
    6,496,677
    
    
    
    5,308,467Recreation and other
    
    
    5,935,466
    
    
    
    4,224,312Marketing
    
    
    3,240,187
    
    
    
    3,894,648General and administrative
    
    
    7,810,109
    
    
    
    7,210,574Depreciation and amoritzation
    
    
    5,124,738
    
    
    
    5,072,973Insurance reimbursement (Note 11)
    
    
    (1,100,000
    )
    
    
    Storm costs (Note 11)
    
    
    116,512
    
    
    
    14,605Loss (gain) on disposal of assets
    
    
    46,118
    
    
    
    Total operating expenses
    
    
    42,076,457
    
    
    
    38,114,234Operating income
    
    
    13,907,870
    
    
    
    14,310,192Other expenseInterest income
    
    
    27,396
    
    
    
    8,394Interest expense
    
    
    (10,910,950
    )
    
    
    (12,070,420
    )Other income
    
    
    16,912
    
    
    
    76,970Total other expense
    
    
    (10,866,642
    )
    
    
    (11,985,056
    )Net income
    
    $
    3,041,228
    
    
    $
    2,325,136
  4




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
 Five months ended
    
    
    Five months endedSeptember 30, 2008
    
    
    September 30, 2009Cash flows from operating activities:Net income
    
    $
    3,041,228
    
    
    $
    2,325,136Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization
    
    
    5,370,576
    
    
    
    5,451,085Gain on disposal of assets
    
    
    (46,118
    )
    
    
    Changes in assets and liabilities:Accounts receivable
    
    
    (163,698
    )
    
    
    (236,497
    )Tribal accounts receivable
    
    
    (166,750
    )
    
    
    Inventories
    
    
    54,988
    
    
    
    (72,687
    )Prepaid expenses
    
    
    (116,391
    )
    
    
    (762,444
    )Storm recovery receivable
    
    
    (1,100,000
    )
    
    
    Other long-term assets
    
    
    4,160
    
    
    
    Accounts payable
    
    
    685,642
    
    
    
    (700,399
    )Accrued expenses, payroll and benefits
    
    
    1,848,027
    
    
    
    2,288,436Accrued interest payable
    
    
    (2,000,000
    )
    
    
    11,186,667Deposits and advanced payments
    
    
    (89,354
    )
    
    
    65,051Net cash provided by operating activities
    
    
    7,322,310
    
    
    
    19,544,348Cash flows from investing activities:Purchase of property, plant and equipment
    
    
    (998,876
    )
    
    
    (836,323
    )Net cash used in investing activities
    
    
    (998,876
    )
    
    
    (836,323
    )Cash flows from financing activities:Principal payments on long-term debt
    
    
    (1,095,057
    )
    
    
    (1,601,323
    )Distributions to Mescalero Apache Tribe
    
    
    (3,291,221
    )
    
    
    (19,034,001
    )Net cash used in financing activities
    
    
    (4,386,278
    )
    
    
    (20,635,324
    )Net increase (decrease) in cash and cash equivalents
    
    
    1,937,156
    
    
    
    (1,927,299
    )Cash and cash equivalents, beginning of period
    
    
    14,975,093
    
    
    
    7,556,735Cash and cash equivalents, end of period
    
    $
    16,912,249
    
    
    $
    5,629,436Supplemental cash flow information:Cash paid for interest
    
    $
    12,244,127
    
    
    $
    141,605Non-cash investing and financing activities:Property, plant and equipment acquired through
capital lease
    
    $
    354,624
    
    
    $
    Property, plant and equipment acquired through
reduction in storm recovery receivable
    
    $
    1,100,000
    
    
    $
    25,000
  5




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INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 NOTE 1BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Change in Fiscal Year
 the Board
  Reporting Entity and Operations
 IMG Resort and Casino Company Tribe Resort Casino Apache
Enterprise Travel Center Travel Center Casino Ski Apache Inn Inn Hotel
 Inn of the Mountain Gods Casino IGRA
 Principles of Consolidation
  Going Concern
 Notes
 6




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
    Reclassifications
  Use of Estimates
  Cash and Cash Equivalents
  7




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 Accounts Receivable
  Inventories
  Property, Plant and Equipment
   Non gaming equipment, furniture and other
    
    3 - 15 yearsGaming equipment
    
    5 - 7 yearsLeasehold and land improvements, lake and golf course
    
    5 - 30 yearsBuildings, lifts and snowmaking equipment
    
    10 - 39 years
 Deferred Financing and Refinancing Costs
  Impairment of Long Lived Assets
 prior authoritative literature: SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets
 8




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INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
   Fair Value of Financial Instruments
   Contributed Capital
  Revenues
   Promotional Allowances
  9




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INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
  EITF Revenue Recognition, Customer payments and
Incentives (prior authoritative literature: , Accounting for Certain
Sales Incentives (FASB ASC 605-50 (FAS Issue No. 00-14 Accounting for Points and Certain Other Time-Based or Volume-Based Sales
Incentive Offers, and Offers for Reproduces, or Services to be delivered in the futur
  The five months ended September 30,2008
    
    
    2009Rooms
    
    $
    20,385
    
    
    $
    18,027Food and beverage
    
    
    282,409
    
    
    
    285,060$
    302,794
    
    
    $
    303,087
 Marketing
  Tribal Taxes
  10




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 Classification of Departmental Costs
  Income Taxes
  New Accounting Pronouncements
 Fair Value Measurements and Disclosures (prior authoritative
literature: Fair Value Measurement, (FASB ASC 820-10 (SFAS
157)).
 Financial Instruments (prior authoritative literature: The Fair Value Option for Financial Assets and Financial Liabilities, ) FASB ASC 825-10 (SFAS No. 159)
 11




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INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
  Intangible- Goodwill and Other, Prior
authoritative literature: Determination of the Useful Life of Intangible Assets,
  Generally Accepted Accounting Principles (prior authoritative
literature: Subsequent Events, FASB ASC 105-10 (SFAS No.
165)
 The FASB Accounting Standards Codification and the Hierarchy of
Generally Accepted Accounting Principles (prior authoritative literature: The
FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting
Principles, FASB ASC 106-10-65 (SFAS No. 168)
 12




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INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 NOTE 2ALLOWANCE FOR DOUBTFUL ACCOUNTS
   NOTE 3INVENTORIES
  April 30, 2009
    
    
    September 30, 2009Food and beverage
    
    $
    240,183
    
    
    $
    237,361Golf and pro shop
    
    
    60,962
    
    
    
    65,853Gift shops, fuel and other
    
    
    488,419
    
    
    
    559,037Inventories, net of reserves
    
    $
    789,564
    
    
    $
    862,251
 NOTE 4PROPERTY, PLANT AND EQUIPMENT, NET
  April 30, 2009
    
    
    September 30, 2009Land
    
    $
    1,000,473
    
    
    $
    1,000,473Buildings
    
    
    212,103,949
    
    
    
    210,005,387Lifts and Snowmaking equipment
    
    
    6,394,805
    
    
    
    8,493,368Non-gaming equipment, furniture and other
    
    
    52,513,112
    
    
    
    52,480,709Gaming equipment
    
    
    21,807,497
    
    
    
    22,470,190Leasehold and land improvements, lake and golf course
    
    
    11,075,633
    
    
    
    11,075,633Subtotal
    
    
    304,895,469
    
    
    
    305,525,760Less accumulated depreciation and amortization
    
    
    (114,666,272
    )
    
    
    (119,375,209
    )Property, plant and equipment, net
    
    
    190,229,197
    
    
    
    186,150,551Construction in progress
    
    
    2,709,800
    
    
    
    2,915,833Net Property, plant and equipment
    
    $
    192,938,997
    
    
    $
    189,066,384
 NOTE 5LONG-TERM DEBT
  13




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INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
       April 30, 2009
    
    
    September 30, 2009Senior Notes, bearing interest at a fixed
rates of 12%, maturing in 2010
    
    $
    200,000,000
    
    
    $
    200,000,000Bureau of Indian Affairs, unsecured notes payable
with payments of $27,100 per month, including interest at 8.5%, maturing in 2011
    
    
    673,505
    
    
    
    560,554Capital Equipment Loans with Key Equipment, Five
(5) year term, 7.65% interest
    
    
    4,248,372
    
    
    
    2,519,922Xerox (3) year term,
    
    
    
    
    
    
    240,080Total
    
    
    204,921,877
    
    
    
    203,320,556Less current portion
    
    
    (203,931,091
    )
    
    
    (202,924,922
    )Long-term portion
    
    $
    990,786
    
    
    $
    395,634
 14




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INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
  2010
    
    $
    202,924,9222011
    
    
    395,6342012
    
    
    $
    203,320,556
 NOTE 6GAMING REVENUE SHARING AND REGULATORY FEES
 Commission
 State Compact
  NOTE 7  EMPLOYEE BENEFITS
   NOTE 8  RISK MANAGEMENT
  15




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INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
    NOTE 9  COMMITMENTS AND CONTINGENCIES
 Legal Matters
  Occupancy Fee
  Employment Agreements
  Consulting Agreement
   16




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INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 NOTE 10RELATED-PARTY TRANSACTIONS
   Shared Services and Cost Allocations
  Employee Benefits Cost Allocations
   NOTE 11STORM RECOVERY
    17




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INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
   NOTE 12  OPERATING SEGMENTS
    18




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SELECTED OPERATING SEGMENT FINANCIAL INFORMATION
(unaudited, in thousands)
 Gaming
    
    GamingIMG
    
    Travel Ctr
    
    Ski
    
    Non Gaming
    
    Non Segment
    
    ConsolidatedFive months endedSeptember 30, 2008Net Revenue
    
    $
    20,956
    
    
    $
    13,882
    
    
    $
    2
    
    
    $
    21,209
    
    
    $
    (65
    )
    
    $
    55,984Operating Income (Loss)
    
    
    16,099
    
    
    
    11,072
    
    
    
    (2
    )
    
    
    6,371
    
    
    
    (19,632
    )
    
    
    13,908Depreciation Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,125
    
    
    
    5,125Interest Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,911
    )
    
    
    (10,911
    )Interest Income and Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    87
    
    
    
    87Five months endedSeptember 30, 2009Net Revenue
    
    $
    22,002
    
    
    $
    12,983
    
    
    $
    4
    
    
    $
    17,913
    
    
    $
    (478
    )
    
    $
    52,424Operating Income (Loss)
    
    
    17,980
    
    
    
    10,671
    
    
    
    5
    
    
    
    6,556
    
    
    
    (20,902
    )
    
    
    14,310Depreciation Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,073
    
    
    
    5,073Interest Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,070
    )
    
    
    (12,070
    )Interest Income and Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    68
    
    
    
    68
 NOTE 13CONSOLIDATING INFORMATION
 wholly-owned
Guarantors
    19




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INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
As of September 30, 2009
(unaudited)
 Wholly-ownedIMGRC
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash and cash equivalents
    
    $
    1,972,250
    
    
    $
    3,657,186
    
    
    $
    
    
    
    $
    5,629,436Restricted cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accounts receivable
    
    
    (12,305
    )
    
    
    629,738
    
    
    
    
    
    
    
    617,433Tribal accounts receivale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Inventories
    
    
    223,821
    
    
    
    638,430
    
    
    
    
    
    
    
    862,251Prepaid expenses
    
    
    1,321,812
    
    
    
    
    
    
    
    
    
    
    
    1,321,812Total current assets
    
    
    3,505,578
    
    
    
    4,925,354
    
    
    
    
    
    
    
    8,430,932Fixed assets
    
    
    
    
    
    
    308,443,306
    
    
    
    
    
    
    
    308,443,306Depreciation
    
    
    
    
    
    
    (119,376,921
    )
    
    
    
    
    
    
    (119,376,921
    )Net fixed assets
    
    
    
    
    
    
    189,066,385
    
    
    
    
    
    
    
    189,066,385Non current assetsOther assets
    
    
    51,000
    
    
    
    
    
    
    
    
    
    
    
    51,000Deferred financing costs
    
    
    2,078,017
    
    
    
    
    
    
    
    
    
    
    
    2,078,017Advances to subsidiaries
    
    
    26,423,434
    
    
    
    14,345,107
    
    
    
    (40,768,541
    )
    
    
    Investment in subsidiaries
    
    
    179,056,903
    
    
    
    
    
    
    
    (179,056,903
    )
    
    
    Total Assets
    
    $
    211,114,932
    
    
    $
    208,336,846
    
    
    $
    (219,825,444
    )
    
    $
    199,626,334Accounts payable
    
    $
    1,422,304
    
    
    $
    
    
    
    $
    
    
    
    $
    1,422,304Accrued expenses
    
    
    3,586,384
    
    
    
    1,882,909
    
    
    
    
    
    
    
    5,469,293Accrued payroll and benefits
    
    
    1,941,522
    
    
    
    
    
    
    
    
    
    
    
    1,941,522Accrued interest
    
    
    22,386,667
    
    
    
    
    
    
    
    
    
    
    
    22,386,667Advance deposits
    
    
    
    
    
    
    413,046
    
    
    
    
    
    
    
    413,046Current portion of long-term debt
    
    
    202,630,139
    
    
    
    294,783
    
    
    
    
    
    
    
    202,924,922Total current liabilities
    
    
    231,967,016
    
    
    
    2,590,738
    
    
    
    
    
    
    
    234,557,754Non current liabilities:Advances from subsidiaries
    
    
    14,345,107
    
    
    
    26,423,434
    
    
    
    (40,768,541
    )
    
    
    Long-term debt, net of current portion
    
    
    129,863
    
    
    
    265,771
    
    
    
    
    
    
    
    395,634Total liabilities
    
    
    246,441,986
    
    
    
    29,279,943
    
    
    
    (40,768,541
    )
    
    
    234,953,388Contributed capital
    
    
    (5,389,062
    )
    
    
    (6,012,897
    )
    
    
    6,012,897
    
    
    
    (5,389,062
    )Retained earnings (deficit)
    
    
    (29,937,992
    )
    
    
    185,069,800
    
    
    
    (185,069,800
    )
    
    
    (29,937,992
    )Total equity (deficit)
    
    
    (35,327,054
    )
    
    
    179,056,903
    
    
    
    (179,056,903
    )
    
    
    (35,327,054
    )Total liabilities and equity (deficit)
    
    $
    211,114,932
    
    
    $
    208,336,846
    
    
    $
    (219,825,444
    )
    
    $
    199,626,334
 20




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS
For the Five Months Ended September 30, 2009
(Unaudited)
 GuarantorIMGRC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedRevenues:Gaming
    
    $
    
    
    
    $
    35,069,897
    
    
    $
    
    
    
    $
    35,069,897Hotel
    
    
    
    
    
    
    5,992,150
    
    
    
    
    
    
    
    5,992,150Food and beverage
    
    
    
    
    
    
    6,050,638
    
    
    
    
    
    
    
    6,050,638Recreation and other
    
    
    
    
    
    
    5,651,371
    
    
    
    
    
    
    
    5,651,371Gross revenue
    
    
    
    
    
    
    52,764,056
    
    
    
    
    
    
    
    52,764,056Less -promotional allowances
    
    
    34,915
    
    
    
    304,715
    
    
    
    
    
    
    
    339,630Net revenue
    
    
    (34,915
    )
    
    
    52,459,341
    
    
    
    
    
    
    
    52,424,426Operating expensesGaming
    
    
    
    
    
    
    10,832,233
    
    
    
    
    
    
    
    10,832,233Hotel
    
    
    
    
    
    
    1,556,422
    
    
    
    
    
    
    
    1,556,422Food and beverage
    
    
    
    
    
    
    5,308,467
    
    
    
    
    
    
    
    5,308,467Recreation and other
    
    
    
    
    
    
    4,224,312
    
    
    
    
    
    
    
    4,224,312Marketing
    
    
    
    
    
    
    3,894,648
    
    
    
    
    
    
    
    3,894,648General and administrative
    
    
    
    
    
    
    7,210,574
    
    
    
    
    
    
    
    7,210,574Depreciation and amortization
    
    
    
    
    
    
    5,072,973
    
    
    
    
    
    
    
    5,072,973Storm costs (Note 11)
    
    
    
    
    
    
    14,605
    
    
    
    
    
    
    
    14,605Total operating expenses
    
    
    
    
    
    
    38,114,234
    
    
    
    
    
    
    
    38,114,234Operating (loss) income
    
    
    (34,915
    )
    
    
    14,345,107
    
    
    
    
    
    
    
    14,310,192Other income (expense)Interest income
    
    
    8,394
    
    
    
    
    
    
    
    
    
    
    
    8,394Interest expense
    
    
    (12,070,420
    )
    
    
    
    
    
    
    
    
    
    
    (12,070,420
    )Income from subsidiaries
    
    
    14,345,107
    
    
    
    
    
    
    
    (14,345,107
    )
    
    
    Other income
    
    
    76,970
    
    
    
    
    
    
    
    
    
    
    
    76,970Total other income (expense)
    
    
    2,360,051
    
    
    
    
    
    
    
    (14,345,107
    )
    
    
    (11,985,056
    )Net income
    
    $
    2,325,136
    
    
    $
    14,345,107
    
    
    $
    (14,345,107
    )
    
    $
    2,325,136
 21




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
For the Five Months ended September 30, 2009
(unaudited)
 GuarantorIMGRC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net income
    
    $
    2,325,136
    
    
    $
    14,345,107
    
    
    $
    (14,345,107
    )
    
    $
    2,325,136Adjustments to reconcile net income to net
cash (used in) provided by operating activities:Depreciation and amortization
    
    
    742,148
    
    
    
    4,708,937
    
    
    
    
    
    
    
    5,451,085Changes in assets and liabilities:Accounts receivable
    
    
    125,500
    
    
    
    (361,997
    )
    
    
    
    
    
    
    (236,497
    )Inventories
    
    
    (39,055
    )
    
    
    (33,632
    )
    
    
    
    
    
    
    (72,687
    )Prepaid expenses
    
    
    (762,444
    )
    
    
    
    
    
    
    
    
    
    
    (762,444
    )Accounts payable
    
    
    (700,399
    )
    
    
    
    
    
    
    
    
    
    
    (700,399
    )Accrued expenses, payroll and benefits
    
    
    1,320,715
    
    
    
    967,721
    
    
    
    
    
    
    
    2,288,436Accrued interest
    
    
    11,186,667
    
    
    
    
    
    
    
    
    
    
    
    11,186,667Deposits and advance payments
    
    
    
    
    
    
    65,051
    
    
    
    
    
    
    
    65,051Net cash provided by (used in) operating
activities
    
    
    14,198,268
    
    
    
    19,691,187
    
    
    
    (14,345,107
    )
    
    
    19,544,348Cash flows from investing activities:Purchase of property, plant and equipment
    
    
    
    
    
    
    (836,323
    )
    
    
    
    
    
    
    (836,323
    )Investment in subsidiaries
    
    
    (14,345,107
    )
    
    
    
    
    
    
    14,345,107
    
    
    
    Net cash provided by (used by) investing
activities
    
    
    (14,345,107
    )
    
    
    (836,323
    )
    
    
    14,345,107
    
    
    
    (836,323
    )Cash flows from financing activities:Advances to (from) affiliates
    
    
    18,121,247
    
    
    
    (18,121,247
    )
    
    
    
    
    
    
    Principal payments on debt
    
    
    (1,488,370
    )
    
    
    (112,953
    )
    
    
    
    
    
    
    (1,601,323
    )Distributions to Mescalero Apache Tribe
    
    
    (19,034,001
    )
    
    
    
    
    
    
    
    
    
    
    (19,034,001
    )Net cash provided by (used in) financing activities
    
    
    (2,401,124
    )
    
    
    (18,234,200
    )
    
    
    
    
    
    
    (20,635,324
    )Net increase in cash and cash equivalents
    
    
    (2,547,963
    )
    
    
    620,664
    
    
    
    
    
    
    
    (1,927,299
    )Cash and cash equivalents, beginning of period
    
    
    4,520,213
    
    
    
    3,036,522
    
    
    
    
    
    
    
    7,556,735Cash and cash equivalents, end of period
    
    $
    1,972,250
    
    
    $
    3,657,186
    
    
    $
    
    
    
    $
    5,629,436
 22




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEETS
As of April 30, 2009
 GuarantorIMGRC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash and cash equivalents
    
    $
    4,520,213
    
    
    $
    3,036,522
    
    
    $
    
    
    
    $
    7,556,735Accounts receivable
    
    
    113,195
    
    
    
    267,741
    
    
    
    
    
    
    
    380,936Inventories
    
    
    184,766
    
    
    
    604,798
    
    
    
    
    
    
    
    789,564Prepaid expenses
    
    
    559,368
    
    
    
    
    
    
    
    
    
    
    
    559,368Total current assets
    
    
    5,377,542
    
    
    
    3,909,061
    
    
    
    
    
    
    
    9,286,603Fixed assets
    
    
    
    
    
    
    307,605,269
    
    
    
    
    
    
    
    307,605,269Accumulated depreciation
    
    
    
    
    
    
    (114,666,272
    )
    
    
    
    
    
    
    (114,666,272
    )Net fixed assets
    
    
    
    
    
    
    192,938,997
    
    
    
    
    
    
    
    192,938,997Other assests
    
    
    51,000
    
    
    
    
    
    
    
    
    
    
    
    51,000Deferred financing costs
    
    
    2,820,165
    
    
    
    
    
    
    
    
    
    
    
    2,820,165Advances to subsidiaries
    
    
    50,198,590
    
    
    
    19,999,016
    
    
    
    (70,197,606
    )
    
    
    Investment in subsidiaries
    
    
    164,711,796
    
    
    
    
    
    
    
    (164,711,796
    )
    
    
    Total Assets
    
    $
    223,159,093
    
    
    $
    216,847,074
    
    
    $
    (234,909,402
    )
    
    $
    205,096,765Accounts payable
    
    $
    2,122,703
    
    
    $
    
    
    
    $
    
    
    
    $
    2,122,703Accrued expenses
    
    
    2,828,891
    
    
    
    915,188
    
    
    
    
    
    
    
    3,744,079Accrued payroll and benefits
    
    
    1,378,300
    
    
    
    
    
    
    
    
    
    
    
    1,378,300Accrued interest
    
    
    11,200,000
    
    
    
    
    
    
    
    
    
    
    
    11,200,000Advance deposits
    
    
    
    
    
    
    347,995
    
    
    
    
    
    
    
    347,995Current portion of long-term debt
    
    
    203,655,133
    
    
    
    275,958
    
    
    
    
    
    
    
    203,931,091Total current liabilities
    
    
    221,185,027
    
    
    
    1,539,141
    
    
    
    
    
    
    
    222,724,168Non-current liabilitiesAdvances from subsidiaries
    
    
    19,999,016
    
    
    
    50,198,590
    
    
    
    (70,197,606
    )
    
    
    Long-term debt, net of current
portion
    
    
    593,239
    
    
    
    397,547
    
    
    
    
    
    
    
    990,786Total liabilities
    
    
    241,777,282
    
    
    
    52,135,278
    
    
    
    (70,197,606
    )
    
    
    223,714,954Contributed Capital
    
    
    13,644,939
    
    
    
    (6,012,897
    )
    
    
    6,012,897
    
    
    
    13,644,939Retained Earnings (accumulated
deficit)
    
    
    (32,263,128
    )
    
    
    170,724,693
    
    
    
    (170,724,693
    )
    
    
    (32,263,128
    )Total (deficit) equity
    
    
    (18,618,189
    )
    
    
    164,711,796
    
    
    
    (164,711,796
    )
    
    
    (18,618,189
    )Total liabilities and equity
(deficit)
    
    $
    223,159,093
    
    
    $
    216,847,074
    
    
    $
    (234,909,402
    )
    
    $
    205,096,765
 23




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS
For the Five Months Ended September 30, 2008
 GuarantorIMGRC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedRevenues:Gaming
    
    $
    
    
    
    $
    34,986,709
    
    
    $
    
    
    
    $
    34,986,709Hotel
    
    
    
    
    
    
    6,679,258
    
    
    
    
    
    
    
    6,679,258Food and beverage
    
    
    
    
    
    
    6,573,494
    
    
    
    
    
    
    
    6,573,494Recreation and other
    
    
    
    
    
    
    8,163,464
    
    
    
    
    
    
    
    8,163,464Gross revenue
    
    
    
    
    
    
    56,402,925
    
    
    
    
    
    
    
    56,402,925Less -promotional allowances
    
    
    48,663
    
    
    
    369,935
    
    
    
    
    
    
    
    418,598Net revenue
    
    
    (48,663
    )
    
    
    56,032,990
    
    
    
    
    
    
    
    55,984,327Operating ExpensesGaming
    
    
    
    
    
    
    12,101,024
    
    
    
    
    
    
    
    12,101,024Hotel expenses
    
    
    
    
    
    
    2,305,626
    
    
    
    
    
    
    
    2,305,626Food and beverage
    
    
    
    
    
    
    6,496,677
    
    
    
    
    
    
    
    6,496,677Recreation and other
    
    
    
    
    
    
    5,935,466
    
    
    
    
    
    
    
    5,935,466Marketing
    
    
    
    
    
    
    3,240,187
    
    
    
    
    
    
    
    3,240,187General and administrative
    
    
    
    
    
    
    7,810,109
    
    
    
    
    
    
    
    7,810,109Depreciation and amortization
    
    
    
    
    
    
    5,124,738
    
    
    
    
    
    
    
    5,124,738Insurance reimbursement on storm loss
    
    
    (1,100,000
    )
    
    
    
    
    
    
    
    
    
    
    (1,100,000
    )Storm costs
    
    
    116,512
    
    
    
    
    
    
    
    
    
    
    
    116,512Loss on disposal of assets
    
    
    
    
    
    
    46,118
    
    
    
    
    
    
    
    46,118Total operating expenses
    
    
    (983,488
    )
    
    
    43,059,945
    
    
    
    
    
    
    
    42,076,457Operating income (loss)
    
    
    934,825
    
    
    
    12,973,045
    
    
    
    
    
    
    
    13,907,870Other income (expense)Interest income
    
    
    27,396
    
    
    
    
    
    
    
    
    
    
    
    27,396Interest expense
    
    
    (10,910,950
    )
    
    
    
    
    
    
    
    
    
    
    (10,910,950
    )Income from subsidiaries
    
    
    12,973,045
    
    
    
    
    
    
    
    (12,973,045
    )
    
    
    Other income
    
    
    16,912
    
    
    
    
    
    
    
    
    
    
    
    16,912Total other income (expense)
    
    
    2,106,403
    
    
    
    
    
    
    
    (12,973,045
    )
    
    
    (10,866,642
    )Net income
    
    $
    3,041,228
    
    
    $
    12,973,045
    
    
    $
    (12,973,045
    )
    
    $
    3,041,228
 24




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
For the Five Months ended September 30, 2008
(unaudited)
 GuarantorIMGRC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net income
    
    $
    3,041,228
    
    
    $
    12,973,045
    
    
    $
    (12,973,045
    )
    
    $
    3,041,228Adjustments to reconcile net income to net
cash provided by operating activities:Depreciation and amortization
    
    
    677,185
    
    
    
    4,693,391
    
    
    
    
    
    
    
    5,370,576Loss on disposal of fixed assets
    
    
    
    
    
    
    (46,118
    )
    
    
    
    
    
    
    (46,118
    )Changes in assets and liabilities:Accounts receivable
    
    
    (12,685
    )
    
    
    (151,013
    )
    
    
    
    
    
    
    (163,698
    )Tribal accounts receivable
    
    
    (166,750
    )
    
    
    
    
    
    
    
    
    
    
    (166,750
    )Inventories
    
    
    (1,371
    )
    
    
    56,359
    
    
    
    
    
    
    
    54,988Prepaid expenses
    
    
    (289,741
    )
    
    
    173,350
    
    
    
    
    
    
    
    (116,391
    )Storm recovery receivable
    
    
    (1,100,000
    )
    
    
    
    
    
    
    
    
    
    
    (1,100,000
    )Other long term assets
    
    
    43,110
    
    
    
    (38,950
    )
    
    
    
    
    
    
    4,160Accounts payable
    
    
    685,642
    
    
    
    
    
    
    
    
    
    
    
    685,642Accrued expenses, payroll and benefits
    
    
    512,557
    
    
    
    1,335,470
    
    
    
    
    
    
    
    1,848,027Accrued interest payable
    
    
    (2,000,000
    )
    
    
    
    
    
    
    
    
    
    
    (2,000,000
    )Deposits and advance payments
    
    
    
    
    
    
    (89,354
    )
    
    
    
    
    
    
    (89,354
    )Net cash provided by operating activities
    
    
    1,389,175
    
    
    
    18,906,180
    
    
    
    (12,973,045
    )
    
    
    7,322,310Cash flows from investing activities:Purchase of property, plant and equipment
    
    
    
    
    
    
    (998,876
    )
    
    
    
    
    
    
    (998,876
    )Investment in subsidiaries
    
    
    (12,956,937
    )
    
    
    
    
    
    
    12,956,937
    
    
    
    Net cash used by investing activities
    
    
    (12,956,937
    )
    
    
    (998,876
    )
    
    
    12,956,937
    
    
    
    (998,876
    )Cash flows from financing activities:Advances to (from) affiliates
    
    
    17,547,878
    
    
    
    (17,547,878
    )
    
    
    
    
    
    
    Principal payments on debt
    
    
    (989,483
    )
    
    
    (105,574
    )
    
    
    
    
    
    
    (1,095,057
    )Distributions to Mescalero Apache Tribe
    
    
    (3,291,221
    )
    
    
    
    
    
    
    
    
    
    
    (3,291,221
    )Net cash provided by (used in) financing activities
    
    
    13,267,174
    
    
    
    (17,653,452
    )
    
    
    
    
    
    
    (4,386,278
    )Net increase (decrease) in cash and cash
equivalents
    
    
    1,699,412
    
    
    
    253,852
    
    
    
    (16,108
    )
    
    
    1,937,156Cash and cash equivalents, beginning of period
    
    
    11,083,394
    
    
    
    3,891,699
    
    
    
    
    
    
    
    14,975,093Cash and cash equivalents, end of period
    
    $
    12,782,806
    
    
    $
    4,145,551
    
    
    $
    
    
    
    $
    16,912,249
 25




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##### Table of Contents



FORWARDLOOKING STATEMENTS
 This Form 10-QT includes forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Statements regarding our expected financial condition,
results of operations, business, strategies and financing plans under the heading Managements
Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this
Form 10-QT are forward-looking statements. In addition, in those and other portions of this Form
10-QT, the words anticipate, expect, plan, intend, will, designed, estimate, adjust
and similar expressions, as they relate to us or our management, indicate forward-looking
statements. These forward-looking statements may prove to be incorrect. Important factors that
could cause actual results to differ materially from these forward-looking statements disclosed in
this Form 10-QT include, without limitation, risks relating to the following: (a) our levels of
leverage and ability to meet our debt service obligations; (b) our financial performance; (c)
restrictive covenants in our debt instruments; (d) realizing the benefits of our business plan and
business strategies; (e) changes in gaming laws or regulations, including potential legalization of
gaming in certain jurisdictions; (f) the impact of competition in our markets; (g) our ability to
attract increasing numbers of customers; and (h) general local, domestic and global economic
conditions
 You are urged to consider these factors carefully in evaluating the forward-looking statements
contained in this Form 10-QT . All subsequent written and oral forward-looking statements
attributable to us or persons acting on our behalf are expressly qualified in their entirety by our
cautionary statements. The forward-looking statements included in this Form 10-QT are made only as
of the date of this Form 10-QT . We do not intend, and undertake no obligation, to update these
forward-looking statements.
 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 Reference in this Transition Report on Form 10-QT (this Form 10-QT or this Report) to (a)
the Tribe refers to the Mescalero Apache Tribe, a federally recognized Indian tribe, (b) IMG
Resort and Casino or the Company refers to Inn of the Mountain Gods Resort and Casino, a
business enterprise of the Tribe, (c) Resort refers to the Inn of the Mountain Gods Resort and
Casino, (d) Casino Apache refers to Casino Apache, a business enterprise of the Tribe, (e) the
Inn refers to Inn of the Mountain Gods, a business enterprise of the Tribe, (f) the Travel Center refers to Casino Apache Travel Center, a business enterprise of the Tribe
and (g) Ski Apache refers to Ski Apache, a business enterprise of the Tribe. Each of Casino
Apache, the Inn, the Travel Center and Ski Apache is a wholly-owned subsidiary of IMG Resort and
Casino. Reference in this Form 10-QT to we, our, and us refer to IMG Resort and Casino.
    26




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##### Table of Contents



Overview
  Gaming Travel Center Casino
 Food and Beverage
 Hotel
 27




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##### Table of Contents



Recreation and Other
 Critical Accounting Policies
  Revenue Recognition
 Promotional Allowances
  EITF Revenue Recognition, Customer payments
and Incentives (prior authoritative literature: Emerging Issues Task
Force Issue No. 00-14: Accounting for Certain Sales Incentives )( (FAS , Accounting for Points and
Certain Other Time-Based or Volume-Based Sales Incentive Offers, and Offers for Reproduces, or
Services to be delivered in the futur
 28




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##### Table of Contents



Classification of Departmental Costs
 Deferred Financing and Refinancing Costs
 Impairment of Long Lived Assets.
  Results of Operations
 Five months Ended September 30, 2009 Compared to Five months Ended September 30, 2008.
 Net Revenues
 Gaming
 Hotel
 29




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##### Table of Contents



Food and Beverage
 Recreation and Other
 Promotional Allowances
 Total
Operating Expenses
 Gaming
 Hotel
 Food and Beverage
 Recreation and Other
 Marketing
 General and Administrative.
 Depreciation
 Storm Costs
 30




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##### Table of Contents



Income
from Operations
 Other Income (Expenses)
 Liquidity and Capital Resources
     Senior Notes
  Description of Indebtedness
 The Senior Notes
    31




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##### Table of Contents



General Indebtedness
  Credit Facility
   Credit Rating
   Off-Balance Sheet Arrangements
  Regulation and Taxes
  32




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk.
   
 Item 4T. Controls and Procedures.
 Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  
 PART II OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Item 3. Defaults Upon Senior Securities.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  33




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##### Table of Contents



Item 5. Other Information.
 Council
 Chair
    
    President Carleton Naiche-PalmerVice Chair
    
    Vice President Jackie BlaylockSecretary
    
    Greg MendezTreasurer
    
    Hazel Botella-SpottedbirdMember
    
    Frederick Chino, Sr.Member
    
    Pamela CordovaMember
    
    Sandra PlateroMember
    
    Oliver EnjadyMember
    
    Silas Cochise, Sr.Member
    
    Randy BellMember
    
    Manuel Lujan, Jr.Member
    
    Miles LedgerwoodMember
    
    Liz Foster-Anderson, COOMember
    
    Ben Martinez, CFO
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##### Table of Contents



Item 6. Exhibits.
 Exhibit No.
    
    Description31.1
    
    Certification of Principal Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Principal Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Principal Executive Officer and Principal
Financial Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
 35




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##### Table of Contents



SIGNATURES
  INN OF THE MOUNTAIN GODS RESORT AND CASINODate: November 14, 2009
    By
    /s/ Liz Foster AndersonName:
    Liz Foster AndersonIts:
    Chief Operating
Officer (Principal
Executive Officer)Date: November 14, 2009
    By
    /s/ Ben MartinezName:
    Ben MartinezIts:
    Chief Financial
Officer (Principal
Financial Officer) 36




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##### Table of Contents



INDEX TO EXHIBITS
 Exhibit No.
    
    Description31.1
    
    Certification of Principal Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Principal Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Principal Executive Officer and Principal
Financial Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
 37