##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED December 31, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTER FROM ___________ TO _________
 Commission file number 333-113140
 INN OF THE MOUNTAIN GODS RESORT AND CASINO
  Not Applicable
(State or other jurisdiction 
of incorporation or organization)
    
    75-3158926
(I.R.S. Employer
Identification Number)287 Carrizo Canyon Road 
Mescalero, New Mexico
(Address of principal executive offices)
    
    88340
(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-Q
FOR THE QUARTER ENDED DECEMBER 31, 2009
INDEX
  
 PagesPART I. FINANCIAL INFORMATIONItem 1. Consolidated Financial Statements:Consolidated Balance Sheets as of September 30, 2009 (unaudited) and December 31, 2009
(unaudited)
    
    
    3Consolidated Income Statements for the Three Month Periods Ended December 31, 2008
(unaudited) and 2009 (unaudited)
    
    
    4Consolidated Statements of Cash Flows for the Three Month Periods Ended December 31, 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
    
    
    36Signatures
    
    
    37EX-31.1EX-32.1EX-31.1EX-31.2EX-32.1EX-10.1EX-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
(unaudited)
 As of September 30,
    
    
    As of December 31,2009
    
    
    2009Current assetsCash and cash equivalents
    
    $
    5,629,436
    
    
    $
    6,648,067Accounts receivable, net of allowance for doubtful accounts
    
    
    617,433
    
    
    
    1,149,023Inventories, net
    
    
    862,251
    
    
    
    903,590Prepaid expenses and other assets
    
    
    1,321,812
    
    
    
    1,342,754Total current assets
    
    
    8,430,932
    
    
    
    10,043,434Non-current assetsProperty, plant and equipment, net
    
    
    189,066,385
    
    
    
    187,394,995Other assets
    
    
    51,000
    
    
    
    51,000Deferred financing cost
    
    
    2,078,017
    
    
    
    1,632,727Total assets
    
    $
    199,626,334
    
    
    $
    199,122,156Liabilities and deficitCurrent liabilitiesAccounts payable
    
    $
    1,422,304
    
    
    $
    1,837,623Accrued expenses
    
    
    5,469,293
    
    
    
    3,900,366Accrued payroll and benefits
    
    
    1,941,522
    
    
    
    1,481,612Accrued interest
    
    
    22,386,667
    
    
    
    29,621,603Advance deposits
    
    
    413,046
    
    
    
    240,101Current portion of long-term debt
    
    
    202,924,922
    
    
    
    201,995,343Total current liabilities
    
    
    234,557,754
    
    
    
    239,076,648Non-current liabilitiesLong-term debt, net of current portion
    
    
    395,634
    
    
    
    338,445Total liabilities
    
    
    234,953,388
    
    
    
    239,415,093DeficitContributed capital
    
    
    (5,389,062
    )
    
    
    (7,389,062
    )Accumulated deficit
    
    
    (29,937,992
    )
    
    
    (32,903,875
    )Total deficit
    
    
    (35,327,054
    )
    
    
    (40,292,937
    )Total liabilities and deficit
    
    $
    199,626,334
    
    
    $
    199,122,156
  3




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(unaudited)
 Three months ended
    
    
    Three months endedDecember 31, 2008
    
    
    December 31, 2009Revenues:Gaming
    
    $
    16,546,046
    
    
    $
    16,168,109Hotel
    
    
    2,600,075
    
    
    
    2,175,376Food and beverage
    
    
    3,201,745
    
    
    
    2,934,841Recreation and other
    
    
    4,002,634
    
    
    
    4,398,312Gross revenue
    
    
    26,350,500
    
    
    
    25,676,638Less-promotional allowances
    
    
    172,511
    
    
    
    238,881Net revenue
    
    
    26,177,989
    
    
    
    25,437,757Operating expensesGaming
    
    
    6,619,171
    
    
    
    5,373,560Hotel
    
    
    1,131,983
    
    
    
    781,436Food and beverage
    
    
    3,556,592
    
    
    
    3,223,781Recreation and other
    
    
    2,627,022
    
    
    
    2,548,161Marketing
    
    
    1,796,111
    
    
    
    2,344,236General and administrative
    
    
    5,183,042
    
    
    
    4,554,801Depreciation and amortization
    
    
    3,023,656
    
    
    
    3,042,632Insurance reimbursement (Note 11)
    
    
    (3,677,047
    )
    
    
    (1,185,023
    )Storm costs (Note 11)
    
    
    232,022
    
    
    
    Gain on disposal of assets
    
    
    (2,563
    )
    
    
    Total operating expenses
    
    
    20,489,989
    
    
    
    20,683,584Operating income
    
    
    5,688,000
    
    
    
    4,754,173Other expenseInterest expense, net
    
    
    (6,533,294
    )
    
    
    (7,737,702
    )Other income
    
    
    303
    
    
    
    17,646Total other expense
    
    
    (6,532,991
    )
    
    
    (7,720,056
    )Net loss
    
    $
    (844,991
    )
    
    $
    (2,965,883
    )
  4




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
 Three months ended
    
    
    Three months endedDecember 31, 2008
    
    
    December 31, 2009Cash flows from operating activities:Net loss
    
    $
    (844,991
    )
    
    $
    (2,965,883
    )Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:Depreciation and amortization
    
    
    3,083,484
    
    
    
    3,488,950Changes in assets and liabilities:Accounts receivable
    
    
    341,857
    
    
    
    (531,590
    )Tribal accounts receivable
    
    
    143,910
    
    
    
    Inventories
    
    
    131,083
    
    
    
    (41,339
    )Prepaid expenses
    
    
    160,905
    
    
    
    (20,942
    )Insurance reimbursement
    
    
    (2,777,047
    )
    
    
    Other long-term assets
    
    
    (4,160
    )
    
    
    Accounts payable
    
    
    803,927
    
    
    
    415,319Accrued expenses, payroll and benefits
    
    
    2,093,634
    
    
    
    (2,028,837
    )Accrued interest payable
    
    
    (6,000,000
    )
    
    
    7,234,936Deposits and advanced payments
    
    
    (126,331
    )
    
    
    (172,945
    )Net cash (used in) provided by operating activities
    
    
    (2,993,729
    )
    
    
    5,377,669Cash flows from investing activities:Purchase of property, plant and equipment
    
    
    (5,741,923
    )
    
    
    (1,372,271
    )Net cash used in investing activities
    
    
    (5,741,923
    )
    
    
    (1,372,271
    )Cash flows from financing activities:Principal payments on long-term debt
    
    
    (909,988
    )
    
    
    (986,767
    )Distributions to Mescalero Apache Tribe
    
    
    (2,001,000
    )
    
    
    (2,000,000
    )Net cash used in financing activities
    
    
    (2,910,988
    )
    
    
    (2,986,767
    )Net (decrease) increase in cash and cash equivalents
    
    
    (11,646,640
    )
    
    
    1,018,631Cash and cash equivalents, beginning of period
    
    
    16,912,249
    
    
    
    5,629,436Cash and cash equivalents, end of period
    
    $
    5,265,609
    
    
    $
    6,648,067Supplemental cash flow information:Cash paid for interest
    
    $
    12,138,528
    
    
    $
    59,737Non-cash investing and financing activitiesProperty, plant and equipment acquired through reduction in
storm recovery receivable
    
    $
    3,253,273
    
    
    $
    1,185,023
  5




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##### Table of Contents



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
  Accounts Receivable
  7




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 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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##### Table of Contents



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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##### Table of Contents



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 future
  The three months ended December 31,2008
    
    
    2009Rooms
    
    $
    18,558
    
    
    $
    16,823Food and beverage
    
    
    143,651
    
    
    
    208,148$
    162,209
    
    
    $
    224,971
 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)
  Three Months EndedDecember 31, 2009Alternative minimum tax due
    
    $
    600,000Total taxes collected
    
    
    (444,986
    )Alternative minimum tax expensed
    
    $
    155,014
 Classification of Departmental Costs
  Income Taxes
  New Accounting Pronouncements
  11




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##### Table of Contents



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)
 NOTE 2ALLOWANCE FOR DOUBTFUL ACCOUNTS
   12




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 NOTE 3INVENTORIES
  September 30, 2009
    
    
    December 31, 2009Food and beverage
    
    $
    237,361
    
    
    $
    244,026Golf and pro shop
    
    
    65,853
    
    
    
    50,654Gift shops, fuel and other
    
    
    559,037
    
    
    
    608,910Inventories, net of reserves
    
    $
    862,251
    
    
    $
    903,590
 NOTE 4PROPERTY, PLANT AND EQUIPMENT, NET
  September 30, 2009
    
    
    December 31, 2009Land
    
    $
    1,000,473
    
    
    $
    1,000,473Buildings
    
    
    210,005,387
    
    
    
    216,396,686Lifts and Snowmaking equipment
    
    
    8,493,368
    
    
    
    5,686,867Non-gaming equipment, furniture and other
    
    
    52,480,709
    
    
    
    52,580,605Gaming equipment
    
    
    22,470,190
    
    
    
    22,550,738Leasehold and land improvements, lake and golf course
    
    
    11,075,633
    
    
    
    11,075,633Subtotal
    
    
    305,525,760
    
    
    
    309,291,002Less accumulated depreciation and amortization
    
    
    (119,375,209
    )
    
    
    (122,419,554
    )Property, plant and equipment, net
    
    
    186,150,551
    
    
    
    186,871,448Construction in progress
    
    
    2,915,834
    
    
    
    523,547Net Property, plant and equipment
    
    $
    189,066,385
    
    
    $
    187,394,995
 NOTE 5LONG-TERM DEBT
    13




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##### Table of Contents



THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
     September 30, 2009
    
    
    December 31, 2009Senior Notes, bearing interest at a fixed rate 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
    
    
    560,554
    
    
    
    490,628Capital Equipment Loans with Key Equipment, Five (5) year term, 7.65% interest
    
    
    2,519,922
    
    
    
    1,631,995Xerox (3) year term,
    
    
    240,080
    
    
    
    211,165Total
    
    
    203,320,556
    
    
    
    202,333,788Less current portion
    
    
    (202,924,922
    )
    
    
    (201,995,343
    )Long-term portion
    
    $
    395,634
    
    
    $
    338,445
  2010
    
    $
    201,995,3432011
    
    
    338,445$
    202,333,788
 NOTE 6GAMING REVENUE SHARING AND REGULATORY FEES
 Commission
 State Compact
 14




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
  NOTE 7  EMPLOYEE BENEFITS
   NOTE 8  RISK MANAGEMENT
    NOTE 9  COMMITMENTS AND CONTINGENCIES
 Legal Matters
  15




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 Occupancy Fee
  Employment Agreements
  Consulting Agreement and Management Agreement
     16




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##### Table of Contents



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INSURANCE RECOVERIES
   17




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##### Table of Contents



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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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 SELECTED OPERATING SEGMENT FINANCIAL INFORMATION
(unaudited, in thousands)
 Gaming
    
    GamingIMG
    
    Travel Ctr
    
    Ski
    
    Non Gaming
    
    Non Segment
    
    ConsolidatedThree months ended
December 31, 2008Net Revenue
    
    $
    9,829
    
    
    $
    6,705
    
    
    $
    397
    
    
    $
    7,638
    
    
    $
    1,609
    
    
    $
    26,178Operating Income (Loss)
    
    
    6,756
    
    
    
    5,168
    
    
    
    65
    
    
    
    961
    
    
    
    (7,262
    )
    
    
    5,688Depreciation Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,024
    
    
    
    3,024Interest Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,533
    )
    
    
    (6,533
    )Interest Income and Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    8Three months ended
December 31, 2009Net Revenue
    
    $
    9,865
    
    
    $
    6,240
    
    
    $
    397
    
    
    $
    6,927
    
    
    $
    2,009
    
    
    $
    25,438Operating Income (Loss)
    
    
    7,691
    
    
    
    5,062
    
    
    
    36
    
    
    
    1,126
    
    
    
    (9,161
    )
    
    
    4,754Depreciation Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,043
    
    
    
    3,043Interest Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,738
    )
    
    
    (7,738
    )Interest Income and Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18
    
    
    
    18
 NOTE 13CONSOLIDATING INFORMATION
 wholly-owned
Guarantors
  19




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
As of December 31, 2009
(unaudited)
 Wholly-ownedIMGRC
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash and cash equivalents
    
    $
    1,890,254
    
    
    $
    4,757,813
    
    
    $
    
    
    
    $
    6,648,067Accounts receivable
    
    
    705,349
    
    
    
    443,674
    
    
    
    
    
    
    
    1,149,023Inventories
    
    
    222,724
    
    
    
    680,866
    
    
    
    
    
    
    
    903,590Prepaid expenses
    
    
    1,342,754
    
    
    
    
    
    
    
    
    
    
    
    1,342,754Total current assets
    
    
    4,161,081
    
    
    
    5,882,353
    
    
    
    
    
    
    
    10,043,434Property, plant and equipment, net
    
    
    
    
    
    
    187,394,995
    
    
    
    
    
    
    
    187,394,995Other assets
    
    
    51,000
    
    
    
    
    
    
    
    
    
    
    
    51,000Deferred financing costs
    
    
    1,632,727
    
    
    
    
    
    
    
    
    
    
    
    1,632,727Advances to subsidiaries
    
    
    11,869,171
    
    
    
    3,588,793
    
    
    
    (15,457,964
    )
    
    
    Investment in subsidiaries
    
    
    182,645,696
    
    
    
    
    
    
    
    (182,645,696
    )
    
    
    Total Assets
    
    $
    200,359,675
    
    
    $
    196,866,141
    
    
    $
    (198,103,660
    )
    
    $
    199,122,156Accounts payable
    
    $
    1,837,623
    
    
    $
    
    
    
    $
    
    
    
    $
    1,837,623Accrued expenses
    
    
    2,279,821
    
    
    
    1,620,545
    
    
    
    
    
    
    
    3,900,366Accrued payroll and benefits
    
    
    1,481,612
    
    
    
    
    
    
    
    
    
    
    
    1,481,612Accrued interest
    
    
    29,621,603
    
    
    
    
    
    
    
    
    
    
    
    29,621,603Advance deposits
    
    
    
    
    
    
    240,101
    
    
    
    
    
    
    
    240,101Current portion of long-term debt
    
    
    201,753,752
    
    
    
    241,591
    
    
    
    
    
    
    
    201,995,343Total current liabilities
    
    
    236,974,411
    
    
    
    2,102,237
    
    
    
    
    
    
    
    239,076,648Non current liabilities:Advances from subsidiaries
    
    
    3,588,793
    
    
    
    11,869,171
    
    
    
    (15,457,964
    )
    
    
    Long-term debt, net of current portion
    
    
    89,408
    
    
    
    249,037
    
    
    
    
    
    
    
    338,445Total liabilities
    
    
    240,652,612
    
    
    
    14,220,445
    
    
    
    (15,457,964
    )
    
    
    239,415,093Contributed capital
    
    
    (7,389,062
    )
    
    
    (6,012,897
    )
    
    
    6,012,897
    
    
    
    (7,389,062
    )Retained earnings (deficit)
    
    
    (32,903,875
    )
    
    
    188,658,593
    
    
    
    (188,658,593
    )
    
    
    (32,903,875
    )Total equity (deficit)
    
    
    (40,292,937
    )
    
    
    182,645,696
    
    
    
    (182,645,696
    )
    
    
    (40,292,937
    )Total liabilities and equity (deficit)
    
    $
    200,359,675
    
    
    $
    196,866,141
    
    
    $
    (198,103,660
    )
    
    $
    199,122,156
 20




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS
For the Three Months Ended December 31, 2009
(unaudited)
 GuarantorIMGRC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedRevenues:Gaming
    
    $
    
    
    
    $
    16,168,109
    
    
    $
    
    
    
    $
    16,168,109Hotel
    
    
    
    
    
    
    2,175,376
    
    
    
    
    
    
    
    2,175,376Food and beverage
    
    
    
    
    
    
    2,934,841
    
    
    
    
    
    
    
    2,934,841Recreation and other
    
    
    
    
    
    
    4,398,312
    
    
    
    
    
    
    
    4,398,312Gross revenue
    
    
    
    
    
    
    25,676,638
    
    
    
    
    
    
    
    25,676,638Less-promotional allowances
    
    
    19,643
    
    
    
    219,238
    
    
    
    
    
    
    
    238,881Net revenue
    
    
    (19,643
    )
    
    
    25,457,400
    
    
    
    
    
    
    
    25,437,757Operating expensesGaming
    
    
    
    
    
    
    5,373,560
    
    
    
    
    
    
    
    5,373,560Hotel
    
    
    
    
    
    
    781,436
    
    
    
    
    
    
    
    781,436Food and beverage
    
    
    
    
    
    
    3,223,781
    
    
    
    
    
    
    
    3,223,781Recreation and other
    
    
    
    
    
    
    2,548,161
    
    
    
    
    
    
    
    2,548,161Marketing
    
    
    
    
    
    
    2,344,236
    
    
    
    
    
    
    
    2,344,236General and administrative
    
    
    
    
    
    
    4,554,801
    
    
    
    
    
    
    
    4,554,801Depreciation and amortization
    
    
    
    
    
    
    3,042,632
    
    
    
    
    
    
    
    3,042,632Insurance reimbursement (Note 11)
    
    
    (1,185,023
    )
    
    
    
    
    
    
    
    
    
    
    (1,185,023
    )Total operating expenses
    
    
    (1,185,023
    )
    
    
    21,868,607
    
    
    
    
    
    
    
    20,683,584Operating income
    
    
    1,165,380
    
    
    
    3,588,793
    
    
    
    
    
    
    
    4,754,173Other income (expense)Interest expense
    
    
    (7,737,702
    )
    
    
    
    
    
    
    
    
    
    
    (7,737,702
    )Income from subsidiaries
    
    
    3,588,793
    
    
    
    
    
    
    
    (3,588,793
    )
    
    
    Other income
    
    
    17,646
    
    
    
    
    
    
    
    
    
    
    
    17,646Total other expense
    
    
    (4,131,263
    )
    
    
    
    
    
    
    (3,588,793
    )
    
    
    (7,720,056
    )Net income (loss)
    
    $
    (2,965,883
    )
    
    $
    3,588,793
    
    
    $
    (3,588,793
    )
    
    $
    (2,965,883
    )
 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 Three Months Ended December 31, 2009
(unaudited)
 GuarantorIMGRC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net income (loss)
    
    $
    (2,965,883
    )
    
    $
    3,588,793
    
    
    $
    (3,588,793
    )
    
    $
    (2,965,883
    )Adjustments to reconcile net income (loss) to net cash (used
in) provided by operating activities:Depreciation and amortization
    
    
    445,290
    
    
    
    3,043,660
    
    
    
    
    
    
    
    3,488,950Changes in assets and liabilities:Accounts receivable
    
    
    (717,654
    )
    
    
    186,064
    
    
    
    
    
    
    
    (531,590
    )Inventories
    
    
    1,097
    
    
    
    (42,436
    )
    
    
    
    
    
    
    (41,339
    )Prepaid expenses
    
    
    (20,942
    )
    
    
    
    
    
    
    
    
    
    
    (20,942
    )Accounts payable
    
    
    415,319
    
    
    
    
    
    
    
    
    
    
    
    415,319Accrued expenses, payroll and benefits
    
    
    (1,766,473
    )
    
    
    (262,364
    )
    
    
    
    
    
    
    (2,028,837
    )Accrued interest
    
    
    7,234,936
    
    
    
    
    
    
    
    
    
    
    
    7,234,936Deposits and advance payments
    
    
    
    
    
    
    (172,945
    )
    
    
    
    
    
    
    (172,945
    )Net cash provided by (used in) operating activities
    
    
    2,625,690
    
    
    
    6,340,772
    
    
    
    (3,588,793
    )
    
    
    5,377,669Cash flows from investing activities:Purchase of property, plant and equipment
    
    
    
    
    
    
    (1,372,271
    )
    
    
    
    
    
    
    (1,372,271
    )Investment in subsidiaries
    
    
    (3,588,793
    )
    
    
    
    
    
    
    3,588,793
    
    
    
    Net cash provided by (used by) investing activities
    
    
    (3,588,793
    )
    
    
    (1,372,271
    )
    
    
    3,588,793
    
    
    
    (1,372,271
    )Cash flows from financing activities:Advances to (from) affiliates
    
    
    3,797,949
    
    
    
    (3,797,949
    )
    
    
    
    
    
    
    Principal payments on debt
    
    
    (916,842
    )
    
    
    (69,925
    )
    
    
    
    
    
    
    (986,767
    )Distributions to Mescalero Apache Tribe
    
    
    (2,000,000
    )
    
    
    
    
    
    
    
    
    
    
    (2,000,000
    )Net cash provided by (used in) financing activities
    
    
    881,107
    
    
    
    (3,867,874
    )
    
    
    
    
    
    
    (2,986,767
    )Net increase in cash and cash equivalents
    
    
    (81,996
    )
    
    
    1,100,627
    
    
    
    
    
    
    
    1,018,631Cash and cash equivalents, beginning of period
    
    
    1,972,250
    
    
    
    3,657,186
    
    
    
    
    
    
    
    5,629,436Cash and cash equivalents, end of period
    
    $
    1,890,254
    
    
    $
    4,757,813
    
    
    $
    
    
    
    $
    6,648,067
 22




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEETS
As of September 30, 2009
(unaudited)
 Wholly-ownedIMGRC
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash and cash equivalents
    
    $
    1,972,250
    
    
    $
    3,657,186
    
    
    $
    
    
    
    $
    5,629,436Accounts receivable
    
    
    (12,305
    )
    
    
    629,738
    
    
    
    
    
    
    
    617,433Inventories
    
    
    223,821
    
    
    
    638,430
    
    
    
    
    
    
    
    862,251Prepaid expenses
    
    
    1,321,812
    
    
    
    
    
    
    
    
    
    
    
    1,321,812Total current assets
    
    
    3,505,578
    
    
    
    4,925,354
    
    
    
    
    
    
    
    8,430,932Property, plant and equipment, net
    
    
    
    
    
    
    189,066,385
    
    
    
    
    
    
    
    189,066,385Other 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
 23




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES

CONSOLIDATING STATEMENT OF OPERATIONS

For the Three Months Ended December 31, 2008
(unaudited)
 GuarantorIMGRC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedRevenues:Gaming
    
    $
    
    
    
    $
    16,546,046
    
    
    $
    
    
    
    $
    16,546,046Hotel
    
    
    
    
    
    
    2,600,075
    
    
    
    
    
    
    
    2,600,075Food and beverage
    
    
    
    
    
    
    3,201,745
    
    
    
    
    
    
    
    3,201,745Recreation and other
    
    
    
    
    
    
    4,002,634
    
    
    
    
    
    
    
    4,002,634Gross revenue
    
    
    
    
    
    
    26,350,500
    
    
    
    
    
    
    
    26,350,500Less-promotional allowances
    
    
    12,543
    
    
    
    159,968
    
    
    
    
    
    
    
    172,511Net revenue
    
    
    (12,543
    )
    
    
    26,190,532
    
    
    
    
    
    
    
    26,177,989Operating ExpensesGaming
    
    
    
    
    
    
    6,619,171
    
    
    
    
    
    
    
    6,619,171Hotel
    
    
    
    
    
    
    1,131,983
    
    
    
    
    
    
    
    1,131,983Food and beverage
    
    
    
    
    
    
    3,556,592
    
    
    
    
    
    
    
    3,556,592Recreation and other
    
    
    
    
    
    
    2,627,022
    
    
    
    
    
    
    
    2,627,022Marketing
    
    
    
    
    
    
    1,796,111
    
    
    
    
    
    
    
    1,796,111General and administrative
    
    
    900,056
    
    
    
    4,282,986
    
    
    
    
    
    
    
    5,183,042Depreciation and amortization
    
    
    
    
    
    
    3,023,656
    
    
    
    
    
    
    
    3,023,656Insurance reimbursement on storm loss (Note 11)
    
    
    
    
    
    
    (3,677,047
    )
    
    
    
    
    
    
    (3,677,047
    )Storm costs (Note 11)
    
    
    
    
    
    
    232,022
    
    
    
    
    
    
    
    232,022Loss on disposal of assets
    
    
    
    
    
    
    (2,563
    )
    
    
    
    
    
    
    (2,563
    )Total operating expenses
    
    
    900,056
    
    
    
    19,589,933
    
    
    
    
    
    
    
    20,489,989Operating income (loss)
    
    
    (912,599
    )
    
    
    6,600,599
    
    
    
    
    
    
    
    5,688,000Other income (expense)Interest expense, net
    
    
    (6,533,294
    )
    
    
    
    
    
    
    
    
    
    
    (6,533,294
    )Income from subsidiaries
    
    
    6,600,599
    
    
    
    
    
    
    
    (6,600,599
    )
    
    
    Other income
    
    
    303
    
    
    
    
    
    
    
    
    
    
    
    303Total other income (expense)
    
    
    67,608
    
    
    
    
    
    
    
    (6,600,599
    )
    
    
    (6,532,991
    )Net income (loss)
    
    $
    (844,991
    )
    
    $
    6,600,599
    
    
    $
    (6,600,599
    )
    
    $
    (844,991
    )
 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 Three Months Ended December 31, 2008
(unaudited)
 GuarantorIMGRC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net income (loss)
    
    $
    (844,991
    )
    
    $
    6,600,599
    
    
    $
    (6,600,599
    )
    
    $
    (844,991
    )Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:Depreciation and amortization
    
    
    406,311
    
    
    
    2,677,173
    
    
    
    
    
    
    
    3,083,484Changes in assets and liabilities:Accounts receivable
    
    
    2,567
    
    
    
    339,290
    
    
    
    
    
    
    
    341,857Tribal accounts receivable
    
    
    143,910
    
    
    
    
    
    
    
    
    
    
    
    143,910Inventories
    
    
    3,928
    
    
    
    127,155
    
    
    
    
    
    
    
    131,083Prepaid expenses
    
    
    160,905
    
    
    
    
    
    
    
    
    
    
    
    160,905Insurance reimbursement
    
    
    (2,777,047
    )
    
    
    
    
    
    
    
    
    
    
    (2,777,047
    )Other long term assets
    
    
    (43,110
    )
    
    
    38,950
    
    
    
    
    
    
    
    (4,160
    )Accounts payable
    
    
    803,927
    
    
    
    
    
    
    
    
    
    
    
    803,927Accrued expenses, payroll and benefits
    
    
    2,537,988
    
    
    
    (444,354
    )
    
    
    
    
    
    
    2,093,634Accrued interest payable
    
    
    (6,000,000
    )
    
    
    
    
    
    
    
    
    
    
    (6,000,000
    )Deposits and advance payments
    
    
    
    
    
    
    (126,331
    )
    
    
    
    
    
    
    (126,331
    )Net cash provided by (used in) operating activities
    
    
    (5,605,612
    )
    
    
    9,212,482
    
    
    
    (6,600,599
    )
    
    
    (2,993,729
    )Cash flows from investing activities:Purchase of property, plant and equipment
    
    
    
    
    
    
    (5,741,923
    )
    
    
    
    
    
    
    (5,741,923
    )Investment in subsidiaries
    
    
    (6,600,599
    )
    
    
    
    
    
    
    6,600,599
    
    
    
    Net cash used by investing activities
    
    
    (6,600,599
    )
    
    
    (5,741,923
    )
    
    
    6,600,599
    
    
    
    (5,741,923
    )Cash flows from financing activities:Advances to (from) affiliates
    
    
    12,218,320
    
    
    
    (12,218,320
    )
    
    
    
    
    
    
    Principal payments on debt
    
    
    (9,577,136
    )
    
    
    8,667,148
    
    
    
    
    
    
    
    (909,988
    )Distributions to Mescalero Apache Tribe
    
    
    (2,001,000
    )
    
    
    
    
    
    
    
    
    
    
    (2,001,000
    )Net cash provided by (used in) financing activities
    
    
    640,184
    
    
    
    (3,551,171
    )
    
    
    
    
    
    
    (2,910,988
    )Net increase (decrease) in cash and cash equivalents
    
    
    (11,566,027
    )
    
    
    (80,612
    )
    
    
    
    
    
    
    (11,646,640
    )Cash and cash equivalents, beginning of period
    
    
    12,782,806
    
    
    
    4,129,443
    
    
    
    
    
    
    
    16,912,249Cash and cash equivalents, end of period
    
    $
    1,216,779
    
    
    $
    4,048,831
    
    
    $
    
    
    
    $
    5,265,609
 25




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##### Table of Contents



FORWARDLOOKING STATEMENTS
 This Form 10-Q 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-Q are forward-looking statements. In addition, in those and other portions of this Form
10-Q, 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-Q 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-Q . 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-Q are made only as
of the date of this Form 10-Q . 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 Quarterly report on Form 10-Q (this Form 10-Q 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-Q 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 future
 Classification of Departmental Costs
 28




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##### Table of Contents



Deferred Financing and Refinancing Costs
 Impairment of Long Lived Assets.
  Results of Operations
 Three months Ended December 31, 2009 Compared to Three months Ended December 31, 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
 Income from Operations
 30




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##### Table of Contents



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
  32




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##### Table of Contents



Regulation and Taxes
  
 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.
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##### Table of Contents



Item 5. Other Information
   Chair
    
    President Mark R. ChinoVice Chair
    
    Vice President Sandra PlateroSecretary
    
    Greg MendezTreasurer
    
    Frederick Chino, Sr.Member
    
    Hazel Botella-SpottedbirdMember
    
    Pamela CordovaMember
    
    Oliver EnjadyMember
    
    Randy BellMember
    
    Kenny BlazerMember
    
    Peter D. KazheMember
    
    Manuel Lujan, Jr.Member
    
    Miles LedgerwoodMember
    
    Liz Foster-Anderson, COOMember
    
    Ben Martinez, CFO
 Mark Chino
  34




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35




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##### Table of Contents



Item 6. Exhibits.
 Exhibit No.
    
    Description10.1
    
    Amended and Restated Management Agreement among the Inn of
the Mountain Gods Resort and Casino, Casino Apache Travel
Center, Ski Apache and WG-IMG, LLC dated as of January 6,
2010. Approved by NIGC January 19, 2010.31.1
    
    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.
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##### Table of Contents



SIGNATURES
  INN OF THE MOUNTAIN GODS RESORT AND CASINODate: February 16, 2010
    By
    /s/ Liz Foster AndersonName:
    Liz Foster AndersonIts:
    Chief Operating Officer (Principal
Executive Officer) Date: February 16, 2010
    By
    /s/ Ben MartinezName:
    Ben MartinezIts:
    Chief Financial Officer
(Principal Financial Officer) 37




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##### Table of Contents



INDEX TO EXHIBITS
 Exhibit No.
    
    Description10.1
    
    Amended and Restated Management Agreement among the Inn of
the Mountain Gods Resort and Casino, Casino Apache Travel
Center, Ski Apache and WG-IMG, LLC dated as of January 6,
2010.
Approved by NIGC January 19, 2010.31.1
    
    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.
 38