##### 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 January 31, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 FOR THE TRANSITION PERIOD FROM  TO
 Commission file number 333-113140
 INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
  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)
 (505) 464-7000
 þ 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




---



##### 



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
 FORM 10-Q
 FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2009
 INDEX
 PagesPART I. FINANCIAL INFORMATIONItem 1. Consolidated Financial Statements:
    
    1Consolidated Balance Sheets as of April 30, 2008 and January 31, 2009 (unaudited)
    
    1Consolidated Statements of Operations for the Three Month and Nine Month Periods Ended January 31, 2008
and 2009 (unaudited)
    
    2Consolidated Statements of Cash Flows for the Nine Month Periods Ended January 31, 2008 and 2009 (unaudited)
    
    3Notes to Consolidated Financial Statements (unaudited)
    
    4Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    23Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    30Item 4T. Controls and Procedures
    
    30PART II. OTHER INFORMATIONItem 1A. Risk Factors
    
    31Item 6. Exhibits
    
    31Signatures
    
    32EX-31.1EX-31.2EX-32.1
  i




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##### Table of Contents



PART I FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 
 INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 As ofAs of
    
    
    January 31, 2009April 30, 2008
    
    
    (unaudited)Current assetsCash and cash equivalents
    
    $
    14,975,093
    
    
    $
    5,465,990Accounts receivable, net of allowance for doubtful accounts
    
    
    567,236
    
    
    
    319,199Inventories
    
    
    1,040,086
    
    
    
    909,653Prepaid expenses and other assets
    
    
    855,754
    
    
    
    686,946Total current assets
    
    
    17,438,169
    
    
    
    7,381,788Non-current assetsProperty plant and equipment
    
    
    299,344,711
    
    
    
    307,224,337Accumulated depreciation
    
    
    (103,333,993
    )
    
    
    (111,697,322
    )Property plant and equipment, net
    
    
    196,010,718
    
    
    
    195,527,015Other assets
    
    
    50,000
    
    
    
    76,000Deferred financing cost
    
    
    4,445,409
    
    
    
    3,226,476Total assets
    
    $
    217,944,296
    
    
    $
    206,211,279Liabilites and DeficitCurrent liabilitiesAccounts payable
    
    $
    2,093,653
    
    
    $
    2,320,764Accrued expenses
    
    
    3,298,719
    
    
    
    4,922,584Accrued payroll and benefits
    
    
    2,578,145
    
    
    
    2,394,686Accrued interest
    
    
    11,200,000
    
    
    
    5,200,000Advance deposits
    
    
    357,648
    
    
    
    76,899Tribal accounts payable
    
    
    
    
    
    
    22,440Current portion of long-term debt
    
    
    3,534,414
    
    
    
    3,855,781Total current liabilities
    
    
    23,062,579
    
    
    
    18,793,154Non-current liabilitiesLong-term debt, net of current portion
    
    
    204,639,002
    
    
    
    202,004,140Total liabilities
    
    
    227,701,581
    
    
    
    220,797,294DeficitContributed capital
    
    
    21,648,939
    
    
    
    15,645,939Accumulated deficit
    
    
    (31,406,224
    )
    
    
    (30,231,954
    )Total deficit
    
    
    (9,757,285
    )
    
    
    (14,586,015
    )Total liabilities and deficit
    
    $
    217,944,296
    
    
    $
    206,211,279
  1




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
 Three Months Ended
    
    
    Three Months Ended
    
    
    Nine Months Ended
    
    
    Nine Months EndedJanuary 31, 2008
    
    
    January 31, 2009
    
    
    January 31, 2008
    
    
    January 31, 2009Revenues:Gaming
    
    $
    16,839,587
    
    
    $
    16,872,851
    
    
    $
    60,135,758
    
    
    $
    57,580,951Hotel
    
    
    2,783,690
    
    
    
    2,552,125
    
    
    
    10,687,186
    
    
    
    10,186,752Food and beverage
    
    
    3,685,058
    
    
    
    2,752,681
    
    
    
    11,554,978
    
    
    
    10,364,390Recreation and other
    
    
    6,101,670
    
    
    
    4,772,791
    
    
    
    15,786,963
    
    
    
    14,064,875Gross revenue
    
    
    29,410,005
    
    
    
    26,950,448
    
    
    
    98,164,885
    
    
    
    92,196,968Less-promotional allowances
    
    
    476,831
    
    
    
    134,654
    
    
    
    1,535,717
    
    
    
    609,360Net revenue
    
    
    28,933,174
    
    
    
    26,815,794
    
    
    
    96,629,168
    
    
    
    91,587,608Operating ExpensesGaming
    
    
    6,105,580
    
    
    
    6,328,702
    
    
    
    20,562,395
    
    
    
    20,680,526Hotel expenses
    
    
    1,013,927
    
    
    
    1,069,708
    
    
    
    3,399,474
    
    
    
    3,805,249Food and beverage
    
    
    3,999,628
    
    
    
    2,966,296
    
    
    
    11,806,481
    
    
    
    10,652,421Recreation and other
    
    
    3,956,607
    
    
    
    2,669,960
    
    
    
    11,491,474
    
    
    
    9,709,225Marketing
    
    
    2,506,468
    
    
    
    2,209,561
    
    
    
    7,720,885
    
    
    
    6,285,568General and administrative
    
    
    3,566,379
    
    
    
    3,756,133
    
    
    
    8,543,721
    
    
    
    10,282,941Health insurance  medical
    
    
    591,728
    
    
    
    652,363
    
    
    
    1,534,939
    
    
    
    1,807,974401 K
    
    
    214,461
    
    
    
    221,319
    
    
    
    656,725
    
    
    
    674,889Mescalero Apache Telecom
    
    
    49,093
    
    
    
    47,929
    
    
    
    150,138
    
    
    
    142,976Tribal Taxes
    
    
    600,000
    
    
    
    600,000
    
    
    
    1,800,000
    
    
    
    1,800,000Depreciation and amortization
    
    
    4,087,672
    
    
    
    3,041,439
    
    
    
    12,472,075
    
    
    
    9,167,261Insurance reimbursement (Note 11)
    
    
    
    
    
    
    (3,677,047
    )
    
    
    
    
    
    
    (4,777,047
    )Storm costs (Note 11)
    
    
    
    
    
    
    129,117
    
    
    
    
    
    
    
    371,124Loss on disposal of assets
    
    
    
    
    
    
    179,172
    
    
    
    63,847
    
    
    
    225,290Total Operating Expenses
    
    
    26,691,543
    
    
    
    20,194,652
    
    
    
    80,202,154
    
    
    
    70,828,397Operating Income
    
    
    2,241,631
    
    
    
    6,621,142
    
    
    
    16,427,014
    
    
    
    20,759,211Other IncomeInterest income
    
    
    32,154
    
    
    
    2,998
    
    
    
    168,523
    
    
    
    36,935Interest (expense)
    
    
    (6,592,441
    )
    
    
    (6,536,173
    )
    
    
    (19,843,634
    )
    
    
    (19,641,696
    )Other Income
    
    
    44,696
    
    
    
    794
    
    
    
    47,003
    
    
    
    19,820Total Other Expense
    
    
    (6,515,591
    )
    
    
    (6,532,381
    )
    
    
    (19,628,108
    )
    
    
    (19,584,941
    )Net Income (Loss)
    
    $
    (4,273,960
    )
    
    $
    88,761
    
    
    $
    (3,201,094
    )
    
    $
    1,174,270
  2




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INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
 Nine Months Ended
    
    
    Nine Months EndedJanuary 31, 2008
    
    
    January 31, 2009Cash flows from operating activities:Net (loss) income
    
    $
    (3,201,094
    )
    
    $
    1,174,270Adjustments to reconcile net (loss) income to net cash provided
by operating activities:Depreciation and amortization
    
    
    13,669,253
    
    
    
    10,386,194Insurance reimbursement
    
    
    
    
    
    
    (4,117,272
    )Loss on disposal of assets
    
    
    63,857
    
    
    
    225,290Changes in assets and liabilities:Accounts receivable
    
    
    114,795
    
    
    
    248,037Inventories
    
    
    (292,759
    )
    
    
    130,433Prepaid expenses
    
    
    (333,141
    )
    
    
    168,808Other long-term assets
    
    
    12,500
    
    
    
    (26,000
    )Accounts payable
    
    
    407,215
    
    
    
    227,111Accrued expenses, payroll and benefits
    
    
    (891,503
    )
    
    
    1,440,406Tribal accounts payable
    
    
    
    
    
    
    22,440Accrued interest payable
    
    
    (6,000,000
    )
    
    
    (6,000,000
    )Deposits and advanced payments
    
    
    (359,072
    )
    
    
    (280,749
    )Net cash provided by operating activities
    
    
    3,190,051
    
    
    
    3,598,968Cash flows from investing activities:Purchase of property, plant and equipment
    
    
    (1,147,600
    )
    
    
    (4,436,951
    )Net cash used in investing activities
    
    
    (1,147,600
    )
    
    
    (4,436,951
    )Cash flows from financing activities:Principal payments on long-term debt
    
    
    (3,097,738
    )
    
    
    (2,668,120
    )Distributions to Mescalero Apache Tribe
    
    
    (6,003,003
    )
    
    
    (6,003,000
    )Net cash used in financing activities
    
    
    (9,100,741
    )
    
    
    (8,671,120
    )Net decrease in cash and cash equivalents
    
    
    (7,058,290
    )
    
    
    (9,509,103
    )Cash and cash equivalents, beginning of period
    
    
    16,929,630
    
    
    
    14,975,093Cash and cash equivalents, end of period
    
    $
    9,871,340
    
    
    $
    5,465,990Supplemental cash flow information:Cash paid for interest
    
    $
    24,624,701
    
    
    $
    24,422,463Non-cash investing and financing activities:Property, plant and equipment acquired through capital lease
    
    $
    289,420
    
    
    $
    354,624Property, plant and equipment acquired through
reduction in storm recovery receivable
    
    $
    
    
    
    $
    4,117,272
  3




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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
 Reporting Entity and Operations
 IMG Resort and Casino Tribe Resort Casino Apache Enterprise Travel Center Travel Center Casino Ski Apache Ski Apache Resort Inn Inn Hotel
 Inn of the Mountain Gods Casino IGRA
 SEC
 Principles of Consolidation
  Reclassifications
  Use of Estimates
  4




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##### Table of Contents



Cash and Cash Equivalents
  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 Costs
  Impairment of Long Lived Assets
    5




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Fair Value of Financial Instruments
   Contributed Capital
  Revenues
   Promotional Allowances
   EITF Accounting for Certain Sales Incentives, Accounting for Points and Certain Other Time-Based or Volume-Based Sales Incentive Offers, and
Offers for Preproducts, or Services to be delivered in the futur
 6




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Three Months Ended January 31,
    
    
    Nine Months Ended January 31,2008
    
    
    2009
    
    
    2008
    
    
    2009Rooms
    
    $
    212,825
    
    
    $
    43,964
    
    
    $
    1,369,660
    
    
    $
    113,943Food and beverage
    
    
    236,696
    
    
    
    147,637
    
    
    
    922,479
    
    
    
    480,469Other
    
    
    (249
    )
    
    
    
    
    
    
    21,772
    
    
    
    20$
    449,272
    
    
    $
    191,601
    
    
    $
    2,313,911
    
    
    $
    594,432
 Marketing
  Tribal Taxes
  Classification of Departmental Costs
  Income Taxes
  New Accounting Pronouncements
 Fair Value
Measurements (SFAS 157).
 7




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##### Table of Contents



The Fair Value Option for Financial Assets
and Financial Liabilities
 NOTE 2ALLOWANCE FOR DOUBTFUL ACCOUNTS
   NOTE 3INVENTORIES
  April 30, 2008
    
    
    January 31, 2009Food and beverage
    
    $
    219,709
    
    
    $
    301,519Golf and pro shop
    
    
    113,058
    
    
    
    52,560Gift shops, fuel and other
    
    
    707,319
    
    
    
    555,574Inventories, net of reserves
    
    $
    1,040,086
    
    
    $
    909,653
 8




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##### Table of Contents



NOTE 4PROPERTY, PLANT AND EQUIPMENT, NET
  April 30, 2008
    
    
    January 31, 2009Land
    
    $
    538,894
    
    
    $
    1,000,473Buildings
    
    
    209,507,247
    
    
    
    209,846,665Lifts and Snowmaking equipment
    
    
    8,421,750
    
    
    
    8,493,368Non-gaming equipment, furniture and other
    
    
    51,819,539
    
    
    
    52,510,939Gaming equipment
    
    
    20,869,501
    
    
    
    21,807,497Leasehold and land improvements, lake and golf course
    
    
    8,072,925
    
    
    
    11,114,241Subtotal
    
    
    299,229,856
    
    
    
    304,773,184Less accumulated depreciation and amortization
    
    
    (103,333,993
    )
    
    
    (111,697,322
    )Property, plant and equipment, net
    
    
    195,895,863
    
    
    
    193,075,862Construction in progress (CIP)
    
    
    114,855
    
    
    
    2,451,153Net Property, plant and equipment
    
    $
    196,010,718
    
    
    $
    195,527,015
   NOTE 5LONG-TERM DEBT
 Notes
   9




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##### Table of Contents



April 30, 2008
    
    
    January 31, 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
    
    
    929,904
    
    
    
    740,721Capital Equipment Loans,Three (3)to Five (5) year terms, interest
ranging from 7.55% to 9.9%
    
    
    7,243,512
    
    
    
    5,119,200208,173,416
    
    
    
    205,859,921Less current portion
    
    
    (3,534,414
    )
    
    
    (3,855,781
    )Long-term portion
    
    $
    204,639,002
    
    
    $
    202,004,140
  2009 (three months)
    
    $
    9362010
    
    
    3,9322011
    
    
    200,8482012
    
    
    144$
    205,860
  NOTE 6GAMING REVENUE SHARING AND REGULATORY FEES
 Commission
 State  Compact 
  NOTE 7  EMPLOYEE BENEFITS
  10




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NOTE 8  RISK MANAGEMENT
      NOTE 9  COMMITMENTS AND CONTINGENCIES
 Legal Matters
  Occupancy Fee
  11




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##### Table of Contents



Employment Agreements
    NOTE 10RELATED-PARTY TRANSACTIONS
   Shared Services and Cost Allocations
  Employee Benefits Cost Allocations
   12




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Tribal Hunts Accounts Payable
 MBGH
 NOTE 11STORM RECOVERY
    NOTE 12 SUBSEQUENT EVENT
   NOTE 13  OPERATING SEGMENTS
    13




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SELECTED OPERATING SEGMENT FINANCIAL INFORMATION
(unaudited, in thousands)
 Gaming
    
    GamingIMG
    
    Travel Ctr
    
    Ski
    
    Non Gaming
    
    Non Segment
    
    ConsolidatedThree Months ended:January 31, 2009Net Revenue
    
    $
    10,092
    
    
    $
    6,805
    
    
    $
    629
    
    
    $
    6,537
    
    
    $
    2,753
    
    
    $
    26,816Operating Income (Loss)
    
    
    7,377
    
    
    
    5,283
    
    
    
    57
    
    
    
    1,047
    
    
    
    (7,143
    )
    
    
    6,621Depreciation Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,041
    
    
    
    3,041Interest Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,536
    )
    
    
    (6,536
    )Interest Income and Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    4Three Months ended:January 31, 2008Net Revenue
    
    $
    9,941
    
    
    $
    6,627
    
    
    $
    602
    
    
    $
    8,830
    
    
    $
    2,933
    
    
    $
    28,933Operating Income (Loss)
    
    
    7,493
    
    
    
    5,233
    
    
    
    75
    
    
    
    1,466
    
    
    
    (12,025
    )
    
    
    2,242Depreciation Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,088
    
    
    
    4,088Interest Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,592
    )
    
    
    (6,592
    )Interest Income and Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    77
    
    
    
    77Nine Months ended:January 31, 2009Net Revenue
    
    $
    34,424
    
    
    $
    23,031
    
    
    $
    640
    
    
    $
    30,770
    
    
    $
    2,723
    
    
    $
    91,588Operating Income (Loss)
    
    
    25,846
    
    
    
    18,153
    
    
    
    32
    
    
    
    7,793
    
    
    
    (31,065
    )
    
    
    20,759Depreciation Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,167
    
    
    
    9,167Interest Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,642
    )
    
    
    (19,642
    )Interest Income and Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    57
    
    
    
    57Nine Months ended:January 31, 2008Net Revenue
    
    $
    36,479
    
    
    $
    23,351
    
    
    $
    635
    
    
    $
    33,327
    
    
    $
    2,837
    
    
    $
    96,629Operating Income (Loss)
    
    
    28,466
    
    
    
    18,745
    
    
    
    (79
    )
    
    
    8,832
    
    
    
    (39,537
    )
    
    
    16,427Depreciation Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,472
    
    
    
    12,472Interest Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,844
    )
    
    
    (19,844
    )Interest Income and Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    216
    
    
    
    216
 NOTE 14CONSOLIDATING INFORMATION
 wholly-owned
Guarantors
  14




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INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEETS
As of January 31, 2009
(unaudited)
 GuarantorIMGRC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash and cash equivalents
    
    $
    1,985,380
    
    
    $
    3,480,610
    
    
    $
    
    
    
    $
    5,465,990Accounts receivable
    
    
    21,957
    
    
    
    297,242
    
    
    
    
    
    
    
    319,199Inventories
    
    
    233,889
    
    
    
    675,764
    
    
    
    
    
    
    
    909,653Prepaid expenses
    
    
    686,946
    
    
    
    
    
    
    
    
    
    
    
    686,946Total current assets
    
    
    2,928,172
    
    
    
    4,453,616
    
    
    
    
    
    
    
    7,381,788Fixed Assets
    
    
    
    
    
    
    307,224,337
    
    
    
    
    
    
    
    307,224,337Accumulated depreciation
    
    
    
    
    
    
    (111,697,322
    )
    
    
    
    
    
    
    (111,697,322
    )Net fixed assets
    
    
    
    
    
    
    195,527,015
    
    
    
    
    
    
    
    195,527,015Non-CurrentOther assests
    
    
    76,000
    
    
    
    
    
    
    
    
    
    
    
    76,000Deferred financing costs
    
    
    3,226,476
    
    
    
    
    
    
    
    
    
    
    
    3,226,476Advances to subsidiaries
    
    
    35,550,034
    
    
    
    5,877,875
    
    
    
    (41,427,909
    )
    
    
    Investment in subsidiaries
    
    
    168,558,803
    
    
    
    
    
    
    
    (168,558,803
    )
    
    
    Total Assets
    
    $
    210,339,485
    
    
    $
    205,858,506
    
    
    $
    (209,986,712
    )
    
    $
    206,211,279Accounts payable
    
    $
    2,320,764
    
    
    $
    
    
    
    $
    
    
    
    $
    2,320,764Accrued expenses
    
    
    3,990,534
    
    
    
    932,050
    
    
    
    
    
    
    
    4,922,584Accrued payroll and benefits
    
    
    2,394,686
    
    
    
    
    
    
    
    
    
    
    
    2,394,686Accrued interest
    
    
    5,200,000
    
    
    
    
    
    
    
    
    
    
    
    5,200,000Advanced deposits
    
    
    
    
    
    
    76,899
    
    
    
    
    
    
    
    76,899Tribal Accounts payable
    
    
    22,440
    
    
    
    
    
    
    
    
    
    
    
    22,440Current portion of long-term debt
    
    
    3,585,605
    
    
    
    270,176
    
    
    
    
    
    
    
    3,855,781Total current liabilities
    
    
    17,514,029
    
    
    
    1,279,125
    
    
    
    
    
    
    
    18,793,154Non-Current LiabilitiesAdvances from subsidiaries
    
    
    5,877,875
    
    
    
    35,550,034
    
    
    
    (41,427,909
    )
    
    
    Long-term debt, net of current portion
    
    
    201,533,596
    
    
    
    470,544
    
    
    
    
    
    
    
    202,004,140Total liabilities
    
    
    224,925,500
    
    
    
    37,299,703
    
    
    
    (41,427,909
    )
    
    
    220,797,294Contributed Capital
    
    
    15,645,939
    
    
    
    (6,012,897
    )
    
    
    6,012,897
    
    
    
    15,645,939Retained Earnings (accumulated deficit)
    
    
    (30,231,954
    )
    
    
    174,571,700
    
    
    
    (174,571,700
    )
    
    
    (30,231,954
    )Total equity (deficit)
    
    
    (14,586,015
    )
    
    
    168,558,803
    
    
    
    (168,558,803
    )
    
    
    (14,586,015
    )Total liabilities and equity (deficit)
    
    $
    210,339,485
    
    
    $
    205,858,506
    
    
    $
    (209,986,712
    )
    
    $
    206,211,279
 15




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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 January 31, 2009
(Unaudited)
 GuarantorIMGRC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedRevenues:Gaming
    
    $
    
    
    
    $
    16,872,851
    
    
    $
    
    
    
    $
    16,872,851Hotel
    
    
    
    
    
    
    2,552,125
    
    
    
    
    
    
    
    2,552,125Food and beverage
    
    
    
    
    
    
    2,752,681
    
    
    
    
    
    
    
    2,752,681Recreation and other
    
    
    
    
    
    
    4,772,791
    
    
    
    
    
    
    
    4,772,791Gross revenue
    
    
    
    
    
    
    26,950,448
    
    
    
    
    
    
    
    26,950,448Less -promotional allowances
    
    
    10,596
    
    
    
    124,058
    
    
    
    
    
    
    
    134,654Net revenue
    
    
    (10,596
    )
    
    
    26,826,390
    
    
    
    
    
    
    
    26,815,794Operating ExpensesGaming
    
    
    
    
    
    
    6,328,702
    
    
    
    
    
    
    
    6,328,702Hotel
    
    
    
    
    
    
    1,069,708
    
    
    
    
    
    
    
    1,069,708Food and beverage
    
    
    
    
    
    
    2,966,296
    
    
    
    
    
    
    
    2,966,296Recreation and other
    
    
    
    
    
    
    2,669,960
    
    
    
    
    
    
    
    2,669,960Marketing
    
    
    
    
    
    
    2,209,561
    
    
    
    
    
    
    
    2,209,561General and administrative
    
    
    2,794,067
    
    
    
    962,066
    
    
    
    
    
    
    
    3,756,133Health Insurance  Medical
    
    
    
    
    
    
    652,363
    
    
    
    
    
    
    
    652,363Mescalero Apache- 401K
    
    
    
    
    
    
    221,319
    
    
    
    
    
    
    
    221,319Mescalero Apache Telecom
    
    
    
    
    
    
    47,929
    
    
    
    
    
    
    
    47,929Tribal Taxes
    
    
    
    
    
    
    600,000
    
    
    
    
    
    
    
    600,000Depreciation and amortization
    
    
    
    
    
    
    3,041,439
    
    
    
    
    
    
    
    3,041,439Insurance reimbursement (Note 11)
    
    
    (3,677,047
    )
    
    
    
    
    
    
    
    
    
    
    (3,677,047
    )Storm Costs
    
    
    129,117
    
    
    
    
    
    
    
    
    
    
    
    129,117Gain (loss) on disposal of assets
    
    
    
    
    
    
    179,172
    
    
    
    
    
    
    
    179,172Total Operating Expenses
    
    
    (753,863
    )
    
    
    20,948,515
    
    
    
    
    
    
    
    20,194,652Operating Income (loss)
    
    
    743,267
    
    
    
    5,877,875
    
    
    
    
    
    
    
    6,621,142Other Income (expense)Interest income
    
    
    2,998
    
    
    
    
    
    
    
    
    
    
    
    2,998Interest
    
    
    (6,536,173
    )
    
    
    
    
    
    
    
    
    
    
    (6,536,173
    )Income from subsidiaries
    
    
    5,877,875
    
    
    
    
    
    
    
    (5,877,875
    )
    
    
    Other income
    
    
    794
    
    
    
    
    
    
    
    
    
    
    
    794Total other income (expense)
    
    
    (654,506
    )
    
    
    
    
    
    
    (5,877,875
    )
    
    
    (6,532,381
    )Net Income
    
    $
    88,761
    
    
    $
    5,877,875
    
    
    $
    (5,877,875
    )
    
    $
    88,761
 16




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS
For the Nine Months Ended January 31, 2009
(Unaudited)
 GuarantorIMGRC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedRevenues:Gaming
    
    $
    
    
    
    $
    57,580,951
    
    
    $
    
    
    
    $
    57,580,951Hotel
    
    
    
    
    
    
    10,186,752
    
    
    
    
    
    
    
    10,186,752Food and beverage
    
    
    
    
    
    
    10,364,390
    
    
    
    
    
    
    
    10,364,390Recreation and other
    
    
    
    
    
    
    14,064,875
    
    
    
    
    
    
    
    14,064,875Gross revenue
    
    
    
    
    
    
    92,196,968
    
    
    
    
    
    
    
    92,196,968Less -promotional allowances
    
    
    64,635
    
    
    
    544,725
    
    
    
    
    
    
    
    609,360Net revenue
    
    
    (64,635
    )
    
    
    91,652,243
    
    
    
    
    
    
    
    91,587,608Operating ExpensesGaming
    
    
    
    
    
    
    20,680,526
    
    
    
    
    
    
    
    20,680,526Hotel
    
    
    
    
    
    
    3,805,249
    
    
    
    
    
    
    
    3,805,249Food and beverage
    
    
    
    
    
    
    10,652,421
    
    
    
    
    
    
    
    10,652,421Recreation and other
    
    
    
    
    
    
    9,709,225
    
    
    
    
    
    
    
    9,709,225Marketing
    
    
    
    
    
    
    6,285,568
    
    
    
    
    
    
    
    6,285,568General and administrative
    
    
    7,428,100
    
    
    
    2,854,841
    
    
    
    
    
    
    
    10,282,941Health Insurance  Medical
    
    
    
    
    
    
    1,807,974
    
    
    
    
    
    
    
    1,807,974Mescalero Apache- 401K
    
    
    
    
    
    
    674,889
    
    
    
    
    
    
    
    674,889Mescalero Apache Telecom
    
    
    
    
    
    
    142,976
    
    
    
    
    
    
    
    142,976Tribal taxes
    
    
    
    
    
    
    1,800,000
    
    
    
    
    
    
    
    1,800,000Depreciation and amortization
    
    
    
    
    
    
    9,167,261
    
    
    
    
    
    
    
    9,167,261Insurance reimbursement (Note 11)
    
    
    (4,777,047
    )
    
    
    
    
    
    
    
    
    
    
    (4,777,047
    )Storm Costs (Note 11)
    
    
    371,124
    
    
    
    
    
    
    
    
    
    
    
    371,124Loss on disposal of assets
    
    
    
    
    
    
    225,290
    
    
    
    
    
    
    
    225,290Total Operating Expenses
    
    
    3,022,177
    
    
    
    67,806,220
    
    
    
    
    
    
    
    70,828,397Operating Income (loss)
    
    
    (3,086,812
    )
    
    
    23,846,023
    
    
    
    
    
    
    
    20,759,211Other Income (Expense)Interest income
    
    
    36,935
    
    
    
    
    
    
    
    
    
    
    
    36,935Interest (expense)
    
    
    (19,641,696
    )
    
    
    
    
    
    
    
    
    
    
    (19,641,696
    )Income from subsidiaries
    
    
    23,846,023
    
    
    
    
    
    
    
    (23,846,023
    )
    
    
    Other income
    
    
    19,820
    
    
    
    
    
    
    
    
    
    
    
    19,820Total other income (expense)
    
    
    4,261,082
    
    
    
    
    
    
    
    (23,846,023
    )
    
    
    (19,584,941
    )Net Income
    
    $
    1,174,270
    
    
    $
    23,846,023
    
    
    $
    (23,846,023
    )
    
    $
    1,174,270
 17




---



##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
For the Nine Months Ended January 31, 2009
(unaudited)
 GuarantorIMGRC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net income (loss)
    
    $
    1,174,270
    
    
    $
    23,846,023
    
    
    $
    (23,846,023
    )
    
    $
    1,174,270Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:Depreciation and amortization
    
    
    1,218,933
    
    
    
    9,167,261
    
    
    
    
    
    
    
    10,386,194Insurance reimbursement
    
    
    (4,117,272
    )
    
    
    
    
    
    
    
    
    
    
    (4,117,272
    )Loss on disposal of fixed assets
    
    
    
    
    
    
    225,290
    
    
    
    
    
    
    
    225,290Changes in assets and liabilities:Restricted cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accounts receivable
    
    
    (3,511
    )
    
    
    251,548
    
    
    
    
    
    
    
    248,037Inventories
    
    
    (17,299
    )
    
    
    147,732
    
    
    
    
    
    
    
    130,433Prepaid expenses
    
    
    (4,542
    )
    
    
    173,350
    
    
    
    
    
    
    
    168,808Other long term assets
    
    
    (76,000
    )
    
    
    50,000
    
    
    
    
    
    
    
    (26,000
    )Accounts payable
    
    
    227,111
    
    
    
    
    
    
    
    
    
    
    
    227,111Accrued expenses, payroll and benefits
    
    
    1,357,236
    
    
    
    83,170
    
    
    
    
    
    
    
    1,440,406Tribal accounts payable
    
    
    22,440
    
    
    
    
    
    
    
    
    
    
    
    22,440Accrued interst payable
    
    
    (6,000,000
    )
    
    
    
    
    
    
    
    
    
    
    (6,000,000
    )Deposits and advance payments
    
    
    
    
    
    
    (280,749
    )
    
    
    
    
    
    
    (280,749
    )Net cash provided by (used in) operating activities
    
    
    (6,218,634
    )
    
    
    33,663,625
    
    
    
    (23,846,023
    )
    
    
    3,598,968Cash flows from investing activities:Purchase of property, plant and equipment
    
    
    
    
    
    
    (4,436,951
    )
    
    
    
    
    
    
    (4,436,951
    )Investment in subsidiaries
    
    
    (23,846,023
    )
    
    
    
    
    
    
    23,846,023
    
    
    
    Net cash used by investing activities
    
    
    (23,846,023
    )
    
    
    (4,436,951
    )
    
    
    23,846,023
    
    
    
    (4,436,951
    )Cash flows from financing activities:Advances to (from) affiliates
    
    
    29,448,578
    
    
    
    (29,448,578
    )
    
    
    
    
    
    
    Principal payments on debt
    
    
    (2,478,935
    )
    
    
    (189,185
    )
    
    
    
    
    
    
    (2,668,120
    )Distributions to Mescalero Apache Tribe
    
    
    (6,003,000
    )
    
    
    
    
    
    
    
    
    
    
    (6,003,000
    )Net cash provided by (used in) financing activities
    
    
    20,966,643
    
    
    
    (29,637,763
    )
    
    
    
    
    
    
    (8,671,120
    )Net decrease in cash and cash equivalents
    
    
    (9,098,014
    )
    
    
    (411,089
    )
    
    
    
    
    
    
    (9,509,103
    )Cash and cash equivalents, beginning of period
    
    
    11,083,394
    
    
    
    3,891,699
    
    
    
    
    
    
    
    14,975,093Cash and cash equivalents, end of period
    
    $
    1,985,380
    
    
    $
    3,480,610
    
    
    $
    
    
    
    $
    5,465,990
 18




---



##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEETS
As of April 30, 2008
 GuarantorIMGRC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash and cash equivalents
    
    $
    11,083,394
    
    
    $
    3,891,699
    
    
    $
    
    
    
    $
    14,975,093Accounts receivable
    
    
    18,446
    
    
    
    548,790
    
    
    
    
    
    
    
    567,236Inventories
    
    
    216,590
    
    
    
    823,496
    
    
    
    
    
    
    
    1,040,086Prepaid expenses
    
    
    682,404
    
    
    
    173,350
    
    
    
    
    
    
    
    855,754Total current assets
    
    
    12,000,834
    
    
    
    5,437,335
    
    
    
    
    
    
    
    17,438,169Fixed assets
    
    
    
    
    
    
    299,344,711
    
    
    
    
    
    
    
    299,344,711Accumulated depreciation
    
    
    
    
    
    
    (103,333,993
    )
    
    
    
    
    
    
    (103,333,993
    )Net fixed assets
    
    
    
    
    
    
    196,010,718
    
    
    
    
    
    
    
    196,010,718Non-current assetsOther assets
    
    
    
    
    
    
    50,000
    
    
    
    
    
    
    
    50,000Deferred financing costs
    
    
    4,445,409
    
    
    
    
    
    
    
    
    
    
    
    4,445,409Advances to subsidiaries
    
    
    60,244,217
    
    
    
    5,595,376
    
    
    
    (65,839,593
    )
    
    
    Investment in subsidiaries
    
    
    144,712,780
    
    
    
    
    
    
    
    (144,712,780
    )
    
    
    Total assets
    
    $
    221,403,240
    
    
    $
    207,093,429
    
    
    $
    (210,552,373
    )
    
    $
    217,944,296Accounts payable
    
    $
    2,093,653
    
    
    $
    
    
    
    $
    
    
    
    $
    2,093,653Accrued expenses
    
    
    2,449,839
    
    
    
    848,880
    
    
    
    
    
    
    
    3,298,719Accrued payroll and benefits
    
    
    2,578,145
    
    
    
    
    
    
    
    
    
    
    
    2,578,145Accrued interest
    
    
    11,200,000
    
    
    
    
    
    
    
    
    
    
    
    11,200,000Advanced deposits
    
    
    
    
    
    
    357,648
    
    
    
    
    
    
    
    357,648Current portion of long-term debt
    
    
    3,280,867
    
    
    
    253,547
    
    
    
    
    
    
    
    3,534,414Total current liabilities
    
    
    21,602,504
    
    
    
    1,460,075
    
    
    
    
    
    
    
    23,062,579Non-current LiabilitiesAdvances from subsidiaries
    
    
    5,595,376
    
    
    
    60,244,217
    
    
    
    (65,839,593
    )
    
    
    Long-term debt, net of current portion
    
    
    203,962,645
    
    
    
    676,357
    
    
    
    
    
    
    
    204,639,002Total liabilities
    
    
    231,160,525
    
    
    
    62,380,649
    
    
    
    (65,839,593
    )
    
    
    227,701,581Contributed capital
    
    
    21,648,939
    
    
    
    (6,012,897
    )
    
    
    6,012,897
    
    
    
    21,648,939Retained earnings (accumulated deficit)
    
    
    (31,406,224
    )
    
    
    150,725,677
    
    
    
    (150,725,677
    )
    
    
    (31,406,224
    )Total equity (deficit)
    
    
    (9,757,285
    )
    
    
    144,712,780
    
    
    
    (144,712,780
    )
    
    
    (9,757,285
    )Total liabilities and equity (deficit)
    
    $
    221,403,240
    
    
    $
    207,093,429
    
    
    $
    (210,552,373
    )
    
    $
    217,944,296
 19




---



##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS
For the Three Months Ended January 31, 2008
 GuarantorIMGRC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedRevenues:Gaming
    
    $
    
    
    
    $
    16,839,587
    
    
    $
    
    
    
    $
    16,839,587Hotel
    
    
    
    
    
    
    2,783,690
    
    
    
    
    
    
    
    2,783,690Food and beverage
    
    
    
    
    
    
    3,685,058
    
    
    
    
    
    
    
    3,685,058Recreation and other
    
    
    
    
    
    
    6,101,670
    
    
    
    
    
    
    
    6,101,670Gross revenue
    
    
    
    
    
    
    29,410,005
    
    
    
    
    
    
    
    29,410,005Less -promotional allowances
    
    
    19,460
    
    
    
    457,371
    
    
    
    
    
    
    
    476,831Net revenue
    
    
    (19,460
    )
    
    
    28,952,634
    
    
    
    
    
    
    
    28,933,174Operating ExpensesGaming
    
    
    
    
    
    
    6,105,580
    
    
    
    
    
    
    
    6,105,580Hotel
    
    
    
    
    
    
    1,013,927
    
    
    
    
    
    
    
    1,013,927Food and beverage
    
    
    
    
    
    
    3,999,628
    
    
    
    
    
    
    
    3,999,628Recreation and other
    
    
    
    
    
    
    3,956,607
    
    
    
    
    
    
    
    3,956,607Marketing
    
    
    
    
    
    
    2,506,468
    
    
    
    
    
    
    
    2,506,468General and administrative
    
    
    2,532,129
    
    
    
    1,034,250
    
    
    
    
    
    
    
    3,566,379Health Insurance  Medical
    
    
    
    
    
    
    591,728
    
    
    
    
    
    
    
    591,728Mescalero Apache- 401K
    
    
    
    
    
    
    214,461
    
    
    
    
    
    
    
    214,461Mescalero Apache Telecom
    
    
    
    
    
    
    49,093
    
    
    
    
    
    
    
    49,093Tribal Taxes
    
    
    
    
    
    
    600,000
    
    
    
    
    
    
    
    600,000Depreciation and amortization
    
    
    
    
    
    
    4,087,672
    
    
    
    
    
    
    
    4,087,672Total Operating Expenses
    
    
    2,532,129
    
    
    
    24,159,414
    
    
    
    
    
    
    
    26,691,543Operating Income (loss)
    
    
    (2,551,589
    )
    
    
    4,793,220
    
    
    
    
    
    
    
    2,241,631Other Income (expense)Interest income
    
    
    32,154
    
    
    
    
    
    
    
    
    
    
    
    32,154Interest
    
    
    (6,592,441
    )
    
    
    
    
    
    
    
    
    
    
    (6,592,441
    )Income from subsidiaries
    
    
    4,793,220
    
    
    
    
    
    
    
    (4,793,220
    )
    
    
    Other income
    
    
    44,696
    
    
    
    
    
    
    
    
    
    
    
    44,696Total other expense
    
    
    (1,722,371
    )
    
    
    
    
    
    
    (4,793,220
    )
    
    
    (6,515,591
    )Net income (loss)
    
    $
    (4,273,960
    )
    
    $
    4,793,220
    
    
    $
    (4,793,220
    )
    
    $
    (4,273,960
    )
 20




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS
For the Nine Months Ended January 31, 2008
 GuarantorIMGRC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedRevenues:Gaming
    
    $
    
    
    
    $
    60,135,758
    
    
    $
    
    
    
    $
    60,135,758Hotel
    
    
    
    
    
    
    10,687,186
    
    
    
    
    
    
    
    10,687,186Food and beverage
    
    
    
    
    
    
    11,554,978
    
    
    
    
    
    
    
    11,554,978Recreation and other
    
    
    
    
    
    
    15,786,963
    
    
    
    
    
    
    
    15,786,963Gross revenue
    
    
    
    
    
    
    98,164,885
    
    
    
    
    
    
    
    98,164,885Less -promotional allowances
    
    
    19,460
    
    
    
    1,516,257
    
    
    
    
    
    
    
    1,535,717Net revenue
    
    
    (19,460
    )
    
    
    96,648,628
    
    
    
    
    
    
    
    96,629,168Operating ExpensesGaming
    
    
    
    
    
    
    20,562,395
    
    
    
    
    
    
    
    20,562,395Hotel
    
    
    
    
    
    
    3,399,474
    
    
    
    
    
    
    
    3,399,474Food and beverage
    
    
    
    
    
    
    11,806,481
    
    
    
    
    
    
    
    11,806,481Recreation and other
    
    
    
    
    
    
    11,491,474
    
    
    
    
    
    
    
    11,491,474Marketing
    
    
    
    
    
    
    7,720,885
    
    
    
    
    
    
    
    7,720,885General and administrative
    
    
    5,970,302
    
    
    
    2,573,419
    
    
    
    
    
    
    
    8,543,721Health Insurance  Medical
    
    
    
    
    
    
    1,534,939
    
    
    
    
    
    
    
    1,534,939Mescalero Apache- 401K
    
    
    
    
    
    
    656,725
    
    
    
    
    
    
    
    656,725Mescalero Apache Telecom
    
    
    
    
    
    
    150,138
    
    
    
    
    
    
    
    150,138Tribal Taxes
    
    
    
    
    
    
    1,800,000
    
    
    
    
    
    
    
    1,800,000Depreciation and amortization
    
    
    
    
    
    
    12,472,075
    
    
    
    
    
    
    
    12,472,075Loss on disposal of assets
    
    
    
    
    
    
    63,847
    
    
    
    
    
    
    
    63,847Total Operating Expenses
    
    
    5,970,302
    
    
    
    74,231,852
    
    
    
    
    
    
    
    80,202,154Operating Income (loss)
    
    
    (5,989,762
    )
    
    
    22,416,776
    
    
    
    
    
    
    
    16,427,014Other Income (expense)Interest income
    
    
    168,523
    
    
    
    
    
    
    
    
    
    
    
    168,523Interest
    
    
    (19,843,634
    )
    
    
    
    
    
    
    
    
    
    
    (19,843,634
    )Income from subsidiaries
    
    
    22,416,776
    
    
    
    
    
    
    
    (22,416,776
    )
    
    
    Other income
    
    
    47,003
    
    
    
    
    
    
    
    
    
    
    
    47,003Total other income (expense)
    
    
    2,788,668
    
    
    
    
    
    
    
    (22,416,776
    )
    
    
    (19,628,108
    )Net income (loss)
    
    $
    (3,201,094
    )
    
    $
    22,416,776
    
    
    $
    (22,416,776
    )
    
    $
    (3,201,094
    )
 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 Nine Months ended January 31, 2008
(unaudited)
 GuarantorIMGRC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net income (loss)
    
    $
    (3,201,094
    )
    
    $
    22,416,776
    
    
    $
    (22,416,776
    )
    
    $
    (3,201,094
    )Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:Depreciation and amortization
    
    
    1,218,933
    
    
    
    12,450,320
    
    
    
    
    
    
    
    13,669,253Loss on disposal of fixed assets
    
    
    
    
    
    
    63,857
    
    
    
    
    
    
    
    63,857Changes in assets and liabilities:Accounts receivable
    
    
    (22,530
    )
    
    
    137,325
    
    
    
    
    
    
    
    114,795Tribal accounts receivable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Inventories
    
    
    (69,557
    )
    
    
    (223,202
    )
    
    
    
    
    
    
    (292,759
    )Prepaid expenses
    
    
    (154,749
    )
    
    
    (178,392
    )
    
    
    
    
    
    
    (333,141
    )Other long term assets
    
    
    50,000
    
    
    
    (37,500
    )
    
    
    
    
    
    
    12,500Accounts payable
    
    
    407,215
    
    
    
    
    
    
    
    
    
    
    
    407,215Accrued expenses, payroll and benefits
    
    
    (877,505
    )
    
    
    (13,998
    )
    
    
    
    
    
    
    (891,503
    )Interest payable
    
    
    (6,000,000
    )
    
    
    
    
    
    
    
    
    
    
    (6,000,000
    )Deposits and advance payments
    
    
    
    
    
    
    (359,072
    )
    
    
    
    
    
    
    (359,072
    )Net cash provided by (used in) operating activities
    
    
    (8,649,287
    )
    
    
    34,256,114
    
    
    
    (22,416,776
    )
    
    
    3,190,051Cash flows from investing activities:Purchase of property, plant and equipment
    
    
    
    
    
    
    (1,147,600
    )
    
    
    
    
    
    
    (1,147,600
    )Investment in subsidiaries
    
    
    (22,416,776
    )
    
    
    
    
    
    
    22,416,776
    
    
    
    Net cash used in investing activities
    
    
    (22,416,776
    )
    
    
    (1,147,600
    )
    
    
    22,416,776
    
    
    
    (1,147,600
    )Cash flows from financing activities:Advances to (from) affiliates
    
    
    33,878,119
    
    
    
    (33,878,119
    )
    
    
    
    
    
    
    Principal payments on debt
    
    
    (2,924,578
    )
    
    
    (173,160
    )
    
    
    
    
    
    
    (3,097,738
    )Distributions to Mescalero Apache Tribe
    
    
    (6,003,003
    )
    
    
    
    
    
    
    
    
    
    
    (6,003,003
    )Net cash provided by (used in) financing activities
    
    
    24,950,538
    
    
    
    (34,051,279
    )
    
    
    
    
    
    
    (9,100,741
    )Net decrease in cash and cash equivalents
    
    
    (6,115,525
    )
    
    
    (942,765
    )
    
    
    
    
    
    
    (7,058,290
    )Cash and cash equivalents, beginning of period
    
    
    12,808,711
    
    
    
    4,120,919
    
    
    
    
    
    
    
    16,929,630Cash and cash equivalents, end of period
    
    $
    6,693,186
    
    
    $
    3,178,154
    
    
    $
    
    
    
    $
    9,871,340
 22




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##### Table of Contents



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 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.
 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.
 Overview
  Gaming Travel Center Casino
 Food and Beverage
 Hotel
 23




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##### Table of Contents



Recreation and Other
 Critical Accounting Policies
  Revenue Recognition
 Promotional Allowances
  EITF Accounting for Certain Sales Incentives, 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
 Classification of Departmental Costs
 24




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##### Table of Contents



Deferred Financing Costs
 Impairment of Long Lived Assets. SFAS
144
   Results of Operations
 Quarter Ended January 31, 2009 Compared to Quarter Ended January 31, 2008.
 Net Revenues
 Gaming
 Hotel
 Food and Beverage
 Recreation and Other
 Promotional Allowances
 25




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##### Table of Contents



Total Operating Expenses
 Gaming
 Hotel
 Food and Beverage
 Recreation and Other
 Marketing
 General and Administrative.
 Health Insurance
 Mescalero Apache 401K
 Mescalero Apache Telecom
 Tribal Taxes
 Insurance Reimbursement
 Depreciation
 Storm Costs
 Income from Operations
 26




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##### Table of Contents



Other Income (Expenses)
 Nine Months Ended January 31, 2009 Compared to Nine Months Ended January 31, 2008.
 Net Revenues
 Gaming
 Hotel
 Food and Beverage
 Recreation and Other
 Promotional Allowances
 Total Operating Expenses
 Gaming
 Hotel
 Food and Beverage
 Recreation and Other
 27




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##### Table of Contents



Marketing
 General and Administrative.
 Health Insurance
 Mescalero Apache 401(K)
 Mescalero Apache Telecom
 Tribal Taxes
 Depreciation
 Insurance Reimbursement
 Income from Operations
 Other Income (Expenses)
 Liquidity and Capital Resources
     Senior Notes
 28




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##### Table of Contents



Indenture
   Description of Indebtedness
 The Senior Notes
    Incurrence of Additional Indebtedness
  General Indebtedness
  29




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##### Table of Contents



Credit Facility
  Credit Rating
   Off-Balance Sheet Arrangements
  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
  30




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##### Table of Contents



PART II OTHER INFORMATION
 
 Item 1A. Risk Factors.
  Unless we are able to refinance our outstanding Senior Notes, we do not expect to have cash sufficient to
pay the interest payment on the Senior Notes due on May 15, 2009.
 Senior Notes Indenture
 There would be a default under our furniture and equipment loan if the Senior Notes are
declared immediately due and payable and upon the occurrence of  certain other events. Foreclosure on a material
portion of the collateral securing the loan could significantly impair our ability to
operate the Resort, which would have a material adverse effect on our business.
  Our insurance policy failed to cover all of the storm damage.
  The downturn in the economy may affect consumer spending on discretionary items such as travel and
leisure, which could have a material adverse effect on our business, financial condition and
results of operations.
  
 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.
 31




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##### Table of Contents



SIGNATURES
  INN OF THE MOUNTAIN GODS RESORT AND CASINODate: March 17, 2009
    By
    /s/ Douglas LentzName:
    Douglas LentzIts:
    Chief Operating Officer (Principal Executive Officer) Date: March 17, 2009
    By
    /s/ Daniel McCueName:
    Daniel McCueIts:
    Chief Financial Officer (Principal Financial Officer) 32




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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.
 33