##### 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 July 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
  Not Applicable
    
    75-3158926(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or organization)
    
    Identification Number)
 287 Carrizo Canyon RoadMescalero, New Mexico
    
    88340(Address of principal executive offices)
    
    (Zip Code)
 (505) 464-7000
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




---



##### 



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIESFORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JULY 31, 2009INDEX
 PagesPART I. FINANCIAL INFORMATIONItem 1. Consolidated Financial Statements:
    
    
    1Consolidated Balance Sheets as of April 30, 2009 and July 31, 2009 (unaudited)
    
    
    3Consolidated Statements of Operations for the Three Month Periods Ended July 31, 2008
(unaudited) and 2009 (unaudited)
    
    
    4Consolidated Statements of Cash Flows for the Three Month Periods Ended July 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
    
    
    25Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    31Item 4T. Controls and Procedures
    
    
    32PART II. OTHER INFORMATION
    
    
    32Item 1. Legal Proceedings
    
    
    32Item 1A. Risk Factors
    
    
    32Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    32Item 3. Defaults Upon Senior Securities.
    
    
    32Item 4. Submission of Matters to a Vote of Security Holders
    
    
    32Item 5. Other Information
    
    
    32Item 6. Exhibits
    
    
    34Signatures
    
    
    35EX-31.1EX-32.1
 2




---



##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 As of April 30,
    
    
    As of July 31,2009
    
    
    2009 ( unaudited)Current assetsCash and cash equivalents
    
    $
    7,556,735
    
    
    $
    9,518,994Accounts receivable, net of allowance for doubtful accounts
    
    
    380,936
    
    
    
    385,352Inventories
    
    
    789,564
    
    
    
    870,680Prepaid expenses and other assets
    
    
    449,368
    
    
    
    1,135,082Total current assets
    
    
    9,176,603
    
    
    
    11,910,108Non-current assetsProperty plant and equipment
    
    
    307,605,269
    
    
    
    308,317,223Accumulated depreciation
    
    
    (114,666,272
    )
    
    
    (117,624,698
    )Property plant and equipment, net
    
    
    192,938,997
    
    
    
    190,692,525Other assets
    
    
    161,000
    
    
    
    51,000Deferred financing cost
    
    
    2,820,165
    
    
    
    2,990,306Total assets
    
    $
    205,096,765
    
    
    $
    205,643,939Liabilities and deficitCurrent liabilitiesAccounts payable
    
    $
    2,122,703
    
    
    $
    2,395,903Accrued expenses
    
    
    3,744,079
    
    
    
    4,237,548Accrued payroll and benefits
    
    
    1,378,300
    
    
    
    1,749,119Accrued interest
    
    
    11,200,000
    
    
    
    17,200,000Advance deposits
    
    
    347,995
    
    
    
    566,923Current portion of long-term debt
    
    
    203,931,091
    
    
    
    203,474,802Total current liabilities
    
    
    222,724,168
    
    
    
    229,624,295Non-current liabilitiesLong-term debt, net of current portion
    
    
    990,786
    
    
    
    492,452Total liabilities
    
    
    223,714,954
    
    
    
    230,116,747DeficitContributed capital
    
    
    13,644,939
    
    
    
    5,610,939Accumulated deficit
    
    
    (32,263,128
    )
    
    
    (30,083,747
    )Total deficit
    
    
    (18,618,189
    )
    
    
    (24,472,808
    )Total liabilities and deficit
    
    $
    205,096,765
    
    
    $
    205,643,939
  3




---



##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF OPERATIONS
 (unaudited)
 Three months ended
    
    
    Three months endedJuly 31, 2008
    
    
    July 31, 2009Revenues:Gaming
    
    $
    21,439,995
    
    
    $
    20,779,971Hotel
    
    
    4,104,367
    
    
    
    3,639,388Food and beverage
    
    
    3,866,700
    
    
    
    3,628,663Recreation and other
    
    
    4,232,600
    
    
    
    3,052,957Gross revenue
    
    
    33,643,662
    
    
    
    31,100,979Less-promotional allowances
    
    
    256,784
    
    
    
    173,205Net revenue
    
    
    33,386,878
    
    
    
    30,927,774Operating expensesGaming
    
    
    7,346,919
    
    
    
    6,750,288Hotel expenses
    
    
    1,421,946
    
    
    
    965,671Food and beverage
    
    
    3,885,545
    
    
    
    3,174,236Recreation and other
    
    
    3,589,158
    
    
    
    2,304,600Marketing
    
    
    1,764,509
    
    
    
    2,292,990General and administrative
    
    
    4,315,667
    
    
    
    3,731,220Depreciation and amortization
    
    
    3,076,918
    
    
    
    3,046,303Insurance reimbursement (Note 11)
    
    
    (1,100,000
    )
    
    
    (20,000
    )Storm costs (Note 11)
    
    
    62,227
    
    
    
    14,605Loss on disposal of assets
    
    
    46,118
    
    
    
    Total operating expenses
    
    
    24,409,007
    
    
    
    22,259,913Operating income
    
    
    8,977,871
    
    
    
    8,667,861Other expenseInterest income
    
    
    12,271
    
    
    
    4,270Interest expense
    
    
    (6,559,504
    )
    
    
    (6,497,499
    )Other income
    
    
    
    
    
    
    4,750Total other expense
    
    
    (6,547,233
    )
    
    
    (6,488,479
    )Net income
    
    $
    2,430,638
    
    
    $
    2,179,382
  4




---



##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF CASH FLOWS
 (unaudited)
 Three months ended
    
    
    Three months endedJuly 31, 2008
    
    
    July 31, 2009Cash flows from operating activities:Net income
    
    $
    2,430,638
    
    
    $
    2,179,382Adjustments to reconcile net income to net cash provided
by (used in) operating activities:Depreciation and amortization
    
    
    3,498,170
    
    
    
    2,788,285Insurance reimbursement (paid directly to contractor)
    
    
    (1,100,000
    )
    
    
    Loss on disposal of assets
    
    
    46,118
    
    
    
    Changes in assets and liabilities:Accounts receivable
    
    
    (27,895
    )
    
    
    (4,416
    )Tribal accounts receivable
    
    
    (191,750
    )
    
    
    Inventories
    
    
    79,103
    
    
    
    (81,116
    )Prepaid expenses
    
    
    (134,512
    )
    
    
    (685,714
    )Other long-term assets
    
    
    (213,502
    )
    
    
    110,000Accounts payable
    
    
    510,172
    
    
    
    273,200Accrued expenses, payroll and benefits
    
    
    203,832
    
    
    
    864,288Accrued interest payable
    
    
    (6,000,000
    )
    
    
    6,000,000Deposits and advanced payments
    
    
    645,875
    
    
    
    218,928Net cash (used in) provided by operating activities
    
    
    (253,751
    )
    
    
    11,662,837Cash flows from investing activities:Purchase of property, plant and equipment
    
    
    (494,032
    )
    
    
    (711,954
    )Net cash used in investing activities
    
    
    (494,032
    )
    
    
    (711,954
    )Cash flows from financing activities:Principal payments on long-term debt
    
    
    (858,617
    )
    
    
    (954,624
    )Distributions to Mescalero Apache Tribe
    
    
    (2,001,001
    )
    
    
    (8,034,000
    )Net cash used in financing activities
    
    
    (2,859,618
    )
    
    
    (8,988,624
    )Net (decrease) increase in cash and cash equivalents
    
    
    (3,607,401
    )
    
    
    1,962,259Cash and cash equivalents, beginning of period
    
    
    14,975,093
    
    
    
    7,556,735Cash and cash equivalents, end of period
    
    $
    11,367,692
    
    
    $
    9,518,994Supplemental cash flow information:Cash paid for interest
    
    $
    12,153,193
    
    
    $
    497,499
  5




---



##### 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
 Reporting Entity and Operations
 IMG Resort and Casino Company" 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
 Principles of Consolidation
  Going Concern
  6




---



##### 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
  Inventories
  7




---



##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 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
   Fair Value of Financial Instruments
   Contributed Capital
  8




---



##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 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 Reproduces, or Services to be delivered in the futur
 9




---



##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
  Quarter ended July 31,2008
    
    
    2009Rooms
    
    $
    25,792
    
    
    $
    55,272Food and beverage
    
    
    159,905
    
    
    
    198,252Other
    
    
    (20
    )
    
    
    (265
    )Retail
    
    $
    185,677
    
    
    $
    253,259
 Marketing
  Tribal Taxes
  Classification of Departmental Costs
  10




---



##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 Income Taxes
  New Accounting Pronouncements
 Fair Value
Measurements (SFAS 157).
 The Fair Value Option for Financial Assets
and Financial
Liabilities
   11




---



##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
   NOTE 2ALLOWANCE FOR DOUBTFUL ACCOUNTS
   NOTE 3INVENTORIES
  April 30, 2009
    
    
    July 31, 2009Food and beverage
    
    $
    240,183
    
    
    $
    229,027Golf and pro shop
    
    
    60,962
    
    
    
    93,813Gift shops, fuel and other
    
    
    488,419
    
    
    
    547,840Inventories, net of reserves
    
    $
    789,564
    
    
    $
    870,680
 12




---



##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 NOTE 4PROPERTY, PLANT AND EQUIPMENT, NET
  April 30, 2009
    
    
    July 31, 2009Land
    
    $
    1,000,473
    
    
    $
    1,000,473Buildings
    
    
    212,103,949
    
    
    
    212,103,949Lifts and Snowmaking equipment
    
    
    6,394,805
    
    
    
    6,394,805Non-gaming equipment, furniture and other
    
    
    52,513,112
    
    
    
    52,497,274Gaming equipment
    
    
    21,807,497
    
    
    
    22,281,747Leasehold and land improvements, lake and golf course
    
    
    11,075,633
    
    
    
    11,075,633Subtotal
    
    
    304,895,469
    
    
    
    305,353,881Less accumulated depreciation and amortization
    
    
    (114,666,272
    )
    
    
    (117,624,698
    )Property, plant and equipment, net
    
    
    190,229,197
    
    
    
    187,729,183Construction in progress (CIP)
    
    
    2,709,800
    
    
    
    2,963,342Net Property, plant and equipment
    
    $
    192,938,997
    
    
    $
    190,692,525
 NOTE 5LONG-TERM DEBT
 Notes
   13




---



##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
   April 30, 2009
    
    
    July 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
    
    
    673,505
    
    
    
    606,209Capital Equipment Loans,Three (3)to Five (5) year terms, interest
ranging from 7.55% to 9.9%
    
    
    4,248,372
    
    
    
    3,361,045204,921,877
    
    
    
    203,967,254Less current portion
    
    
    (203,931,091
    )
    
    
    (203,474,802
    )Long-term portion
    
    $
    990,786
    
    
    $
    492,452
  2010
    
    $
    202,976,4682011
    
    
    847,4672012
    
    
    143,319$
    203,967,254
 NOTE 6GAMING REVENUE SHARING AND REGULATORY FEES
 Commission
 State  Compact 
  14




---



##### 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
  Occupancy Fee
  15




---



##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 Employment Agreements
  Consulting Agreement
   NOTE 10RELATED-PARTY TRANSACTIONS
   Shared Services and Cost Allocations
  16




---



##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 Employee Benefits Cost Allocations
   NOTE 11  STORM RECOVERY
    NOTE 12  OPERATING SEGMENTS
    17




---



##### Table of Contents



SELECTED OPERATING SEGMENT FINANCIAL INFORMATION(unaudited, in thousands)
 Gaming
    
    GamingIMG
    
    Travel Ctr
    
    Ski
    
    Non Gaming
    
    Non Segment
    
    ConsolidatedQuarter endedJuly 31, 2008Net Revenue
    
    $
    12,840
    
    
    $
    8,463
    
    
    $
    1
    
    
    $
    12,109
    
    
    $
    (26
    )
    
    $
    33,387Operating Income (Loss)
    
    
    9,903
    
    
    
    6,765
    
    
    
    (1
    )
    
    
    3,210
    
    
    
    (10,899
    )
    
    
    8,978Depreciation Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,077
    
    
    
    3,077Interest Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,560
    )
    
    
    (6,560
    )Interest Income and Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    12Quarter endedJuly 31, 2009Net Revenue
    
    $
    13,178
    
    
    $
    7,597
    
    
    $
    2
    
    
    $
    10,299
    
    
    $
    (148
    )
    
    $
    30,928Operating Income (Loss)
    
    
    10,505
    
    
    
    6,177
    
    
    
    3
    
    
    
    3,841
    
    
    
    (11,858
    )
    
    
    8,668Depreciation Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,046
    
    
    
    3,046Interest Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,497
    )
    
    
    (6,497
    )Interest Income and Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9
    
    
    
    9
 NOTE 13CONSOLIDATING INFORMATION
 wholly-owned
Guarantors
   18




---



##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEETS
As of July 31, 2009
(unaudited)
 Wholly-ownedIMGRC
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash and cash equivalents
    
    $
    5,125,756
    
    
    $
    4,393,238
    
    
    $
    
    
    
    $
    9,518,994Accounts receivable
    
    
    (14,689
    )
    
    
    400,041
    
    
    
    
    
    
    
    385,352Inventories
    
    
    222,218
    
    
    
    648,462
    
    
    
    
    
    
    
    870,680Prepaid expenses
    
    
    1,135,082
    
    
    
    
    
    
    
    
    
    
    
    1,135,082Total current assets
    
    
    6,468,367
    
    
    
    5,441,741
    
    
    
    
    
    
    
    11,910,108Fixed assets
    
    
    
    
    
    
    308,317,223
    
    
    
    
    
    
    
    308,317,223Depreciation
    
    
    
    
    
    
    (117,624,698
    )
    
    
    
    
    
    
    (117,624,698
    )Net fixed assets
    
    
    
    
    
    
    190,692,525
    
    
    
    
    
    
    
    190,692,525Non current assetsOther assets
    
    
    51,000
    
    
    
    
    
    
    
    
    
    
    
    51,000Deferred financing costs
    
    
    2,990,306
    
    
    
    
    
    
    
    
    
    
    
    2,990,306Advances to subsidiaries
    
    
    29,229,379
    
    
    
    8,689,726
    
    
    
    (37,919,105
    )
    
    
    Investment in subsidiaries
    
    
    173,401,522
    
    
    
    
    
    
    
    (173,401,522
    )
    
    
    Total Assets
    
    $
    212,140,574
    
    
    $
    204,823,992
    
    
    $
    (211,320,627
    )
    
    $
    205,643,939Accounts payable
    
    $
    2,395,903
    
    
    $
    
    
    
    $
    
    
    
    $
    2,395,903Accrued expenses
    
    
    3,217,589
    
    
    
    1,019,959
    
    
    
    
    
    
    
    4,237,548Accrued payroll and benefits
    
    
    1,749,119
    
    
    
    
    
    
    
    
    
    
    
    1,749,119Accrued interest
    
    
    17,200,000
    
    
    
    
    
    
    
    
    
    
    
    17,200,000Advance deposits
    
    
    
    
    
    
    566,923
    
    
    
    
    
    
    
    566,923Current portion of long-term debt
    
    
    203,192,938
    
    
    
    281,864
    
    
    
    
    
    
    
    203,474,802Total current liabilities
    
    
    227,755,549
    
    
    
    1,868,746
    
    
    
    
    
    
    
    229,624,295Non current liabilities:Advances from subsidiaries
    
    
    8,689,726
    
    
    
    29,229,379
    
    
    
    (37,919,105
    )
    
    
    Long-term debt, net of current portion
    
    
    168,107
    
    
    
    324,345
    
    
    
    
    
    
    
    492,452Total liabilities
    
    
    236,613,382
    
    
    
    31,422,470
    
    
    
    (37,919,105
    )
    
    
    230,116,747Contributed capital
    
    
    5,610,939
    
    
    
    (6,012,897
    )
    
    
    6,012,897
    
    
    
    5,610,939Retained earnings (deficit)
    
    
    (30,083,747
    )
    
    
    179,414,419
    
    
    
    (179,414,419
    )
    
    
    (30,083,747
    )Total equity (deficit)
    
    
    (24,472,808
    )
    
    
    173,401,522
    
    
    
    (173,401,522
    )
    
    
    (24,472,808
    )Total liabilities and equity (deficit)
    
    $
    212,140,574
    
    
    $
    204,823,992
    
    
    $
    (211,320,627
    )
    
    $
    205,643,939
 19




---



##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS
For the Three Months Ended July 31, 2009
(Unaudited)
 GuarantorIMGRC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedRevenues:Gaming
    
    $
    
    
    
    $
    20,779,971
    
    
    $
    
    
    
    $
    20,779,971Hotel
    
    
    
    
    
    
    3,639,388
    
    
    
    
    
    
    
    3,639,388Food and beverage
    
    
    
    
    
    
    3,628,663
    
    
    
    
    
    
    
    3,628,663Recreation and other
    
    
    
    
    
    
    3,052,957
    
    
    
    
    
    
    
    3,052,957Gross revenue
    
    
    
    
    
    
    31,100,979
    
    
    
    
    
    
    
    31,100,979Less -promotional allowances
    
    
    27,260
    
    
    
    145,945
    
    
    
    
    
    
    
    173,205Net revenue
    
    
    (27,260
    )
    
    
    30,955,034
    
    
    
    
    
    
    
    30,927,774Operating expensesGaming
    
    
    
    
    
    
    6,750,288
    
    
    
    
    
    
    
    6,750,288Hotel
    
    
    
    
    
    
    965,671
    
    
    
    
    
    
    
    965,671Food and beverage
    
    
    
    
    
    
    3,174,236
    
    
    
    
    
    
    
    3,174,236Recreation and other
    
    
    
    
    
    
    2,304,600
    
    
    
    
    
    
    
    2,304,600Marketing
    
    
    
    
    
    
    2,292,990
    
    
    
    
    
    
    
    2,292,990General and administrative
    
    
    
    
    
    
    3,731,220
    
    
    
    
    
    
    
    3,731,220Depreciation and amortization
    
    
    
    
    
    
    3,046,303
    
    
    
    
    
    
    
    3,046,303Insurance reimbursement (Note 11)
    
    
    (20,000
    )
    
    
    
    
    
    
    
    
    
    
    (20,000
    )Storm costs
    
    
    14,605
    
    
    
    
    
    
    
    
    
    
    
    14,605Total operating expenses
    
    
    (5,395
    )
    
    
    22,265,308
    
    
    
    
    
    
    
    22,259,913Operating income (loss)
    
    
    (21,865
    )
    
    
    8,689,726
    
    
    
    
    
    
    
    8,667,861Other income (expense)Interest income
    
    
    4,270
    
    
    
    
    
    
    
    
    
    
    
    4,270Interest expense
    
    
    (6,497,499
    )
    
    
    
    
    
    
    
    
    
    
    (6,497,499
    )Income from subsidiaries
    
    
    8,689,726
    
    
    
    
    
    
    
    (8,689,726
    )
    
    
    Other income
    
    
    4,750
    
    
    
    
    
    
    
    
    
    
    
    4,750Total other income (expense)
    
    
    2,201,247
    
    
    
    
    
    
    
    (8,689,726
    )
    
    
    (6,488,479
    )Net income (loss)
    
    $
    2,179,382
    
    
    $
    8,689,726
    
    
    $
    (8,689,726
    )
    
    $
    2,179,382
 20




---



##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
For the Three Months Ended July 31, 2009
(unaudited)
 GuarantorIMGRC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net income
    
    $
    2,179,382
    
    
    $
    8,689,726
    
    
    $
    (8,689,726
    )
    
    $
    2,179,382Adjustments to reconcile net income to net
cash (used in) provided by operating activities:Depreciation and amortization
    
    
    (170,141
    )
    
    
    2,958,426
    
    
    
    
    
    
    
    2,788,285Changes in assets and liabilities:Accounts receivable
    
    
    127,884
    
    
    
    (132,300
    )
    
    
    
    
    
    
    (4,416
    )Inventories
    
    
    (37,452
    )
    
    
    (43,664
    )
    
    
    
    
    
    
    (81,116
    )Prepaid expenses
    
    
    (685,714
    )
    
    
    
    
    
    
    
    
    
    
    (685,714
    )Other long term assets
    
    
    110,000
    
    
    
    
    
    
    
    
    
    
    
    110,000Accounts payable
    
    
    273,200
    
    
    
    
    
    
    
    
    
    
    
    273,200Accrued expenses, payroll and benefits
    
    
    759,517
    
    
    
    104,771
    
    
    
    
    
    
    
    864,288Accrued interest
    
    
    6,000,000
    
    
    
    
    
    
    
    
    
    
    
    6,000,000Deposits and advance payments
    
    
    
    
    
    
    218,928
    
    
    
    
    
    
    
    218,928Net cash provided by (used in) operating
activities
    
    
    8,556,676
    
    
    
    11,795,887
    
    
    
    (8,689,726
    )
    
    
    11,662,837Cash flows from investing activities:Purchase of property, plant and equipment
    
    
    
    
    
    
    (711,954
    )
    
    
    
    
    
    
    (711,954
    )Investment in subsidiaries
    
    
    (8,689,726
    )
    
    
    
    
    
    
    8,689,726
    
    
    
    Net cash provided by (used by) investing
activities
    
    
    (8,689,726
    )
    
    
    (711,954
    )
    
    
    8,689,726
    
    
    
    (711,954
    )Cash flows from financing activities:Advances to (from) affiliates
    
    
    9,659,920
    
    
    
    (9,659,920
    )
    
    
    
    
    
    
    Principal payments on debt
    
    
    (887,327
    )
    
    
    (67,297
    )
    
    
    
    
    
    
    (954,624
    )Distributions to Mescalero Apache Tribe
    
    
    (8,034,000
    )
    
    
    
    
    
    
    
    
    
    
    (8,034,000
    )Net cash provided by (used in) financing activities
    
    
    738,593
    
    
    
    (9,727,217
    )
    
    
    
    
    
    
    (8,988,624
    )Net increase in cash and cash equivalents
    
    
    605,543
    
    
    
    1,356,716
    
    
    
    
    
    
    
    1,962,259Cash and cash equivalents, beginning of period
    
    
    4,520,213
    
    
    
    3,036,522
    
    
    
    
    
    
    
    7,556,735Cash and cash equivalents, end of period
    
    $
    5,125,756
    
    
    $
    4,393,238
    
    
    $
    
    
    
    $
    9,518,994
 21




---



##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEETS
As of April 30, 2009
 GuarantorIMGRC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash and cash equivalents
    
    $
    4,520,213
    
    
    $
    3,036,522
    
    
    $
    
    
    
    $
    7,556,735Accounts receivable
    
    
    113,195
    
    
    
    267,741
    
    
    
    
    
    
    
    380,936Inventories
    
    
    184,766
    
    
    
    604,798
    
    
    
    
    
    
    
    789,564Prepaid expenses
    
    
    449,368
    
    
    
    
    
    
    
    
    
    
    
    449,368Total current assets
    
    
    5,267,542
    
    
    
    3,909,061
    
    
    
    
    
    
    
    9,176,603Fixed assets
    
    
    
    
    
    
    307,605,269
    
    
    
    
    
    
    
    307,605,269Accumulated depreciation
    
    
    
    
    
    
    (114,666,272
    )
    
    
    
    
    
    
    (114,666,272
    )Net fixed assets
    
    
    
    
    
    
    192,938,997
    
    
    
    
    
    
    
    192,938,997Non-current assetsOther assets
    
    
    161,000
    
    
    
    
    
    
    
    
    
    
    
    161,000Deferred financing costs
    
    
    2,820,165
    
    
    
    
    
    
    
    
    
    
    
    2,820,165Advances to subsidiaries
    
    
    50,198,590
    
    
    
    19,999,016
    
    
    
    (70,197,606
    )
    
    
    Investment in subsidiaries
    
    
    164,711,796
    
    
    
    
    
    
    
    (164,711,796
    )
    
    
    Total Assets
    
    $
    223,159,093
    
    
    $
    216,847,074
    
    
    $
    (234,909,402
    )
    
    $
    205,096,765Accounts payable
    
    $
    2,122,703
    
    
    $
    
    
    
    $
    
    
    
    $
    2,122,703Accrued expenses
    
    
    2,828,891
    
    
    
    915,188
    
    
    
    
    
    
    
    3,744,079Accrued payroll and benefits
    
    
    1,378,300
    
    
    
    
    
    
    
    
    
    
    
    1,378,300Accrued interest
    
    
    11,200,000
    
    
    
    
    
    
    
    
    
    
    
    11,200,000Advance deposits
    
    
    
    
    
    
    347,995
    
    
    
    
    
    
    
    347,995Current portion of long-term debt
    
    
    203,655,133
    
    
    
    275,958
    
    
    
    
    
    
    
    203,931,091Total current liabilities
    
    
    221,185,027
    
    
    
    1,539,141
    
    
    
    
    
    
    
    222,724,168Non-current liabilitiesAdvances from subsidiaries
    
    
    19,999,016
    
    
    
    50,198,590
    
    
    
    (70,197,606
    )
    
    
    Long-term debt, net of current portion
    
    
    593,239
    
    
    
    397,547
    
    
    
    
    
    
    
    990,786Total liabilities
    
    
    241,777,282
    
    
    
    52,135,278
    
    
    
    (70,197,606
    )
    
    
    223,714,954Contributed Capital
    
    
    13,644,939
    
    
    
    (6,012,897
    )
    
    
    6,012,897
    
    
    
    13,644,939Retained Earnings (accumulated deficit)
    
    
    (32,263,128
    )
    
    
    170,724,693
    
    
    
    (170,724,693
    )
    
    
    (32,263,128
    )Total (deficit) equity
    
    
    (18,618,189
    )
    
    
    164,711,796
    
    
    
    (164,711,796
    )
    
    
    (18,618,189
    )Total liabilities and equity (deficit)
    
    $
    223,159,093
    
    
    $
    216,847,074
    
    
    $
    (234,909,402
    )
    
    $
    205,096,765
 22




---



##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS
For the Three Months Ended July 31, 2008
 GuarantorIMGRC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedRevenues:Gaming
    
    $
    
    
    
    $
    21,439,995
    
    
    $
    
    
    
    $
    21,439,995Hotel
    
    
    
    
    
    
    4,104,367
    
    
    
    
    
    
    
    4,104,367Food and beverage
    
    
    
    
    
    
    3,866,700
    
    
    
    
    
    
    
    3,866,700Recreation and other
    
    
    
    
    
    
    4,232,600
    
    
    
    
    
    
    
    4,232,600Gross revenue
    
    
    
    
    
    
    33,643,662
    
    
    
    
    
    
    
    33,643,662Less -promotional allowances
    
    
    15,402
    
    
    
    241,382
    
    
    
    
    
    
    
    256,784Net revenue
    
    
    (15,402
    )
    
    
    33,402,280
    
    
    
    
    
    
    
    33,386,878Operating Expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Gaming
    
    
    
    
    
    
    7,346,919
    
    
    
    
    
    
    
    7,346,919Hotel expenses
    
    
    
    
    
    
    1,421,946
    
    
    
    
    
    
    
    1,421,946Food and beverage
    
    
    
    
    
    
    3,885,545
    
    
    
    
    
    
    
    3,885,545Recreation and other
    
    
    
    
    
    
    3,589,158
    
    
    
    
    
    
    
    3,589,158Marketing
    
    
    
    
    
    
    1,764,509
    
    
    
    
    
    
    
    1,764,509General and administrative
    
    
    2,370,546
    
    
    
    1,945,121
    
    
    
    
    
    
    
    4,315,667Depreciation and amortization
    
    
    
    
    
    
    3,076,918
    
    
    
    
    
    
    
    3,076,918Storm recovery
    
    
    16,108
    
    
    
    46,119
    
    
    
    
    
    
    
    62,227Insurance reimbursement on storm loss
    
    
    (1,100,000
    )
    
    
    
    
    
    
    
    
    
    
    (1,100,000
    )Gain (loss) on disposal of assets
    
    
    
    
    
    
    46,118
    
    
    
    
    
    
    
    46,118Total operating expenses
    
    
    1,286,654
    
    
    
    23,122,353
    
    
    
    
    
    
    
    24,409,007Operating income (loss)
    
    
    (1,302,056
    )
    
    
    10,279,927
    
    
    
    
    
    
    
    8,977,871Other income (expense)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest income
    
    
    12,271
    
    
    
    
    
    
    
    
    
    
    
    12,271Interest expense
    
    
    (6,559,504
    )
    
    
    
    
    
    
    
    
    
    
    (6,559,504
    )Income from subsidiaries
    
    
    10,279,927
    
    
    
    
    
    
    
    (10,279,927
    )
    
    
    Total other income (expense)
    
    
    3,732,694
    
    
    
    
    
    
    
    (10,279,927
    )
    
    
    (6,547,233
    )Net income (loss)
    
    $
    2,430,638
    
    
    $
    10,279,927
    
    
    $
    (10,279,927
    )
    
    $
    2,430,638
 23




---



##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
For the Three Months ended July 31, 2008
(unaudited)
 GuarantorIMGRC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net income
    
    $
    2,430,638
    
    
    $
    10,279,927
    
    
    $
    (10,279,927
    )
    
    $
    2,430,638Adjustments to reconcile net income to net
cash provided by (used in) operating activities:Depreciation and amortization
    
    
    406,311
    
    
    
    3,091,859
    
    
    
    
    
    
    
    3,498,170Insurance reimbursement (paid directly to
contractor)
    
    
    (1,100,000
    )
    
    
    
    
    
    
    
    
    
    
    (1,100,000
    )Loss on disposal of fixed assets
    
    
    
    
    
    
    46,118
    
    
    
    
    
    
    
    46,118Changes in assets and liabilities:Accounts receivable
    
    
    (1,037
    )
    
    
    (26,858
    )
    
    
    
    
    
    
    (27,895
    )Tribal accounts receivable
    
    
    (191,750
    )
    
    
    
    
    
    
    
    
    
    
    (191,750
    )Inventories
    
    
    16,337
    
    
    
    62,766
    
    
    
    
    
    
    
    79,103Prepaid expenses
    
    
    (307,862
    )
    
    
    173,350
    
    
    
    
    
    
    
    (134,512
    )Other long term assets
    
    
    
    
    
    
    (213,502
    )
    
    
    
    
    
    
    (213,502
    )Accounts payable
    
    
    510,172
    
    
    
    
    
    
    
    
    
    
    
    510,172Accrued expenses, payroll and benefits
    
    
    (28,929
    )
    
    
    232,761
    
    
    
    
    
    
    
    203,832Accrued interest payable
    
    
    (6,000,000
    )
    
    
    
    
    
    
    
    
    
    
    (6,000,000
    )Deposits and advance payments
    
    
    
    
    
    
    645,875
    
    
    
    
    
    
    
    645,875Net cash (used in) provided by operating
activities
    
    
    (4,266,120
    )
    
    
    14,292,296
    
    
    
    (10,279,927
    )
    
    
    (253,751
    )Cash flows from investing activities:Purchase of property, plant and equipment
    
    
    
    
    
    
    (494,032
    )
    
    
    
    
    
    
    (494,032
    )Investment in subsidiaries
    
    
    (10,279,927
    )
    
    
    
    
    
    
    10,279,927
    
    
    
    Net cash used by investing activities
    
    
    (10,279,927
    )
    
    
    (494,032
    )
    
    
    10,279,927
    
    
    
    (494,032
    )Cash flows from financing activities:Advances to (from) affiliates
    
    
    13,526,182
    
    
    
    (13,526,182
    )
    
    
    
    
    
    
    Principal payments on debt
    
    
    (796,880
    )
    
    
    (61,737
    )
    
    
    
    
    
    
    (858,617
    )Distributions to Mescalero Apache Tribe
    
    
    (2,001,001
    )
    
    
    
    
    
    
    
    
    
    
    (2,001,001
    )Net cash provided by (used in) financing activities
    
    
    10,728,301
    
    
    
    (13,587,919
    )
    
    
    
    
    
    
    (2,859,618
    )Net (decrease) increase in cash and cash
equivalents
    
    
    (3,817,746
    )
    
    
    210,345
    
    
    
    
    
    
    
    (3,607,401
    )Cash and cash equivalents, beginning of period
    
    
    11,083,394
    
    
    
    3,891,699
    
    
    
    
    
    
    
    14,975,093Cash and cash equivalents, end of period
    
    $
    7,265,648
    
    
    $
    4,102,044
    
    
    $
    
    
    
    $
    11,367,692
 24




---



##### 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.
   25




---



##### Table of Contents



Overview
  Gaming Travel Center Casino
 Food and Beverage
 Hotel
 26




---



##### 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
 27




---



##### Table of Contents



Deferred Financing and Refinancing Costs
 Impairment of Long Lived Assets. SFAS
144
  Results of Operations
 Quarter Ended July 31, 2009 Compared to Quarter Ended July 31, 2008.
 Net Revenues
 Gaming
 Hotel
 Food and Beverage
 Recreation and Other
 Promotional Allowances
 28




---



##### Table of Contents



Total Operating Expenses
 Gaming
 Hotel
 Food and Beverage
 Recreation and Other
 Marketing
 General and Administrative.
 Depreciation
 Storm Costs
 Income from Operations
 Other Income (Expenses)
 Liquidity and Capital Resources
     29




---



##### Table of Contents



Senior Notes
  Description of Indebtedness
 The Senior Notes
    Incurrence of Additional Indebtedness
  General Indebtedness
  30




---



##### Table of Contents



Credit Facility
   Credit Rating
   Off-Balance Sheet Arrangements
  Regulation and Taxes
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
   31




---



##### Table of Contents



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.
  
 Item 5. Other Information.
  32




---



##### Table of Contents



33




---



##### Table of Contents



Item 6. Exhibits.
 Exhibit No.
    
    Description31.1
    
    Certification of Principal Executive Officer and
Interim-Principal Financial Officer Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Principal Executive Officer and
Interim-Principal Financial Officer Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
 34




---



##### Table of Contents



SIGNATURES
  INN OF THE MOUNTAIN GODS RESORT AND CASINODate: September 14, 2009
    
    By
    
    /s/ Liz Foster AndersonName:
    
    Liz Foster AndersonIts:
    
    Chief Operating
Officer (Principal
Executive Officer)
and Interim Chief
Financial Officer
(Principal
Financial Officer)
 35




---



##### Table of Contents



INDEX TO EXHIBITS
 Exhibit No.
    
    Description31.1
    
    Certification of Principal Executive Officer and
Interim-Principal Financial Officer Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Principal Executive Officer and
Interim-Principal Financial Officer Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
 36