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**UNITEDSTATES**

**SECURITIESAND EXCHANGE COMMISSION**

**WASHINGTON, D. C.  20549**

 

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**FORM 10-Q/A**

 

**Amendment No. 1**

 

**(Mark One)**

 

**x****      QUARTERLY REPORT PURSUANT TOSECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.**

 

**For the quarterly period ended September 30, 2010**

 

**OR**

 

**o****         TRANSITION REPORTPURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934.**

 

**For the transition period from to**

 

**Commission File Number: 333-115186**

 

**RIVERROCK ENTERTAINMENT AUTHORITY**

(Exactname of registrant as specified in its charter)

 

| **Not Applicable**               | ** ** | **68-0490898**       |
|----------------------------------|------------|----------------------|
| (State  or other jurisdiction of |       | (I.R.S.  Employer    |
| incorporation  or organization)  |       | Identification  No.) |

 

**3250 Highway 128 EastGeyserville, California 95441(707) 857-2777**

(Address,including zip code, and telephone number,including area code, of registrant’s principal executive offices)

 

Indicate by check markwhether the registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes  x  No  o

 

Indicateby check mark whether the registrant has submitted electronically and posted onits corporate website, if any, every Interactive Data File required to besubmitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 ofthis chapter) during the preceding 12 months (or for such shorter period thatthe registrant was required to submit and post such files). Yes  o  No  o

 

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a smaller reporting company. See definitions of “largeaccelerated filer,” “accelerated filer,” and “smaller reporting company” inRule 12b-2 of the Exchange Act. (Check one):

 

| Large  accelerated filer o                     |   | Accelerated  filer o         |
|------------------------------------------------|--------|-----------------------------------|
|                                           |   |                              |
| Non-accelerated  filer x                       |   | Smaller  reporting company o |
| (Do  not check if a smaller reporting company) |   |                              |

 

Indicate by check markwhether the Registrant is a shell company (as defined in Rule 12b-2 of theExchange Act). Yes  o  No  x

 

 

 

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**RIVER ROCKENTERTAINMENT AUTHORITY**

**INDEX TO FORM 10-Q/A**

 
| **Item**           | ** **                                                                                                                                                     | **Description** | ** ** |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------|------------|
|               |                                                                                                                                                           |            |
| ** **         | **PART I  — FINANCIAL INFORMATION**                                                                                                                  | ** **      |
|               |                                                                                                                                                           |            |
| 1.                 | Unaudited Condensed  Financial Statements                                                                                                                      | 4               |
|               | Condensed  Balance Sheets-September 30, 2010 (unaudited) and December 31, 2009                                                                       | 4               |
|               | Unaudited  Condensed Statements of Revenues, Expenses and Changes in Net Assets  (Deficit) — Three and Nine Months ended September 30, 2010 and 2009 | 5               |
|               | Unaudited  Condensed Statements of Cash Flows — Nine Months ended September 30,  2010 and 2009                                                       | 6               |
|               | Notes  to Unaudited Condensed Financial Statements                                                                                                             | 8               |
|               |                                                                                                                                                           |            |
| ** **         | **PART II  — OTHER INFORMATION**                                                                                                                     | ** **      |
|               |                                                                                                                                                           |            |
| 6.                 | Exhibits                                                                                                                                                       | 18              |
|               |                                                                                                                                                           |            |
| Signatures         |                                                                                                                                                           | 19              |
|               |                                                                                                                                                           |            |
| Exhibit Index |                                                                                                                                                           | 19              |

 

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**EXPLANATORY NOTE**

 

Weare filing this Amendment No. 1 on Form 10-Q/A (“Form 10-Q/A”)to amend our Form 10-Q for the three months ended September 30,2010.  We originally filed ourForm 10-Q for the three months ended September 30, 2010 (the “OriginalFiling”) on November 12, 2010. We are filing this Form 10-Q/A tocorrect the following typographical errors on the Balance Sheet for the periodending September 30, 2010, set forth on page 4 of the Original Filingin “Part I — Financial Information, Item 1 — FinancialStatements (Unaudited)”: 1. the title, “Condensed Balance Sheets”, included atypographical error that reads “June 30, 2010 and 2009” which should havebeen deleted; 2. total current liabilities at September 30, 2010 was$23,907,408 not $24,007,408 as had been previously reported; and 3. totalliabilities at September 30, 2010 was $223,542,057 not $223,642,057.

 

**CAUTIONARY STATEMENT**

 

*Except forthe historical financial information contained herein, the matters discussed inthis report on Form 10-Q/A (as well as documents incorporated herein byreference) may be considered forward-looking statements within the meaning ofSection 27A of the Securities Act of 1933, as amended, andSection 21E of the Securities Exchange Act of 1934, as amended (the “ExchangeAct”).  Such forward-looking statementsare based upon current expectations that involve risks and uncertainties andinclude declarations regarding the intent, belief or current expectations of usand our management and may be signified by the words “believes,” “anticipates,”“plans,” “expects,” “intends” and similar expressions. Our actual results andthe timing of certain events may differ significantly from the resultsdiscussed in the forward-looking statements. All forward-looking statements inthis document are based on information available to us as of the date hereof,and we assume no obligation to update any such forward-looking statements,whether as a result of new information, future events, or otherwise. Alldiscussion in this report should be read in conjunction with our financial statementsand the accompanying notes contained in this report.*

 

*Referencesin this Form 10-Q/A to the “Authority” and the “Tribe” are to the RiverRock Entertainment Authority and the Dry Creek Rancheria Band of Pomo Indians,respectively. The terms “we,” “us” and “our” refer to the Authority.*

 

*Our keyrisks are described in our annual report on Form 10-K filed with theSecurities and Exchange Commission.*

 

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**PART I.FINANCIAL INFORMATION**

**ITEM 1.FINANCIAL STATEMENTS (UNAUDITED)**

 

**(A Governmental Instrumentality of the Dry Creek RancheriaBand of Pomo Indians)**

 

**CONDENSED BALANCE SHEETS**

 
| ** **                                      | ** ** | **September 30, 2010** | ** **  | **December 31, 2009** | ** ** |
|-------------------------------------------------|------------|----------------------------------|-------------|---------------------------------|------------|
| ** **                                      | ** ** | **(Unaudited)**                  | ** **  | ** **                      | ** ** |
| **ASSETS**                                      |       |                             |        |                            |       |
| CURRENT  ASSETS:                                |       |                             |        |                            |       |
| Cash  and cash equivalents                      |       | $                                | 43,653,977  |                            | $          | 31,617,507 |   |
| Accounts  receivable                            |       | 34,952                           |        | 266,146                         |       |
| Inventories                                     |       | 80,309                           |        | 77,643                          |       |
| Prepaid  expenses and other current assets      |       | 1,299,216                        |        | 1,379,133                       |       |
|                                            |       |                             |        |                            |       |
| Total  current assets                           |       | 45,068,454                       |        | 33,340,429                      |       |
|                                            |       |                             |        |                            |       |
| RESTRICTED  CASH                                |       | 4,328,870                        |        | 7,097,526                       |       |
|                                            |       |                             |        |                            |       |
| CAPITAL  ASSETS:                                |       |                             |        |                            |       |
| Buildings  and building improvements            |       | 132,886,286                      |        | 131,361,604                     |       |
| Furniture,  fixtures and equipment              |       | 33,020,780                       |        | 35,102,290                      |       |
| Accumulated  depreciation                       |       | (63,891,253                      | )           | (60,121,221                     | )          |
| Construction  in progress                       |       | 75,337,956                       |        | 59,588,618                      |       |
|                                            |       |                             |        |                            |       |
| Capital  assets - net                           |       | 177,353,769                      |        | 165,931,291                     |       |
|                                            |       |                             |        |                            |       |
| DEPOSITS  AND OTHER ASSETS                      |       | 1,772,584                        |        | 1,936,623                       |       |
|                                            |       |                             |        |                            |       |
| TOTAL  ASSETS                                   |       | $                                | 228,523,677 |                            | $          | 208,305,869 |   |
|                                            |       |                             |        |                            |       |
| **LIABILITIES AND NET ASSETS (DEFICIT)**        |       |                             |        |                            |       |
| ** **                                      |       |                             |        |                            |       |
| CURRENT  LIABILITIES:                           |       |                             |        |                            |       |
| Accounts  payable                               |       | $                                | 3,223,149   |                            | $          | 6,060,663 |   |
| Payable  to Tribe                               |       | 7,517,818                        |        | —                          |       |
| Accrued  liabilities                            |       | 13,166,441                       |        | 7,695,373                       |       |
| Current  maturities of long-term debt           |       | —                           |        | 492,203                         |       |
| Total  current liabilities                      |       | 23,907,408                       |        | 14,248,239                      |       |
|                                            |       |                             |        |                            |       |
| LONG-TERM  DEBT - net of current maturities     |       | 199,634,649                      |        | 199,381,712                     |       |
|                                            |       |                             |        |                            |       |
| Total  long-term liabilities                    |       | 199,634,649                      |        | 199,381,712                     |       |
|                                            |       |                             |        |                            |       |
| TOTAL  LIABILITIES                              |       | 223,542,057                      |        | 213,629,951                     |       |
|                                            |       |                             |        |                            |       |
| COMMITMENTS  AND CONTINGENCIES                  |       |                             |        |                            |       |
|                                            |       |                             |        |                            |       |
| NET  ASSETS (DEFICIT)                           |       |                             |        |                            |       |
| Invested  in capital assets-net of related debt |       | (22,280,880                      | )           | (33,942,624                     | )          |
| Restricted  for capital projects                |       | 4,328,870                        |        | 7,097,526                       |       |
| Unrestricted                                    |       | 22,933,630                       |        | 21,521,016                      |       |
|                                            |       |                             |        |                            |       |
| Total  net assets (deficit)                     |       | 4,981,620                        |        | (5,324,082                      | )          |
|                                            |       |                             |        |                            |       |
| TOTAL  LIABILITIES AND NET ASSETS (DEFICIT)     |       | $                                | 228,523,677 |                            | $          | 208,305,869 |   |

 

The accompanying notes are an integral part of these unaudited interimfinancial statements.

 

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**RIVER ROCK ENTERTAINMENT AUTHORITY**

**(A Governmental Instrumentality of the Dry Creek RancheriaBand of Pomo Indians)**

 

**CONDENSED STATEMENTS OF REVENUES, EXPENSES AND CHANGESIN NET ASSETS (DEFICIT)**

**(Unaudited)**

 
| ** **                                  | ** ** | **Three-Month Period Ended** | ** ** | **Nine-Month Period Ended** | ** ** |
|---------------------------------------------|------------|----------------------------------------|------------|---------------------------------------|------------|
| ** **                                  | ** ** | **September 30,**                 | ** ** | **September 30,**                | ** ** |
| ** **                                  | ** ** | **2010**                               | ** ** | **2009**                              | ** ** | **2010** | ** ** | **2009** | ** ** |
| **OPERATING REVENUES:**                     |       |                                   |       |                                  |       |   |   |   |   |
|                                        |       |                                   |       |                                  |       |   |   |   |   |
| Casino                                      |       | $                                      | 29,059,197 |                                  | $          | 28,151,221 |   | $ | 91,135,512 |   | $ | 87,572,755 |   |
| Food,  beverage, and retail                 |       | 1,499,183                              |       | 1,459,193                             |       | 4,422,390 |   | 4,366,065 |   |
| Other                                       |       | 274,169                                |       | 224,493                               |       | 781,441 |   | 686,858 |   |
|                                        |       |                                   |       |                                  |       |   |   |   |   |
| Gross  revenues                             |       | 30,832,549                             |       | 29,834,907                            |       | 96,339,343 |   | 92,625,678 |   |
|                                        |       |                                   |       |                                  |       |   |   |   |   |
| Promotional  allowances                     |       | (462,355                               | )          | (318,348                              | )          | (1,281,280 | ) | (1,006,645 | ) |
|                                        |       |                                   |       |                                  |       |   |   |   |   |
| Net  revenues                               |       | 30,370,194                             |       | 29,516,559                            |       | 95,058,063 |   | 91,619,033 |   |
|                                        |       |                                   |       |                                  |       |   |   |   |   |
| OPERATING  EXPENSES:                        |       |                                   |       |                                  |       |   |   |   |   |
| Casino                                      |       | 4,225,756                              |       | 3,670,167                             |       | 12,110,705 |   | 11,767,556 |   |
| Food,  beverage, and retail                 |       | 1,914,685                              |       | 1,811,574                             |       | 5,420,269 |   | 5,576,559 |   |
| Selling,  general, and administrative       |       | 9,944,330                              |       | 9,521,985                             |       | 30,647,743 |   | 29,419,073 |   |
| Depreciation                                |       | 2,598,240                              |       | 2,388,383                             |       | 7,392,513 |   | 7,144,404 |   |
| Gaming  commission and surveillance expense |       | 853,775                                |       | 985,703                               |       | 2,389,222 |   | 2,901,577 |   |
| Compact  revenue sharing trust fund         |       | 333,750                                |       | 333,750                               |       | 1,001,250 |   | 1,001,250 |   |
| (Gain)  on sale of assets                   |       | —                                 |       | —                                |       | — |   | (33,000 | ) |
|                                        |       |                                   |       |                                  |       |   |   |   |   |
| Total  Operating expenses                   |       | 19,870,536                             |       | 18,711,562                            |       | 58,961,702 |   | 57,777,419 |   |
|                                        |       |                                   |       |                                  |       |   |   |   |   |
| INCOME  FROM OPERATIONS                     |       | 10,499,658                             |       | 10,804,997                            |       | 36,096,361 |   | 33,841,614 |   |
|                                        |       |                                   |       |                                  |       |   |   |   |   |
| NON-OPERATING  EXPENSE-Net:                 |       |                                   |       |                                  |       |   |   |   |   |
| Interest  expense                           |       | (5,214,736                             | )          | (5,214,781                            | )          | (15,644,208 | ) | (15,645,267 | ) |
| Interest  income                            |       | 19,609                                 |       | 21,244                                |       | 47,485 |   | 53,044 |   |
|                                        |       |                                   |       |                                  |       |   |   |   |   |
| Non-operating  expense-net                  |       | (5,195,127                             | )          | (5,193,537                            | )          | (15,596,723 | ) | (15,592,223 | ) |
|                                        |       |                                   |       |                                  |       |   |   |   |   |
| INCOME  BEFORE DISTRIBUTIONS TO TRIBE       |       | 5,304,531                              |       | 5,611,460                             |       | 20,499,638 |   | 18,249,391 |   |
|                                        |       |                                   |       |                                  |       |   |   |   |   |
| DISTRIBUTIONS  TO TRIBE                     |       | (3,397,978                             | )          | (3,324,979                            | )          | (10,193,936 | ) | (9,974,938 | ) |
|                                        |       |                                   |       |                                  |       |   |   |   |   |
| CHANGES  IN NET ASSETS                      |       | 1,906,553                              |       | 2,286,481                             |       | 10,305,702 |   | 8,274,453 |   |
|                                        |       |                                   |       |                                  |       |   |   |   |   |
| NET  ASSETS (DEFICIT) -Beginning of period  |       | 3,075,067                              |       | (9,681,182                            | )          | (5,324,082 | ) | (15,669,154 | ) |
|                                        |       |                                   |       |                                  |       |   |   |   |   |
| NET  ASSETS (DEFICIT) -End of period        |       | $                                      | 4,981,620  |                                  | $          | (7,394,701 | ) | $ | 4,981,620 |   | $ | (7,394,701 | ) |

 

The accompanying notes are an integral part of these unaudited interimfinancial statements.

 

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**RIVER ROCK ENTERTAINMENT AUTHORITY**

**(A Governmental Instrumentality of the Dry Creek RancheriaBand of Pomo Indians)**

 

**CONDENSED STATEMENTS OFCASH FLOWS**

**(Unaudited)**

 
| ** **                                                            | ** ** | **Nine-Month**         | ** ** |
|-----------------------------------------------------------------------|------------|------------------------|------------|
| ** **                                                            | ** ** | **Period Ended**  | ** ** |
| ** **                                                            | ** ** | **September 30,** | ** ** |
| ** **                                                            | ** ** | **2010**               | ** ** | **2009** | ** ** |
| **CASH FLOWS FROM OPERATING  ACTIVITIES:**                            |       |                   |       |   |   |
| Cash received from gaming winnings and  concessions                   |       | $                      | 95,138,762 |   | $ | 91,653,393 |   |
| Cash paid for salaries and benefits                                   |       | (20,742,874            | )          | (21,449,143 | ) |
| Cash paid to suppliers                                                |       | (29,931,376            | )          | (29,253,527 | ) |
| Cash paid for compact revenue sharing  trust fund                     |       | (1,001,250             | )          | (1,001,250 | ) |
|                                                                  |       |                   |       |   |   |
| Net cash provided by operating  activities                            |       | 43,463,262             |       | 39,949,473 |   |
|                                                                  |       |                   |       |   |   |
| **CASH FLOWS FROM CAPITAL  AND RELATED FINANCING ACTIVITIES:**        |       |                   |       |   |   |
| Payments of debt                                                      |       | (492,203               | )          | (156,966 | ) |
| Payments of Offering Cost in Connection  with Refinancing of Debt     |       | (515,191               | )          | — |   |
| Purchases of capital assets                                           |       | (4,917,130             | )          | (4,542,366 | ) |
| Transfers to the Tribe for development  costs and slope reinforcement |       | (8,287,432             | )          | (8,067,445 | ) |
| Change in restricted cash                                             |       | 2,768,656              |       | (5,377 | ) |
| Interest paid                                                         |       | (9,750,000             | )          | (9,751,058 | ) |
| Proceeds from sale of assets                                          |       | —                 |       | 33,000 |   |
| Issuance of Short-term Debt to purchase  slots                        |       | —                 |       | 715,500 |   |
| Other                                                                 |       | (87,041                | )          | — |   |
|                                                                  |       |                   |       |   |   |
| Net cash used in capital and related  financing activities            |       | (21,280,341            | )          | (21,774,712 | ) |
|                                                                  |       |                   |       |   |   |
| **CASH FLOWS PROVIDED BY  INVESTING ACTIVITIES:**                     |       |                   |       |   |   |
| Interest Income                                                       |       | 47,485                 |       | 53,044 |   |
|                                                                  |       |                   |       |   |   |
| **CASH FLOWS USED IN  NON-CAPITAL FINANCING ACTIVITIES:**             |       |                   |       |   |   |
| ** **                                                            |       |                   |       |   |   |
| Distributions to Tribe                                                |       | (10,193,936            | )          | (9,974,938 | ) |
|                                                                  |       |                   |       |   |   |
| **CHANGE IN CASH AND CASH  EQUIVALENTS**                              |       | 12,036,470             |       | 8,252,867 |   |
| ** **                                                            |       |                   |       |   |   |
| **CASH AND CASH  EQUIVALENTS, Beginning of the period**               |       | 31,617,507             |       | 27,348,392 |   |
| ** **                                                            |       |                   |       |   |   |
| **CASH AND CASH  EQUIVALENTS, End of the period**                     |       | $                      | 43,653,977 |   | $ | 35,601,259 |   |

 

The accompanying notes are an integral part of these unaudited interimfinancial statements.

 

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**RIVER ROCK ENTERTAINMENT AUTHORITY**

**(A Governmental Instrumentality of the Dry Creek RancheriaBand of Pomo Indians)**

 

**CONDENSED STATEMENTS OF CASH FLOWS**

**(Unaudited)**

 
| ** **                                                                                  | ** ** | **Nine-Month**         | ** ** |
|---------------------------------------------------------------------------------------------|------------|------------------------|------------|
| ** **                                                                                  | ** ** | **Period Ended**  | ** ** |
| ** **                                                                                  | ** ** | **September 30,** | ** ** |
| ** **                                                                                  | ** ** | **2010**               | ** ** | **2009** | ** ** |
| **RECONCILIATION OF  INCOME FROM OPERATIONS TO NET CASH PROVIDED BY OPERATING ACTIVITIES:** |       |                   |       |   |   |
|                                                                                        |       |                   |       |   |   |
| Income From Operations                                                                      |       | $                      | 36,096,361 |   | $ | 33,841,614 |   |
|                                                                                        |       |                   |       |   |   |
| Adjustments to reconcile operating  income to net cash provided by operating activities:    |       |                   |       |   |   |
| Depreciation                                                                                |       | 7,392,513              |       | 7,144,404 |   |
| (Gain) on sale of assets                                                                    |       | —                 |       | (33,000 | ) |
| Changes in operating assets and  liabilities:                                               |       |                   |       |   |   |
| Accounts receivable                                                                         |       | 231,194                |       | (179,459 | ) |
| Inventories                                                                                 |       | (2,666                 | )          | 77,642 |   |
| Prepaid expenses                                                                            |       | 79,917                 |       | 73,774 |   |
| Deposit and other assets                                                                    |       | —                 |       | 57,708 |   |
| Accounts payable                                                                            |       | (986,037               | )          | (1,070,907 | ) |
| Related party payable                                                                       |       | 55,912                 |       | — |   |
| Accrued liabilities                                                                         |       | 596,068                |       | 37,697 |   |
| Total adjustments                                                                           |       | 7,366,901              |       | 6,107,859 |   |
|                                                                                        |       |                   |       |   |   |
| **NET CASH PROVIDED BY  OPERATING ACTIVITIES**                                              |       | $                      | 43,463,262 |   | $ | 39,949,473 |   |
| ** **                                                                                  |       |                   |       |   |   |
| **SUPPLEMENTARY SCHEDULE  OF NONCASH CAPITAL AND RELATED FINANCING ACTIVITIES:**            |       |                   |       |   |   |
| ** **                                                                                  |       |                   |       |   |   |
| Acquisition of property and equipment  through accounts payable                             |       | $                      | 727,655    |   | $ | — |   |
|                                                                                        |       |                   |       |   |   |
| Acquisition of property and equipment  through transfers to Tribe for development costs     |       | $                      | 14,397,678 |   | $ | — |   |
|                                                                                        |       |                   |       |   |   |
| Acquisition of property and equipment  through transfers to Tribe for slope reinforcement   |       | $                      | 1,351,660  |   | $ | — |   |

 

The accompanying notes are an integral part of these unaudited interimfinancial statements.

 

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**NOTES TOUNAUDITED CONDENSED FINANCIAL STATEMENTS**

 

**1.****                         ****DESCRIPTIONOF BUSINESS**

 

RiverRock Entertainment Authority (the “Authority”) is a governmentalinstrumentality of the Dry Creek Rancheria Band of Pomo Indians (the “Tribe”),a federally recognized Indian tribe. River Rock Casino (the “Casino”) is agovernmental development project of the Authority. The Casino offersClass III gaming (as defined by the Indian Gaming Regulatory Act of 1988,as amended) on tribal land located in Geyserville, California. The legalauthority for slot machines and table games is provided by the Tribe’s gamingcompact with the State of California (the “Compact”), which was entered into inSeptember 1999 and became effective upon approval by the Secretary ofInterior on May 5, 2000.  The Compact expires on December 31,2020.

 

The Authority was formed asan unincorporated instrumentality of the Tribe on November 5, 2003pursuant to a reorganization whereby the Tribe’s gaming business became ownedand operated by the Authority. This reorganization was accounted for as areorganization of entities under common control. Accordingly, after thereorganization, the assets and liabilities of the Casino’s operating propertywere presented by the Authority on a historical-cost basis.

 

TheAuthority operates as a separate, wholly owned operating unit of the Tribe andis not a separate legal entity. These financial statements reflect thefinancial position and activity of the Authority only and do not purport torepresent the financial position and activity of the Tribe.

 

**2.****                               ****BASIS OF PRESENTATION, UNAUDITED INTERIM FINANCIAL STATEMENTS**

 

Theunaudited condensed financial statements of the Authority, presented herein arepresented on the same basis and can be compared to the audited financialstatements reported in the Authority’s 2009 Annual Report on Form 10-K,filed with the Securities and Exchange Commission (“the SEC”). The accompanyingcondensed balance sheet as of December 31, 2009 has been derived from theaudited financial statements included in the Authority’s Annual Report onForm 10-K for the year ended December 31, 2009.

 

RiverRock Entertainment Authority has made its disclosures in accordance withaccounting principles generally accepted in the United States of America asthey apply to interim reporting, but condensed or omitted certain informationand disclosures normally included in notes to financial statements inaccordance with the SEC’s rules and regulations. The unaudited condensedfinancial statements should be read in conjunction with the financialstatements and the notes thereto in River Rock Entertainment Authority’s AnnualReport on Form 10-K for the year ended December 31, 2009.

 

Inthe opinion of the Authority’s management, the accompanying unaudited interimcondensed financial statements contain all adjustments (consisting of normalrecurring adjustments) to fairly present the Authority’s condensed financialposition as of September 30, 2010 and the condensed statements ofrevenues, expenses and changes in net assets (deficit) for the three and ninemonth periods ended September 30, 2010 and 2009, and condensed statementsof cash flows for the nine months ended September 30, 2010 and 2009, asapplicable. The condensed statements of revenues, expenses and changes in netassets (deficit) and condensed cash flows for all periods presented are notnecessarily indicative of the results of operations or cash flows expected forthe year or any other period.

 

**3.****                   ****SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES**

 

*Accounting Standards*—The Authority prepares itsfinancial statements in accordance with accounting principles generallyaccepted in the United States of America (“GAAP”) applicable to State and localgovernment agencies and, as such, the Authority is accounted for as aproprietary fund. The financial statements presented are prepared on theaccrual basis of accounting from the accounts and financial transactions of theAuthority. GAAP requires the Authority to apply all applicable pronouncementsof the Governmental Accounting Standards Board (“GASB”). The Authority is alsorequired to follow the Accounting Standards Codification issued by theFinancial Accounting Standards Board (“FASB”) for topics issued on or beforeNovember 30, 1989, unless those topics conflict with or contradict GASBpronouncements.  The Authority is given the option whether to apply theFASB topics issued after November 30, 1989, except for those that conflict

 

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withor contradict GASB pronouncements. Accordingly, the Authority has elected toimplement non-conflicting FASB topics issued after November 30, 1989.

 

Thereare differences between financial statements prepared in accordance with GASBpronouncements and those prepared in accordance with the FASB Codification. Thestatements of revenues, expenses and changes in net assets (deficit) are acombined statement under GASB pronouncements. The FASB Codification allows astatement of income or operations and a separate statement of owners’ orshareholders’ equity (deficit), which is where distributions to owners would bepresented.  The amount shown as income before distributions to Tribe wouldbe the most comparable amount to net income computed under the FASBCodification.  The Authority is a separate enterprise fund of the Tribe, agovernmental entity, and as such there is no owners’ or shareholders’ equity(deficit) as traditionally represented under the FASB Codification.  Themost comparable measure of owners’ equity (deficit) is presented on theAuthority’s balance sheet as net assets (deficit).

 

During the third quarter of2009, the Authority adopted the new Accounting Standards Codification (“ASC”)as issued by the FASB.  The ASC hasbecome the source of authoritative GAAP recognized by the FASB to be applied bynongovernmental entities.  Rules andinterpretive releases of the SEC under authority of federal securities laws arealso sources of authoritative GAAP for SEC registrants.  The ASC is not intended to change or alterexisting GAAP.  The adoption of the ASCdid not have a material impact on the Authority’s financial statements.

 

FASBhas issued Accounting Standards Update (“ASU”) No. 2010-06, “*Fair Value Measurements and Disclosures (Topic 820) -Improving Disclosures about Fair Value Measurements*.” This ASUrequires certain new disclosures and clarifies some existing disclosurerequirements about fair value measurement as set forth in Codification Subtopic820-10. The FASB’s objective is to improve these disclosures and, thus,increase the transparency in financial reporting. Specifically, ASU 2010-06amends Codification Subtopic 820-10 to now require: (A) A reporting entityshould disclose separately the amounts of significant transfers in and out of Level1 and Level 2 fair value measurements and describe the reasons for thetransfers; and (B) In the reconciliation for fair value measurements usingsignificant unobservable inputs, Level 3, a reporting entity should presentseparately information about purchases, sales, issuances, andsettlements.  In addition, ASU 2010-06 clarifies the requirements of thefollowing existing disclosures: (A) For purposes of reporting fair valuemeasurement for each class of assets and liabilities, a reporting entity needsto use judgment in determining the appropriate classes of assets andliabilities; and (B) A reporting entity should provide disclosures aboutthe valuation techniques and inputs used to measure fair value for bothrecurring and nonrecurring fair value measurements.  ASU 2010-06 iseffective for interim and annual reporting periods beginning afterDecember 15, 2009, except for the disclosures about purchases, sales,issuances, and settlements in the roll forward of activity in Level 3 fairvalue measurements. Those disclosures are effective for fiscal years beginningafter December 15, 2010, and for interim periods within those fiscalyears. As this update is only “disclosure-related,” it does not have an impacton the Authority’s financial position and results of revenues, expenses andchanges in net assets (deficit).

 

FASB has issued ASU No. 2010-16,“*Entertainment — Casinos (Topic 924) — Accruals forCasino Jackpot Liabilities.*” This ASU addresses the accounting for casino base jackpot liabilities,specifically, whether an entity accrues liabilities for a base jackpot beforeit is won if the entity is not required to award the base jackpot.  This ASU clarifies that an entity should notaccrue jackpot liabilities (or portions thereof) before a jackpot is won if theentity can avoid paying that jackpot. Jackpots should be accrued and charged to revenue when an entity has theobligation to pay the jackpot.  Thisguidance applies to both base and progressive jackpots.  This ASU is effective for fiscal yearsbeginning after December 15, 2010, and for interim periods within thosefiscal years.  The adoption of this newstandard is not expected to have any effect on the Authority’s financialposition or result of operations.

 

*Use ofEstimates*—The preparation of financial statements inconformity with GAAP requires management to make estimates and assumptions thataffect the reported amounts of assets and liabilities and disclosures of contingentassets and liabilities at the date of the financial statements, and thereported amounts of revenues and expenses during the reporting period.Significant estimates include legal and other contingencies, obligations underplayers’ club programs and useful lives and recoverability of long-livedassets. Actual results could differ from these estimates.

 

*Cash andCash Equivalents*— The Authority considers all highly liquidinvestments with a maturity of three months or less at date of purchase as cashequivalents. The carrying amount of cash and cash equivalents approximates itsfair value.

 

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Cash and cash equivalentsinclude cash on hand, cash on deposit with banks and highly liquidinvestments.  The Federal DepositInsurance Corporation (“FDIC”) has insured $250,000 of the cash on deposit atan FDIC member bank. The Authority believes that there is little risk of lossregarding the uninsured amounts of cash and cash equivalents on deposit withthe banks.

 

*Restricted Cash*— Restricted cash consistsof net proceeds from the Notes Offering and investment earnings thereon setaside in construction financing accounts, for construction costs for relatedinfrastructure improvements and construction contingencies. It also includesfunds that are reserved for construction contingencies and the funds for thedevelopment of the Dugan Property, an approximately 18-acre parcel of landadjacent to the Tribe’s reservation. The restricted cash is held in escrowaccounts that can only be used for authorized construction disbursements untilthe related projects are completed.  These escrow accounts are invested inmoney market accounts, which generate interest on a monthly basis. The FDIC hasinsured $250,000 of this balance. The Authority believes that there is littlerisk of loss regarding the uninsured amounts of restricted cash held in theescrow accounts. Restricted cash was $4,328,870 and $7,097,526 atSeptember  30, 2010 and December 31,2009, respectively.  As of September 30, 2010, restricted cash includesfunds available for land development, more specifically the emergency accessroad which will be used to further develop either the Dugan Road or analternate access road.  On July 30, 2010,U.S. Bank National Association, as trustee and collateral agent for the SeniorNotes, transferred $2,682,699 from restricted accounts held by U.S. Bank to theAuthority’s unrestricted operating account which is net of related fees of$85,957. The transferred amount represents the remaining balances of proceedsfrom the sale of the Senior Notes and investment earnings thereon that had beenheld by U.S. Bank in a restricted construction financing account and aconstruction escrow account less all fees and expenses owed to U.S. Bank todate.

 

*Inventories*— Inventories, consisting principally of gaming supplies and food andbeverage items, are stated at the lower of cost (first-in, first-out) or marketvalue.

 

*CapitalAssets*— Capital Assets are stated at cost. Depreciation and amortization arecomputed using the straight-line method over the estimated useful lives of theassets as follows:

 
| Buildings  and improvements:        |   | 5-21 years |   |
|-------------------------------------|--------|------------|--------|
| Furniture,  fixtures and equipment: |   | 5 years    |   |

 

The costs of normalmaintenance and repairs that do not add to the value of the asset or materiallyextend the life of the asset are not capitalized.

 

Major outlays of capitalassets and improvements are capitalized as construction-in-progress as projectsare constructed.

 

*Evaluation of Long-Lived Assets* — Accountingpronouncement GASB No. 42, “*Accounting and FinancialReporting for Impairment of Capital Assets and for Insurance Recoveries,*”established accounting and financial reporting standards for impairment ofcapital assets.  The Authority’s capitalassets include building and improvements, furniture, fixtures andequipment.  A capital asset is consideredimpaired if both the decline in service utility of the capital asset is largein magnitude and the event or change in circumstances is outside the normallife cycle of the capital asset.  TheAuthority is required to evaluate prominent events or changes in circumstancesaffecting capital assets to determine whether impairment of a capital asset hasoccurred.  Common indicators ofimpairment include evidence of physical damage where restoration efforts are neededto restore service utility, enactment or approval of laws or regulationssetting standards that the capital asset would not be able to meet,technological development or evidence of obsolescence, a change in the manneror expected duration of use of a capital asset or construction stoppage.  This Statement will require the Authority toreport the effects of capital asset impairment in its financial statements whenthey occur, rather than as part of the ongoing depreciation expense for thecapital asset or upon disposal of the capital asset, and to account forinsurance recoveries in the same manner. The Authority’s management has determined that no impairment of capitalassets currently exists.

 

*Capitalized interest*—**Theinterest cost associated with major development and construction projects iscapitalized and included in the cost of the asset.  Capitalization of interest ceases when theproject is substantially complete or when

 

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developmentactivity is suspended.  The Authority didnot capitalize any interest for the nine months ended September 30, 2010 and2009.

 

*Prepaid Expenses and Other Current Assets* — Prepaidexpenses and other current assets were $1,299,216 and $1,379,133 as ofSeptember 30, 2010 and December 31, 2009, respectively, which includes prepaidinsurance, prepaid uniforms and prepaid supplies.

 

*Depositsand Other Assets*— As of September 30, 2010 and December 31,2009, respectively, deposits and other assets mainly represent $1,109,176 and$1,875,448 in unamortized legal fees and other issuance costs related to theissuance of the Authority’s 9 3⁄4% Senior Notes due 2011 (the “Senior Notes”)under the Indenture, dated November 7, 2003 (the “Indenture”) and $515,191and $0 in costs incurred in connection with efforts to refinance the SeniorNotes.

 

*AccruedLiabilities*— Accrued liabilities consist of accrued interest,accrued payroll and other accrued liabilities.

 

*ProgressiveJackpots Liabilities*—The Casino has a number of progressivejackpot slot machines.  As coins are played, the amount available to winincreases and will be paid out when the appropriate winning combinationoccurs.  The progressive jackpots are recorded as a liability, with acorresponding charge against gaming revenue, of $1,415,498 and $1,587,748 as ofSeptember 30, 2010 and December 31, 2009, respectively.  Also, the Casinohas available for customer play wide area progressive slot machines that areinterlinked with other unrelated casinos.  These machines are monitoredand maintained by the vendor and the Casino is required to remit a percentageof coin-in to the respective vendor.  The charge is recorded againstrevenue for the portion of the fee applied to the wide area progressivejackpots.  Amounts recorded against revenue for the portion of the feeapplied to the wide area progressive jackpots were approximately $308,594 and$325,069 for the three months ended September 30, 2010 and 2009, respectively;and approximately $800,724 and $1,027,039 for the nine months ended September30, 2010 and 2009.  All other administrative charges are recorded inoperating expenses.

 

*AccruedSlot Players Club*— The Authority has recorded a liability related tofree play, prizes and cash incentives earned by the members of our PlayersClub. The Authority has recorded the estimated redemption of the liability ascontra-revenue in the accompanying statements of revenues, expenses and changesin net assets (deficit).

 

*Contingencies* — TheAuthority assesses its exposure to loss contingencies, including legal matters,and provides for an exposure if it is judged to be probable and estimable. Ifthe actual loss from a contingency differs from management’s estimate,operating results could be materially impacted. As of September 30, 2010,management determined that no accruals for claims and legal actions arerequired. If circumstances surrounding claims and legal actions changematerially, the addition of accruals for such items in future periods may berequired.

 

*Authority net assets* — Investments in capitalassets, net of related debt, consists of capital assets, net of accumulateddepreciation, reduced by the outstanding balances of any borrowings used forthe acquisition, construction or improvement of those assets.  Invested incapital assets, net of related debt, excludes unspent debt proceeds. Restricted net assets represent amounts that are appropriated or are legallysegregated for a specific purpose.  The Authority’s net assets arereported as restricted when there are limitations imposed on its use, eitherthrough the enabling legislation adopted by the Authority or through externalrestrictions imposed by creditors, grantors, laws or regulations of othergovernments.

 

*Casino Revenues*—The Authority recognizes ascasino revenue the net win from gaming activities, which is the differencebetween gaming wins and losses. Casino revenues are net of accruals foranticipated payouts of progressive slot jackpots and certain player incentives,when earned by the customer.

 

*Food, Beverage and Retail Revenues*— The Authorityrecognizes as food, beverage and retail revenues the proceeds from its food,beverage and gift shop sales. The Authority continues to distributenon-alcoholic beverages without cost in the gaming area for playingguests.  In December 2009, the Authority replaced the gift shop withvending machines.  The vending machines are owned and operated by a thirdparty.  The Authority receives a commission from the vending machine salesand such commission are recorded as Other Revenues.

 

*OtherRevenues*— Other revenues are comprised of commissions on ATMand vending machine transactions.

 

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*PromotionalAllowances*— The retail value of food and beverages provided tocustomers without charge or at a discount is included in food, beverage andretail revenues and then deducted as promotional allowances. Such amounts thatare included in food, beverage, and retail revenues for the three months endedSeptember 30, 2010 and 2009 were $462,355 and $318,348, respectively.  The amounts included in food, beverage andretail revenues for the nine months ended September 30, 2010 and 2009 were$1,281,280 and $1,006,645, respectively.

 

*Food and Beverage Expenses*— Food andbeverage expenses include cost of goods sold related to providing food andbeverage to our customers. The estimated costs of providing complimentaryproducts and services are reflected in Casino expenses.

 

*AdvertisingCosts*— Advertising costs are expensed as incurred or when an advertisementis first aired or circulated. Advertising costs included in selling, generaland administrative expenses for the three months ended September 30, 2010 and2009 were $1,120,697 and $1,097,397, respectively.  Advertising costs for the nine months endedSeptember 30, 2010 and 2009 were $4,096,326 and $3,166,096, respectively.

 

*GamingCommission and Surveillance Expenses*— The Authority pays forvarious expenses for the Tribal Gaming Commission and Surveillance.  Suchexpenses include salaries and wages and related benefits for Regulatory,Surveillance and office staff, training, audit fees, background checks andlicensing.

 

*IncomeTaxes*—As a governmental instrumentality of the Tribe, the Authority is anon-taxable entity for purposes of federal and state income taxes.

 

*Distributions to Tribe*— Distributionsto Tribe are made up of permitted and service payments under the covenants ofthe Indenture.  They are included in the Statements of Revenues, Expensesand Changes in Net Assets (deficit) as distributions to Tribe allowed pursuantto the Indenture.  Total distributions to the Tribe for the three monthsended September 30, 2010 and 2009 were $3,397,978 and $3,324,979,respectively.  Total distributions to theTribe for the nine month ended September 30, 2010 and 2009 were $10,193,936 and$9,974,938, respectively.

 

*Reclassifications*— Certain prior period balances in the Statements of Cash Flows, havebeen reclassified to be consistent with current period presentation with noimpact on cash provided by operating activities, cash used in capital andrelated financing activities, cash provided by investing activities or cashused in non-capital financing activities. In addition, $216,947 and $686,772 ofpromotional allowances for the three and nine month periods ended September 30,2009 was reclassified from selling, general and administrative expenses topromotional allowances with no impact on income from operations.

 

**4.****                         ****CERTAINRISKS AND UNCERTAINTIES**

 

The Authority’s operationsare dependent on the continued licensing and qualification of the Authority bythe Tribal Gaming Commission. Such licensing and qualification are reviewedperiodically by the Tribal Gaming Commission and regulatory agencies of theState of California. The Authority believes that no events or circumstanceshave arisen that would have an adverse effect on the Casino’s ability tocontinue its licensing and qualification by the Tribal Gaming Commission orregulatory agencies of the State of California to operate the Authority.

 

**5.****                         ****RELATEDPARTIES**

 

The Casino has beenconstructed on federal land beneficially owned by the Tribe. The Authority doesnot pay the Tribe for the use of the land.

 

The Authority pays forvarious expenses for the following departments operated by the Tribe:  Tribal Gaming Commission includingsurveillance, and plant operations and human resources. These departmentalexpenses include but are not limited to payroll and related expenses, legal,and other operational expenses. In April 2010, the Authority took over theoperation of the warehouse from the Tribe.

 

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Total amounts billed by theTribe to the Casino for these departments, excluding Tribal Gaming Commissionand surveillance, for the three months ended September 30, 2010 and 2009 were$999,700 and $950,706 respectively.  Asof September 30, 2010, $55,912 is accrued in Payable to Tribe.  These amounts are recorded as a component ofselling, general and administrative expenses. The expenses for these departments for the nine months ending September30, 2010 and 2009 were $2,929,983 and $2,808,488, respectively.

 

 The Authority pays forvarious expenses for the Tribal Gaming Commission and surveillance. TribalGaming Commission and surveillance expenses are recorded in Gaming Commissionand surveillance expenses on the Statements of Revenues, Expenses and Changesin Net Assets (deficit).  Gaming Commission and surveillance expenses forthe three months ended September 30, 2010 and 2009 were $853,775 and $985,703,respectively.  Gaming Commission andsurveillance expenses for the nine months ended September 30, 2010 and 2009were $2,389,222 and $2,901,577.

 

TheTribe incurred approximately $67 million in total expenses on the Authority’s behalffor master planning of the proposed resort and infrastructure improvements onthe reservation that benefits the Casino, of which almost all of suchexpenditures were incurred prior to 2009 before the construction wassuspended.  The Authority reimbursed the Tribe approximately $52.4 millionthrough 2009.  On January 8, 2010,the Authority’s Board of Directors authorized the reimbursement of the Tribe inan amount not to exceed approximately $14.9 million of constructioncosts.  The approval included a payment reimbursement schedule to theTribe of $2,700,000 on January 18, 2010, $400,000 from February 1, 2010through April 1, 2010 and $700,000 monthly thereafter without exceeding $14.9million.  The Authority reimbursed the Tribe $2.1 million for the threemonths ended September 30, 2010 and $7.4 million for the nine months endedSeptember 30, 2010.  The remaining $7.0million is included in Payable to Tribe in the Condensed Balance Sheet atSeptember 30, 2010.  When thereimbursement payments are made or accrued, the related amounts are capitalizedand reflected in construction-in-progress. The reimbursed costs consist ofengineering and design costs related to the proposed master plan development,including electrical, HVAC, landscaping, interior design services andconsulting fees for legal, branding, feasibility, and public relationsservices, as well as the construction costs of the lower Acorn Road.

 

The Tribe incurred expensesrelated to the reinforcement of the slope on the northwest side of the Reservationnear the Casino.  On May 19, 2010, theAuthority’s Board of Directors authorized the reimbursement to the Tribe in anamount not to exceed $0.9 and an additional $2.4 million was approved in August2010.  Subsequently, on October 13, 2010,the Authority’s Board of Directors authorized the reimbursement to the Tribenot to exceed $3.5 million.  As ofSeptember 30, 2010, the Casino has incurred approximately $1.4 million inconstruction costs of which $0.5 million is accrued in Payable to Tribe.  We currently expect that the cost of thisproject will be approximately $3.5 million.

 

The Authority reserved 50 recreational vehicle spaces and 10 campsitespaces at Alexander RV Park and Campground for casino guests.  Alexander RV Park and Campground is a whollyowned subsidiary of the Tribe.  The costof reserving the parking spaces and campsite spaces was $72,930 and $69,458 forthe three months ended September 30, 2010 and 2009, respectively.  The cost of reserving the parking spaces andcampsite spaces was $211,846 and $201,758 for the nine months ended September30, 2010 and 2009, respectively.

 

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**6.****                         ****CASH AND CASH EQUIVALENTS AND RESTRICTED CASH**

 

Cash and cash equivalentsand restricted cash consisted of the following as of September 30, 2010 andDecember 31, 2009:

 
| ** **                                           | ** ** | **September 30,** | ** ** | **December 31,** | ** ** |
|------------------------------------------------------|------------|------------------------|------------|-----------------------|------------|
| ** **                                           | ** ** | **2010**               | ** ** | **2009**              | ** ** |
| ** **                                           | ** ** | **(Unaudited)**        | ** ** | ** **            | ** ** |
|                                                 |       |                   |       |                  |       |
| Operating  accounts                                  |       | $                      | 12,740,088 |                  | $          | 16,281,764 |   |
| Money  market accounts*                              |       | 26,137,196             |       | 10,095,039            |       |
| Cash  on hand                                        |       | 4,776,693              |       | 5,240,704             |       |
|                                                 |       |                   |       |                  |       |
| Cash  and cash equivalents                           |       | 43,653,977             |       | 31,617,507            |       |
| Restricted  cash                                     |       | 4,328,870              |       | 7,097,526             |       |
|                                                 |       |                   |       |                  |       |
| Total  cash and cash equivalents and restricted cash |       | $                      | 47,982,847 |                  | $          | 38,715,033 |   |

 

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*Represents level 1 fairvalue measurement, quoted prices in active markets for identical items.

 

*Deposits* — Custodialcredit risk is the risk that in the event of a bank failure, the Authority’sdeposits (cash in checking, sweep, and money market accounts held with itsthird-party administrator) may not be returned to it.  The Authority doesnot have a deposit policy for custodial credit risk.  As of September 30,2010 and December 31, 2009, approximately $42,627,805 and $34,009,525,respectively, of the Authority’s bank balance for deposits of $43,127,805 and$34,580,666, respectively, were exposed to custodial credit risk, as it wasuninsured and uncollateralized.

 

**7.****            ****CAPITALASSETS**

 

CapitalAssets at September 30, 2010 and December 31, 2009 consisted of the following:

 
| ** **                         | ** ** | **Balance, as of** | ** **  | ** **    | ** ** | ** **       | ** ** | ** **    | ** ** | ** **                   | ** ** |
|------------------------------------|------------|------------------------------|-------------|---------------|------------|------------------|------------|---------------|------------|------------------------------|------------|
| ** **                         | ** ** | **December 31,**        | ** **  | ** **    | ** ** | ** **       | ** ** | **Transfers** | ** ** | **Balance, as of** | ** ** |
| ** **                         | ** ** | **2009**                     | ** **  | **Additions** | ** ** | **Dispositions** | ** ** | **In(Out)**   | ** ** | **Sept 30, 2010**  | ** ** |
| ** **                         | ** ** | ** **                   | ** **  | ** **    | ** ** | ** **       | ** ** | ** **    | ** ** | **(Unaudited)**              | ** ** |
| Building  and improvements         |       | $                            | 131,361,604 |          | $          | 1,176,533        |       | $             | —     |                         | $          | 348,149 |   | $ | 132,886,286 |   |
| Furniture,  fixtures and equipment |       | 35,102,290                   |        | 1,475,124     |       | (3,622,481       | )          | 65,847        |       | 33,020,780                   |       |
| Less  accumulated depreciation     |       | (60,121,221                  | )           | (7,392,513    | )          | 3,622,481        |       | —        |       | (63,891,253                  | )          |
|                               |       | 106,342,673                  |        | (4,740,856    | )          | —           |       | 413,996       |       | 102,015,813                  |       |
| Construction  in Progress          |       | 59,588,618                   |        | 16,163,334    |       | —           |       | (413,996      | )          | 75,337,956                   |       |
| Capital  assets - net              |       | $                            | 165,931,291 |          | $          | 11,422,478       |       | $             | —     |                         | $          | — |   | $ | 177,353,769 |   |

 

Construction in progressconsists of payments to the Tribe and various vendors related to the Authority’smaster plan development and land improvements. Substantially all of the Authority’s personal property is pledged ascollateral to secure its debt.

 

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**8.****        ****ACCRUED LIABILITIES**

 

Accruedliabilities consisted of the following as of September 30, 2010 andDecember 31, 2009:

 
| ** **                                  | ** ** | **September 30,** | ** ** | **December 31,** | ** ** |
|---------------------------------------------|------------|------------------------|------------|-----------------------|------------|
| ** **                                  | ** ** | **2010**               | ** ** | **2009**              | ** ** |
| ** **                                  | ** ** | **(Unaudited)**        | ** ** | ** **            | ** ** |
|                                        |       |                   |       |                  |       |
| Accrued  in-house progressive slot jackpots |       | $                      | 1,415,498  |                  | $          | 1,587,748 |   |
| Accrued  payroll and related benefits       |       | 2,414,371              |       | 1,514,557             |       |
| Accrued  interest                           |       | 8,125,000              |       | 3,250,000             |       |
| Accrued  other expenses                     |       | 1,211,572              |       | 1,343,068             |       |
| Total  accrued liabilities                  |       | $                      | 13,166,441 |                  | $          | 7,695,373 |   |

 

**9.****            ****LONG-TERMDEBT**

 

Long-termdebt consisted of the following as of September 30, 2010 and December 31,2009:

 
| ** **                                                                                           | ** ** | **September 30,** | ** **  | **December 31,** | ** ** |
|------------------------------------------------------------------------------------------------------|------------|------------------------|-------------|-----------------------|------------|
| ** **                                                                                           | ** ** | **2010**               | ** **  | **2009**              | ** ** |
| ** **                                                                                           | ** ** | **(Unaudited)**        | ** **  | ** **            | ** ** |
|                                                                                                 |       |                   |        |                  |       |
| 9-3/4%  Senior Notes, net of unamortized issue discount of $365,351 and $618,288. Due  November 2011 |       | $                      | 199,634,649 |                  | $          | 199,381,712 |   |
| Vehicle  and Slot Notes                                                                              |       | —                 |        | 492,203               |       |
|                                                                                                 |       |                   |        |                  |       |
| Total  Long-Term Debt                                                                                |       | 199,634,649            |        | 199,873,915           |       |
| Less:  current portion                                                                               |       | —                 |        | (492,203              | )          |
|                                                                                                 |       |                   |        |                  |       |
| Total  long-term-debt - net of current maturities                                                    |       | $                      | 199,634,649 |                  | $          | 199,381,712 |   |

 

On November 7, 2003,the Authority issued the Senior Notes. The proceeds were utilized to fund anexpansion project, which included three parking structures, relatedinfrastructure improvements, repayment of various debt and advances and fundpayment of various accruals and payables, as well as to increase cash on hand.The proceeds were also utilized to fund a land purchase and settlelitigation.  The Senior Notes are collateralized by a first priority pledgeof the Authority’s revenue and substantially all of the existing and futuretangible and intangible personal property. The Authority may redeem the SeniorNotes, in whole or in part, at a redemption price that is at a premium to theprincipal amount of the Senior Notes (expressed as percentages of principalamount), plus accrued and unpaid interest. Interest on the Senior Notes is due semi-annually in May and November.

 

The Authority’s long-termdebt is recorded at an amortized historical cost basis.  The fair value ofthe Senior Notes was approximately $183.1 million as of September 30, 2010based on level one inputs, quoted prices in active markets.

 

**10.****                  ****EMPLOYEEBENEFIT PLAN**

 

TheAuthority participates in a 401(k) plan, a retirement plan (the “Plan”),which is qualified under Section 401(k) of the Internal RevenueCode.  The Plan is a defined contribution plan administered by aninsurance company and is available to all eligible employees of the Casino whohave attained age 21 and have at least three months of eligible service asdefined in the Plan.  The Plan participants may contribute up to 50percent of their eligible pretax compensation, subject to legal

 

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limitations. The Authority, at its discretion, will make matching contributions.  Anyforfeiture due to employee terminations reduces future Casinocontributions.  Participants become vested in employer contributions, aswell as any earnings thereon, over a three-year period at the rate of 30percent, 60 percent and 100 percent at the end of each year, respectively.

 

Employeecontributions to the Plan were $165,210 and $148,211 for the three months endedSeptember 30, 2010, and 2009, respectively; and $429,118 and $469,444 for thenine months ended September 30, 2010 and 2009, respectively.

 

TheCasino made matching contributions to the Plan of $87,888 and $0 during thethree months ended September 30, 2010 and 2009, respectively; and $166,631 and$41,719 for the nine months ended September 30, 2010 and 2009,respectively.  The Casino temporarily suspended its matching contributionin January 2009 and reinstated it in March 2010.

 

**11.****                   ****RISK MANAGEMENT**

 

TheCasino is exposed to various risks of loss related to worker’s compensation andtorts; theft of, damage to or destruction of assets; and errors oromissions.  The Casino has purchased commercial insurance policies forsaid risks.  There has been no significant reduction of insurancecoverage, and settlements have not exceeded coverage in the past threeyears.  The Casino retains the risk of dental claims subject to individuallimits of $1,500 per enrolled employee and covered dependent.

 

**12.****                  ****LEASES**

 

TheAuthority extended its operating lease of the sprung structure that houses theCasino operations.  The amended lease expires on June 17, 2012. The agreement calls for monthly payments of $25,395.  Total rental expensewas $76,248 and $76,185 for the three months ended September 30, 2010 and 2009,respectively.  Total rental expense was$228,555 and $282,730 for the nine months ended September 30, 2010 and 2009,respectively.

 

Otheroperating leases include leases for office spaces and copiers.

 

**13.****                  ****LEGALMATTERS**

 

TheAuthority is involved in litigation and disputes from time to time in theordinary course of business with vendors and patrons. The Authority believesthat the aggregate liability, if any, arising from such litigation or disputeswill not have a material adverse effect on its results of operations, financialcondition or cash flows.

 

**14.****                  ****COMPACTREVENUE SHARING TRUST FUND**

 

Underthe Compact as entered into with the State of California inSeptember 1999, the Tribe must pay annual license fees of $900-$4,350 perClass III gaming device, based on the number of gaming device licensesapproved by the state gaming commission.  The Compact does not require alicense for the first 350 Class III gaming devices in use and does notrequire a license fee for an additional 350 machines.  Payments are due ona quarterly basis and are remitted into a state revenue sharing trustfund.  License fees expense totaled $333,750 for each of the three monthsended September 30, 2010 and 2009. License fees expense totaled $1,001,250 for each of the nine monthsended September 30, 2010 and 2009.

 

**15.****                  ****COMMITMENTSAND CONTINGENCIES**

 

The Authority is anunincorporated instrumentality of the Tribe formed pursuant to an adopted lawof the Tribe. While the Authority is not a separate corporation or other legalentity distinct from the Tribe, this tribal law allows the Authority to own andoperate its business. This tribal law also provides that the Authority’sobligations and other liabilities are not those of the Tribe and that the obligationsand liabilities of the Tribe are not those of the Authority. This law isuntested and generally has no direct counterpart in other areas of the law. Ifthis law should prove to be ineffective at limiting the Authority’s liability,the Authority’s business and assets could become subject to claims assertedagainst the Tribe or its assets.

 

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OnMarch 18, 2008, the Tribe and the Sonoma County Board of Supervisorsentered into a memorandum of agreement (“MOA”) which settled severallong-standing legal disputes between Sonoma County (the “County”) and the Tribeand provides a binding framework for resolving future disputes.  Pursuantto the MOA, the Tribe has agreed to pay the County up to $75 million inmitigation fees over a 12 year period to offset impacts of the potential lossesand impacts to the County resulting from the Tribe’s various ongoing projectsand is intended to support the services being provided by theCounty.   In addition to the mitigation fees, the Tribe will pay afee in lieu of the County’s Transient Occupancy Tax in the amount of 9% of therental collected on occupied hotel rooms, to be paid quarterly and continuingfor five years after the later to occur of the termination of the MOA, as maybe extended, or the Tribe’s Compact with the State (which is now terminable in2020 at the earliest), which fees may be applied to programs and services thatserve to promote tourism in the County. Such in lieu fees could total as muchas $25 million during the term of the MOA.  The Tribe has not made anydeterminations to seek reimbursement or direct payment from the Authority ofamounts due to the County pursuant to the MOA.

 

Acasino renovation was completed as part of ongoing efforts to improve theoverall appearance and appeal of the Casino to meet customer requirements.  In order to appeal more specifically tohigher end players, management moved the Poker tables to an open section of theCasino floor and converted the current poker room into a high-limit roomoffering high-limit slot machines and table games, comfortable seating, a barwith food and beverage service, and a private restroom.  The project was completed by late September2010.

 

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**PART II.****               ****OTHER INFORMATION**

 

**ITEM 6.****                 ****EXHIBITS**

 

TheExhibit Index filed herewith is incorporated herein by reference.

 

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**SIGNATURE**

 

Pursuant to the requirementsof the Securities Exchange Act of 1934, the Registrant has duly caused thisreport to be signed on its behalf by the undersigned thereunto duly authorized.

 
| Dated: November 18, 2010 |   | RIVER ROCK ENTERTAINMENT  AUTHORITY |
|--------------------------|--------|-------------------------------------|
|                     |   | (Registrant)                        |
|                     |   |                                |
|                     |   | By:                                 | /s/ David Fendrick |
|                     |   |                                | David Fendrick, |
|                     |   |                                | Chief Executive Officer |

 

**EXHIBITINDEX**

 
| **Exhibit No.** | ** ** | **Exhibit**                                                                                                                                                                                                                                              |
|----------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.1                 |       | Certification by David  Fendrick, Chief Executive Officer, pursuant to Exchange Act  Rules 13a-14(a) and 15d-14(a) (filed herewith)                                                                                                            |
|                 |       |                                                                                                                                                                                                                                                     |
| 31.2                 |       | Certification by Joseph R.  Callahan, Chief Financial Officer, pursuant to Exchange Act  Rules 13a-14(a) and 15d-14(a) (filed herewith)                                                                                                        |
|                 |       |                                                                                                                                                                                                                                                     |
| 32*                  |       | Certification by David  Fendrick, Chief Executive Officer, and by Joseph R. Callahan, Chief Financial  Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith) |

 

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*               Thiscertification is being furnished solely to accompany this quarterly reportpursuant to 18 U.S.C. Section 1350, and is not being filed for purposes ofSection 18 of the Exchange Act and is not to be incorporated by referenceinto any filing of River Rock Entertainment Authority whether made before orafter the date hereof, regardless of any general incorporation language in suchfiling.

 

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