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Inn of the Mountain Gods Resort and Casino Announces Operating Results for Third Quarter Ended January 31, 2008

Posted on: Thursday, 13 March 2008, 18:00 CDT

Inn of the Mountain Gods Resort and Casino ("IMGRC") today reported revenue of $28.9 million, operating income of $2.2 million and EBITDA(1) of $6.3 million for its third quarter ended January 31, 2008.

Net loss for the quarter increased $1.8 million from the prior year due to an increase in expenses.

Net revenues increased $0.3 million, or 1%, to $28.9 million for the quarter ended January 31, 2008 from $28.6 million for the quarter ended January 31, 2007. Gaming net revenues increased $0.8 million from the comparable prior period; food and beverage revenues increased $0.4 million, or 12%, from the comparable prior period; hotel revenues decreased $0.1 million, or (3%), over a year ago. Recreation and other revenue for the 2008 period decreased $1.0 million, or (14%), from January 31, 2007. Promotional Allowances decreased $0.1 million, or (16%), for the quarter ended January 31, 2008 compared to the quarter ended January 31, 2007 as part of a refined marketing strategy to award gaming patrons.

"In the third quarter, we experienced a year-over-year decrease in EBITDA that was attributable to three primary factors: (1) very light natural snowfall which affected visitor volumes and lift ticket pricing, (2) higher cost of goods sold (COGS) in the areas of food and beverage as well as fuel, and (3) increased spending on SOX controls to ensure that we'll be fully 404-level compliant by our fiscal year-end. Going forward, we are combating the effects of the light snowfall with additional marketing programs to boost non-skier visitation. Price increases in food and beverage and retail have also been implemented to offset the higher COGS. The accelerated spending on SOX compliance has helped us strengthen our control environment and build vital infrastructure for the future," stated Brian Parrish, COO.

IMGRC posted the following results for the fiscal quarter ended January 31, 2008:

Net Gaming revenues increased $0.8 million to $16.8 million for the quarter ended January 31, 2008 from $16.0 million for the quarter ended January 31, 2007. Slot revenues decreased to $15.6 million for the quarter ended January 31, 2008 from $15.9 million for the quarter ended January 31, 2007. Gross slot win per unit, per day was $117 for the quarter ended January 31, 2008 compared to $108 for the quarter ended January 31, 2007; the weighted average number of machines slightly decreased to 1,450 for the quarter ended January 31, 2008 from 1,498 for the quarter ended January 31, 2007. Table games revenue increased $0.8 million, or 50%, to $2.4 million for the quarter ended January 31, 2008 from $1.6 million for the quarter ended January 31, 2007. Daily Net Win per Table for the quarter ended January 31, 2008 was $522 as compared to $476 for the same period a year ago.

Hotel revenues for the quarter ended January 31, 2008 decreased $0.1 million to $2.8 million while the quarter ending January 31, 2007 hotel revenues were $2.9 million. Occupancy rates averaged 61% for the quarter ended January 31, 2008, as compared to 65% for the same period a year ago. The average daily rate increased to $177 for the quarter ended January 31, 2008, as compared to $166 for the same period a year ago. Revenue per available room was $109 for the quarter ended January 31, 2008.

Food and beverage revenues increased $0.4 million, or 12%, to $3.7 million for the quarter ended January 31, 2008 from $3.3 million for the quarter ended January 31, 2007 due to an increase in covers.

Recreation and other revenues decreased $1.0 million, or (14%), to $6.1 million for the quarter ended January 31, 2008 compared to $7.1 million for the quarter ended January 31, 2007 due a decrease in natural snowfall, resulting in decreased skier visits as well as lower ticket prices

Total operating expenses increased $2.2 million, or 9%, to $26.7 million for the quarter ended January 31, 2008 compared to $24.5 million for the quarter ended January 31, 2007 due to increased cost associated with Sarbanes-Oxley compliance, COGS, salaries and wages and utilities.

Gaming expenses remained flat at $6.1 million for the quarters ended January 31, 2008 and January 31, 2007.

Food and beverage expenses increased $0.7 million to $4.0 million for the quarter ended January 31, 2008 from $3.3 million for the quarter ended January 31, 2007 due to an increase in cost of goods, wages and benefits, associated with increased revenue.

Hotel expenses remained flat at $1.0 million for the quarters ended January 31, 2008 and January 31, 2007.

Recreation and other costs increased $0.9 million, or 29%, to $4.0 million for the quarter ended January 31, 2008 from $3.1 million for the quarter ended January 31, 2007 due to an increase of cost of goods, salaries, and wages as well as repairs and maintenance.

Marketing costs increased $0.2 million to $2.5 million for the quarter ended January 31, 2008 from $2.3 million for the quarter ended January 31, 2007 due to additions to sales staff, air charter advertising, and air charter operations.

General and administrative expenses increased $0.7 million, or 24%, to $3.6 million for the quarter ended January 31, 2008 from $2.9 million for the quarter ended January 31, 2007 due to increase costs associated with Sarbanes-Oxley compliance.

Income from operations decreased $1.9 million, or (46%), to $2.2 million for the quarter ended January 31, 2008 from $4.1 million for the quarter ended January 31, 2007.

As of April 30, 2007 and January 31, 2008, we had cash and cash equivalents of $16.9 million and $9.9 million, respectively. Our principal uses of liquidity for the nine-month period ended January 31, 2008 were $3.2 million provided by operations, $1.1 million used in investing activities and $9.1 million used in financing activities.

Cash provided by operating activities was $3.2 million, a $3.5 million improvement over the previous year, as a result of improved management of payables.

Cash used in investing activities for the nine-month period ended January 31, 2008 was $1.1 million, which consisted of $1.1 million in purchase of property, plant and equipment.

Cash used from financing activities for the nine-month period ended January 31, 2008 was $9.1 million, consisting of $3.1 million from long-term debt, which consisted of $0.2 million in notes payable to Bureau of Indian Affairs, $2.2 million to capital loans and $0.7 million in short-term notes and $6.0 million distributed to the Tribe.

INN OF THE MOUNTAIN GODS RESORT AND CASINO

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands; unaudited)

As of

April 30,

2007

As of

January 31,

2008

ASSETS

Current assets:

Cash and cash equivalents

$ 16,930

$ 9,871

Other - A/R, Inventory and Prepaids

1,900

2,412

Total current assets

18,830

12,283

Property and equipment, net

210,526

199,449

Deferred Financing costs

6,071

4,852

Other assets, net

112

100

Total assets

$ 235,539

$ 216,684

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

Current liabilities:

Accounts payable

$ 1,462

$ 1,869

Accrued Interest

11,200

5,200

Other accrued expenses and deposits

6,624

5,373

Current portion of long-term debt

3,659

3,476

Total current liabilities

22,945

15,919

Long-term debt

208,174

205,549

Total liabilities

231,119

221,467

Shareholders' equity (deficit)

4,420

(4,783

)

Total liabilities and shareholders' equity (deficit)

$ 235,539

$ 216,684

INN OF THE MOUNTAIN GODS RESORT AND CASINO

CONDENSED CONSOLIDATED STATEMENTS OF OPERATION

(in thousands; unaudited)

Three months

ended

January 31,

2007

Three months

ended

January 31,

2008

Gaming revenue

$ 16,015

$ 16,839

Hotel Revenue

2,865

2,784

Food and Beverage revenue

3,262

3,685

Recreation and other

7,087

6,102

Promotional Allowances

(608

)

(477

)

Net Revenue

28,621

28,933

Gaming expenses

6,113

6,105

Hotel expenses

1,021

1,013

Food and Beverage expense

3,252

4,000

Recreation and other

3,143

3,957

Marketing, G&A, Shared Services

6,508

7,528

Depreciation and Amortization

4,502

4,088

Total operating expenses

24,539

26,691

Operating income

4,082

2,242

Net interest and other (expense) income

(6,619

)

(6,516

)

Net Loss

$ (2,537

)

$ (4,274

)

INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

As of

April 30,

2007

As of

January 31,

2008

(unaudited)

Current Assets

Cash and cash equivalents

$ 16,929,630

$ 9,871,340

Accounts receivable, net of allowance for doubtful accounts

539,368

424,573

Inventories

766,658

1,059,417

Prepaid expenses and other assets

594,478

927,619

Total current assets

18,830,134

12,282,949

Non-Current Assets

Property plant and equipment

298,091,568

299,193,962

Accumulated Depreciation

(87,565,430

)

(99,744,981

)

Property plant and equipment, net

210,526,138

199,448,981

Other Assets

112,500

100,000

Deferred financing costs

6,070,653

4,851,720

Total Assets

$ 235,539,425

$ 216,683,650

Liabilities and Equity (Deficit)

Current Liabilities

Accounts Payable

$ 1,461,913

$ 1,869,128

Accrued expenses

3,966,057

4,519,805

Accrued payroll and benefits

2,218,879

773,628

Accrued interest

11,200,000

5,200,000

Advanced deposits

438,659

79,588

Current portion of long-term debt

3,659,278

3,476,414

Total current liabilities

22,944,786

15,918,563

Non-Current Liabilities

Long-term debt, net of current portion

208,174,124

205,548,669

Total liabilities

231,118,910

221,467,232

Commitments and contingencies

Equity (Deficit)

Contributed Capital

29,652,939

23,649,936

Accumulated deficit

(25,232,424

)

(28,433,518

)

Total equity (Deficit)

4,420,515

(4,783,582

)

Total liabilities and equity (Deficit)

$ 235,539,425

$ 216,683,650

INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

Three Months

Ended

January 31,

2007

Three Months

Ended

January 31,

2008

Nine Months

Ended

January 31,

2007

Nine Months

Ended

January 31,

2008

Revenues:

Gaming

$ 16,015,221

$ 16,839,587

$ 57,246,790

$ 60,135,758

Hotel

2,865,334

2,783,690

10,423,235

10,687,186

Food and Beverage

3,261,779

3,685,058

10,377,119

11,554,978

Recreation and other

7,086,737

6,101,670

16,643,556

15,786,963

Gross Revenue

29,229,071

29,410,005

94,690,700

98,164,885

Less-Promotional Allowances

608,012

476,831

1,585,198

1,535,717

Net Revenue

28,621,059

28,933,174

93,105,502

96,629,168

Operating Expenses

Gaming

6,113,440

6,105,580

20,360,359

20,562,395

Hotel expenses

1,021,451

1,013,927

3,497,811

3,399,474

Food and beverage

3,252,257

3,999,628

10,619,481

11,806,481

Recreation and other

3,143,070

3,956,607

10,056,461

11,491,474

Marketing

2,259,640

2,506,468

6,645,184

7,720,885

General and administrative

2,882,714

3,566,379

8,136,480

8,543,721

Health Insurance -- Medical

617,657

591,728

1,704,953

1,534,939

401 K

99,183

214,461

99,183

656,725

Mescalero Apache Telecom

47,539

49,093

151,134

150,138

Tribal Regulatory Fees

600,000

600,000

1,800,000

1,800,000

Depreciation and amortization

4,502,354

4,087,672

13,576,720

12,472,075

Loss on disposal of assets

-

-

7,439

63,847

Total Operating Expenses

24,539,305

26,691,543

76,655,205

80,202,154

Operating Income

4,081,754

2,241,631

16,450,297

16,427,014

Other Income (Expense)

Interest Income

36,810

32,154

217,392

168,523

Interest Expense

(6,655,336

)

(6,592,441

)

(20,012,919

)

(19,843,634

)

Other Income (expense)

-

44,696

59,423

47,003

Total Other Income (expense)

(6,618,526

)

(6,515,591

)

(19,736,104

)

(19,628,108

)

Net Loss

$ (2,536,772

)

$ (4,273,960

)

$ (3,285,807

)

$ (3,201,094

)

INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

Nine Months

Ended

January 31,

2007

Nine Months

Ended

January 31,

2008

Cash flows from operating activities

Net loss

$ (3,285,807

)

$ (3,201,094

)

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Depreciation and amortization

15,575,980

13,669,253

Changes in assets and liabilities:

Loss on disposal of fixed assets

7,439

63,857

Accounts receivable, net of allowance

324,983

114,795

Inventories

282,474

(292,759

)

Prepaid expenses

(476,167

)

(333,141

)

Other long-term assets

(88,353

)

12,500

Accounts payable

(2,353,467

)

407,215

Accrued expenses, payroll and benefits

(4,294,438

)

(891,503

)

Deposits and advance payments

--

(359,072

)

Accrued interest payable

(6,000,000

)

(6,000,000

)

Net cash (used in) provided by operating activities

(307,356

)

3,190,051

Cash flows from investing activities:

Purchase of property, plant and equipment

(382,018

)

(1,147,600

)

Construction accounts payable

(892,236

)

--

Net cash used in investing activities

(1,274,254

)

(1,147,600

)

Cash flows from financing activities:

Restricted cash for construction payments and interest reserve

18,171,534

--

Principal payments on long-term debt, net

(3,045,060

)

(3,097,738

)

Distributions to Mescalero Apache Tribe

(20,979,160

)

(6,003,003

)

Net cash used in financing activities

(5,852,686

)

(9,100,741

)

Net decrease in cash and cash equivalents

(7,434,296

)

(7,058,290

)

Cash and cash equivalents, beginning of period

16,768,372

16,929,630

Cash and cash equivalents, end of period

$ 9,334,076

$ 9,871,340

Supplemental cash flow information:

Cash paid for interest

$ 24,094,305

$ 24,624,701

Non-cash investing and financing activities:

Property, plant and equipment acquired through capital lease

$ 1,171,020

$ 289,420

(1) IMGRC defines EBITDA as earnings before interest, taxes, depreciation and amortization. IMGRC is an instrumentality of a sovereign Indian nation and is not subject to federal or state income tax. Below is a quantitative reconciliation of EBITDA to the most directly comparable GAAP financial performance measure, which is net income (in thousands):

Q1

FY 07

Q2

FY 07

Q3

FY 07

Q4

FY 07

Q1

FY 08

Q2

FY 08

Q3

FY 08

Net income (loss)

$ (837)

$ 88

$ (2,537)

$ (679)

$ 859

$ 214

$ (4,274)

Interest expense (income), net

6,606

6,511

6,619

6,566

6,575

6,538

6,516

Depreciation and amortization

4,511

4,563

4,502

4,593

4,235

4,149

4,088

EBITDA

$ 10,280

$ 11,162

$ 8,584

$ 10,480

$ 11,669

$ 10,901

$ 6,330

IMGRC cautions you that amounts presented in accordance with its definition of EBITDA may not be comparable to similar measures disclosed by other issuers because not all issuers and analysts calculate EBITDA in the same manner. EBITDA is presented in this press release because management believes it is a useful supplement to income from operations and cash provided by operating activities in understanding cash flows available for debt service, capital expenditures and Tribal distributions. Accordingly, IMGRC's management utilizes EBITDA along with net income, income from operations and other GAAP measures in evaluating its operations and performance. EBITDA should not be considered as an alternative measure of IMGRC's net income, income from operations, cash flow or liquidity. EBITDA is not a measurement of financial performance or liquidity in accordance with GAAP. Although IMGRC believes EBITDA enhances an understanding of its financial condition and results of operations, this non-GAAP financial measure, when viewed individually, is not necessarily a better indicator of any trend as compared to GAAP financial measures (e.g., income from operations, net revenues, cash provided by operating activities) conventionally computed in accordance with GAAP.

ABOUT INN OF THE MOUNTAIN GODS RESORT AND CASINO

IMGRC is a business enterprise of the Mescalero Apache Tribe, a federally recognized Indian tribe with an approximately 725-square-mile reservation situated in the Sacramento Mountains in south-central New Mexico. IMGRC includes all of the resort enterprises of the Mescalero Apache Tribe including Casino Apache Travel Center, Ski Apache and IMGRC's new resort, which opened on September 15, 2005, and features a 273-room hotel, a 38,000-square-foot casino, a fitness center and indoor swimming pool and a 37,000-square-foot convention and special events center, which includes capacity for 17,000 square feet of divisible meeting room space.

NON-GAAP FINANCIAL MEASURES

In this press release, IMGRC makes references to EBITDA. EBITDA is defined as earnings before interest, taxes, depreciation and amortization. IMGRC is an instrumentality of a sovereign Indian tribe and is not subject to federal or state income tax. IMGRC cautions investors that amounts presented in accordance with its definition of EBITDA may not be comparable to similar measures disclosed by other issuers, because not all issuers and analysts calculate EBITDA in the same manner.

EBITDA provides an additional way to view IMGRC's operations and, when viewed in connection with both the GAAP results and reconciliation to net income, IMGRC believes EBITDA provides a more complete understanding of its business than could be obtained absent this disclosure. EBITDA is presented solely as a supplemental disclosure because (i) IMGRC believes it enhances an overall understanding of IMGRC's past and current financial performance; (ii) IMGRC believes it is a useful tool for investors to assess the operating performance of the business in comparison to other operators within the gaming industry because EBITDA excludes certain items that may not be indicative of IMGRC's operating results; (iii) measures that are comparable to EBITDA are often used as an important basis for the valuation of gaming companies; and (iv) IMGRC uses EBITDA internally to evaluate the performance of its operating personnel and also as a benchmark to evaluate its operating performance in comparison to its competitors.

The use of EBITDA has certain limitations. EBITDA should be considered in addition to, not as a substitute for or superior to, any GAAP financial measure including net income (as an indicator of IMGRC's performance) or cash flows provided by operating activities (as an indicator of IMGRC's liquidity), nor should it be considered as an indicator of IMGRC's overall financial performance. EBITDA eliminates certain substantial recurring items from net income, such as depreciation and amortization and interest expense. Each of these items has been incurred in the past, will continue to be incurred in the future and should be considered in the overall evaluation of IMGRC's results. IMGRC compensates for these limitations by providing the relevant disclosure of depreciation and amortization and interest expense excluded in the calculation of EBITDA both in its reconciliation to the GAAP financial measure of net income and in its consolidated financial statements, all of which should be considered when evaluating its results. IMGRC strongly encourages investors to review its financial information in its entirety and not to rely on a single financial measure. A reconciliation of EBITDA to net income is included in the selected financial information that accompanies this press release.

CONFERENCE CALL

IMGRC will discuss its quarterly results during a conference call at 2:00 pm (EDT) on Monday, March 17, 2008. The call can be accessed via telephone by dialing 877-591-4956. Interested parties should call at least ten minutes prior to the start of the conference call to register. You can access a live broadcast of the call by visiting IMGRC's website at www.innofthemountaingods.com. Interested parties will be able to access a replay of the conference call by visiting IMGRC's website anytime within the next 60 days.

FORWARD-LOOKING STATEMENTS

Some information included in this press release contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements include information relating to business activities and project development. These statements can sometimes be identified by the use of forward-looking words such as "may,""will,""anticipate,""estimate,""except,""scheduled," or "intend" and similar expressions. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ materially from those expressed in any forward-looking statements made by or on behalf of IMGRC. Additional information concerning these potential factors is included in IMGRC's Annual Report on Form 10-K for its fiscal year ended April 30, 2007, filed with the Securities and Exchange Commission (the "SEC") on July 27, 2007. The forward-looking statements included in this press release are made only as of the date of this release. IMGRC does not undertake any obligation to update or supplement any forward-looking statements to reflect subsequent events or circumstances. IMGRC cannot assure you that projected results or events will be achieved.

INN OF THE MOUNTAIN GODS RESORT AND CASINO

INVESTOR INFORMATION SUMMARY

(unaudited)

Q3 FY 08

VS

Q3 FY 07

Q3 FY 07

Q4 FY 07

Q1 FY 08

Q2 FY 08

Q3 FY 08

Occupancy

65%

76%

86%

82%

61%

(4)%

ADR

$166

$154

$170

$167

$177

$11

Hotel Revenue

$2,865

$3,050

$4,121

$3,782

$2,784

$(81)

Hotel Gross Profit %

64%

64%

70%

69%

64%

0%

Slot Drop

$211,774

$247,464

$293,387

$284,191

$226,297

$14,523

Gross Slot Revenue

$15,888

$18,870

$20,668

$19,889

$15,642

$(246)

Gross Win Per Day Per Machine

$108

$141

$152

$147

$117

$9

Hold Percent

8%

8%

7%

7%

7%

(1)%

Table Drop

$11,278

$11,487

$14,108

$13,288

$10,526

$(752)

Gross Table Game Revenue

$1,550

$2,677

$2,945

$2,996

$2,368

$818

Gross Win Per Day Per Table

$476

$533

$642

$674

$522

$46

Hold Percent

13%

23%

21%

23%

22%

9%

Gross Gaming Revenue

$16,015

$21,547

$23,613

$22,885

$16,840

$825

Gaming Gross Profit %

70%

91%

74%

74%

71%

1%

Recreation and Other Gross Profit

$3,944

$2,889

$630

$5,306

$2,146

$(1,798)

Recreation and Other Gross Profit %

56%

43%

14%

29%

35%

(21)%

Retail Revenue

$2,851

$3,037

$3,660

$3,112

$2,910

$59

Retail GP

$705

$280

$398

$299

$230

$(475)

Retail Gross Profit %

25%

9%

11%

10%

8%

(17)%

Food, Beverage and Banquet Revenue

$3,262

$3,581

$4,009

$3,861

$3,585

$323

F&B GP

$9

$82

$127

$(64)

$(315)

$(324)

F&B Gross Profit %

0%

2%

3%

(2)%

(9)%

(9)%

Net Revenue

$28,621

$31,746

$33,829

$33,867

$28,933

$312

FTE's

935

941

960

952

903

(32)

Division (Direct expenses)

$13,530

$11,541

$16,212

$15,972

$15,076

$1,546

Marketing, G&A, Shared Services

$6,507

$9,713

$5,948

$6,994

$7,528

$1,021

Depreciation

$4,502

$4,593

$4,235

$4,149

$4,088

$(414)

Operating Expenses

$24,539

$25,847

$26,395

$27,115

$26,692

$2,153

Operating Income (Loss)

$4,082

$5,899

$7,434

$6,752

$2,242

$(1,840)

EBITDA

$8,582

$10,481

$11,669

$10,901

$6,329

$(2,253)

Net Income

$(2,537)

$(679)

$859

$214

$(4,274)

$(1,737)

Operating Income (Loss) % of net revenue

14.3%

18.6%

22.0%

20.0%

7.7%

(6.5)%

EBITDA % of net revenue

30.0%

33.0%

34.5%

32.2%

21.9%

-(8.2)%

Direct/ Divisional Profit % of net revenue

47%

36%

48%

47%

52%

5%

Unrestricted Cash

$9,702

$16,930

$13,138

$19,204

$9,871

$169

Total Cash

$9,702

$16,930

$13,138

$19,204

$9,871

$169

Source: Business Wire

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