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Inn of the Mountain Gods reports results

17 March 2008

MESCALERO, New Mexico – (PRESS RELEASE) -- 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.

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