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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549



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FORM 10-K



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|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------



For the fiscal year ended December 31, 2003



or



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



For the transition period from  to



Commission file number 000-32987



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COLONY RIH HOLDINGS, INC.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|DELAWARE                                                       |  | 95-4849060                          
|(State or Other Jurisdiction of Incorporation or Organization) |  | (I.R.S. Employer Identification No.)



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RESORTS INTERNATIONAL HOTEL AND CASINO, INC.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|DELAWARE                                                       |  | 95-4828297                          
|(State or Other Jurisdiction of Incorporation or Organization) |  | (I.R.S. Employer Identification No.)



|                                         |  |           
|---------------------------------------- |  | ----------
|1133 Boardwalk Atlantic City, NJ         |  | 08401     
|(Address of principal executive offices) |  | (Zip Code)



Registrants
telephone number, including area code:

(609) 344-6000



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Securities registered pursuant to Section 12(b) of the Act:

None



Securities registered pursuant to Section 12(g) of the Act:



COLONY RIH HOLDINGS, INC.

CLASS A COMMON STOCK, PAR VALUE $.01 PER SHARE

(Title of Class)



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RESORTS INTERNATIONAL HOTEL AND CASINO, INC.

COMMON STOCK, PAR VALUE $.01 PER SHARE

(Title of Class)



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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No ̈



Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x



Indicate by check mark whether
the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).    Yes ̈No  x



The aggregate market value of the voting and non-voting common stock held by non-affiliates of Colony RIH Holdings, Inc. and Resorts International Hotel and Casino, Inc. as of June 30, 2003, was $0.



As of March 29, 2004, 38,295 shares of class A common stock and 774,982
shares of class B common stock of Colony RIH Holdings, Inc. were outstanding.



As of March 29, 2004, 100 shares of common stock of Resorts International Hotel and Casino, Inc. were outstanding.



Information required by Part III of this Form 10-K, to the extent not set forth herein, is incorporated by reference from the registrants definitive
proxy statement for its 2004 annual meeting of stockholders, which will be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, within 120 days after the end of the registrants fiscal year ended December 31,
2003.



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COLONY RIH HOLDINGS, INC.

AND

RESORTS INTERNATIONAL HOTEL AND CASINO, INC.



Annual Report on Form 10-K



TABLE OF CONTENTS



|         |  |                                                                                       |  |     
|-------- |  | ------------------------------------------------------------------------------------- |  | ----
|         |  |                                                                                       |  | Page
|Part I   |  |                                                                                       |  |     
|Item 1.  |  | Business                                                                              |  | 2   
|Item 2.  |  | Properties                                                                            |  | 13  
|Item 3.  |  | Legal Proceedings                                                                     |  | 13  
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                   |  | 13  
|         |  |                                                                                      
|Part II  |  |                                                                                       |  |     
|Item 5.  |  | Market for Registrants Common Equity and Related Stockholder Matters                 |  | 13  
|Item 6.  |  | Selected Financial Data                                                               |  | 14  
|Item 7.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 15  
|Item 7A. |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 26  
|Item 8.  |  | Financial Statements and Supplementary Data                                           |  | 27  
|Item 9.  |  | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure  |  | 65  
|Item 9A. |  | Controls and Procedures                                                               |  | 65  
|         |  |                                                                                      
|Part III |  |                                                                                       |  |     
|Item 10. |  | Directors and Executive Officers of the Registrant                                    |  | 65  
|Item 11. |  | Executive Compensation                                                                |  | 65  
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management                        |  | 65  
|Item 13. |  | Certain Relationships and Related Transactions                                        |  | 65  
|Item 14. |  | Principal Accountant Fees and Services                                                |  | 65  
|         |  |                                                                                      
|Part IV  |  |                                                                                       |  |     
|Item 15. |  | Exhibits, Financial Statement Schedules, and Reports on Form 8-K                      |  | 66  



CAUTIONARY STATEMENT FOR PURPOSES
OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.



This document includes various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, which represent the registrants expectations or beliefs concerning future events. Statements containing expressions such as believes, anticipates,
expects seeks, estimates, plans, intends and similar expressions used in the registrants press releases and periodic reports on Forms 10-K and 10-Q filed with the Securities and
Exchange Commission are intended to identify forward-looking statements. All forward-looking statements involve risks and uncertainties. Although the registrants believe their expectations are based upon reasonable assumptions within the bounds of
their knowledge of their business and operations, there can be no assurances that actual results will not materially differ from expected results. The registrants caution that these and similar statements included in this report and in previously
filed periodic reports, including reports filed on Form 10-Q, are further qualified by important factors that could cause actual results to differ materially from those in the forward-looking statements. Such factors include, without limitation, the
following: increased competition in existing markets or the opening of new gaming jurisdictions, a decline in the public acceptance of gaming, the limitation, conditioning or suspension of any of the registrants gaming licenses, increases in
or new taxes imposed on gaming revenues or gaming devices, a finding of unsuitability by regulatory authorities with respect to the registrants officers, directors or key employees, loss or retirement of key executives, adverse economic
conditions in the registrants key markets, severe and unusual weather in Atlantic City, and leverage and debt service. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date thereof.
The registrants undertake no obligation to publicly release any revision to such forward-looking statements to reflect events or circumstances after the date thereof.



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##### Table of Contents

PART I



Item 1. Business.



Colony RIH
Holdings, Inc. (CRH, or the Company), incorporated on March 7, 2001 as a Delaware corporation, owns 100% of the outstanding common stock of Resorts International Hotel and Casino, Inc. (RIHC), incorporated on
October 24, 2000 as a Delaware corporation. RIHC, through its wholly-owned subsidiary, Resorts International Hotel, Inc. (RIH, or the Predecessor) a New Jersey corporation, owns and operates Resorts Atlantic City
(Resorts), a casino hotel located in Atlantic City, New Jersey.



RIHC, Kerzner International North America, Inc. (KINA), formerly Sun International North America, Inc., a Delaware corporation, and GGRI, Inc. (GGRI), a Delaware corporation, entered into a
purchase agreement, dated as of October 30, 2000, as amended, (the Purchase Agreement). Pursuant to the Purchase Agreement, RIHC acquired all of the capital stock of RIH, the Warehouse Assets (as defined in the Purchase Agreement) and
all of the capital stock of New Pier Operating Company, Inc. (New Pier), a New Jersey corporation, (collectively, the Acquisition), on April 25, 2001 for approximately $144.8 million. In conjunction with the Acquisition, RIHC
borrowed $82.0 million under an Amended and Restated Credit Agreement, dated April 25, 2001, from the lenders named therein (the Credit Facility) and CRH issued a $17.5 million note to KINA (the Seller Note).



Prior to the completion of the Acquisition on April 25, 2001, neither CRH nor
RIHC had conducted business other than in connection with the Purchase Agreement and the new Credit Facility.



On April 1, 2003, Resorts Real Estate Holdings, Inc. (RREH) was formed as a wholly-owned subsidiary of CRH. RREH, which was incorporated as a
New Jersey corporation, was formed to acquire certain land which is currently leased by RIHC. See Option Land.



The Companys executive offices are located at 1133 Boardwalk, Atlantic City, New Jersey 08401. The telephone number is (609) 344-6000.



In addition to this annual report on Form 10-K, the Company files periodic
and current reports, proxy statements and other information with the SEC. A copy of these documents may be obtained free of charge upon written request to: Resorts International Hotel and Casino, Inc., 1133 Boardwalk, Atlantic City, New Jersey
08401. You may also read and copy any document the Company files with the SEC at the SECs Public Reference Room at 450 Fifth Street, NW, Washington, DC 20549. Please call the SEC at (800) SEC-0330 for further information about the public
reference facilities. These documents also may be accessed through the SECs electronic data gathering, analysis and retrieval system (EDGAR) via electronic means, including the SECs home page on the Internet, www.sec.gov.



Overview



The Company, through its ownership of RIH, owns and operates Resorts, a casino hotel in Atlantic City, New Jersey, which
offers casino gaming and other amenities.



Resorts commenced
operations in May 1978 as the first casino hotel opened in Atlantic City. This was accomplished by the conversion of the former Haddon Hall Hotel, a classic hotel structure originally built in the early 1900s, into a casino hotel. Resorts is
situated on 11.0 acres of land with approximately 310 feet of Boardwalk frontage overlooking the Atlantic Ocean. Prior to September 2002, Resorts consisted of two hotel towers, the 15-story Ocean Tower and the nine-story Atlantic City Tower. In
September 2002, CRH decommissioned the 166-room Atlantic City Tower in anticipation of beginning construction of a 27-story hotel tower on the same site (see The Expansion). In addition to the casino facilities described below, the
casino hotel complex currently has 480 hotel rooms and suites, a 1,400-seat theater, two smaller entertainment venues, six restaurants, a VIP slot and table player lounge, an indoor swimming pool, a lounge, a health club and leased retail shops. The
complex also has approximately 39,100 square feet of convention facilities, including six large meeting rooms and a 12,000 square foot ballroom.



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Resorts is situated on the Boardwalk of Atlantic City, along with eight of Atlantic Citys twelve
casinos. Resorts sits at the northern end of the Boardwalk adjacent to the Trump Taj Mahal Casino Resort, which is also adjoined by the Showboat Hotel and Casino. These three properties have a total of approximately 3,000 hotel rooms and
approximately 348,000 square feet of gaming space in close proximity to each other. An enclosed pedestrian bridge between Resorts and the Trump Taj Mahal Casino Resort allows patrons of both hotels to move between both casinos without exposure to
the weather and readily partake in events at both casino hotels. A similar enclosed pedestrian bridge connects the Showboat to the Taj Mahal, allowing patrons to walk under cover among all three casino hotels. The remaining nine Atlantic City casino
hotels are located approximately one-half mile to one and one-half miles to the south on the Boardwalk or in the Marina District of Atlantic City.



Facilities Overview



Gaming Floor. As of December 31, 2003, Resorts had a casino floor of approximately 75,000 square feet, including a simulcast and pari-mutuel
betting facility of approximately 12,000 square feet. Also, the casino contained approximately 2,354 slot machines, and 59 table games, which included twenty-five blackjack tables, eight roulette tables, six craps tables, and other specialty games
such as Caribbean Stud, Baccarat, Mini-Baccarat, Let It Ride, Three-Card Poker, Pai Gow Poker and Spanish Twenty-One.



The configuration of the casino floor is continually monitored and the games are offered to patrons with a view towards enhancing customer service and
offering the latest gaming products and technology as they are approved by the New Jersey Casino Control Commission (the NJCCC). Customer trends and preferences toward newer, themed slot machines are also actively monitored; management
is committed to meeting these demands with the mix of slot machines offered. Additionally, the amount and type of table games on the gaming floor will be adjusted in anticipation of seasonal changes or special events.



Meeting Rooms, Restaurants and Other Amenities. Resorts meeting
room facilities consist of a large banquet room with five breakout rooms. In the aggregate, these rooms have the ability to accommodate approximately 2,600 people in 39,100 square feet of space. Meeting rooms range in size from 450 to 12,028 square
feet. Although management believes the meeting room facilities are competitive with those offered by other operators in the market, the ability to attract convention and other large meeting traffic is constrained by our limited number and quality of
hotel rooms and suites. Management believes the increase in number and improved quality of hotel rooms and suites resulting from the expansion will allow us to significantly improve our marketability to conventions, which tend to draw higher margin
customers.



Management believes the quality of our restaurants
gives Resorts a significant competitive advantage over other casinos in Atlantic City, as it features several restaurants catering to differing customer tastes and price points. Resorts restaurants include: Capriccio, Asian Spice, Camelot
Steakhouse, Beach Ball Deli, Breadsticks and the Boardwalk Buffet, an all-you-can-eat breakfast, lunch and dinner buffet.



With a capacity to seat 1,400 patrons in approximately 18,000 square feet of space, the primary purpose of Resorts Superstar Theater is to attract
patrons to the casino. The theater is used to enhance the casinos image as an entertainment facility offering some of the best entertainment in Atlantic City. Recent acts which we believe target our core customer base include: Tom Jones,
Smokey Robinson, Engelbert Humperdinck, Bobby Vinton, Jerry Seinfield and Gladys Knight. In 2003, Resorts opened two additional entertainment venues, the 300-seat Screening Room, used for off-Broadway-style shows, and a 200-seat room used to present
the Improv Comedy Club.



Other amenities include a full service
salon and spa which offers an array of beauty and body treatments from massages to makeovers, as well as a gym facility and indoor/outdoor pool which is open year-round.



Parking. A multi-level parking garage that is connected to Resorts by an enclosed walkway is used for patrons
self-parking and accommodates approximately 700 vehicles. Additional adjacent properties, consisting of approximately 3.5 acres, which are owned by CRH, provide parking for approximately 300 vehicles. In addition, RIH leases approximately 4.4 acres
adjoining Resorts from RREH, which are currently used to provide additional uncovered self-parking for approximately 400 vehicles and valet parking for approximately 450 vehicles. See Option Land and Item 2. Properties.



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The Expansion



On March 22, 2002, RIHC sold $180.0 million aggregate principal amount of 111/2% First Mortgage Notes (the First Mortgage Notes) at a price of 97.686% yielding $175.8 million. Concurrent with the sale of the notes, CRH issued 17,295 shares of
class A common stock at a cash price of $0.0475 and 349,992 shares of class B common stock at a price of $100 to its existing shareholders for a total price of approximately $35.0 million. The proceeds from the sale of the First Mortgage Notes and
issuance of stock were used to retire existing debt and are being used to finance a portion of the cost to develop, construct, and equip a new hotel tower.



On September 4, 2002, CRH decommissioned the 166-room Atlantic City Tower in anticipation of beginning construction in
November 2002 of a 27-story hotel tower on the same site, at a cost of approximately $115.5 million. The expansion will add approximately 400 hotel rooms and suites, 25,000 square feet of additional gaming space, 781 slot machines and 12 table games
as compared to December 31, 2003 levels. From the proceeds of the sale of the First Mortgage Notes, $89.4 million was deposited in a construction disbursement account for use in construction of the hotel tower. Additionally, the New Jersey Casino
Reinvestment Development Authority (CRDA) will reimburse certain costs for the construction of the new hotel tower totaling approximately $13.1 million through 2008, of which $9.2 million was received in 2003, approximately $950,000 is
expected to be received in 2004, and approximately $2.9 million is expected to be received in the aggregate from 2005 through 2008. The CRDA will also make an additional $1.5 million available for expenses incurred in connection with public
improvements relating to the construction of the new hotel tower. In June 2002, RIH entered into a $20.0 million credit facility, the proceeds of which are to be used for the acquisition of furniture, fixtures and equipment. RIHC has guaranteed the
obligations of RIH under this equipment credit facility. The Companies intend to use $15.0 million of the equipment credit facility to purchase furniture, fixtures and equipment for the new hotel tower and expanded gaming facility. In November 2002,
the Companies also entered into a $10.0 million revolving credit facility.



The expansion is a key component in continuing the Companys strategy of growing its core customer base. Management believes that there existed a significant disparity in the quality of amenities offered by the
two hotel towers, which constrained its ability to attract and retain higher-margin, mid-level slot players and mid-level table game players. Resorts classifies its customers according to their gaming budget. A low-level slot player is defined
as a customer who is willing to gamble less than $400 per sitting, a mid-level slot player as a customer who is willing to gamble $400 to $1,000 per sitting and a high-level slot player as a customer who is willing to gamble more than $1,000 per
sitting. A low-level table game player is defined as a customer who is willing to gamble less than $5,000 per visit, a mid-level table game player as a customer who is willing to gamble $5,000 to $25,000 per visit, a high-level table game player as
a customer who is willing to gamble $25,000 to $100,000 per visit and a premium table game player as a customer who is willing to gamble more than $100,000 per visit.



Rooms in the Ocean Tower, a classic hotel structure constructed in the 1920s and completely renovated in 1999, are
competitive with the hotel rooms offered by other facilities in the Atlantic City market. In contrast, the Atlantic City Tower was built in the 1960s as a motel and consequently had smaller corridors, thinner walls and smaller bathrooms than
the hotel rooms offered by the other casino hotels in the Atlantic City market. Based on an analysis of the players which are tracked, management believes the Ocean Tower had historically generated a win per occupied room greater than twice that
generated by the Atlantic City Tower.



Management believes the
opening of the new hotel tower will increase both the top-line revenues and significantly expand the operating margins for the following reasons:



| |  | Customers tend to play longer and spend more of their budgeted gaming dollars at the casino hotel in which they stay. Correspondingly, management believes that the new hotel rooms
and suites will encourage patrons to stay at Resorts, increase their length of play and spend more of their gaming dollars at Resorts casino, contributing to an increased average win per customer.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The new hotel rooms will be among the largest in the Atlantic City market, which will facilitate a shift in the customer mix to the higher-margin, mid-to high-level slot player and
the higher end of the core customer base of table game players.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Fixed costs are expected to only marginally increase following the expansion. Consequently, management expects to generate higher margins from the new hotel rooms and suites and
additional slot machines.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Management has assembled what it believes to be a highly qualified team to design and construct the new
hotel tower, including Perini Building Company, Inc. as construction manager and contractor and the partnership of Bergman, Walls & Associates, Ltd. as the architects.



Construction of the tower expansion is currently underway and the hotel tower and expanded casino is anticipated to open by
the end of the second quarter of 2004. However, the hotel tower project is subject to many variables, including financing, regulatory and governmental approvals and typical delays associated with construction. No assurances can be given as to when
this expansion project will be completed.



Option Land



In conjunction with the purchase of RIH from KINA in April 2001 by CRH and
RIHC, CRH obtained an option to purchase approximately 10.0 acres of real property immediately adjacent to the Resorts site and approximately 2.0 acres of real property located in the Atlantic City metropolitan area, pursuant to an option agreement
(Option Agreement) for a total purchase price of $40.0 million. Portions of the option property (the Option Land) are zoned for casino hotel use and are available for future expansion. Some of the option property was leased
from KINA by RIH for use as a surface parking lot under a lease agreement with terms running contemporaneous with the terms of the Option Agreement.



The Option Agreement had a two-year term, which could be extended for two additional one-year terms upon the payment of a $2.5 million extension fee
payable upon each extension. The initial term of the Option Agreement was to expire in April 2003. The expiration date of the initial term of the Option Agreement was initially extended to June 15, 2003, as negotiations between the Companies and
KINA for the purchase of the Option Land commenced. Subsequently, the expiration date of the initial term was further extended, upon the payment by RIH of one-half of the $2.5 million extension fee.



In January 2004, CRH announced that it had reached agreement with KINA to
acquire the Option Land, subject to the approval of the New Jersey Casino Control Commission, which approval was received on March 17, 2004. Following the approval, the Option Land was acquired by RREH on March 18, 2004 in exchange for the issuance
of a $40 million note by RREH to KINA. This $40 million note will mature immediately following the maturity, acceleration or refinancing (other than permitted refinancing) of the First Mortgage Notes which are due March 22, 2009. Interest on the $40
million note will be payable semi-annually, and will be calculated at the following annual rates: 0% through September 2004, 4% from October 2004 through March 2006, 6% from April 2006 through March 2008, and 9% from April 2008 through March 2009.
The note payable to KINA is guaranteed by CRH, RIHC and RIH, provided, however that the guarantee of RIHC and RIH does not become effective until either the First Mortgage Notes have been paid in full or the fixed charge coverage ratio (the ratio of
Consolidated EBITDA to Fixed Charges, all as further defined in the First Mortgage Notes Indenture) of RIHC is at least 2.0 to 1.0. In addition, the amount guaranteed is initially limited to $20 million increasing by $5 million each year.



In conjunction with the option land purchase transaction, the
Option Agreement between RIHC and KINA was terminated. With the termination of the Option Agreement, the lease agreement between KINA and RIH converts to a month-to-month fair market value lease. As part of the option land purchase transaction, the
lease was amended to be a triple-net lease and was assigned by KINA to RREH. The amended agreement calls for the following payments: a $1.3 million security deposit paid upon closing, offset against lease payments of $205,000 per month through
September 2004; $135,833 per month from October 2004 through March 2006; $202,500 per month from April 2006 through March 2008; $302,500 per month from April 2008 through March 2009 and $402,500 per month thereafter. The lease agreement may be
terminated by either party upon 30 days notice, with the remaining security deposit refunded to RIH upon termination.



Business Strategy



Resorts offers its customers a full compliment of table games and slot choices, with the primary focus on slots. The mix of table games choices are
currently limited because of capacity limitations, but are expected to increase in 2004 with the opening of the hotel expansion and subsequent expansion of the casino floor. Resorts is committed to offering a wide variety of slot machine
denominations and up-to-date themes, believing this focus is critical to retaining the mid-to high level slot player.



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Resorts marketing programs are focused to maintain its loyal customer base, through efficient use of
player information. Resorts will also look to expand its core customer base with the opening of the new hotel tower, when it will be able to offer more high quality hotel rooms and suites. In addition, the expansion of supplemental services, such as
the increased entertainment options added in 2003 are used to attract new customers to the property.



In addition to the casino and hotel amenities offered, Resorts is committed to providing customer service that is superior to other casino properties, by
providing on-going training to all employees emphasizing the importance of providing outstanding customer service.



Marketing Overview



Resorts marketing programs target middle- and higher-income customers who have the propensity to gamble. Management uses its customer database to
identify and target value-added, high-income repeat gaming customers and uses player tracking systems to determine the value of customers and provide programs conducive to their level of play.



Resorts is promoted through radio, outdoor and print advertising and direct
mailings. Management currently intends to focus its marketing efforts, seeking to increase Resorts market share of drive-in slot players. Management believes drive-in players tend to be higher income slot customers than customers who travel by
bus and tend to spend more of their time in the casino where they are staying.



Resorts primary market is the 200-mile radius from Atlantic City, which includes all of New Jersey, New York City, Philadelphia and Baltimore, and its secondary market is the 200 plus-mile radius from Atlantic
City, which includes Washington, D.C. The primary market receives the heaviest allocation of marketing resources, with strategically targeted efforts in key outer market areas.



Atlantic City Market



Atlantic Citys strategic location, combined with its core demographics and steady market growth, makes it a compelling gaming market. Atlantic City
is located along the most densely populated area of the United States, the New York-Philadelphia-Baltimore-Washington D.C. corridor.



The Atlantic City market has demonstrated continued and steady growth, despite several recessions and the recent proliferation of new gaming
jurisdictions, including Delaware and Connecticut. Compound annual growth in total gaming revenue has averaged 3.3% per year since 1990. Resorts competes directly with 11 other casino hotels in Atlantic City. The Atlantic City casino market, as of
December 31, 2003, contained approximately 14,300 hotel rooms and suites and 1.41 million square feet of gaming area, including simulcast betting and poker rooms.



According to the South Jersey Transportation Authority, Atlantic City hosted approximately 32.2 million visitors in 2003, a
decrease of 3.0% from 2002, which tallied approximately 33.2 million visitors. In addition, these visitors spent over $4.4 billion in the local economy.



The Atlantic City market has a strong locals component, which includes gaming patrons that generally live within 150 miles of Atlantic
City. As a result of this close vicinity, management believes the Atlantic City customer tends to frequent the casinos in the market more than customers in destination-based markets such as Las Vegas. Management believes the Atlantic City customer
tends to be more sophisticated and sensitive to changes in slot hold percentage than customers in other gaming jurisdictions. Additionally, management believes that the locals component of the Atlantic City market results in a more stable stream of
cash flow that is less susceptible to economic downturns than that of destination-based markets.



Slot play has become increasingly popular with Atlantic City gaming patrons. This popularity is partially due to technological improvements such as
cashless slot machines, bill and coupon acceptors, video poker and themed slot machines



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that have increased convenience and entertainment value. Additionally, slot machines tend to generate higher margins than
table games, and Atlantic City gaming operators have correspondingly increased the number of slot machines while reducing the number of table games on their gaming floors. This trend is evidenced by the 29.3% increase in the number of slot machines
in the Atlantic City market since 1996 as compared to the 3.0% decrease in the number of table games. Slot revenues increased from 68.7% of total casino revenues in the Atlantic City market in 1996 to 74.0% of total casino revenues in 2003.



Atlantic City gaming operators, including Resorts, have become
increasingly focused on improving the quality of revenues in recent years. This trend is evidenced by the markets reduced reliance on promotional expenses and allowances, such as bus packages and customer give-away promotions. Although such
promotions can drive top-line growth, management believes they result in lower operating margins as they are generally matched by competitors.



Significant private and public investment in the Atlantic City market has been made over the past few years. In 1984, the New Jersey State Legislature
created the CRDA, the state agency that levies a 1.25% tax on gross gaming revenues and oversees the expenditure of such funds to rebuild Atlantic City through an organized master plan (see Regulation and Gaming Taxes and FeesLicense
Fees, Taxes and Investment Obligations). Some of the most significant improvements to Atlantic City as a result of this initiative include:



| |  | the $268.0 million Atlantic City Convention Center;
| | - | ---------------------------------------------------



| |  | the $84.0 million renovation of the entrance to the Atlantic City Expressway;
| | - | -----------------------------------------------------------------------------



| |  | the $330.0 million Atlantic City Tunnel project connecting the Atlantic City Expressway to the Marina District;
| | - | ---------------------------------------------------------------------------------------------------------------



| |  | $225.0 million in CRDA housing;
| | - | -------------------------------



| |  | the construction of a $14.5 million minor league baseball stadium;
| | - | ------------------------------------------------------------------



| |  | the $90.0 million refurbishment of the Boardwalk Convention Center Hall into a special events venue; and
| | - | --------------------------------------------------------------------------------------------------------



| |  | the $76.0 million, 300,000 square foot retail and entertainment complex, The Walk, located adjacent to the Atlantic City Convention Center, which is partially opened and
expected to be completed in the Spring 2004.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Additionally, the CRDA has undertaken an enhancement project of North Carolina Avenue, which will allow for improved traffic flow in Atlantic City. Upon completion, North Carolina Avenue will serve as the primary thoroughfare from the
Marina District to the Boardwalk, thereby promoting traffic flow to Resorts entrance, which is located on North Carolina Avenue.



Several gaming operators have announced new development or expansion projects which management believes will attract new, higher-margin customers and
alleviate hotel room and suite inventory constraints. The most significant addition to the Atlantic City market has been the completion by Boyd Gaming Corporation and MGM Mirage, Inc. of a resort complex located in the Marina District, named the
Borgata Hotel Casino and Spa, which opened in July 2003. It is expected that the Borgata will attract a younger gaming customer and will increase the size and profitability of the overall market in the long term. In addition, management
believes the Borgata will be Atlantic Citys first destination-based resort and will drive additional traffic to the Boardwalk due to the longer estimated length of stay of the Borgatas target customers. However, for the short term, the
opening of the Borgata has negatively impacted the results of the existing Atlantic City casinos, including Resorts, as casino patrons visit the citys newest attraction. In addition to the construction of the Borgata, several Atlantic City
properties have announced or are currently undergoing renovations, including:



| |  | The Atlantic City Tropicanas $265.0 million expansion that will include construction of an additional 502 hotel rooms and a 200,000 square foot retail, dining and
entertainment complex, named The Quarter. Construction at the Tropicana was delayed by the collapse of its partially built parking garage on October 30, 2003. Construction has resumed at the project and is expected to be completed in
September 2004;
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| |  | The Showboat is transforming its boardwalk entrance into a New Orleans style themed façade along with a food court, open air bar, and lounge. Plans also call for a casino
expansion with 426 slots, replacing the Mardi-Gras showroom. Showboats new 19-story, 544-room hotel tower opened in May 2003;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Caesars Entertainment (formerly Park Place Entertainment) is proceeding with development plans for the Pier at Caesars, a retail, dining and entertainment facility
located on a pier directly across the boardwalk from Caesars, which was formerly used as a shopping mall. The complex is being developed by The Gordon Group, co-creator of the Forum Shops in Las Vegas, and is expected to be completed in the summer
of 2005, and cost $140 million;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Caesars Entertainment recently broke ground for construction of a $75 million, 3,200-space parking garage to serve The Walk, Caesars Ballys casino, Caesars casino, the Pier at
Caesars, and the Atlantic City Medical Center. This garage is expected to be completed in spring 2005;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Harrahs Entertainment, Showboats owner, confirmed that they will be purchasing a parcel of land from the Atlantic City Housing Authority. Harrahs recently
announced plans to build an estimated 1,500 space valet-parking garage to serve the Showboat on this property, which is located between New Jersey and Delaware avenues. In addition, Harrahs has the option to purchase another parcel of land
which could be used for a 500-room hotel tower for the Showboat. Harrahs also announced the possibility of constructing a fifth hotel tower for its Harrahs Atlantic City property in the near future;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The Borgata is developing plans to add more restaurants, meeting space, gaming tables and slots, parking and a significant amount of retail space to its newly-opened property, at an
expected cost of more than $200 million; and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Trump Hotels and Casino Resorts, Inc. announced in February 2004 that it is pursuing a recapitalization which, if successful, will facilitate expansion of the companys current
Atlantic City properties, including an announced 800- to 1000-room hotel tower at the Taj Mahal.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Competition



General. Competition in the Atlantic City market remains intense. At the present time, there are 12 casino hotels located in Atlantic City, including Resorts, all of which compete for patrons. Competition in the Atlantic City market
centers on hotel and casino facilities and related amenities; ease of access and parking facilities; services and promotions provided to patrons; and entertainment.



Substantial new expansion and development activity has recently been completed or has been announced in Atlantic City, which
intensifies the pressure in the Atlantic City market as discussed above.



Competition also extends to the employment market. The demand for qualified and experienced gaming personnel was especially evident in 2003, as the opening of the Borgata created thousands more jobs in the industry.
The surplus of positions, many of which are required to be licensed by the NJCCC, resulted in increased labor costs as companies competed for the most qualified personnel.



Competing Jurisdictions. Resorts also competes, or will compete, with facilities in the northeastern and mid-Atlantic
regions of the United States at which casino gaming or other forms of wagering are currently, or in the future may be, authorized. To a minimal extent, Resorts faces competition from gaming facilities nationwide. Moreover, Resorts also faces
competition from various forms of internet gambling.



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##### Table of Contents

Resorts also faces competition from casino facilities in a number of states operated by federally
recognized Native American tribes. Pursuant to the Indian Gaming Regulatory Act of 1988, (IGRA), any state that permits casino-style gaming (even if only for limited charity purposes) is required to negotiate gaming compacts with
federally recognized Native American tribes. Under the IGRA, Native American tribes enjoy comparative freedom from regulation and taxation of gaming operations, which provides them with an advantage over their competitors, including Resorts.



There are currently two Native American-owned gaming
properties in Connecticut that compete directly with Atlantic City for gaming patrons, Foxwoods Resort and Casino and the Mohegan Sun Resort. In addition, the Seneca Niagara Casino opened on December 31, 2002 in Niagara Falls, New York. Plans for
another Seneca casino in Buffalo, New York are being discussed. Other Native American nations are seeking federal recognition and land and are negotiating gaming compacts in New York, Rhode Island, Connecticut and other states on the Eastern
seaboard, which could further increase competition for gaming customers.



In addition to Native American casinos, a major competitive threat to the Atlantic City gaming market has been the slot machine facilities located at Delaware racetracks. As of December 31, 2003, the three facilities
located in Delaware offered a total of approximately 5,683 slot machines, and reportedly generated approximately $502 million in revenues for the year 2003, a decrease of 11.3% from 2002. A smoking ban which was enacted in Delaware in November 2002,
appears to be the major contributing factor in the decline in revenues during 2003.



Legislation permitting other forms of casino gaming has been proposed, from time to time, in various states, including those bordering New Jersey. In November 2002, pro-gambling governors were elected in Pennsylvania
and Maryland, where it is expected that slot machines will be proposed for those states race tracks. New York allows slot machines at its racetracks with the first two Racinos opening in the early months of 2004 and another
scheduled to open in March 2004. Although, the Pennsylvania Senate passed a 2004 state budget that did not include a proposed bill that would allow slots at racetracks, gambling proponents continue to pursue the idea. In early 2003, New Jersey
Governor McGreevey established a commission to study the feasibility of installing video lottery terminals (VLTs), a form of slot machine, at race tracks in New Jersey. However Governor McGreevey, in a meeting with Wall Street
gaming analysts in January 2004, stated that he would not pursue the installation of slots at New Jersey racetracks without the support of the Atlantic City gaming industry.



Gaming Credit Policy



Resorts extends credit to selected gaming customers, primarily in order to compete with other casino hotels in Atlantic City that also extend credit to
customers. Credit play represented 22% of table game volume at Resorts in 2003, 21% in 2002 and 25% in 2001. RIHs gaming receivables, net of allowance for uncollectible amounts, were $3.7 million as of December 31, 2003, $4.0 million as of
December 31, 2002 and $5.2 million as of December 31, 2001. The collectibility of gaming receivables has an effect on results of operations and management believes that overall collections have been satisfactory. Atlantic City gaming debts are
enforceable under the laws of New Jersey and certain other states, although it is not clear whether other states will honor this policy or enforce judgments rendered by the courts of New Jersey with respect to such debts.



Security Controls



Gaming at Resorts is conducted by trained personnel and supervised by RIH. Prior to employment, all casino personnel must be
licensed under the New Jersey Casino Control Act (NJCCA). Security checks are made to determine, among other matters, that job applicants for key positions have had no criminal ties or associations. RIH employs extensive security and
internal controls at its casino. Security at Resorts utilizes closed circuit video cameras to monitor the casino floor and money counting areas. The count is observed daily by representatives of NJCCC.



Seasonal Factors



RIHs business activities are affected by seasonal factors that influence New Jersey tourism. Higher revenues and
earnings are typically realized during the middle third of the year.



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Employees



As of December 31, 2003, Resorts had approximately 2,800 employees, including approximately 700 casino employees, 700 food and beverage employees, 170
security employees, 150 administrative support employees, 360 hotel employees, 400 marketing and entertainment employees, 100 facilities employees, 50 parking employees and a senior management team of approximately 12 members. All of its employees
have completed the Companys customer service program during which they were taught to function on the highest level of service and professionalism within their specific segment.



Management believes that its employee relations are satisfactory. Approximately 1,200 of the employees are represented by
unions. Of these employees, approximately 900 are represented by the Hotel Employees and Restaurant Employees International Union Local 54, whose contract was renewed in September 1999 for a term of five years. This contract is expected to be
renewed in September 2004. There are several union contracts covering other union employees.



All casino employees and certain hotel employees must be licensed under the NJCCA. Casino employees are those employees whose work requires access to the casino, the casino simulcasting facility or restricted casino
areas.



Regulation and Gaming Taxes and Fees



General. Resorts operations in Atlantic City are subject to
regulation under the NJCCA, which authorizes the establishment of casinos in Atlantic City, provides for licensing, regulation and taxation of casinos and created the NJCCC, and the Division of Gaming Enforcement to administer the NJCCA. In general,
the provisions of the NJCCA concern:



| |  | the ability, character and financial stability and integrity of casino operators, their officers, directors and employees and others financially interested in a casino;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | the nature and suitability of hotel and casino facilities, operating methods and conditions; and
| | - | ------------------------------------------------------------------------------------------------



| |  | financial and accounting practices.
| | - | -----------------------------------



Gaming operations are subject to a number of restrictions relating to the rules of games, type of games, credit play, size of hotel and casino operations,
hours of operation, persons who may be employed, companies which may do business with casinos, the maintenance of accounting and cash control procedures, security and other aspects of the business.



There were significant regulatory changes in recent years. In addition to the
approval of new games, the NJCCA was amended to allow casinos to expand their casino floors before building the requisite number of hotel rooms, subject to approval of the NJCCC. This amendment was designed to encourage hotel room construction by
giving casino licensees an incentive and an added ability to generate cash flow to finance hotel construction. Prior law only allowed for casino expansion if a casino built new hotel rooms first. In addition, the maximum casino square footage has
been increased from 50,000 square feet to 60,000 square feet for the first 500 qualifying rooms and the current law allows for an additional 10,000 square feet for each additional 100 qualifying rooms over 500, up to a maximum of 200,000 square
feet. Future costs of regulation have been reduced as new legislation no longer requires hotel employees to be registered, extends the term for casino and casino key employee license renewals from two years to four years and allows greater
efficiency by either reducing or eliminating the time permitted to allow the NJCCC to approve internal controls, patron complimentary programs and the movement of gaming equipment.



Casino License. A casino license is initially issued for a term of one year and must be renewed annually by action of
the NJCCC for the first two renewal periods succeeding the initial issuance of a casino license. The NJCCC may renew a casino license for a period of four years, although the NJCCC may reopen licensing hearings at any time. A license is not
transferable and may be conditioned, revoked or suspended at any time upon proper action by the NJCCC. The NJCCA also requires an operations certificate, which, in effect, has a term consistent with that of a casino license.



In January 2004, the casino license of RIH was renewed for the four-year
period ending January 31, 2008.



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##### Table of Contents

Restrictions on Ownership of Equity and Debt Securities. The NJCCA imposes certain restrictions
upon the ownership of securities issued by a corporation that holds a casino license or is a holding, intermediary or subsidiary company of a corporate licensee, or collectively, a Holding Company. For example, the sale, assignment, transfer, pledge
or other disposition of any security issued by a corporation, which holds a casino license, is conditional, and shall be ineffective if disapproved by the NJCCC. If the NJCCC finds that an individual owner or holder of any securities of a corporate
licensee or its Holding Company must be qualified, and such owner or holder is not qualified under the NJCCA, the NJCCC has the right to propose any necessary remedial action. In the case of corporate holding companies and affiliates whose
securities are publicly traded, the NJCCC may require divestiture of the security held by any disqualified holder who is required to be qualified under the NJCCA.



In the event that entities or persons required to be qualified refuse or fail to qualify and fail to divest themselves of
such security interest, the NJCCC has the right to take any necessary action, including the revocation or suspension of the casino license. If any security holder of the licensee or its holding company or affiliate who is required to be qualified is
found disqualified, it will be unlawful for the security holder to:



| |  | receive any dividends or interest upon any such securities;
| | - | -----------------------------------------------------------



| |  | exercise, directly or through any trustee or nominee, any right conferred by such securities; or
| | - | ------------------------------------------------------------------------------------------------



| |  | receive any remuneration in any form from the corporate licensee for services rendered or otherwise.
| | - | ----------------------------------------------------------------------------------------------------



CRHs amended and restated certificate of incorporation and RIHCs certificate of incorporation provide that all
securities of CRH and securities of RIHC are held subject to the condition that if the holder thereof is found to be disqualified by the NJCCC pursuant to the provisions of the NJCCA, then CRH or RIHC, as the case may be, has the absolute right to
repurchase at the lesser of the market price or the purchase price, any security, share or other interest in the corporation.



The indenture governing the First Mortgage Notes provides that if any holder of First Mortgage Notes is found to be disqualified by the NJCCC, then RIHC
has the right to redeem such holders First Mortgage Notes at a redemption price equal to the lesser of the principal amount plus accrued interest, the purchase price plus accrued interest or the fair market value of the First Mortgage Notes.



Remedies. In the event that it is determined that a
licensee has violated the NJCCA, or if a security holder of the licensee required to be qualified is found disqualified but does not dispose of his securities in the licensee or holding company, under certain circumstances the licensee could be
subject to fines or have its license suspended or revoked.



The
NJCCA provides for the mandatory appointment of a conservator to operate the casino and hotel facility if a license is revoked or not renewed, and permits the appointment of a conservator if a license is suspended for a period in excess of 120 days.
If a conservator is appointed, the suspended or former licensee is entitled to a fair rate of return out of net earnings, if any, during the period of the conservatorship, taking into consideration that which amounts to a fair rate of return
in the casino or hotel industry. Under certain circumstances, upon the revocation of a license or failure to renew, the conservator, after approval by the NJCCC and consultation with the former licensee, may sell, assign, convey or otherwise
dispose of all of the property of the casino hotel. In such cases, the former licensee is entitled to a summary review of such proposed sale by the NJCCC and creditors of the former licensee and other parties in interest are entitled to prior
written notice of the sale.



License Fees, Taxes and
Investment Obligations. The NJCCA provides for casino license renewal fees, other fees based upon the cost of maintaining control and regulatory activities and various license fees for the various classes of employees. In addition, a casino
licensee is subject annually to a tax of 8% of gross revenue, as defined under the NJCCA, and license fees of $500 for every slot machine for use or in use in a casino as of the first of July each year. Also, the NJCCA was amended in 1995 to create
an Atlantic City fund, (the AC Fund), for economic development projects other than the construction and renovation of casino hotels. Beginning with fiscal year 1999/2000 and for the following three fiscal years, an amount equal to the
average amount paid into the AC Fund for the previous four fiscal years shall be contributed to the AC Fund. Each licensees share of the amount to be contributed to the AC Fund is based upon its percentage of the total industry gross revenue
for the relevant fiscal year. After eight years, the casino licensees requirement to contribute to this fund ceases. Resorts requirements to contribute to the Atlantic City Fund ceased in 2003.



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##### Table of Contents

On June 30, 2003 the NJCCA was amended, effective July 1, 2003, to impose or increases certain taxes and
fees on the Atlantic City casino industry. These taxes and fees, which were imposed in an effort to reduce the states budget deficit, include: (1) a 7.5% tax on casino net profits subject to a minimum tax of $350,000 per licensee per year
through June 30, 2006; (2) a 4.25% tax on rooms, food, drinks and entertainment admissions provided to customers at no cost or reduced cost; (3) a $3.00 occupied room fee; (4) an increase in the parking fee from $1.50 per car per day to $3.00 per
car per day; and (5) a revision in the calculation of the 8% tax on gross gaming revenues, to eliminate the deduction for uncollectible debts.



The following table summarizes, for the periods shown, the cost to RIH of the various fees, taxes and contributions assessed by the NJCCC.



|                                                  |  |                                 |        |      |   |        |  |   |       
|------------------------------------------------- |  | ------------------------------- | ------ | ---- | - | ------ |  | - | ------
|                                                  |  | For the Year Ended December 31,
|                                                  |  | 2003                            |        | 2002 |   | 2001  
|                                                  |  | ($ in thousands)               
|Gaming tax                                        |  | $                               | 18,608 |      | $ | 20,862 |  | $ | 19,433
|License, investigation, inspection and other fees |  |                                 | 4,951  |      |   | 4,780  |  |   | 4,348 
|Contribution to AC Fund                           |  |                                 | 256    |      |   | 444    |  |   | 206   
|Casino net profits tax                            |  |                                 | 175    |      |   |       |  |   |      
|Other taxes and fees                              |  |                                 | 394    |      |   |       |  |   |      
|                                                  |  |                                 |        |      |   |        |  |   |       
|Total                                             |  | $                               | 24,384 |      | $ | 26,086 |  | $ | 23,987
|                                                  |  |                                 |        |      |   |        |  |   |       



The amended NJCCA
requires a licensee to satisfy its investment obligation by purchasing bonds to be issued by the CRDA or by making other investments authorized by the CRDA, in an amount equal to 1.25% of a licensees gross revenue. If the investment obligation
is not satisfied, then the licensee will be subject to an investment alternative tax of 2.5% of gross revenue. Licensees are required to make quarterly deposits with the CRDA against their current year investment obligations. RIHs investment
obligations amounted to $3.0 million for 2003, $3.3 million for 2002, and $3.0 million for 2001, and have been satisfied by deposits made with the CRDA. At December 31, 2003, RIH held $7.2 million face amount of bonds issued by the CRDA and had $6.1
million on deposit with the CRDA, the majority of which has been pledged for specific projects. The CRDA bonds issued through 2003 have interest rates ranging from 3.5% to 7.0% and have repayment terms of between 20 and 50 years.



CRDA Funds. The CRDA is a public body of the State of New Jersey
established pursuant to P.L. 1984, c218, as amended and supplemented (the CRDA Act). Resorts has entered into a Credit Agreement with the CRDA pursuant to the CRDA Act for funding pursuant to NJAC 19:65-1.1 et seq. Pursuant to Resolution
97-90, adopted on April 15, 1997, the hotel expansion was determined to be an approved project in accordance with the CRDA Act. As such, through 2008, Resorts will receive funds from the CRDAs AC Fund and South Jersey Fund of approximately
$13.1 million in reimbursement payments for approved invoices resulting from the construction of the hotel tower.



Pursuant to the CRDA Act, funds deposited by Resorts are deposited into several accounts, one of which is the Atlantic City Housing Fund which finances
improving Atlantic City housing. As a result of recent appropriations from this dedicated account, in 2002 Resorts has received a lump sum payment of $1.5 million representing Resorts share of donations made to the Atlantic City Housing Fund.
Resorts is utilizing these funds for the hotel expansion project as they are not restricted to housing use.



Additionally, in exchange for pledging a portion of the proceeds from Resorts South Jersey Fund to enhance the credit on recently issued CRDA Bonds,
the CRDA has agreed to make an additional amount of up to $1.5 million available to Resorts to fund public improvements, as approved by the CRDA. RIHC intends to dedicate these funds, as approved by the CRDA, to public improvement in and around the
hotel expansion project.



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##### Table of Contents

Item 2. Properties.



Casino,
Hotel and Related Properties. RIHCs core real estate assets consist of developed land and land available for development in Atlantic City which RIHC either owns or leases.



Land used in the operation of the casino hotel consists of approximately 11.0 acres and is owned in fee simple, except for
approximately 1.2 acres of the Resorts site which are leased pursuant to four ground leases expiring from 2056 through 2067. The 11.0 acres include approximately 6.0 acres under the Resorts building complex, approximately 3.5 acres of parking lots
available for future expansion and approximately 1.0 acre in front of the casino hotel which is utilized for patron valet and related services.



RIHC also owns an approximate 5.5 acre Atlantic Ocean pier site, 2.0 acres of which contained the former Steeplechase Pier. The pier has been removed and
RIHC possesses current federal and state permits to construct a new pier on a portion of the 5.5 acre site, although no decision has been made at this time to develop this location. Atlantic City amended its zoning ordinances to permit casinos,
hotel rooms and ancillary amusements on five of the Citys pier sites, including this site.



In conjunction with the purchase of RIH from KINA in April 2001 by CRH and RIHC, CRH obtained an option to purchase approximately 10.0 acres of real
property immediately adjacent to the Resorts site and approximately 2.0 acres of real property located in the Atlantic City metropolitan area, pursuant to the Option Agreement for a total purchase price of $40.0 million. Portions of the Option Land
are zoned for casino hotel use and are available for future expansion. Some of the property was leased from KINA by RIH for use as a surface parking lot under a lease agreement with terms running contemporaneous with the terms of the Option
Agreement. In January 2004, CRH announced that it had reached agreement with KINA to acquire the Option Land, subject to the approval of the New Jersey Casino Control Commission, which approval was received on March 17, 2004. See Item
1-Business: Option Land.



Other Properties. RIHC
also owns land adjacent to Delaware Avenue in Atlantic City, a portion of which is utilized for a warehouse operation servicing Resorts.



Mortgaged Properties. All property currently held or leased by RIHC is mortgaged for the benefit of Bankers Trust Company as collateral for
RIHCs $180.0 million aggregate principal amount of 111/2% First Mortgage Notes due 2009.



Item 3. Legal Proceedings.



Various legal proceedings are now pending against the Company. Management considers all such proceedings to be ordinary litigation incident to the operation of its business. Management believes that the resolution of these claims will not,
individually or in the aggregate, have a material adverse effect on its financial condition or results of operations.



Item 4. Submission of Matters to a Vote of Security Holders.



No matters were submitted to a vote of security holders during the quarter ended December 31, 2003.



PART II



Item 5. Market for Registrants Common Equity and Related Stockholder Matters.



No established public trading market exists for either CRHs or RIHCs common equity. There are no plans, proposals, arrangements or
understandings with any person with regard to the development of a trading market in either of CRHs or RIHCs common equity.



As of March 29, 2004, CRH has two holders of record of each of its class A common stock, par value $.01 per share, and class B common stock, par value
$.01 per share. RIHC is a wholly owned subsidiary of CRH.



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##### Table of Contents

Neither CRH nor RIHC has ever paid a dividend on its common stock. Certain funds received upon issuance
of the First Mortgage Notes were deposited into a construction disbursement account for use in connection with construction of the new hotel tower. Under the terms of the Disbursement Agreement, dated March 22, 2002, funds remaining in the liquidity
disbursement account, after the financial statements for the four fiscal quarter period ending December 31, 2004 have been delivered and the required disbursements under the agreement have been made, may be distributed as a dividend to CRH. The
Indenture governing the First Mortgage Notes contains restrictions on the payment of dividends or other distributions by RIHC and its restricted subsidiaries. In addition, Section 1.05 of the NJCCA prohibits CRH from paying dividends to any person
who is disqualified by the NJCCC.



Item 6. Selected Financial Data.



The following table sets forth the selected financial data of Colony RIH Holdings, Inc. (CRH) and its Predecessor, Resorts International Hotel, Inc. (RIH) as of and for each of the periods indicated. The selected
financial data of RIH as of December 31, 2000 and 1999 and for each of the years then ended are derived from the audited financial statements of our predecessor, RIH. The selected financial data of RIH for the period from January 1, 2001 to April
24, 2001 (pre-acquisition period) are derived from RIHs financial statements, which have been audited by Ernst & Young LLP. The selected financial data of CRH as of December 31, 2003, 2002, and 2001 and for the years ended December 31,
2003, and 2002, and for the period from April 25, 2001 to December 31, 2001 (post-acquisition period) are derived from CRHs financial statements, which have been audited by Ernst & Young LLP. Certain amounts in the prior period financial
statements have been reclassified to conform to their current period presentation.



|                                    |  |                         |         |   |                                             |   |         |                                            |  |      |                         |   |      |               |         |   |               |   |         |   |  |   |         |  
|----------------------------------- |  | ----------------------- | ------- | - | ------------------------------------------- | - | ------- | ------------------------------------------ |  | ---- | ----------------------- | - | ---- | ------------- | ------- | - | ------------- | - | ------- | - |  | - | ------- | -
|                                    |  | Year Ended December 31, |         |   | Period fromApril 25,2001 toDecember 31,2001 |   |         | Period fromJanuary 1,2001 to April 24,2001 |  |      | Year ended December 31, |  
|                                    |  | 2003                    |         |   | 2002                                        |   |         |                                            |  | 2000 |                         |   | 1999 |              
|                                    |  | (Successor)             |         |   | (Successor)                                 |   |         | (Successor)                                |  |      | (Predecessor)           |   |      | (Predecessor) |         |   | (Predecessor) |  
|                                    |  | ($ in thousands)        |        
|Revenues:                           |  |                         |         |   |                                             |   |         |                                            |  |      |                         |   |      |               |         |   |               |   |         |   |  |   |         |  
|Casino                              |  | $                       | 230,135 |   |                                             | $ | 259,208 |                                            |  | $    | 168,687                 |   |      | $             | 72,417  |   |               | $ | 235,827 |   |  | $ | 221,016 |  
|Lodging                             |  |                         | 11,163  |   |                                             |   | 13,031  |                                            |  |      | 10,083                  |   |      |               | 3,996   |   |               |   | 16,412  |   |  |   | 15,161  |  
|Food and beverage                   |  |                         | 22,079  |   |                                             |   | 24,649  |                                            |  |      | 17,880                  |   |      |               | 6,977   |   |               |   | 26,039  |   |  |   | 25,512  |  
|Other                               |  |                         | 6,496   |   |                                             |   | 6,488   |                                            |  |      | 4,169                   |   |      |               | 1,523   |   |               |   | 4,973   |   |  |   | 8,076   |  
|Less: promotional allowances        |  |                         | (54,426 | ) |                                             |   | (66,664 | )                                          |  |      | (42,564                 | ) |      |               | (17,995 | ) |               |   | (62,993 | ) |  |   | (63,474 | )
|                                    |  |                         |         |   |                                             |   |         |                                            |  |      |                         |   |      |               |         |   |               |   |         |   |  |   |         |  
|Total net revenues                  |  |                         | 215,447 |   |                                             |   | 236,712 |                                            |  |      | 158,255                 |   |      |               | 66,918  |   |               |   | 220,258 |   |  |   | 206,291 |  
|Costs and Expenses:                 |  |                         |         |   |                                             |   |         |                                            |  |      |                         |   |      |               |         |   |               |   |         |   |  |   |         |  
|Casino                              |  |                         | 117,156 |   |                                             |   | 123,616 |                                            |  |      | 84,620                  |   |      |               | 35,987  |   |               |   | 120,393 |   |  |   | 115,413 |  
|Lodging                             |  |                         | 1,318   |   |                                             |   | 1,672   |                                            |  |      | 1,970                   |   |      |               | 913     |   |               |   | 4,186   |   |  |   | 2,929   |  
|Food and beverage                   |  |                         | 11,721  |   |                                             |   | 12,564  |                                            |  |      | 9,228                   |   |      |               | 3,639   |   |               |   | 14,716  |   |  |   | 15,401  |  
|Other operating                     |  |                         | 25,686  |   |                                             |   | 25,557  |                                            |  |      | 16,683                  |   |      |               | 8,292   |   |               |   | 25,667  |   |  |   | 28,762  |  
|Selling, general and administrative |  |                         | 30,983  |   |                                             |   | 36,769  |                                            |  |      | 21,526                  |   |      |               | 10,492  |   |               |   | 37,522  |   |  |   | 35,375  |  
|Depreciation and amortization       |  |                         | 9,993   |   |                                             |   | 10,160  |                                            |  |      | 5,412                   |   |      |               | 5,325   |   |               |   | 17,034  |   |  |   | 16,737  |  
|Pre-opening                         |  |                         |        |   |                                             |   |        |                                            |  |      |                        |   |      |               |        |   |               |   |        |   |  |   | 5,398   |  
|                                    |  |                         |         |   |                                             |   |         |                                            |  |      |                         |   |      |               |         |   |               |   |         |   |  |   |         |  
|Total costs and expenses            |  |                         | 196,857 |   |                                             |   | 210,338 |                                            |  |      | 139,439                 |   |      |               | 64,648  |   |               |   | 219,518 |   |  |   | 220,015 |  
|Operating income (loss)             |  |                         | 18,590  |   |                                             |   | 26,374  |                                            |  |      | 18,816                  |   |      |               | 2,270   |   |               |   | 740     |   |  |   | (13,724 | )
|Interest expense, net               |  |                         | (17,838 | ) |                                             |   | (17,104 | )                                          |  |      | (5,625                  | ) |      |               | (7,163  | ) |               |   | (23,146 | ) |  |   | (19,639 | )
|Other income (expense)              |  |                         | (281    | ) |                                             |   | 182     |                                            |  |      | (408                    | ) |      |               |        |   |               |   |        |   |  |   |        |  
|Loss on extinguishment of debt      |  |                         |        |   |                                             |   | (3,378  | )                                          |  |      |                        |   |      |               |        |   |               |   |        |   |  |   |        |  
|                                    |  |                         |         |   |                                             |   |         |                                            |  |      |                         |   |      |               |         |   |               |   |         |   |  |   |         |  
|Income (loss) before income taxes   |  |                         | 471     |   |                                             |   | 6,074   |                                            |  |      | 12,783                  |   |      |               | (4,893  | ) |               |   | (22,406 | ) |  |   | (33,363 | )
|Provision for income taxes          |  |                         | 1,727   |   |                                             |   | 3,197   |                                            |  |      | 5,046                   |   |      |               |        |   |               |   |        |   |  |   |        |  
|                                    |  |                         |         |   |                                             |   |         |                                            |  |      |                         |   |      |               |         |   |               |   |         |   |  |   |         |  
|Net income (loss)                   |  | $                       | (1,256  | ) |                                             | $ | 2,877   |                                            |  | $    | 7,737                   |   |      | $             | (4,893  | ) |               | $ | (22,406 | ) |  | $ | (33,363 | )
|                                    |  |                         |         |   |                                             |   |         |                                            |  |      |                         |   |      |               |         |   |               |   |         |   |  |   |         |  



14



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##### Table of Contents

|                          |  |                  |         |             |   |             |  |               |         |               |   |         |  |   |        
|------------------------- |  | ---------------- | ------- | ----------- | - | ----------- |  | ------------- | ------- | ------------- | - | ------- |  | - | -------
|                          |  | December 31,    
|                          |  | 2003             |         | 2002        |   | 2001        |  | 2000          |         | 1999         
|                          |  | (Successor)      |         | (Successor) |   | (Successor) |  | (Predecessor) |         | (Predecessor)
|                          |  | ($ in thousands)
|Balance Sheet Data:       |  |                  |         |             |   |             |  |               |         |               |   |         |  |   |        
|Cash and cash equivalents |  | $                | 28,417  |             | $ | 32,989      |  | $             | 15,363  |               | $ | 21,453  |  | $ | 14,541 
|Total assets              |  |                  | 302,686 |             |   | 309,354     |  |               | 179,144 |               |   | 410,971 |  |   | 417,251
|Long-term debt, net       |  |                  | 183,281 |             |   | 183,008     |  |               | 88,502  |               |   | 278,337 |  |   | 272,374
|Stockholders equity      |  |                  | 83,156  |             |   | 84,435      |  |               | 48,429  |               |   | 57,495  |  |   | 79,901 



Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.



The financial information contained in Results of Operations and Liquidity provides a comparison of the combination of CRH and RIH
in 2003 and 2002 to that of RIH in 2001. CRH is a successor company to RIH and accordingly is on a different basis of accounting than RIH; however, management believes amounts included in revenue and certain costs and expenses are comparable.



The discussion and analysis of the Companys financial
condition and results of operations are based upon its financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.



The preparation of these financial statements requires management to make estimates and judgments that offset the reported
amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Managements estimates are based on historical experience and on various other assumptions that are believed to be reasonable
under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different
assumptions or conditions.



Executive Overview



CRH was formed at the direction of Colony Investors IV, L.P. (Colony
IV), an affiliate of Colony Capital, LLC (Colony Capital) of Los Angeles, California, on March 7, 2001. CRH is owned by Colony IV, Colony RIH Voteco, LLC (Voteco), another affiliate of Colony Capital, and Nicholas L.
Ribis, a Director and executive officer of both CRH and RIHC. RIHC is a wholly-owned subsidiary of CRH and was formed at the direction of Colony IV on October 24, 2000. RIH is RIHCs wholly-owned subsidiary. RIH owns and operates Resorts
Atlantic City, a casino hotel in Atlantic City, New Jersey.



Several significant events have affected the operating results of Resorts since 1999. Prior to RIHCs purchase of Resorts in April 2001, KINA implemented a substantial renovation of the Ocean Tower, casino floor, hotel porte cochere
and lobby area. The renovation adversely impacted gaming operations for much of 1999 as large portions of the gaming floor were closed during the renovation period from February 1999 through June 1999. Although the renovation significantly improved
the facilitys appearance and functionality, several factors relating to the renovation, such as the decommissioning of gaming space, adversely impacted Resorts performance in 1999. KINA was only partially successful in regaining the
customers lost during this period. KINA also raised slot hold percentages well above Atlantic City market averages during this period which, when combined with unfocused marketing, resulted in a significant drop in overall slot revenue.



The current management team joined Resorts in February 2000 and
subsequently put into practice a number of successful initiatives that took effect between six and twelve months after their implementation. Such initiatives included: shifting marketing focus to mid-level slot customers and mid- to high-level table
game customers, completely reengineering the customer database, lowering slot hold percentages to market norms, implementing direct marketing programs and a new slot club, discontinuing several unsuccessful promotions, adding a new bus center and
expanding the gaming floor. The results of such initiatives are reflected in the significant improvement in the Companys operating results beginning in the third quarter of 2000.



15



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##### Table of Contents

On September 4, 2002, CRH decommissioned the 166-room Atlantic City Tower in anticipation of beginning
construction in November 2002 of a 27-story hotel tower on the same site. The expansion will add approximately 400 hotel rooms and suites, 25,000 square feet of additional gaming space, 781 slot machines and 12 table games as compared to December
31, 2003 levels. In addition, the expansion plans include the relocation and expansion of the hotel lobby and porte cochere. The expansion is budgeted to cost approximately $115.5 million and is expected to be completed by the end of the second
quarter of 2004.



Although significant improvement was
reflected in the Companys operating results beginning in the third quarter of 2000 and continuing through the end of 2002, operating results for 2003 were unfavorably impacted by many factors, most notably the disruption resulting from the
current hotel expansion project and the resulting loss of hotel rooms and gaming capacity during the construction. Management anticipates that the opening of the hotel expansion in mid-2004 will have a positive impact on operating results in the
coming year, and are focusing current efforts on positioning the Company to capitalize on that impact.



Key Performance Indicators



The Companies generate the majority of their net revenues from gaming operations, therefore many of the key performance indicators that management uses to manage its business are related to the casino. The key indicators related to gaming
revenue are as follows:



| |  | Table games drop (the dollar amount of chips purchased) and slot handle (the dollar amounts wagered in slot machines), which are indicators of volume;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The hold percentage (the percentage of win to drop or handle); Resorts typical table games hold percentage is in the range of 15% to 17% of table games drop, and its typical
slot hold percentage is in the range of 7% to 8% of slot handle.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Key performance indicators related to non-gaming revenues include hotel occupancy, an indicator of volume in the hotel, and restaurant covers (number of meals served), also a volume indicator.



The Company also considers EBITDA to be a key indicator of its
performance. EBITDA, as further defined in the indenture governing the First Mortgage Notes (the Indenture), represents the Companys earnings before interest expense, taxes, depreciation and amortization costs, pre-opening costs
incurred in connection with the Hotel Expansion, and other non-cash items. Management believes that EBITDA is a commonly used measure of performance in the gaming industry, and uses it as the primary measurement in evaluating managements
operating performance. EBITDA should not be considered as an alternative to operating income (as determined in accordance with generally accepted accounting principles, or GAAP) as an indicator of operating performance, or to cash flows
from operating activities (as determined in accordance with GAAP) as a measure of liquidity, or to other consolidated income or cash flow statement data, as are determined in accordance with GAAP. All companies do not calculate EBITDA in the same
manner. The following table reflects a reconciliation of EBITDA, as defined in the Indenture, to net income as determined in accordance with GAAP for the periods noted:



|                                     |  |                         |        |   |      |   |        |      |  |   |       
|------------------------------------ |  | ----------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------
|                                     |  | Year ended December 31,
|                                     |  | 2003                    |        |   | 2002 |   |        | 2001
|                                     |  | ($ in thousands)       
|Net income (loss)                    |  | $                       | (1,256 | ) |      | $ | 2,877  |      |  | $ | 2,844 
|Add:                                 |  |                         |        |   |      |   |        |      |  |   |       
|Interest expense                     |  |                         | 19,133 |   |      |   | 19,055 |      |  |   | 13,892
|Provision for income taxes           |  |                         | 1,727  |   |      |   | 3,197  |      |  |   | 5,046 
|Depreciation and amortization        |  |                         | 9,993  |   |      |   | 10,160 |      |  |   | 10,737
|Pre-opening expense                  |  |                         |       |   |      |   |       |      |  |   |      
|Non-cash value of stock compensation |  |                         | (23    | ) |      |   | (182   | )    |  |   | 88    
|Loss on disposal of assets           |  |                         | 61     |   |      |   |       |      |  |   |      
|Loss on extinguishment of debt       |  |                         |       |   |      |   | 3,378  |      |  |   |      
|                                     |  |                         |        |   |      |   |        |      |  |   |       
|EBITDA                               |  | $                       | 29,635 |   |      | $ | 38,485 |      |  | $ | 32,607
|                                     |  |                         |        |   |      |   |        |      |  |   |       



16



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##### Table of Contents

Operating Results



Various events have had a significant impact on Resorts operations over the last three years. The most notable of these are as follows:



| |  | The successful marketing programs and practices put into place in 2000 by the current management team, the results of which were reflected in the improvement in operating results
beginning in late 2000 and continuing through 2002;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The decommissioning of the 166-room Atlantic City Tower in September 2002 in preparation for the construction of the new 27-story hotel tower. The loss of hotel rooms and associated
decrease in gaming space had a significant negative impact on operations during 2003;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Certain regional and national events, including severe weather conditions, the war in Iraq, and the general economic conditions have impacted results during 2003; and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | In the longer term, the opening of the Borgata casino is expected to have a positive impact on the Atlantic City gaming industry by increasing the number of visitor trips and
improving the quality of visitors coming to the city; however, in the short term the opening of Borgata in July 2003 had a negative impact on other Atlantic City casinos, including Resorts, as visitors were anxious to see the citys newest
attraction.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Revenues



The following table presents the detail of the Companies net revenues
for the periods noted:



|                                |  |                         |         |   |          |       |    |      |   |         |          |  |       |      |  |   |         |  
|------------------------------- |  | ----------------------- | ------- | - | -------- | ----- | -- | ---- | - | ------- | -------- |  | ----- | ---- |  | - | ------- | -
|                                |  | Year ended December 31, |        
|                                |  | 2003                    |         |   | % change |       |    | 2002 |   |         | % change |  |       | 2001 | 
|                                |  | ($ in thousands)        |        
|Casino revenues:                |  |                         |         |   |          |       |    |      |   |         |          |  |       |      |  |   |         |  
|Slots                           |  | $                       | 170,307 |   |          | (8.7  | )% |      | $ | 186,610 |          |  | 9.3   | %    |  | $ | 170,671 |  
|Table games                     |  |                         | 58,307  |   |          | (16.6 | )% |      |   | 69,908  |          |  | 3.8   | %    |  |   | 67,374  |  
|Other                           |  |                         | 1,521   |   |          | (43.5 | )% |      |   | 2,690   |          |  | (12.1 | )%   |  |   | 3,059   |  
|                                |  |                         |         |   |          |       |    |      |   |         |          |  |       |      |  |   |         |  
|Total casino revenues           |  |                         | 230,135 |   |          | (11.2 | )% |      |   | 259,208 |          |  | 7.5   | %    |  |   | 241,104 |  
|Non-casino revenue:             |  |                         |         |   |          |       |    |      |   |         |          |  |       |      |  |   |         |  
|Food and beverage               |  |                         | 22,079  |   |          | (10.4 | )% |      |   | 24,649  |          |  | (0.8  | )%   |  |   | 24,857  |  
|Lodging                         |  |                         | 11,163  |   |          | (14.3 | )% |      |   | 13,031  |          |  | (7.4  | )%   |  |   | 14,079  |  
|Entertainment, retail and other |  |                         | 6,496   |   |          | 0.1   | %  |      |   | 6,488   |          |  | 14.0  | %    |  |   | 5,692   |  
|                                |  |                         |         |   |          |       |    |      |   |         |          |  |       |      |  |   |         |  
|Total non-casino revenues       |  |                         | 39,738  |   |          | (10.0 | )% |      |   | 44,168  |          |  | (1.0  | )%   |  |   | 44,628  |  
|Less: promotional allowances    |  |                         | (54,426 | ) |          | 18.4  | %  |      |   | (66,664 | )        |  | (10.1 | )%   |  |   | (60,559 | )
|                                |  |                         |         |   |          |       |    |      |   |         |          |  |       |      |  |   |         |  
|Total net revenues              |  | $                       | 215,447 |   |          | (9.0  | )% |      | $ | 236,712 |          |  | 5.1   | %    |  | $ | 225,173 |  
|                                |  |                         |         |   |          |       |    |      |   |         |          |  |       |      |  |   |         |  



The decrease in slot
revenues in 2003 was due to a $295.5 million (11.9%) decrease in slot handle to $2,193.8 million from $2,489.3 million in 2002, while the 2003 net slot hold increased to 7.8% from the 2002 net slot hold of 7.5%. The decrease in slot handle was a
direct result of the loss of hotel rooms, on-going construction, and the impact of the opening of the Borgata.



The increase in slot revenues in 2002 was due to a $318.0 million (14.6%) increase in slot handle to $2,489.3 million from $2,171.3 million in 2001, while
the 2002 net slot hold decreased to 7.5% from the 2001 net slot hold of 7.9%. In 2002, Resorts benefited from the continuation of its effective marketing programs commenced in 2001 and from new marketing initiatives started in 2002. The decline in
the net slot hold was deliberately initiated to allow Resorts to maintain its competitive position within the Atlantic City market.



The decrease in table games revenues in 2003 was due to a $47.5 million (11.0%) decrease in table games drop to $384.4 million from $431.9 million in
2002, along with a 2003 table games hold decrease to 15.2% from 16.2% in 2002. The decrease in table drop was a direct result of the loss of hotel rooms, on-going construction, and the impact of the opening of the Borgata.



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##### Table of Contents

The increase in table games revenues in 2002 was due to an increase in the tables games hold to 16.2%
from 15.0% in 2001, while 2002 table games drop decreased $17.9 million (4.0%) to $431.9 million from $449.8 million in 2001.



The decreases in other gaming revenues in 2003 and 2002 was due to the relocation and subsequent reduction in the size of Resorts simulcast room in
August 2002 in preparation for the commencement of the Hotel Expansion Project.



The decrease in food and beverage revenues in 2003 was due to a 10.3% decrease in restaurant covers to 1.31 million covers from 1.46 million covers in 2002 as a result of reduced volumes throughout the property.



The decrease in lodging revenues in 2003 was a result of the
loss of hotel rooms as part of the Hotel Expansion Project. Resorts had a 17.8% decrease in available rooms and, subsequently, a 15.3% decrease in occupied rooms. Resorts occupancy increased to 94.6% with an average daily room rate of $68.29
in 2003 from occupancy of 91.8% with an average daily room rate of $67.56 in 2002.



The decrease in lodging revenues in 2002 was also affected by the loss of hotel rooms in September 2002 as part of the Hotel Expansion Project. Resorts had a 8.3% decrease in available rooms and, subsequently, a 5.4%
decrease in occupied rooms. Resorts occupancy increased to 91.8% with an average daily room rate of $67.56 in 2002 from occupancy of 89.0% with an average daily room rate of $69.01 in 2001.



The increase in entertainment, retail, and other revenue in 2002 was due to
the offering of more headliner acts targeted to our gaming patron and increased retail revenues due to Resorts assuming the operation of the gift shop in February 2002, which had previously been outsourced.



Promotional allowances are expenses incurred by Resorts for complimentary
services (goods and services provided free of charge to gaming patrons) and cash incentives given to gaming patrons. The largest change in expense in 2003 was for cash incentives earned by slot machine patrons which accounted for a $9.3 million
(34.5%) decrease, attributable to the decreased volume of slot machine play. Also contributing to the 2003 decrease were a $1.3 million (9.4%) decrease in food and beverage complimentaries and a $1.3 million (11.6%) decrease in lodging
complimentaries, both related to reduced volume throughout the property.



Operating Results



The following table
presents the detail of the Companies operating results for the periods noted:



|                                    |  |                         |         |          |       |    |      |   |          |  |      |      |  |   |        
|----------------------------------- |  | ----------------------- | ------- | -------- | ----- | -- | ---- | - | -------- |  | ---- | ---- |  | - | -------
|                                    |  | Year ended December 31,
|                                    |  | 2003                    |         | % change |       |    | 2002 |   | % change |  |      | 2001
|                                    |  | ($ in thousands)       
|Total net revenues                  |  | $                       | 215,447 |          | (9.0  | )% |      | $ | 236,712  |  | 5.1  | %    |  | $ | 225,173
|Costs and expenses:                 |  |                         |         |          |       |    |      |   |          |  |      |      |  |   |        
|Casino and hotel operations         |  |                         | 155,881 |          | (4.6  | )% |      |   | 163,409  |  | 1.3  | %    |  |   | 161,332
|Selling, general and administrative |  |                         | 30,983  |          | (15.7 | )% |      |   | 36,769   |  | 14.8 | %    |  |   | 32,018 
|Depreciation and amortization       |  |                         | 9,993   |          | (1.6  | )% |      |   | 10,160   |  | (5.4 | )%   |  |   | 10,737 
|                                    |  |                         |         |          |       |    |      |   |          |  |      |      |  |   |        
|Total costs and expenses            |  |                         | 196,857 |          | (6.4  | )% |      |   | 210,338  |  | 3.1  | %    |  |   | 204,087
|                                    |  |                         |         |          |       |    |      |   |          |  |      |      |  |   |        
|Income from operations              |  | $                       | 18,590  |          | (29.5 | )% |      | $ | 26,374   |  | 25.1 | %    |  | $ | 21,086 
|                                    |  |                         |         |          |       |    |      |   |          |  |      |      |  |   |        



The on-going Hotel
Expansion Project during 2003 contributed to decreased volumes throughout the property. As a result, revenues decreased in almost every category, but costs and expenses also decreased in almost every category. The largest reduction in expenses in
2003 was a 7.4% decrease in labor and related charges, which represent approximately half of the casino, hotel, and selling, general, and administrative charges. Management continuously monitored and reduced staffing levels in response to the
declines in business in order to offset the reductions in revenues.



18



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##### Table of Contents

Also contributing to the expense reductions were reductions in gaming fees and taxes (10.5%) due to
reduced gaming revenues, promotional expenses (12.1%) due to reduced volumes and decreased real estate taxes (6.5%) due to the loss of the hotel tower.



Non-Operating Results



The following table presents information related to the Companies non-operating income and expenses for the periods noted:



|                               |  |                         |        |   |      |   |        |      |  |   |        |  
|------------------------------ |  | ----------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                               |  | Year ended December 31, |       
|                               |  | 2003                    |        |   | 2002 |   |        | 2001 | 
|                               |  | ($ in thousands)        |       
|Interest income                |  | $                       | 1,295  |   |      | $ | 1,951  |      |  | $ | 1,104  |  
|                               |  |                         |       
|Interest expense:              |  |                         |        |   |      |   |        |      |  |   |        |  
|Total interest cost            |  | $                       | 22,755 |   |      | $ | 19,484 |      |  | $ | 13,910 |  
|Less: capitalized interest     |  |                         | (3,622 | ) |      |   | (429   | )    |  |   | (18    | )
|                               |  |                         |        |   |      |   |        |      |  |   |        |  
|Interest expense, net          |  | $                       | 19,133 |   |      | $ | 19,055 |      |  | $ | 13,892 |  
|                               |  |                         |       
|Other income (expense)         |  | $                       | 281    |   |      | $ | (182   | )    |  | $ | 408    |  
|                               |  |                         |       
|Loss on extinguishment of debt |  | $                       |       |   |      | $ | 3,378  |      |  | $ |       |  



The change in interest
income is related to the change in Resorts restricted cash balance for the Hotel Expansion Project. Resorts received an influx of cash with the sale of the First Mortgage Notes on March 22, 2002. From the proceeds of the sale of the First
Mortgage Notes, $89.4 million was deposited in a construction disbursement account for use in construction of the hotel tower. In addition, $10.0 million of the restricted cash was deposited in a liquidity disbursement account to be used for working
capital in the event RIHCs Consolidated EBITDA, as defined in the First Mortgage Notes Indenture, for any four fiscal quarters ending on or prior to December 31, 2004, is less than $28 million. Draws on the construction disbursement account
since that time have decreased the restricted cash balance to $50.4 million as of December 31, 2003.



The increase in interest expense in 2003 is due to a full year of interest expense following the sale of the First Mortgage Notes on March 22, 2002,
offset by higher capitalized interest. The increase in 2002 is also due to the sale of the First Mortgage Notes which increased the Companies long-term debt to $183.0 million, at December 31, 2002 compared to $88.5 million at December 31,
2001.



The loss on extinguishment of debt recorded in 2002
includes a $2.3 million write-off of deferred debt issuance costs and a $1.1 million prepayment penalty resulting from the repayment of the Credit Facility.



19



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##### Table of Contents

Income Taxes



The following table presents information related to the Companies income tax expense for the periods noted:



|                          |  |                         |       |      |   |       |  |   |      
|------------------------- |  | ----------------------- | ----- | ---- | - | ----- |  | - | -----
|                          |  | Year ended December 31,
|                          |  | 2003                    |       | 2002 |   | 2001 
|                          |  | ($ in thousands)       
|Federal income tax        |  | $                       | 648   |      | $ | 2,250 |  | $ | 5,046
|NJ state income tax       |  |                         | 904   |      |   | 947   |  |   |     
|NJ Casino net profits tax |  |                         | 175   |      |   |      |  |   |     
|                          |  |                         |       |      |   |       |  |   |      
|Total income tax expense  |  | $                       | 1,727 |      | $ | 3,197 |  | $ | 5,046
|                          |  |                         |       |      |   |       |  |   |      



On June 30, 2003, the
State of New Jersey amended the Casino Control Act, effective July 1, 2003, to impose or increase certain taxes and fees, including a tax at the rate of 7.5% on the adjusted net income of casino licenses in calendar year 2002, payable in the
states fiscal years 2004 though 2006. The amount of this tax for each licensee is limited to a maximum of $10.0 million annually and a minimum of $350,000 annually. For the year ended December 31, 2003, the company recorded a provision of
$175,000 for this tax.



On July 3, 2002, the State of New
Jersey passed the New Jersey Business Tax Reform Act which, among other things, requires the suspension of the use of the New Jersey net operating loss carryforwards for two years and the introduction of a new alternative minimum amount under the
New Jersey corporate business tax based on gross receipts or gross profits, as defined. This tax was retroactive to January 1, 2002



At December 31, 2003, the Company has a state net operating loss carryforward of approximately $144.9 million. The carryforward will expire as follows:
2005, $32.8 million; 2006, $2.4 million; 2007, $40.2 million; 2008, $20.7 million; and 2009, $48.8 million. The Company has reported a full valuation allowance against the carryforward because it does not expect to realize the tax benefit.



20



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##### Table of Contents

Liquidity and Capital Resources



The Companies cash flows consisted of the following:



|                                                     |  |                         |         |   |      |   |          |      |  |   |          |  
|---------------------------------------------------- |  | ----------------------- | ------- | - | ---- | - | -------- | ---- |  | - | -------- | -
|                                                     |  | Year ended December 31, |        
|                                                     |  | 2003                    |         |   | 2002 |   |          | 2001 | 
|                                                     |  | ($ in thousands)        |        
|Net cash provided by operations                      |  | $                       | 4,056   |   |      | $ | 27,003   |      |  | $ | 14,683   |  
|Cash flows from investing activities:                |  |                         |         |   |      |   |          |      |  |   |          |  
|Purchases of property and equipment                  |  |                         | (53,368 | ) |      |   | (21,642  | )    |  |   | (12,806  | )
|Purchase (releases) of restricted cash               |  |                         | 39,613  |   |      |   | (89,971  | )    |  |   |         |  
|Purchase of RIH, net of cash acquired                |  |                         |        |   |      |   |         |      |  |   | (97,004  | )
|CRDA refunds (deposits), net                         |  |                         | 6,168   |   |      |   | (1,775   | )    |  |   | (2,990   | )
|                                                     |  |                         |         |   |      |   |          |      |  |   |          |  
|Net cash used in investing activities                |  |                         | (7,587  | ) |      |   | (113,388 | )    |  |   | (112,800 | )
|Cash flows from financing activities:                |  |                         |         |   |      |   |          |      |  |   |          |  
|Proceeds of borrowings                               |  |                         |        |   |      |   | 180,835  |      |  |   | 92,084   |  
|Debt repayments                                      |  |                         | (979    | ) |      |   | (102,400 | )    |  |   | (12,251  | )
|Proceeds from issuance of common stock               |  |                         |        |   |      |   | 35,000   |      |  |   | 42,500   |  
|Other                                                |  |                         | (62     | ) |      |   | (9,424   | )    |  |   | (2,810   | )
|                                                     |  |                         |         |   |      |   |          |      |  |   |          |  
|Net cash provided by (used in) financing activities  |  |                         | (1,041  | ) |      |   | 104,011  |      |  |   | 119,523  |  
|Net increase (decrease) in cash and cash equivalents |  | $                       | (4,572  | ) |      | $ | 17,626   |      |  | $ | 21,406   |  
|                                                     |  |                         |         |   |      |   |          |      |  |   |          |  



Cash flows from Operating
Activities



The Companies year-to-year operating
cash flow comparisons are closely related to operating income, since the casino industry is primarily cash-based. Therefore, the reduction in cash flows from operations for 2003 primarily resulted from the reduction in operating income, as
previously discussed. In addition, cash interest paid in 2003 was approximately $7.7 million higher than in 2002 as a result of the issuance of the First Mortgage Notes in March 2002.



At December 31, 2003, CRH had cash and cash equivalents of $28.4 million, as compared to $33.0 million at December 31, 2002.
Included in this balance at December 31, 2003 is approximately $17.6 million representing cash on hand, which is needed to operate the business.



Cash Flows from Investing Activities



During the year ended December 31, 2003, the Company expended $53.4 million for the purchase of property and equipment, which includes $41.1 million for
the construction of the new hotel tower, $3.6 million of capitalized interest related to the construction of the new hotel tower, and $8.7 million for other expenditures, such as the purchase of new slot machines and related equipment, computer
upgrades, the relocation of Resorts Asian restaurant, and other facility improvements.



During the year ended December 31, 2002, the Company expended $21.6 million for the hotel expansion and other capital improvements and replacements, including purchases of slot machines and related equipment, computer
upgrades and facility improvements. Of the total, $12.5 million was expended for the construction of the new hotel tower, which includes $0.4 million of capitalized interest. During the year ended December 31, 2001, the Company expended $12.8
million for capital expenditures, which included the conversion of a closed nightclub into a slot parlor with 257 slot machines, purchases of additional slot machines to maintain a current product offering, normal property maintenance, and
pre-development costs for the new hotel tower.



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##### Table of Contents

At December 31, 2003, CRH had a restricted cash balance of $50.4 million, which is included in other
assets on the Companys Consolidated Balance Sheet. The restricted cash consists of the unexpended portion of the proceeds of RIHCs First Mortgage Notes which are to be used to finance the cost to develop, construct, and equip the new
hotel tower. In addition, $10.0 million of the restricted cash has been deposited in a liquidity disbursement account to be used for working capital in the event RIHCs EBITDA, as defined in the First Mortgage Notes Indenture, for any four
fiscal quarters ending on or prior to December 31, 2004, is less than $28 million. At the end of the measurement period referred to in the previous sentence, RIHC will be permitted to secure a release of any unutilized amount in the liquidity
disbursement account for use in its business or to fund a dividend to CRH to return such unutilized amount to CRHs stockholders.



The CRDA will reimburse certain costs associated with the hotel tower construction, totaling approximately $13.1 million through 2008. Approximately $9.2
million of these reimbursements were received by CRH in 2003.



Cash Flows
from Financing Activities



On March 22, 2002, RIHC sold
$180.0 million aggregate principal amount of 111/2% First Mortgage Notes at a price of 97.686% yielding $175.8
million. Concurrent with the sale of the notes, CRH issued 17,295 shares of class A common stock at a cash price of $0.0475 per share and 349,992 shares of class B common stock at a price of $100 per share to its existing shareholders resulting in
aggregate proceeds of approximately $35.0 million. The proceeds from the sale of the First Mortgage Notes and issuance of stock were used to retire existing debt and are being used to finance the costs associated with the construction of the new
hotel tower.



Other Factors Affecting Liquidity



In June 2002, RIH entered into a $20.0 million credit facility, the proceeds
of which are to be used for the acquisition of furniture, fixtures, and equipment. RIHC has guaranteed the obligations of RIH under this equipment credit facility. The Companies intend to use $15.0 million of the equipment credit facility to
purchase furniture, fixtures, and equipment for the new hotel tower and the expanded gaming facility. The outstanding balance due under this facility at December 31, 2003 was $1.1 million. In November 2002, the Companies also entered into a $10.0
million revolving credit facility, against which a standby letter of credit in the amount of $1.7 million has been issued, leaving an availability of $8.3 million.



In June 2002, the Companies entered into a Thermal Energy Services Agreement (the Agreement) with an energy
supplier. The initial term of the Agreement is 20 years, renewable at the Companies option for two additional five year terms. The Agreement has three components: a monthly charge for operation and maintenance of the thermal energy facilities;
a capital lease component for capital improvements whose value is estimated at $6.2 million, for which payments during 2003 were $126,000, including interest, with the total payments over the 20 year initial term estimated at $9.6 million including
interest, and; a usage fee for steam and chilled water, whose usage and rate will vary by month of the year.



Future Developments



In
conjunction with the purchase of RIH from KINA in April 2001 by CRH and RIHC, CRH obtained an option to purchase approximately 10.0 acres of real property immediately adjacent to the Resorts site and approximately 2.0 acres of real property located
in the Atlantic City metropolitan area, pursuant to an option agreement (Option Agreement) for a total purchase price of $40.0 million. Portions of the option property (the Option Land) are zoned for casino hotel use and are
available for future expansion. Some of the option property was leased from KINA by RIH for use as a surface parking lot under a lease agreement with terms running contemporaneous with the terms of the Option Agreement.



The Option Agreement had a two-year term, which could be extended for two
additional one-year terms upon the payment of a $2.5 million extension fee payable upon each extension. The initial term of the Option Agreement was to expire in April 2003. The expiration date of the initial term of the Option Agreement was
initially extended to June 15, 2003, as negotiations between the Companies and KINA for the purchase of the Option Land commenced. Subsequently, the expiration date of the initial term was further extended, upon the payment by RIH of one-half of the
$2.5 million extension fee.



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##### Table of Contents

In January 2004, CRH announced that it had reached agreement with KINA to acquire the Option Land,
subject to the approval of the New Jersey Casino Control Commission, which approval was received on March 17, 2004. Following the approval, the Option Land was acquired by RREH on March 18, 2004 in exchange for the issuance of a $40 million note by
RREH to KINA. This $40 million note will mature immediately following the maturity, acceleration or refinancing (other than permitted refinancing) of the First Mortgage Notes which are due March 22, 2009. Interest on the $40 million note will be
payable semi-annually, and will be calculated at the following annual rates: 0% through September 2004, 4% from October 2004 through March 2006, 6% from April 2006 through March 2008, and 9% from April 2008 through March 2009. The note payable to
KINA is guaranteed by CRH, RIHC and RIH, provided, however that the guarantee of RIHC and RIH does not become effective until either the First Mortgage Notes have been paid in full or the fixed charge coverage ratio (the ratio of Consolidated EBITDA
to Fixed Charges, all as further defined in the First Mortgage Notes Indenture) of RIHC is at least 2.0 to 1.0. In addition, the amount guaranteed is initially limited to $20 million increasing by $5 million each year.



In conjunction with the option land purchase transaction, the Option
Agreement between RIHC and KINA was terminated. With the termination of the Option Agreement, the lease agreement between KINA and RIH converts to a month-to-month fair market value lease. As part of the option land purchase transaction, the lease
was amended to be a triple-net lease and was assigned by KINA to RREH. The amended agreement calls for the following payments: a $1.3 million security deposit paid upon closing, offset against lease payments of $205,000 per month through September
2004; $135,833 per month from October 2004 through March 2006; $202,500 per month from April 2006 through March 2008; $302,500 per month from April 2008 through March 2009 and $402,500 per month thereafter. The lease agreement may be terminated by
either party upon 30 days notice, with the remaining security deposit refunded to RIH upon termination.



Commitments and Contractual Obligations



The following table summarizes the Companies contractual commitments as of December 31, 2003:



|                         |  |                  |         |                 |   |             |  |             |        |              |   |        |  |   |        
|------------------------ |  | ---------------- | ------- | --------------- | - | ----------- |  | ----------- | ------ | ------------ | - | ------ |  | - | -------
|                         |  | Total            |         | Less than 1year |   | 1  3 years |  | 4  5 years |        | After 5years
|                         |  | ($ in thousands)
|Long-term debt:          |  |                  |         |                 |   |             |  |             |        |              |   |        |  |   |        
|Principal                |  | $                | 180,996 |                 | $ | 534         |  | $           | 258    |              | $ | 204    |  | $ | 180,000
|Interest                 |  |                  | 107,888 |                 |   | 20,735      |  |             | 41,432 |              |   | 41,408 |  |   | 4,313  
|Capital leases           |  |                  | 9,130   |                 |   | 498         |  |             | 996    |              |   | 996    |  |   | 6,640  
|Operating leases         |  |                  | 31,248  |                 |   | 3,973       |  |             | 4,131  |              |   | 3,216  |  |   | 19,928 
|Other obligations:       |  |                  |         |                 |   |             |  |             |        |              |   |        |  |   |        
|Construction commitments |  |                  | 50,209  |                 |   | 50,209      |  |             |       |              |   |       |  |   |       
|Purchase obligations     |  |                  | 1,778   |                 |   | 1,098       |  |             | 240    |              |   | 240    |  |   | 200    
|                         |  |                  |         |                 |   |             |  |             |        |              |   |        |  |   |        
|                         |  | $                | 381,249 |                 | $ | 77,047      |  | $           | 47,057 |              | $ | 46,064 |  | $ | 211,081
|                         |  |                  |         |                 |   |             |  |             |        |              |   |        |  |   |        



Construction
commitments represent obligations for the construction of the Hotel Expansion, as well as commitments to purchase furniture, fixtures, equipment and other costs related to the Hotel Expansion. Purchase obligations represent agreements to purchase
goods or services that are enforceable and legally binding on the Company.



Resorts plans to fund contractual obligations and other estimated spending through operating cash flows and available borrowings under the revolving credit facility. Resorts generated $14.7 million and $27.0 million
in cash from operating activities in the two years prior to the start of construction. Management expects operating cash flows to increase beyond those levels with the opening of the new hotel tower in 2004.



Off Balance Sheet Arrangements



The Companies do not have any off-balance sheet arrangements that have, or
are reasonably likely to have, a current or future effect on the Companies financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources that is material.



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##### Table of Contents

Application of Critical Accounting Policies



The preparation of financial statements in conformity with accounting principles generally accepted within the United States
requires management to make estimates and assumptions in certain circumstances that affect the amounts reported. The Companys significant accounting policies are more fully described in Note 2 (Summary of Significant Accounting
Policies) to the Companys consolidated financial statements. Certain of these significant accounting policies are considered to be critical accounting policies, as defined below.



A critical accounting policy is defined as one that is both material to the
presentation of CRHs consolidated financial statements, and requires management to make difficult, subjective, or complex judgments that could have a material effect on the Companys financial condition and results of operations.
Specifically, an accounting estimate is defined as critical if 1) it would require the Company to make assumptions about matters that were highly uncertain at the time the estimate was made, and 2) different estimates that the Company could
reasonably have used, or changes in the estimates that are reasonably likely to occur, would have a material effect on the Companys financial condition or results of operations.



Management believes that following are critical accounting estimates:



Allowances for Doubtful Accounts - Casino. Allowances for doubtful accounts arising from casino receivables are based
upon a review of specific estimated uncollectible accounts. The methodology used to evaluate uncollectibility of accounts is based on historical collection rates over the past five years, applied based on the aging of the receivable, as well as
consideration of other factors, including information related to specific larger accounts, an appraisal of current economic conditions, a change in the character of the receivables, a change in the Companys collection policy, and the judgment
and expertise of management. Management believes that past experience has indicated that the companys estimates are reasonable.



Cashback Liability. The Company awards incentives to its casino customers, based on their levels of gaming activity, through its
Cashback marketing program. The incentives awarded are in the form of points which may be redeemed for coin to wager on slot machines. The Company records a liability for outstanding Cashback incentives (those incentives which have been
earned, but not yet redeemed by the customer), adjusted for an estimated redemption factor based on historical results. The amount of expense resulting from this marketing program could vary from the liability recorded based on actual redemption
rates; however, management believes the historical actual redemptions have been materially consistent with the original estimates.



Litigation/Loss Reserves. Various legal proceedings, considered by management to be ordinary litigation incident to the operation of its business,
may be pending at any time against the Company. The Company records a liability for these items, which liability is estimated based on a review and analysis of each individual event, and periodically reviewed for adequacy. Although management
estimates that none of these proceedings, either individually or in the aggregate, will have a material adverse effect on its financial condition or results of operations, no assurances can be given as to the eventual outcome of these issues.
Management believes that past experience has indicated that the companys estimates are reasonable.



Income Taxes. CRH records an income tax liability in accordance with Statement of Financial Accounting Standards No. 109 (SFAS No.
109), Accounting for Income Taxes. Accordingly, deferred tax assets and liabilities are calculated as the difference between the financial statement carrying amounts and the tax bases of assets and liabilities. SFAS No. 109 also
requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that a portion of the deferred tax asset will not be realized. CRH has provided a full valuation allowance against the amount of its New Jersey net
operating loss carryforwards, because it does not expect to realize the tax benefit. In July 2002, New Jersey passed the New Jersey Tax Act, which, among other things, requires the suspension of the use of New Jersey net operating loss carryforwards
for two years.



Long-lived Assets. Management has
determined that the Companys policy associated with its long-lived assets and the related estimates is critical to the preparation of the consolidated financial statements. The Company has a significant investment in longlived property and
equipment. Management estimates that the undiscounted future cash flows expected to result from the use of these assets exceed the current carrying value of these assets. Any adverse change to the estimate of these undiscounted cash flows could
necessitate an impairment charge that would adversely affect operating results. Management estimates the useful lives for the Companys assets based on historical experience and the estimates of assets commercial lives. Should the actual
useful life of a class of assets differ from the estimated useful life, an impairment charge would be recorded. Management reviews useful lives and obsolescence and assesses commercial viability of the Companys assets periodically.



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##### Table of Contents

Adoption of Recent Accounting Pronouncements



Effective January 1, 2003, the company adopted the Financial Accounting Standards Boards (FASB)
interpretation No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebteness of Others, an Interpretation of FASB Statement No. 5, 57 and 107 and Rescission of FASB Interpretation
No. 34 (FIN 45). The interpretation requires that upon issuance of a guarantee, the entity must recognize a liability for the fair value of the obligation it assumes under the guarantee. In addition, FIN 45 requires disclosures
about the guarantee that an entity has issued, including a roll-forward of the entitys product warranty liabilities. This interpretation is intended to improve the comparability of financial reporting by requiring identical accounting for
guarantees issued with separately identified consideration and guarantees issued without separately identified consideration. Adoption of this interpretation had no material impact on the companys consolidated financial position, consolidated
results of operation, or liquidity.



Pending Adoption of Accounting Standard



In January 2003, the FASB issued Interpretation No. 46
(FIN 46), Consolidation of Variable Interest Entities, an interpretation of ARB 51. The primary objectives of this interpretation are to provide guidance on the identification of entities for which control is achieved through
means other than through voting rights (variable interest entities) and how to determine when and which business enterprise ( the primary beneficiary) should consolidate the variable interest entity. This new model for
consolidation applies to an entity which either (i) the equity investors (if any) do not have a controlling financial interest; or (ii) the equity investment at risk is insufficient to finance that entitys activities without receiving
additional subordinated financial support form other parties. In addition, FIN 46 requires that the primary beneficiary, as well as all other enterprises with a significant variable interest in a variable interest entity, make additional
disclosures. Certain disclosure requirements of FIN 46 were effective for financial statements issued after January 31, 2003. In December 2003, The FASB issued FIN 46 (revised December 2003), Consolidation of Variable Interest Entities
(FIN 46-R) to address certain FIN 46 implementation issues. The effective dates and impact of FIN 46 and FIN 46-R are as follows: (i) Special-purpose entities (SPEs) created prior to February 1, 2003- the company must apply
either the provision of FIN 46 or early adopt the provisions of FIN 46-R at the end of the first interim or annual reporting period ending after December 15, 2003. (ii) Non-SPEs created prior to February 1, 2003- the company is required to adopt FIN
46-R at the end of the first interim or annual reporting period ending after March 15, 2004. (iii) All entities, regardless of whether an SPE, that were created subsequent to January 31, 2003- the provision of FIN 46 were applicable for variable
interests in entities obtained after January 31, 2003. The adoption of the provisions applicable to SPEs and all other variable interests obtained after January 31, 2003 did not have a material impact on the companys consolidated financial
position, consolidated results of operations, or liquidity. The company is currently evaluating the impact of adopting FIN 46-R applicable to Non-SPEs created prior to February 1, 2003 but does not expect a material impact.



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##### Table of Contents

Quarterly Results of Operations



The following table sets forth certain unaudited financial information on a quarterly basis:



|                        |  |                  |        |   |               |   |              |  |                |        |  |   |        |  
|----------------------- |  | ---------------- | ------ | - | ------------- | - | ------------ |  | -------------- | ------ |  | - | ------ | -
|                        |  | FirstQuarter     |        |   | SecondQuarter |   | ThirdQuarter |  | Fourth Quarter |       
|                        |  | ($ in thousands) |       
|2003                    |  |                  |        |   |               |   |              |  |                |        |  |   |        |  
|Revenues                |  | $                | 52,317 |   |               | $ | 58,801       |  | $              | 60,295 |  | $ | 44,034 |  
|Operating income (loss) |  |                  | 2,381  |   |               |   | 7,621        |  |                | 10,386 |  |   | (1,798 | )
|Net income (loss)       |  | $                | (2,082 | ) |               | $ | 1,641        |  | $              | 3,502  |  | $ | (4,317 | )



|                        |  |                  |        |   |               |   |              |  |               |        |  |   |        |  
|----------------------- |  | ---------------- | ------ | - | ------------- | - | ------------ |  | ------------- | ------ |  | - | ------ | -
|                        |  | FirstQuarter     |        |   | SecondQuarter |   | ThirdQuarter |  | FourthQuarter |       
|                        |  | ($ in thousands) |       
|2002                    |  |                  |        |   |               |   |              |  |               |        |  |   |        |  
|Revenues                |  | $                | 57,433 |   |               | $ | 62,131       |  | $             | 65,308 |  | $ | 51,840 |  
|Operating income (loss) |  |                  | 5,894  |   |               |   | 9,566        |  |               | 10,880 |  |   | 34     |  
|Net income (loss)       |  | $                | (18    | ) |               | $ | 2,761        |  | $             | 2,713  |  | $ | (2,579 | )



Item 7A. Quantitative and Qualitative Disclosures About Market Risk.



The Company has exposure to interest rate risk from its short-term and long-term debt. In general, the companys long-term debt is fixed rate. See
Note 8 of the Notes to the Consolidated Financial Statements of CRH for components of the Companys long term debt. The Company believes that the market risk from changes in interest rates would not be material to the fair value of these
financial instruments, or the related cash flows, or future results of operations.



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##### Table of Contents

Item 8. Financial Statements and Supplementary Data.



INDEX TO FINANCIAL STATEMENTS



|                                                                                                                                                                                                                                           |  |   
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | --
|Colony RIH Holdings, Inc.                                                                                                                                                                                                                  |  |   
|                                                                                                                                                                                                                                           | 
|Report of Independent Auditors                                                                                                                                                                                                             |  | 28
|                                                                                                                                                                                                                                           | 
|Consolidated Balance Sheets at December 31, 2003 and 2002                                                                                                                                                                                  |  | 29
|                                                                                                                                                                                                                                           | 
|Consolidated Statements of Operations for the years ended December 31, 2003 and 2002, and for the period from April 25, 2001 to December 31, 2001 and the period from January 1, 2001 to April 24, 2001
(Predecessor)                      |  | 30
|                                                                                                                                                                                                                                           | 
|Consolidated Statements of Cash Flows for the years ended December 31, 2003 and 2002, and for the period from April 25, 2001 to December 31, 2001 and the period from January 1, 2001 to April 24, 2001
(Predecessor)                      |  | 31
|                                                                                                                                                                                                                                           | 
|Consolidated Statements of Changes of Shareholders Equity for the years ended December 31, 2003 and 2002, and for the period from April 25, 2001 to December 31, 2001 and the period from January 1, 2001 to April 24, 2001
(Predecessor) |  | 33
|                                                                                                                                                                                                                                           | 
|Notes to Consolidated Financial Statements                                                                                                                                                                                                 |  | 34
|                                                                                                                                                                                                                                           | 
|Financial Statement ScheduleSchedule II Valuation and Qualifying Accounts                                                                                                                                                                 |  | 46
|                                                                                                                                                                                                                                           | 
|Resorts International Hotel and Casino, Inc.                                                                                                                                                                                               |  |   
|                                                                                                                                                                                                                                           | 
|Report of Independent Auditors                                                                                                                                                                                                             |  | 47
|                                                                                                                                                                                                                                           | 
|Consolidated Balance Sheets at December 31, 2003 and 2002                                                                                                                                                                                  |  | 48
|                                                                                                                                                                                                                                           | 
|Consolidated Statements of Operations for the years ended December 31, 2003 and 2002, and for the period from April 25, 2001 to December 31, 2001 and the period from January 1, 2001 to April 24, 2001
(Predecessor)                      |  | 49
|                                                                                                                                                                                                                                           | 
|Consolidated Statements of Cash Flows for the years ended December 31, 2003 and 2002, and for the period From April 25, 2001 to December 31, 2001 and the period from January 1, 2001 to April 24, 2001
(Predecessor)                      |  | 50
|                                                                                                                                                                                                                                           | 
|Consolidated Statements of Changes of Shareholders Equity for the years ended December 31, 2003 and 2002, and for the period from April 25, 2001 to December 31, 2001 and the period from January 1, 2001 to April 24, 2001
(Predecessor) |  | 52
|                                                                                                                                                                                                                                           | 
|Notes to Consolidated Financial Statements                                                                                                                                                                                                 |  | 53
|                                                                                                                                                                                                                                           | 
|Financial Statement ScheduleSchedule II Valuation and Qualifying Accounts                                                                                                                                                                 |  | 64



All other schedules
called for under Regulation S-X are not submitted because they are not applicable, not required, or because the required information is not material, or is included in the financial statements or notes thereto.



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##### Table of Contents

Report of Independent Auditors



Board of Directors

Colony RIH Holdings, Inc.



We have audited the accompanying consolidated balance sheets of Colony RIH Holdings, Inc. (the Company) as of December 31, 2003 and 2002, and the related
consolidated statements of operations, shareholders equity, and cash flows for the years ended December 31, 2003 and 2002 and for the period from April 25, 2001 to December 31, 2001 (post-acquisition period) and the consolidated statements of
operations, cash flows, and shareholders equity of Resorts International Hotel, Inc. (Predecessor) for the period from January 1, 2001 to April 24, 2001 (pre-acquisition period). Our audits also included the financial statement schedule listed
in the Index to Financial Statements. These financial statements and schedule are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.



We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.



In our
opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Colony RIH Holdings, Inc. at December 31, 2003 and 2002, and the consolidated results of its operations and its cash
flows for the years ended December 31, 2003 and 2002 and the period from April 25, 2001 to December 31, 2001 in conformity with accounting principles generally accepted in the United States. Further, in our opinion, the aforementioned Predecessor
consolidated financial statements present fairly, in all material respects, the consolidated results of operations and cash flows of Resorts International Hotel, Inc. for the pre-acquisition period from January 1, 2001 to April 24, 2001 in
conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.



/s/ Ernst & Young LLP



Philadelphia, Pennsylvania

January 30, 2004, except for Note 14

as to which the date is March 18, 2004



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##### Table of Contents

COLONY RIH HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share amounts)



|                                                                                                                   |  |              |         |      |   |        
|------------------------------------------------------------------------------------------------------------------ |  | ------------ | ------- | ---- | - | -------
|                                                                                                                   |  | December 31,
|                                                                                                                   |  | 2003         |         | 2002
|Assets                                                                                                             |  |              |         |      |   |        
|Current assets                                                                                                     |  |              |         |      |   |        
|Cash and cash equivalents                                                                                          |  | $            | 28,417  |      | $ | 32,989 
|Receivables, net                                                                                                   |  |              | 5,175   |      |   | 5,098  
|Inventories                                                                                                        |  |              | 1,503   |      |   | 1,290  
|Prepaid expenses and other current assets                                                                          |  |              | 2,766   |      |   | 3,338  
|Deferred income taxes                                                                                              |  |              | 4,294   |      |   | 4,374  
|                                                                                                                   |  |              |         |      |   |        
|Total current assets                                                                                               |  |              | 42,155  |      |   | 47,089 
|Property and equipment, net                                                                                        |  |              | 189,609 |      |   | 145,841
|Other assets (including $50,358 and $89,971 of restricted cash and cash equivalents in 2003 and 2002, respectively |  |              | 70,922  |      |   | 116,424
|                                                                                                                   |  |              |         |      |   |        
|Total assets                                                                                                       |  | $            | 302,686 |      | $ | 309,354
|                                                                                                                   |  |              |         |      |   |        
|Liabilities and Shareholders Equity                                                                               |  |              |         |      |   |        
|Current liabilities                                                                                                |  |              |         |      |   |        
|Current maturities of long-term debt                                                                               |  | $            | 846     |      | $ | 1,004  
|Accounts payable                                                                                                   |  |              | 3,390   |      |   | 5,563  
|Accrued interest payable                                                                                           |  |              | 6,038   |      |   | 6,038  
|Accrued expenses and other current liabilities                                                                     |  |              | 16,509  |      |   | 20,778 
|                                                                                                                   |  |              |         |      |   |        
|Total current liabilities                                                                                          |  |              | 26,783  |      |   | 33,383 
|Long-term debt, less current portion                                                                               |  |              | 183,281 |      |   | 183,008
|Deferred income taxes                                                                                              |  |              | 5,591   |      |   | 4,653  
|Redeemable common stock                                                                                            |  |              | 3,875   |      |   | 3,875  
|                                                                                                                   |  |              |         |      |   |        
|Total liabilities                                                                                                  |  |              | 219,530 |      |   | 224,919
|Shareholders equity                                                                                               |  |              |         |      |   |        
|Common stock:                                                                                                      |  |              |         |      |   |        
|Class A$.01 par value, 900,000 shares authorized, 38,295 shares issued and outstanding                            |  |              |        |      |   |       
|Class B$.01 par value, 800,000 shares authorized, 774,982 shares issued and outstanding                           |  |              | 8       |      |   | 8      
|Capital in excess of par                                                                                           |  |              | 73,790  |      |   | 73,813 
|Retained earnings                                                                                                  |  |              | 9,358   |      |   | 10,614 
|                                                                                                                   |  |              |         |      |   |        
|Total shareholders equity                                                                                         |  |              | 83,156  |      |   | 84,435 
|                                                                                                                   |  |              |         |      |   |        
|Total liabilities and shareholders equity                                                                         |  | $            | 302,686 |      | $ | 309,354
|                                                                                                                   |  |              |         |      |   |        



See
accompanying notes.



29



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COLONY RIH HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands)



|                                     |  |                             |         |   |                             |   |         |                                                 |  |   |                                             |   |  |   |         |  
|------------------------------------ |  | --------------------------- | ------- | - | --------------------------- | - | ------- | ----------------------------------------------- |  | - | ------------------------------------------- | - |  | - | ------- | -
|                                     |  | Year ended December 31,2003 |         |   | Year ended December 31,2002 |   |         | Period from April 25, 2001 to December 31, 2001 |  |   | Period fromJanuary 1, 2001 to April 24,2001 |  
|                                     |  | (Successor)                 |         |   | (Successor)                 |   |         | (Successor)                                     |  |   | (Predecessor)                               |  
|Revenue:                             |  |                             |         |   |                             |   |         |                                                 |  |   |                                             |   |  |   |         |  
|Casino                               |  | $                           | 230,135 |   |                             | $ | 259,208 |                                                 |  | $ | 168,687                                     |   |  | $ | 72,417  |  
|Lodging                              |  |                             | 11,163  |   |                             |   | 13,031  |                                                 |  |   | 10,083                                      |   |  |   | 3,996   |  
|Food and beverage                    |  |                             | 22,079  |   |                             |   | 24,649  |                                                 |  |   | 17,880                                      |   |  |   | 6,977   |  
|Other                                |  |                             | 6,496   |   |                             |   | 6,488   |                                                 |  |   | 4,169                                       |   |  |   | 1,523   |  
|Less: promotional allowances         |  |                             | (54,426 | ) |                             |   | (66,664 | )                                               |  |   | (42,564                                     | ) |  |   | (17,995 | )
|                                     |  |                             |         |   |                             |   |         |                                                 |  |   |                                             |   |  |   |         |  
|Total net revenue                    |  |                             | 215,447 |   |                             |   | 236,712 |                                                 |  |   | 158,255                                     |   |  |   | 66,918  |  
|                                     |  |                             |         |  
|Costs and expenses:                  |  |                             |         |   |                             |   |         |                                                 |  |   |                                             |   |  |   |         |  
|Casino                               |  |                             | 117,156 |   |                             |   | 123,616 |                                                 |  |   | 84,620                                      |   |  |   | 35,987  |  
|Lodging                              |  |                             | 1,318   |   |                             |   | 1,672   |                                                 |  |   | 1,970                                       |   |  |   | 913     |  
|Food and beverage                    |  |                             | 11,721  |   |                             |   | 12,564  |                                                 |  |   | 9,228                                       |   |  |   | 3,639   |  
|Other operating                      |  |                             | 25,686  |   |                             |   | 25,557  |                                                 |  |   | 16,683                                      |   |  |   | 8,292   |  
|Selling, general, and administrative |  |                             | 30,983  |   |                             |   | 36,769  |                                                 |  |   | 21,526                                      |   |  |   | 10,492  |  
|Depreciation and amortization        |  |                             | 9,993   |   |                             |   | 10,160  |                                                 |  |   | 5,412                                       |   |  |   | 5,325   |  
|                                     |  |                             |         |   |                             |   |         |                                                 |  |   |                                             |   |  |   |         |  
|Total costs and expenses             |  |                             | 196,857 |   |                             |   | 210,338 |                                                 |  |   | 139,439                                     |   |  |   | 64,648  |  
|                                     |  |                             |         |  
|Income from operations               |  |                             | 18,590  |   |                             |   | 26,374  |                                                 |  |   | 18,816                                      |   |  |   | 2,270   |  
|                                     |  |                             |         |  
|Interest income                      |  |                             | 1,295   |   |                             |   | 1,951   |                                                 |  |   | 594                                         |   |  |   | 510     |  
|Interest expense                     |  |                             | (19,133 | ) |                             |   | (19,055 | )                                               |  |   | (6,219                                      | ) |  |   | (7,673  | )
|Other income (expense)               |  |                             | (281    | ) |                             |   | 182     |                                                 |  |   | (408                                        | ) |  |   |        |  
|Loss on extinguishment of debt       |  |                             |        |   |                             |   | (3,378  | )                                               |  |   |                                            |   |  |   |        |  
|                                     |  |                             |         |   |                             |   |         |                                                 |  |   |                                             |   |  |   |         |  
|Income (loss) before income taxes    |  |                             | 471     |   |                             |   | 6,074   |                                                 |  |   | 12,783                                      |   |  |   | (4,893  | )
|                                     |  |                             |         |  
|Provision for income taxes           |  |                             | 1,727   |   |                             |   | 3,197   |                                                 |  |   | 5,046                                       |   |  |   |        |  
|                                     |  |                             |         |   |                             |   |         |                                                 |  |   |                                             |   |  |   |         |  
|Net income (loss)                    |  | $                           | (1,256  | ) |                             | $ | 2,877   |                                                 |  | $ | 7,737                                       |   |  | $ | (4,893  | )
|                                     |  |                             |         |   |                             |   |         |                                                 |  |   |                                             |   |  |   |         |  



See
accompanying notes.



30



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COLONY RIH HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

|                                                                                         |  |                            |         |   |                            |   |          |                                             |  |   |                                            |   |  |   |        |  
|---------------------------------------------------------------------------------------- |  | -------------------------- | ------- | - | -------------------------- | - | -------- | ------------------------------------------- |  | - | ------------------------------------------ | - |  | - | ------ | -
|                                                                                         |  | Year endedDecember 31,2003 |         |   | Year endedDecember 31,2002 |   |          | Period fromApril 25,2001 toDecember 31,2001 |  |   | Period fromJanuary 1,2001 to April 24,2001 |  
|                                                                                         |  | (Successor)                |         |   | (Successor)                |   |          | (Successor)                                 |  |   | (Predecessor)                              |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                    |  |                            |         |   |                            |   |          |                                             |  |   |                                            |   |  |   |        |  
|Net income (loss)                                                                        |  | $                          | (1,256  | ) |                            | $ | 2,877    |                                             |  | $ | 7,737                                      |   |  | $ | (4,893 | )
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |                            |         |   |                            |   |          |                                             |  |   |                                            |   |  |   |        |  
|Loss on extinguishment of debt                                                           |  |                            |        |   |                            |   | 3,378    |                                             |  |   |                                           |   |  |   |       |  
|Depreciation and amortization                                                            |  |                            | 12,273  |   |                            |   | 9,614    |                                             |  |   | 4,752                                      |   |  |   | 5,038  |  
|Amortization of debt premiums, discounts and issuance costs                              |  |                            | 1,733   |   |                            |   | 1,397    |                                             |  |   | 340                                        |   |  |   | 203    |  
|Provision for doubtful receivables                                                       |  |                            | 468     |   |                            |   | 1,305    |                                             |  |   | 1,038                                      |   |  |   | 517    |  
|Provision for discount on CRDA obligations, net of amortization                          |  |                            | (2,280  | ) |                            |   | 551      |                                             |  |   | 660                                        |   |  |   | 287    |  
|Deferred income taxes                                                                    |  |                            | 1,017   |   |                            |   | 1,455    |                                             |  |   | (784                                       | ) |  |   |       |  
|Paid in kind interest on Seller Note                                                     |  |                            |        |   |                            |   |         |                                             |  |   | 518                                        |   |  |   |       |  
|Other                                                                                    |  |                            | 38      |   |                            |   | (182     | )                                           |  |   | 88                                         |   |  |   |       |  
|Changes in operating assets and liabilities:                                             |  |                            |         |   |                            |   |          |                                             |  |   |                                            |   |  |   |        |  
|Net (increase) decrease in receivables                                                   |  |                            | (545    | ) |                            |   | 1,870    |                                             |  |   | (2,407                                     | ) |  |   | 684    |  
|Net (increase) decrease in inventories and prepaid expenses and other current assets     |  |                            | 360     |   |                            |   | (426     | )                                           |  |   | 1,515                                      |   |  |   | (1,600 | )
|Net (increase) decrease in deferred charges and other assets                             |  |                            | (1,309  | ) |                            |   | 1,083    |                                             |  |   | (1,218                                     | ) |  |   | 65     |  
|Net increase (decrease) in accounts payable and accrued expense                          |  |                            | (6,321  | ) |                            |   | (680     | )                                           |  |   | (6,394                                     | ) |  |   | 2,837  |  
|Net increase in interest payable                                                         |  |                            |        |   |                            |   | 4,761    |                                             |  |   |                                           |   |  |   | 5,700  |  
|                                                                                         |  |                            |         |   |                            |   |          |                                             |  |   |                                            |   |  |   |        |  
|Net cash provided by operating activities                                                |  |                            | 4,178   |   |                            |   | 27,003   |                                             |  |   | 5,845                                      |   |  |   | 8,838  |  
|                                                                                         |  |                            |         |   |                            |   |          |                                             |  |   |                                            |   |  |   |        |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                    |  |                            |         |   |                            |   |          |                                             |  |   |                                            |   |  |   |        |  
|Purchases (releases) of cash and cash equivalents  restricted                           |  |                            | 39,613  |   |                            |   | (89,971  | )                                           |  |   |                                           |   |  |   |       |  
|Purchases of property and equipment                                                      |  |                            | (53,490 | ) |                            |   | (21,642  | )                                           |  |   | (11,577                                    | ) |  |   | (1,229 | )
|CRDA deposits                                                                            |  |                            | (3,021  | ) |                            |   | (3,267   | )                                           |  |   | (1,658                                     | ) |  |   | (1,332 | )
|CRDA refunds                                                                             |  |                            | 9,189   |   |                            |   | 1,492    |                                             |  |   |                                           |   |  |   |       |  
|Purchase of RIH, net of cash acquired                                                    |  |                            |        |   |                            |   |         |                                             |  |   | (97,004                                    | ) |  |   |       |  
|                                                                                         |  |                            |         |   |                            |   |          |                                             |  |   |                                            |   |  |   |        |  
|Net cash used in investing activities                                                    |  |                            | (7,709  | ) |                            |   | (113,388 | )                                           |  |   | (110,239                                   | ) |  |   | (2,561 | )
|                                                                                         |  |                            |         |   |                            |   |          |                                             |  |   |                                            |   |  |   |        |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                    |  |                            |         |   |                            |   |          |                                             |  |   |                                            |   |  |   |        |  
|Proceeds of borrowings                                                                   |  |                            |        |   |                            |   | 180,835  |                                             |  |   | 92,084                                     |   |  |   |       |  
|Payments to secure borrowings                                                            |  |                            | (62     | ) |                            |   | (8,432   | )                                           |  |   | (2,810                                     | ) |  |   |       |  
|Proceeds from the issuance of common stock                                               |  |                            |        |   |                            |   | 33,250   |                                             |  |   | 40,375                                     |   |  |   |       |  
|Proceeds from the issuance of redeemable common stock                                    |  |                            |        |   |                            |   | 1,750    |                                             |  |   | 2,125                                      |   |  |   |       |  
|Other                                                                                    |  |                            |        |   |                            |   | 102      |                                             |  |   |                                           |   |  |   |       |  
|Prepayment penalty on long-term debt                                                     |  |                            |        |   |                            |   | (1,094   | )                                           |  |   |                                           |   |  |   |       |  
|Debt repayments                                                                          |  |                            | (979    | ) |                            |   | (102,400 | )                                           |  |   | (12,017                                    | ) |  |   | (234   | )
|                                                                                         |  |                            |         |   |                            |   |          |                                             |  |   |                                            |   |  |   |        |  
|Net cash provided by (used in) financing activities                                      |  |                            | (1,041  | ) |                            |   | 104,011  |                                             |  |   | 119,757                                    |   |  |   | (234   | )
|                                                                                         |  |                            |         |   |                            |   |          |                                             |  |   |                                            |   |  |   |        |  
|Net increase (decrease) in cash and cash equivalents                                     |  |                            | (4,572  | ) |                            |   | 17,626   |                                             |  |   | 15,363                                     |   |  |   | 6,043  |  
|Cash and cash equivalents at beginning of period                                         |  |                            | 32,989  |   |                            |   | 15,363   |                                             |  |   |                                           |   |  |   | 21,453 |  
|                                                                                         |  |                            |         |   |                            |   |          |                                             |  |   |                                            |   |  |   |        |  
|Cash and cash equivalents at end of period                                               |  | $                          | 28,417  |   |                            | $ | 32,989   |                                             |  | $ | 15,363                                     |   |  | $ | 27,496 |  
|                                                                                         |  |                            |         |   |                            |   |          |                                             |  |   |                                            |   |  |   |        |  



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|                                                                |  |   |        |   |  |   |        |  |   |        |  |   |  
|--------------------------------------------------------------- |  | - | ------ | - |  | - | ------ |  | - | ------ |  | - | -
|SUPPLEMENTAL CASH FLOW DISCLOSURES:                             |  |   |        |   |  |   |        |  |   |        |  |   |  
|Cash paid during the period for:                                |  |   |        |   |  |   |        |  |   |        |  |   |  
|Interest                                                        |  | $ | 21,023 |   |  | $ | 13,318 |  | $ | 4,621  |  | $ | 8
|Income taxes paid, net of refunds                               |  |   | (609   | ) |  |   | 4,350  |  |   | 4,525  |  |   | 
|Non-cash investment and financing transactions:                 |  |   |        |   |  |   |        |  |   |        |  |   |  
|Obligations incurred for the purchase of property and equipment |  |   | 645    |   |  |   |       |  |   |       |  |   | 
|Property and equipment acquired under capital lease obligations |  |   |       |   |  |   | 6,530  |  |   | 299    |  |   | 
|Note payable issued in connection with Acquisition              |  |   |       |   |  |   |       |  |   | 17,500 |  |   | 



See
accompanying notes.



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COLONY RIH HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY

(Dollars in thousands)



|                                                                      |  |             |       |                         |   |         |                                      |  |   |                                     |   |  |                            |      |   |  |   |        |  
|--------------------------------------------------------------------- |  | ----------- | ----- | ----------------------- | - | ------- | ------------------------------------ |  | - | ----------------------------------- | - |  | -------------------------- | ---- | - |  | - | ------ | -
|                                                                      |  | CommonStock |       | Capital inExcess of Par |   |         | RetainedEarningsAccumulated(Deficit) |  |   | AccumulatedOtherComprehensiveIncome |   |  | Total Shareholders Equity |     
|PREDECESSOR:                                                          |  |             |       |                         |   |         |                                      |  |   |                                     |   |  |                            |      |   |  |   |        |  
|Balance at December 31, 2000                                          |  | $           | 1,000 |                         | $ | 123,660 |                                      |  | $ | (67,165                             | ) |  | $                          |     |   |  | $ | 57,495 |  
|Net loss for the period from January 1, 2001 to April 24, 2001        |  |             |      |                         |   |        |                                      |  |   | (4,893                              | ) |  |                            |     |   |  |   | (4,893 | )
|                                                                      |  |             |       |                         |   |         |                                      |  |   |                                     |   |  |                            |      |   |  |   |        |  
|Balance at April 24, 2001                                             |  | $           | 1,000 |                         | $ | 123,660 |                                      |  | $ | (72,058                             | ) |  | $                          |     |   |  | $ | 52,602 |  
|                                                                      |  |             |       |                         |   |         |                                      |  |   |                                     |   |  |                            |      |   |  |   |        |  
|SUCCESSOR:                                                            |  |             |       |                         |   |         |                                      |  |   |                                     |   |  |                            |      |   |  |   |        |  
|Issuance of common stock to acquire RIH                               |  | $           | 4     |                         | $ | 40,371  |                                      |  | $ |                                    |   |  | $                          |     |   |  | $ | 40,375 |  
|Stock options granted to employees and consultants                    |  |             |      |                         |   | 379     |                                      |  |   |                                    |   |  |                            |     |   |  |   | 379    |  
|Other                                                                 |  |             |      |                         |   |        |                                      |  |   | (213                                | ) |  |                            |     |   |  |   | (213   | )
|Net income from April 25, 2001 to December 31, 2001                   |  |             |      |                         |   |        |                                      |  |   | 7,737                               |   |  |                            |     |   |  |   | 7,737  |  
|Increase in fair value of hedges                                      |  |             |      |                         |   |        |                                      |  |   |                                    |   |  |                            | 151  |   |  |   | 151    |  
|                                                                      |  |             |       |                         |   |         |                                      |  |   |                                     |   |  |                            |      |   |  |   |        |  
|Comprehensive income                                                  |  |             |      |                         |   |        |                                      |  |   |                                    |   |  |                            |     |   |  |   | 7,888  |  
|                                                                      |  |             |       |                         |   |         |                                      |  |   |                                     |   |  |                            |      |   |  |   |        |  
|Balance at December 31, 2001                                          |  |             | 4     |                         |   | 40,750  |                                      |  |   | 7,524                               |   |  |                            | 151  |   |  |   | 48,429 |  
|                                                                      |  |             |       |                         |   |         |                                      |  |   |                                     |   |  |                            |      |   |  |   |        |  
|Issuance of common stock                                              |  |             | 4     |                         |   | 33,246  |                                      |  |   |                                    |   |  |                            |     |   |  |   | 33,250 |  
|Other                                                                 |  |             |      |                         |   |        |                                      |  |   | 213                                 |   |  |                            |     |   |  |   | 213    |  
|Change in value of stock options granted to employees and consultants |  |             |      |                         |   | (183    | )                                    |  |   |                                    |   |  |                            |     |   |  |   | (183   | )
|Net income                                                            |  |             |      |                         |   |        |                                      |  |   | 2,877                               |   |  |                            |     |   |  |   | 2,877  |  
|Termination of fair value hedge                                       |  |             |      |                         |   |        |                                      |  |   |                                    |   |  |                            | (151 | ) |  |   | (151   | )
|                                                                      |  |             |       |                         |   |         |                                      |  |   |                                     |   |  |                            |      |   |  |   |        |  
|Comprehensive income                                                  |  |             |      |                         |   |        |                                      |  |   |                                    |   |  |                            |     |   |  |   | 2,726  |  
|                                                                      |  |             |       |                         |   |         |                                      |  |   |                                     |   |  |                            |      |   |  |   |        |  
|Balance at December 31, 2002                                          |  |             | 8     |                         |   | 73,813  |                                      |  |   | 10,614                              |   |  |                            |     |   |  |   | 84,435 |  
|                                                                      |  |             |       |                         |   |         |                                      |  |   |                                     |   |  |                            |      |   |  |   |        |  
|Change in value of stock options granted to employees and consultants |  |             |      |                         |   | (23     | )                                    |  |   |                                    |   |  |                            |     |   |  |   | (23    | )
|Net loss                                                              |  |             |      |                         |   |        |                                      |  |   | (1,256                              | ) |  |                            |     |   |  |   | (1,256 | )
|                                                                      |  |             |       |                         |   |         |                                      |  |   |                                     |   |  |                            |      |   |  |   |        |  
|Balance at December 31, 2003                                          |  | $           | 8     |                         | $ | 73,790  |                                      |  | $ | 9,358                               |   |  | $                          |     |   |  | $ | 83,156 |  
|                                                                      |  |             |       |                         |   |         |                                      |  |   |                                     |   |  |                            |      |   |  |   |        |  



See
accompanying notes.



33



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##### Table of Contents

COLONY RIH HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



1. Basis of Presentation and Consolidation



Colony RIH Holdings, Inc., a Delaware corporation (CRH, the
Company, or the Successor), owns 100% of the outstanding common stock of Resorts International Hotel and Casino, Inc., also a Delaware corporation (RIHC). RIHC, through its wholly-owned subsidiary, Resorts
International Hotel, Inc., a New Jersey corporation (RIH, or the Predecessor), owns and operates Resorts Atlantic City, a casino/hotel located in Atlantic City, NJ. On April 1, 2003, Resorts Real Estate Holdings, Inc.
(RREH) was formed as a wholly-owned subsidiary of CRH. RREH, which was incorporated as a New Jersey Corporation, was formed to acquire certain land. RREH had no substantive business operations prior to January 2004 (see note 14). Colony
RIH Holdings, Inc., Resorts International Hotel and Casino, Inc., and Resorts International Hotels, Inc. are referred to collectively as The Companies.



CRH was formed at the direction of Colony Investors IV, L.P. (Colony IV), a Delaware limited partnership, under
the laws of the State of Delaware on March 7, 2001. RIHC was formed at the direction of Colony IV on October 24, 2000.



RIHC, Kerzner International North America, Inc., a Delaware corporation (KINA), formerly Sun International North America, Inc., and GGRI,
Inc., a Delaware corporation (GGRI), entered into a purchase agreement, dated October 30, 2000, as amended (the Purchase Agreement). Pursuant to the Purchase Agreement, RIHC acquired all of the capital stock of RIH, the
Warehouse Assets (as defined in the Purchase Agreement) and all of the capital stock of New Pier Operating Company, Inc. (New Pier), a New Jersey corporation (collectively, the Acquisition) on April 25, 2001 for approximately
$144.8 million.



The consolidated financial statements include
the accounts of CRH and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. The Predecessors financial statements include the accounts of RIH.



2. Summary of Significant Accounting Policies



Use of Estimates



The preparation of the financial statements in conformity with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.



Allowances for doubtful accounts arising from casino, hotel and other
services, are based upon a specific review of certain outstanding receivables. In determining the amounts of the allowances, certain estimates and assumptions are made, and actual results may differ from those assumptions.



Cash Equivalents



Short-term money market securities purchased with original maturities of three months or less are considered to be cash
equivalents. These securities are classified as available-for-sale, which are carried at fair value with unrealized gains and losses, net of tax, reported in other comprehensive income. The carrying value of cash equivalents approximates fair value
due to the short-term maturity of these instruments.



Inventories



Inventories of provisions, supplies and spare parts are
valued at the lower of cost (first-in, first-out) or market.



34



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2. Summary of Significant Accounting Policies (continued)



Property and Equipment



Property and equipment are stated at cost and are depreciated over their estimated useful lives reported below using the
straight-line method. Interest costs incurred during the construction period are capitalized in accordance with Statement of Financial Accounting Standards No. 34, Capitalization of Interest Costs. Interest cost of $3.6 million and
$429,000 was capitalized for the years ended December 31, 2003 and 2002, respectively.



|                                 |  |              
|-------------------------------- |  | -------------
|Hotels and other buildings       |  | 35  40 years
|Furniture fixtures and equipment |  | 2  5 years  



The provisions of SFAS
No. 144 Accounting for the Impairment or Disposal of Long- Lived Assets requires, among other things, that an entity review its long-lived assets and certain intangibles for impairment whenever changes in circumstances indicate that the
carrying amount of an asset may not be fully recoverable. SFAS No. 144 requires an impairment loss to be recognized only if the carrying amounts of long-lived assets to be held and used are not recoverable from their expected undiscounted future
cash flows. There was no impairment recognized for the periods presented.



Goodwill



Goodwill for the Predecessor was
amortized on a straight-line basis over 40 years. Amortization of goodwill included in the accompanying statements of operations amounted to $836,000 in the 2001 Predecessor period.



Income Taxes



Prior to the Acquisition discussed in Note 1, RIHs taxable income (loss) was included in the consolidated Federal income tax returns of KINA.
Although RIH was a member of a consolidated group for Federal income tax purposes, RIH calculated its income tax provision on a separate return basis for financial reporting purposes.



CRH follows the provisions of SFAS No. 109, Accounting for Income Taxes. Accordingly, deferred tax assets and
liabilities are calculated as the difference between the financial statement carrying amounts and tax bases of assets and liabilities. These differences are affected by the tax rate for the year in which they are expected to be recovered or settled.
A valuation allowance is recognized, if necessary, to account for the likelihood that these differences will not be realized in the future. Note 11 further addresses the components of the deferred tax assets and liabilities.



Revenue Recognition



Gaming revenue is recorded as the net win from gaming activities, which represents the difference between amounts wagered
and amounts won by patrons. Revenues from hotel and related services and from theater ticket sales are recognized at the time the related service is performed.



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##### Table of Contents

2. Summary of Significant Accounting Policies (continued)



Promotional Allowances



The retail value of hotel accommodations, food, beverage and other services provided to customers without charge is included
in gross revenues and deducted as promotional allowances. The estimated departmental costs of providing such promotional allowances are included in gaming costs and expenses as follows (in thousands):



|                        |  |                         |        |                                              |   |                                           |  |               |        |  |   |      
|----------------------- |  | ----------------------- | ------ | -------------------------------------------- | - | ----------------------------------------- |  | ------------- | ------ |  | - | -----
|                        |  | Year ended December 31, |        | Period fromApril 25, 2001 toDecember 31,2001 |   | Period fromJanuary 1,2001 toApril 24,2001
|                        |  | 2003                    |        | 2002                                         |   |                                          
|                        |  | (Successor)             |        | (Successor)                                  |   | (Successor)                               |  | (Predecessor)
|Rooms                   |  | $                       | 10,363 |                                              | $ | 10,277                                    |  | $             | 6,646  |  | $ | 2,760
|Food and beverage       |  |                         | 15,729 |                                              |   | 16,386                                    |  |               | 11,355 |  |   | 4,823
|Entertainment and other |  |                         | 3,390  |                                              |   | 3,224                                     |  |               | 2,084  |  |   | 949  
|                        |  |                         |        |                                              |   |                                           |  |               |        |  |   |      
|                        |  | $                       | 29,482 |                                              | $ | 29,887                                    |  | $             | 20,085 |  | $ | 8,532
|                        |  |                         |        |                                              |   |                                           |  |               |        |  |   |      



Cash discounts based
upon a negotiated amount with each customer are recognized as a promotional allowance on the date the related revenues is recorded. Cash-back awards given to a customer based upon earning points for future awards are accrued as the customer earns
the points. The amount is recorded as a promotional allowance in the statement of operations. When estimating the amount of the accrual, the Company calculates a redemption rate based on historical redemption rates.



The Company offers other incentive programs. These are gifts and other
promotional items, the type and distribution of which are predetermined by management. Since these awards are not cash awards, the Company records them as gaming expenses in the statement of operations. Such amounts are expensed on the date the
award can be utilized by the customer.



Stock Based Compensation



The Companies have elected to follow Accounting
Principles Board Number 25, Accounting for Stock Issued to Employees, and related interpretations in accounting for employee stock options. The effect of applying the fair value method proscribed by Financial Accounting Standards Board
Statement Number 123 would result in net income that is not materially different from the amount reported in the accompanying statement of operations. Pro forma results of operations may not be representative of the effects on pro forma results of
operations for future periods.



Equity instruments issued to
non-employees in exchange for goods or services are accounted for using the fair value method and expense is recorded based on the value determined.



36



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##### Table of Contents

2. Summary of Significant Accounting Policies (continued)



New Accounting Pronouncements



Effective January 1, 2003, the Company adopted the Financial Accounting
Standards Boards (FASB) interpretation No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebteness of Others, an Interpretation of FASB Statement No. 5, 57 and
107 and Rescission of FASB Interpretation No. 34 (FIN 45). The interpretation requires that upon issuance of a guarantee, the entity must recognize a liability for the fair value of the obligation it assumes under the guarantee. In
addition, FIN 45 requires disclosures about the guarantee that an entity has issued, including a roll-forward of the entitys product warranty liabilities. This interpretation is intended to improve the comparability of financial reporting by
requiring identical accounting for guarantees issued with separately identified consideration and guarantees issued without separately identified consideration. Adoption of this interpretation had no material impact on the Companys
consolidated financial position, consolidated results of operation, or liquidity.



In January 2003, the FASB issued interpretation No. 46 (FIN 46), Consolidation of Variable Interest Entities, an interpretation of ARB 51. The primary objectives of this interpretation are to
provide guidance on the identification of entities for which control is achieved through means other than through voting rights (variable interest entities) and how to determine when and which business enterprise ( the primary
beneficiary) should consolidate the variable interest entity. This new model for consolidation applies to an entity which either (i) the equity investors (if any) do not have a controlling financial interest; or (ii) the equity investment at
risk is insufficient to finance that entitys activities without receiving additional subordinated financial support form other parties. In addition, FIN 46 requires that the primary beneficiary, as well s all other enterprises with a
significant variable interest in a variable interest entity, make additional disclosures. Certain disclosure requirements of FIN 46 were effective for financial statements issued after January 31, 2003. In December 2003, The FASB issued FIN 46
(revised December 2003), Consolidation of Variable Interest Entities (FIN 46-R) to address certain FIN 46 implementation issues. The effective dates and impact of FIN 46 and FIN 46-R are as follows: (i) Special-purpose
entities (SPEs) created prior to February 1, 2003- the company must apply either the provision of FIN 46 or early adopt the provisions of FIN 46-R at the end of the first interim or annual reporting period ending after December 15, 2003.
(ii) Non-SPEs created prior to February 1, 2003- the company is required to adopt FIN 46-R at the end of the first interim or annual reporting period ending after March 15, 2004. (iii) All entities, regardless of whether an SPE, that were created
subsequent to January 31, 2003- the provisions of FIN 46 were applicable for variable interests in entities obtained after January 31, 2003. The adoption of the provisions applicable to SPEs and all other variable interests obtained after January
31, 2003 did not have a material impact on the Companys consolidated financial position, consolidated results of operations, or liquidity. The Company is currently evaluating the impact of adopting FIN 46-R applicable to non-SPEs created prior
to February 1, 2003 but does not expect a material impact.



3. Acquisition



RIHC, KINA, and GGRI entered into the Purchase Agreement
on October 30, 2000. Pursuant to the Purchase Agreement, RIHC acquired all of the capital stock of RIH, the Warehouse Assets (as defined in the Purchase Agreement) and all of the capital stock of New Pier Operating Company, Inc., a New Jersey
corporation (collectively, the Acquisition) on April 25, 2001 for approximately $144.8 million.



The Acquisition has been accounted for using the purchase method, and accordingly, the aggregate purchase price, including transaction fees and expenses,
has been allocated based on the estimated fair value of the assets acquired and liabilities assumed. As a result, the consolidated financial statements for the period subsequent to the Acquisition are presented on a different basis of accounting
than those for the periods prior to the Acquisition and, therefore, are not directly comparable.



CRH financed the Acquisition and paid related fees and expenses with: (i) proceeds of $42.5 million from the issuance of common stock, (ii) a $17.5
million note issued by CRH to KINA (the Seller Note), (iii) borrowings by RIHC, guaranteed by CRH under a $90 million credit agreement (the Credit Facility) and (iv) RIHs available cash.



Prior to the Acquisition, CRH conducted no business other than in connection
with the Purchase Agreement and the Credit Facility.



37



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##### Table of Contents

3. Acquisition (continued)



In connection with the Acquisition for approximately $144.8 million, CRH acquired assets with a fair value of $173.9 million
and assumed liabilities of $29.1 million.



The pro forma
unaudited results of operations for the year ended December 31, 2001, assuming consummation of the Acquisition and issuance of CRHs common stock, Seller Note and Credit Facility as of the beginning of 2001 is as follows (in thousands):



|                   |  |                            |        
|------------------ |  | -------------------------- | -------
|                   |  | Year endedDecember 31,2001
|Total net revenues |  | $                          | 225,173
|Net income         |  | $                          | 8,616  



4. Receivables



Components of receivables were as follows at December 31 (in thousands):



|                                      |  |      |        |   |      |   |        |  
|------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|                                      |  | 2003 |        |   | 2002 |  
|Gaming                                |  | $    | 5,733  |   |      | $ | 8,135  |  
|Less: allowance for doubtful accounts |  |      | (2,010 | ) |      |   | (4,161 | )
|                                      |  |      |        |   |      |   |        |  
|                                      |  |      | 3,723  |   |      |   | 3,974  |  
|Non-gaming:                           |  |      |        |   |      |   |        |  
|Hotel and related                     |  |      | 320    |   |      |   | 282    |  
|Other                                 |  |      | 1,173  |   |      |   | 883    |  
|                                      |  |      |        |   |      |   |        |  
|                                      |  |      | 1,493  |   |      |   | 1,165  |  
|Less: allowance for doubtful accounts |  |      | (41    | ) |      |   | (41    | )
|                                      |  |      |        |   |      |   |        |  
|                                      |  |      | 1,452  |   |      |   | 1,124  |  
|                                      |  |      |        |   |      |   |        |  
|Receivables, net                      |  | $    | 5,175  |   |      | $ | 5,098  |  
|                                      |  |      |        |   |      |   |        |  



5. Property and Equipment



Components of property and equipment were as follows at
December 31 (in thousands):



|                                  |  |      |         |   |      |   |         |  
|--------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                  |  | 2003 |         |   | 2002 |  
|Land and land rights              |  | $    | 34,698  |   |      | $ | 34,698  |  
|Hotels and other buildings        |  |      | 80,125  |   |      |   | 79,038  |  
|Furniture, fixtures and equipment |  |      | 39,091  |   |      |   | 30,435  |  
|Construction in progress          |  |      | 58,816  |   |      |   | 14,604  |  
|                                  |  |      |         |   |      |   |         |  
|                                  |  |      | 212,730 |   |      |   | 158,775 |  
|Less: accumulated depreciation    |  |      | (23,121 | ) |      |   | (12,934 | )
|                                  |  |      |         |   |      |   |         |  
|Net property and equipment        |  | $    | 189,609 |   |      | $ | 145,841 |  
|                                  |  |      |         |   |      |   |         |  



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##### Table of Contents

6. Other Assets



Components of other assets were as follows at December 31 (in thousands):



|                                                |  |      |        |      |   |        
|----------------------------------------------- |  | ---- | ------ | ---- | - | -------
|                                                |  | 2003 |        | 2002
|CRDA deposits, bonds and other investments, net |  | $    | 12,356 |      | $ | 18,530 
|Debt issuance costs, net                        |  |      | 6,299  |      |   | 7,521  
|Other                                           |  |      | 1,909  |      |   | 402    
|Restricted cash                                 |  |      | 50,358 |      |   | 89,971 
|                                                |  |      |        |      |   |        
|                                                |  | $    | 70,922 |      | $ | 116,424
|                                                |  |      |        |      |   |        



The New Jersey Casino
Control Act, as amended, requires RIH to purchase bonds issued by the Casino Reinvestment Development Authority (CRDA) or make other investments authorized by the CRDA, in an amount equal to 1.25% of RIHs gross gaming revenue, as defined.



The CRDA bonds have interest rates ranging from 3.5% to 7.0%
and have repayment terms of between 20 and 50 years. RIH records charges to expense to reflect the below-market interest rate payable on the bonds it may have to purchase to fulfill its investment obligation at the date the obligation arises. The
charges (credits) for the years 2003 and 2002, for the period from April 25, 2001 to December 31, 2001, and the period from January 1, 2001 to April 24, 2001 for discounts on obligations arising in those years were ($2,280,000), $547,000, $660,000,
$287,000, respectively. The current year credit is due to the reversal of approximately $3.0 million of amortization expense related to discounts on funds previously deposited with the CRDA in below-market bearing instruments. This reversal resulted
from the receipt from the CRDA of $9,189,000 of previously deposited funds as reimbursement for costs incurred for the construction of a new hotel tower. The discount on CRDA bonds purchased is amortized to interest income over the life of the bonds
using the effective interest method.



From time to time RIH has
donated certain funds it has had on deposit with the CRDA in return for either relief from its obligation to purchase CRDA bonds or credits against future CRDA deposits. At December 31, 2003, RIH owned $7,165,000 face value of bonds issued by the
CRDA and had $6,129,000 on deposit with the CRDA. The majority of the Companys deposits have been pledged for specific projects.



Debt issuance costs consist of amounts incurred in connection with obtaining long-term debt. The costs are amortized on a straight line basis over the
contractual life of the loan and amortization of such costs is included in interest expense.



Restricted cash represents funds received from the issuance of the First Mortgage Notes (see Note 8), which were deposited into a construction disbursement account for use for construction of the new hotel tower.



7. Accrued Expenses and Other Current Liabilities



Components of accrued expenses and other current liabilities were as follows
at December 31 (in thousands):



|                                         |  |      |        |      |   |       
|---------------------------------------- |  | ---- | ------ | ---- | - | ------
|                                         |  | 2003 |        | 2002
|Insurance and related costs              |  | $    | 1,720  |      | $ | 1,623 
|Payroll                                  |  |      | 6,496  |      |   | 9,293 
|Unredeemed chip liability                |  |      | 1,178  |      |   | 1,024 
|Liability for unredeemed cash incentives |  |      | 2,058  |      |   | 2,538 
|Other                                    |  |      | 5,057  |      |   | 6,300 
|                                         |  |      |        |      |   |       
|                                         |  | $    | 16,509 |      | $ | 20,778
|                                         |  |      |        |      |   |       



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##### Table of Contents

8. Long-Term Debt



Long-term debt is summarized as follows at December 31 (in thousands):



|                                                  |  |      |         |      |   |        
|------------------------------------------------- |  | ---- | ------- | ---- | - | -------
|                                                  |  | 2003 |         | 2002
|First Mortgage Notes, net of unamortized discount |  | $    | 176,599 |      | $ | 176,151
|Thermal Energy capital lease                      |  |      | 6,474   |      |   | 6,562  
|Other notes payable                               |  |      | 1,054   |      |   | 1,299  
|                                                  |  |      |         |      |   |        
|                                                  |  |      | 184,127 |      |   | 184,012
|Less: current portion                             |  |      | 846     |      |   | 1,004  
|                                                  |  |      |         |      |   |        
|                                                  |  | $    | 183,281 |      | $ | 183,008
|                                                  |  |      |         |      |   |        



On March 22, 2002,
RIHC sold $180.0 million aggregate principal amount of First Mortgage Notes (the First Mortgage Notes) at a price of 97.686% yielding $175.8 million. Interest on the First Mortgage Notes is payable on March 15 and September 15 of each
year, and the First Mortgage Notes are due in full on March 15, 2009.



The First Mortgage Notes contain certain covenants that, among other things, will limit RIHCs ability and the ability of its subsidiaries to pay dividends on, redeem or repurchase its or their capital stock, make investments, incur
additional indebtedness, permit payment of or restrict dividends by certain of its subsidiaries, enter into sale leaseback transactions, sell assets, guarantee indebtedness, create certain liens, engage in transactions with affiliates, and
consolidate, merge or transfer all or substantially all its assets and the assets of its subsidiaries on a consolidated basis.



In June 2002, RIH entered into a Thermal Energy Services Agreement (the Thermal Agreement). The initial term of the Thermal Agreement is 20
years, renewable at RIHs option for two additional five-year terms. The Thermal Agreement has three components: a monthly charge for operation and maintenance of the thermal energy facilities; a capital lease component for capital improvements
whose value was estimated at $6.5 million on the date the Thermal Agreement was executed, and; a usage fee for steam and chilled water, whose usage and rate will vary by month of the year. The outstanding balance of the capital lease was $6.5
million at December 31, 2003.



In June 2002, RIH entered into a
Restated Loan and Security Agreement, as amended, with CIT Group/Equipment Financing, Inc (CIT Facility). The CIT Facility permits RIH to borrow up to $20 million for the purchase of machinery, furniture, or equipment. Loans pursuant to
the CIT Facility are repayable in up to a sixty-month amortization period from the date the loan is made. Interest on outstanding loans bear interest at the rate of LIBOR plus three and one-half percent. RIH is required to pay an annual fee equal to
one-half percent of the unused portion of the CIT Facility. The outstanding balance due to CIT at December 31, 2003 was $1.1 million.



In November 2002, RIH entered into a Loan and Security Agreement with Commerce Bank, N.A (Commerce Facility). The Commerce Facility provides
for working capital borrowings and letters of credit up to $10 million. The Commerce Facility expires on December 31, 2004. There was no outstanding balance on the Commerce Facility at December 31, 2003.



In conjunction with the Acquisition, RIHC borrowed $82.0 million under an
Amended and Restated Credit Agreement, dated April 25, 2001, from the lenders named therein. The Credit Facility was comprised of $80.0 million in term loans and a $10.0 million revolving credit facility. Principal payments on the term loans were
due quarterly, commencing on June 29, 2001. Interest on borrowings outstanding was either at LIBOR or an alternative base rate, plus an applicable margin in each case. The outstanding balance on the Credit Facility was repaid on March 22, 2002, with
the proceeds from the sale of the First Mortgage Notes. Additionally, the Company terminated its existing interest rate collar agreements.



In conjunction with the Acquisition, CRH also issued a $17.5 million note to KINA (the Seller Note). The Seller Note was subordinated to the
term loans under the Credit Facility and had a 7-year term. This loan had interest at 12.5% per annum of which 6.25% was payable in cash and 6.25% was paid in kind. There was no amortization of principal on this loan. The Seller Note was repaid on
March 22, 2002, with the proceeds from the sale of the First Mortgage Notes.



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##### Table of Contents

8. Long-Term Debt (continued)



In connection with the repayment of the Credit Facility and the Seller Note, the Company recorded a loss on extinguishment
of debt, of $3,378,000 related to pre-payment penalties and the write-off of deferred financing costs associated with the Credit Facility.



9. Related Party Transactions



For the year ended December 31, 2003 and 2002, the Company incurred expenses of approximately $105,000 and $527,000, respectively, for fees and expenses
incurred by affiliates of Colony Capital, the Companys principal shareholder, and the Companys directors.



10. Retirement Plans



RIH has a defined contribution plan in which substantially all non-union employees are eligible to participate. Employees of certain other affiliated
companies are also eligible to participate in this plan. Contributions are made to the plan based on a percentage of eligible employee contributions. Contribution expense for this plan was $609,000, $682,000, $436,000, and $209,000 for the years
ended December 31, 2003 and 2002, the period from April 25, 2001 to December 31, 2001, and the period from January 1, 2001 to April 24, 2001, respectively.



Union employees are covered by various multi-employer pension plans to which contributions are made by RIH and other unrelated employers. RIHs
pension expense for these plans was $1,709,000, $1,665,000, $1,009,000, and $437,000 for the years ended December 31, 2003, 2002, for the period from April 25, 2001 to December 31, 2001, and the period from January 1, 2001 to April 24, 2001,
respectively.



11. Income Taxes



Income tax expense is comprised of the following for the period ended
December 31 (in thousands):



|          |  |      |       |   |      |   |       |  |   |       |  
|--------- |  | ---- | ----- | - | ---- | - | ----- |  | - | ----- | -
|          |  | 2003 |       |   | 2002 |   | 2001  | 
|Current:  |  |      |       |   |      |   |       |  |   |       |  
|Federal   |  | $    | (369  | ) |      | $ | 795   |  | $ | 5,830 |  
|State     |  |      | 1,079 |   |      |   | 947   |  |   |      |  
|          |  |      |       |   |      |   |       |  |   |       |  
|          |  |      | 710   |   |      |   | 1,742 |  |   | 5,830 |  
|Deferred: |  |      |       |   |      |   |       |  |   |       |  
|Federal   |  |      | 1,017 |   |      |   | 1,455 |  |   | (784  | )
|State     |  |      |      |   |      |   |      |  |   |      |  
|          |  |      |       |   |      |   |       |  |   |       |  
|          |  |      | 1,017 |   |      |   | 1,455 |  |   | (784  | )
|          |  |      |       |   |      |   |       |  |   |       |  
|          |  | $    | 1,727 |   |      | $ | 3,197 |  | $ | 5,046 |  
|          |  |      |       |   |      |   |       |  |   |       |  



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##### Table of Contents

11. Income Taxes (continued)



The components of the deferred tax assets and liabilities were as follows at December 31 (in thousands):



|                                                |  |      |        |   |      |   |        |  
|----------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|                                                |  | 2003 |        |   | 2002 |  
|Deferred tax liabilities:                       |  |      |        |   |      |   |        |  
|Basis differences on property and equipment     |  | $    | (5,033 | ) |      | $ | (3,702 | )
|Other                                           |  |      | (1,564 | ) |      |   | (1,809 | )
|                                                |  |      |        |   |      |   |        |  
|Total deferred tax liabilities                  |  |      | (6,597 | ) |      |   | (5,511 | )
|Deferred tax assets:                            |  |      |        |   |      |   |        |  
|NOL and capital loss carryforwards              |  |      | 8,477  |   |      |   | 8,477  |  
|Book reserves not yet deductible for tax        |  |      | 3,190  |   |      |   | 3,823  |  
|Tax credit carryforwards                        |  |      | 441    |   |      |   | 73     |  
|Other                                           |  |      | 1,832  |   |      |   | 1,361  |  
|                                                |  |      |        |   |      |   |        |  
|Total deferred tax assets                       |  |      | 13,940 |   |      |   | 13,734 |  
|Valuation allowance for deferred tax assets     |  |      | (8,640 | ) |      |   | (8,503 | )
|                                                |  |      |        |   |      |   |        |  
|Deferred tax assets, net of valuation allowance |  |      | 5,300  |   |      |   | 5,231  |  
|                                                |  |      |        |   |      |   |        |  
|Net deferred tax liabilities                    |  | $    | (1,297 | ) |      | $ | (280   | )
|                                                |  |      |        |   |      |   |        |  



The effective income
tax rate varies from the statutory Federal income tax rate as a result of the following factors:



|                                                                                      |  |                         |   |  |                                                 |   |  |                                             |   |  |               |   
|------------------------------------------------------------------------------------- |  | ----------------------- | - |  | ----------------------------------------------- | - |  | ------------------------------------------- | - |  | ------------- | --
|                                                                                      |  | Year ended December 31, |   |  | Period from April 25, 2001 to December 31, 2001 |   |  | Period fromJanuary 1,2001 to April 24, 2001 |  
|                                                                                      |  | 2003                    |   |  | 2002                                            |   |  |                                            
|                                                                                      |  | (Successor)             |   |  | (Successor)                                     |   |  | (Predecessor)                               |   |  | (Predecessor) |   
|Statutory Federal income tax rate                                                     |  | 34.0                    | % |  | 34.0                                            | % |  | 35.0                                        | % |  | 35.0          | % 
|NOL and temporary differences for which no taxes were provided or benefits recognized |  |                        |   |  |                                                |   |  |                                            |   |  | (25.6         | )%
|State taxes, net of federal benefit                                                   |  | 151.3                   | % |  | 10.3                                            | % |  |                                            |   |  |              |   
|Non-deductible provisions and expenses                                                |  | 181.7                   | % |  | 8.3                                             | % |  | 4.5                                         | % |  | (9.4          | )%
|                                                                                      |  |                         |   |  |                                                 |   |  |                                             |   |  |               |   
|Effective tax rate                                                                    |  | 367.0                   | % |  | 52.6                                            | % |  | 39.5                                        | % |  | 0.0           | % 
|                                                                                      |  |                         |   |  |                                                 |   |  |                                             |   |  |               |   



On June 30, 2003, the
State of New Jersey amended the New Jersey Casino Control Act, effective July 1, 2003, to impose or increase certain taxes and fees, including a tax at the rate of 7.5% on the adjusted net income of casino licensees in calendar year 2002, payable in
the states fiscal years 2004 though 2006. The amount of this tax for each licensee is limited to a maximum of $10.0 million annually and a minimum of $350,000 annually. For the year ended December 31, 2003, the company recorded a provision of
$175,000 for this tax.



On July 3, 2002, the State of New
Jersey passed the New Jersey Business Tax Reform Act which, among other things, requires the suspension of the use of the New Jersey net operating loss carryforwards for two years and the introduction of a new alternative minimum amount under the
New Jersey corporate business tax based on gross receipts or gross profits, as defined. The Tax Act was retroactive to January 1, 2002. In accordance with the Tax Act, the Company recorded a provision for current income tax of $712,000, net of
federal benefit, for the year ended December 31, 2003.



At
December 31, 2003, the Company has a state net operating loss carryforward of approximately $144.9 million. The carryforward will expire as follows: 2005, $32.8 million; 2006, $2.4 million; 2007, $40.2 million; 2008, $20.7 million; and 2009, $48.8
million. The Company has reported a full valuation allowance against the carryforward because it does not expect to realize the tax benefit.



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12. Common Stock and Stock Based Compensation



The proceeds from the sale of 1,915 shares of Class A Common Stock and 38,750 shares of Class B Common Stock have been
classified separately from shareholders equity as Redeemable Common Stock in the balance sheet to reflect the rights granted to a shareholder to require CRH to repurchase his shares under certain circumstances.



In connection with the acquisition discussed in Note 3, CRH established the
2001 Omnibus Stock Incentive Plan (the Plan). Awards denominated or payable in shares or options to purchase shares of CRHs common stock may be granted to officers and other key employees and consultants of CRH and its
subsidiaries. The Plan permits the granting of up to 2,131 shares of Class A Common Stock and 43,122 shares of Class B Common Stock. The Board of Directors has sole discretion concerning administration of the Plan, including the determination of
award goals, individuals to receive awards, types of awards, the terms and conditions of the awards, and the time at which awards will be granted. The Board of Directors may terminate the Plan at any time.



The exercise price for awards issued under the Plan is determined by the
Board of Directors and is generally equal to the fair market value of the underlying common stock at the date of the grant. During the period from April 25, 2001 to December 31, 2001, the Company granted 1,789 options to purchase Class A common
shares and 36,204 options to purchase Class B common shares. All of the Class A options were granted with an exercise price of $.0475 per share and all of the Class B common shares were granted with an exercise price of $100.00 per share. These
exercise prices were determined to be the fair market value of the common stock on the date of grant.



Of the options granted during the period ended December 31, 2001, 555 options to purchase Class A common shares and 11,188 options to purchase Class B
common shares were granted to an independent contractor and were immediately vested as a part of the closing of the Acquisition. The fair value of these options was approximately $291,000 on the Acquisition date, and this amount has been recorded as
a part of the cost of the Acquisition.



An additional 550
options to purchase Class A common shares and 11,180 options to purchase Class B common shares were also issued to an independent contractor on the Acquisition date. A portion of these options (275 Class A and 5,590 Class B) vest in equal
installments (55 Class A and 1,118 Class B) from April 2002 to April 2006, and a portion of these options (275 Class A and 5,590 Class B) vest upon the Company meeting specified performance targets. All of these options may be put back to the
Company or called by the Company in certain circumstances as defined in the agreement; accordingly, for financial accounting purposes, these awards are re-measured at the end of each reporting period using the fair value method and changes in fair
value are recorded as compensation expense until the options are exercised.



The remaining Class A options (684) and Class B options (13,836) were granted to employees during the period from April 25, 2001 to December 31, 2001. As of December 31, 2002, there were 684 Class A and 13,836 Class B
options outstanding of which 274 Class A and 5,534 Class B options had vested and were exercisable. During the year ended December 31, 2003, 325 Class A options and 6,571 Class B options were forfeited and 77 Class A options and 1,556 Class B
options were granted. As of December 31, 2003, 436 Class A options and 8,821 Class B options were outstanding, of which 174 Class A options and 3,528 Class B options have vested and are currently exercisable. All of these options may be called by
the Company in certain circumstances as defined in the agreement. For financial accounting purposes, these awards are re-measured at the end of each reporting period using the intrinsic value method and changes in intrinsic value are recorded as
compensation expense at the end of each reporting period until the options are exercised.



Compensation expense recognized on all stock option awards for the years ended December 31, 2003 and 2002 and the period from April 25, 2001 to December 31, 2001 was approximately $(23,000), $(183,000) and $88,000.



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13. Commitments and Contingencies



Litigation



The Companies are a defendant in certain litigation. In the opinion of management, based upon advice of counsel, the aggregate liability, if any, arising
from such litigation will not have a material adverse effect on the financial position, results of operations, or liquidity of the Company.



License Renewal



On January 21, 2004, the New Jersey Casino Control Commission (the NJCCC) renewed RIHs license to operate its casino hotel complex in
Atlantic City for the four-year period ending January 31, 2008. A casino license is not transferable, and must be renewed every four years by filing an application, which must be acted upon by the NJCCC no later than 30 days prior to the expiration
of the license then in force.



Commitments



The Company leases land, office space and certain equipment under
non-cancelable operating lease arrangements. These leases expire in various years. Rent expense under these lease agreements for the years ended December 31, 2003 and 2002, the period from April 25, 2001 to December 31, 2001, and the period from
January 1, 2001 to April 24, 2001 were approximately $3.5 million, $3.7 million, $3.1 million, and $433,000, respectively. Future minimum lease payments under noncancelable operating leases consist of the following at December 31, 2003 (in
thousands):



|                    |  |   |       
|------------------- |  | - | ------
|2004                |  | $ | 3,973 
|2005                |  |   | 2,290 
|2006                |  |   | 1,841 
|2007                |  |   | 1,608 
|2008 and thereafter |  |   | 21,536
|                    |  |   |       
|Total               |  | $ | 31,248
|                    |  |   |       



Fair Value of Financial Instruments



The carrying values of cash and cash equivalents, and
restricted cash in other assets, are reasonable estimates of fair values because of the short term maturities of these investments. The carrying values of the capital leases and other notes payable approximate the fair market value of these
instruments based on their terms and rates. CRDA deposits, bonds, and other investments are stated net of a valuation allowance reflecting the below-market interest rates associated with these investments, therefore the carrying values approximate
their fair values. The fair value of the Companys First Mortgage Notes is estimated to be $195,525,000 as of December 31, 2003, based on the trading price as of that date, compared to the carrying value of $176,599,000.



14. Subsequent Events



In conjunction with the purchase of RIH from KINA in April 2001 by CRH and RIHC, CRH obtained an option to purchase
approximately 10.0 acres of real property immediately adjacent to the Resorts site and approximately 2.0 acres of real property located in the Atlantic City metropolitan area, pursuant to an option agreement (Option Agreement) for a
total purchase price of $40.0 million. Portions of the option property (the Option Land) are zoned for casino hotel use and are available for future expansion. Some of the option property was leased from KINA by RIH for use as a surface
parking lot under a lease agreement with terms running contemporaneous with the terms of the Option Agreement.



The Option Agreement had a two-year term, which could be extended for two additional one-year terms upon the payment of a $2.5 million extension fee
payable upon each extension. The initial term of the Option Agreement was to expire in April 2003. The expiration date of the initial term of the Option Agreement was initially extended to June 15, 2003, as negotiations between the Companies and
KINA for the purchase of the Option Land commenced. Subsequently, the expiration date of the initial term was further extended, upon the payment by RIH of one-half of the $2.5 million extension fee.



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##### Table of Contents

14. Subsequent Events (continued)



In January 2004, CRH announced that it had reached agreement with KINA to acquire the Option Land, subject to the approval
of the New Jersey Casino Control Commission, which approval was received on March 17, 2004. Following the approval, the Option Land was acquired by RREH on March 18, 2004 in exchange for the issuance of a $40 million note by RREH to KINA. This $40
million note will mature immediately following the maturity, acceleration or refinancing (other than permitted refinancing) of the First Mortgage Notes which are due March 22, 2009. Interest on the $40 million note will be payable semi-annually, and
will be calculated at the following annual rates: 0% through September 2004, 4% from October 2004 through March 2006, 6% from April 2006 through March 2008, and 9% from April 2008 through March 2009. The note payable to KINA is guaranteed by CRH,
RIHC and RIH, provided, however that the guarantee of RIHC and RIH does not become effective until either the First Mortgage Notes have been paid in full or the fixed charge coverage ratio (the ratio of Consolidated EBITDA to Fixed Charges, all as
further defined in the First Mortgage Notes Indenture) of RIHC is at least 2.0 to 1.0. In addition, the amount guaranteed is initially limited to $20 million increasing by $5 million each year.



In conjunction with the option land purchase transaction, the Option
Agreement between RIHC and KINA was terminated. With the termination of the Option Agreement, the lease agreement between KINA and RIH converts to a month-to-month fair market value lease. As part of the option land purchase transaction, the lease
was amended to be a triple-net lease and was assigned by KINA to RREH. The amended agreement calls for the following payments: a $1.3 million security deposit paid upon closing, offset against lease payments of $205,000 per month through September
2004; $135,833 per month from October 2004 through March 2006; $202,500 per month from April 2006 through March 2008; $302,500 per month from April 2008 through March 2009 and $402,500 per month thereafter. The lease agreement may be terminated by
either party upon 30 days notice, with the remaining security deposit refunded to RIH upon termination.



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##### Table of Contents

SCHEDULE II

COLONY RIH HOLDINGS, INC.

VALUATION AND QUALIFYING ACCOUNTS

(In Thousands)



|                                                |  |                               |        |                               |   |        |                            |  |   |                          |      |  |   |       
|----------------------------------------------- |  | ----------------------------- | ------ | ----------------------------- | - | ------ | -------------------------- |  | - | ------------------------ | ---- |  | - | ------
|                                                |  | Balance at Beginning ofPeriod |        | Charged to Costs and Expenses |   |        | Other Changes (Deductions) |  |   | Balance at End of Period
|PREDECESSOR:                                    |  |                               |        |                               |   |        |                            |  |   |                          |      |  |   |       
|Period from January 1, 2001 to April 24, 2001   |  |                               |        |                               |   |        |                            |  |   |                          |      |  |   |       
|Allowances for doubtful accounts                |  | $                             | 2,926  |                               | $ | 517    |                            |  | $ | 4                        |      |  | $ | 3,447 
|Valuation allowance for CRDA investments        |  | $                             | 10,780 |                               | $ | 287    |                            |  | $ | (7                       | )    |  | $ | 11,060
|SUCCESSOR:                                      |  |                               |        |                               |   |        |                            |  |   |                          |      |  |   |       
|Period from April 25, 2001 to December 31, 2001 |  |                               |        |                               |   |        |                            |  |   |                          |      |  |   |       
|Allowances for doubtful accounts                |  | $                             | 3,447  |                               | $ | 1,038  |                            |  | $ | (591                     | )(a) |  | $ | 3,894 
|Valuation allowance for CRDA investments        |  | $                             | 11,060 |                               | $ | 660    |                            |  | $ | (1,827                   | )(b) |  | $ | 9,893 
|Year ended December 31, 2002                    |  |                               |        |                               |   |        |                            |  |   |                          |      |  |   |       
|Allowances for doubtful accounts                |  | $                             | 3,894  |                               | $ | 1,305  |                            |  | $ | (997                     | )(a) |  | $ | 4,202 
|Valuation allowance for CRDA investments        |  | $                             | 9,893  |                               | $ | 547    |                            |  | $ | 3                        |      |  | $ | 10,443
|Year ended December 31, 2003                    |  |                               |        |                               |   |        |                            |  |   |                          |      |  |   |       
|Allowances for doubtful accounts                |  | $                             | 4,202  |                               | $ | 468    |                            |  | $ | (2,618                   | )(a) |  | $ | 2,052 
|Valuation allowance for CRDA investments        |  | $                             | 10,443 |                               | $ | (2,280 | )(c)                       |  | $ | 154                      | (d)  |  | $ | 8,317 

---

|(a) | Write-off uncollectible amounts.
|--- | --------------------------------

|(b) | Includes the write-off of $991 of CRDA Convention Center Hotel Bonds.
|--- | ---------------------------------------------------------------------

|(c) | Includes a $3.0 million credit for CRDA reimbursement.
|--- | ------------------------------------------------------

|(d) | CRDA administration charge related to reimbursement.
|--- | ----------------------------------------------------



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##### Table of Contents

Report of Independent Auditors



Board of Directors

Resorts International Hotel and Casino, Inc.



We have audited the accompanying consolidated balance sheets of Resorts International Hotel and Casino, Inc. (the Company) as of December 31, 2003 and 2002,
and the related consolidated statements of operations, shareholders equity, and cash flows for the years ended December 31, 2003 and 2002 and for the period from April 25, 2001 to December 31, 2001 (post-acquisition period) and the
consolidated statements of operations, cash flows, and shareholders equity of Resorts International Hotel, Inc. (Predecessor) for the period from January 1, 2001 to April 24, 2001 (pre-acquisition period). Our audits also included the
financial statement schedule listed in the Index to Financial Statements. These financial statements and schedule are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements and
schedule based on our audits.



We conducted our audits in accordance with
auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.



In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Resorts International Hotel and Casino, Inc. at December 31, 2003 and 2002,
and the consolidated results of its operations and its cash flows for the years ended December 31, 2003 and 2002 and the period from April 25, 2001 to December 31, 2001 in conformity with accounting principles generally accepted in the United
States. Further, in our opinion, the aforementioned Predecessor consolidated financial statements present fairly, in all material respects, the consolidated results of operations and cash flows of Resorts International Hotel, Inc. for the
pre-acquisition period from January 1, 2001 to April 24, 2001 in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects the information set forth therein.



/s/ ERNST & YOUNG LLP



Philadelphia, Pennsylvania

January 30, 2004, except for Note 15

as to which the date is March 18, 2004



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##### Table of Contents

RESORTS INTERNATIONAL HOTEL AND CASINO, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share amounts)



|                                                                                                                   |  |              |         |      |   |        
|------------------------------------------------------------------------------------------------------------------ |  | ------------ | ------- | ---- | - | -------
|                                                                                                                   |  | December 31,
|                                                                                                                   |  | 2003         |         | 2002
|Assets                                                                                                             |  |              |         |      |   |        
|Current assets                                                                                                     |  |              |         |      |   |        
|Cash and cash equivalents                                                                                          |  | $            | 28,417  |      | $ | 32,989 
|Receivables, net                                                                                                   |  |              | 5,175   |      |   | 5,098  
|Inventories                                                                                                        |  |              | 1,503   |      |   | 1,290  
|Prepaid expenses and other current assets                                                                          |  |              | 2,766   |      |   | 3,338  
|Deferred income taxes                                                                                              |  |              | 4,294   |      |   | 4,374  
|                                                                                                                   |  |              |         |      |   |        
|Total current assets                                                                                               |  |              | 42,155  |      |   | 47,089 
|Property and equipment, net                                                                                        |  |              | 189,609 |      |   | 145,841
|Other assets (including $50,358 and $89,971 of restricted cash and cash equivalents in 2003 and 2002, respectively |  |              | 70,922  |      |   | 116,424
|                                                                                                                   |  |              |         |      |   |        
|Total assets                                                                                                       |  | $            | 302,686 |      | $ | 309,354
|                                                                                                                   |  |              |         |      |   |        
|Liabilities and Shareholders Equity                                                                               |  |              |         |      |   |        
|Current liabilities                                                                                                |  |              |         |      |   |        
|Current maturities of long-term debt                                                                               |  | $            | 846     |      | $ | 1,004  
|Accounts payable                                                                                                   |  |              | 3,390   |      |   | 5,563  
|Accrued interest payable                                                                                           |  |              | 6,038   |      |   | 6,038  
|Accrued expenses and other current liabilities                                                                     |  |              | 16,509  |      |   | 20,778 
|                                                                                                                   |  |              |         |      |   |        
|Total current liabilities                                                                                          |  |              | 26,783  |      |   | 33,383 
|Long-term debt, less current portion                                                                               |  |              | 183,281 |      |   | 183,008
|Deferred income taxes                                                                                              |  |              | 5,591   |      |   | 4,653  
|                                                                                                                   |  |              |         |      |   |        
|Total liabilities                                                                                                  |  |              | 215,655 |      |   | 221,044
|Shareholders equity                                                                                               |  |              |         |      |   |        
|Common stock - $0.01 par value, 10,000 shares authorized issued and outstanding                                    |  |              |        |      |   |       
|Capital in excess of par                                                                                           |  |              | 77,673  |      |   | 77,696 
|Retained earnings                                                                                                  |  |              | 9,358   |      |   | 10,614 
|                                                                                                                   |  |              |         |      |   |        
|Total shareholders equity                                                                                         |  |              | 87,031  |      |   | 88,310 
|                                                                                                                   |  |              |         |      |   |        
|Total liabilities and shareholders equity                                                                         |  | $            | 302,686 |      | $ | 309,354
|                                                                                                                   |  |              |         |      |   |        



See
accompanying notes.



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##### Table of Contents

RESORTS INTERNATIONAL HOTEL AND CASINO, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands)



|                                     |  |                            |         |   |                            |   |         |                                               |  |   |                                             |   |  |   |         |  
|------------------------------------ |  | -------------------------- | ------- | - | -------------------------- | - | ------- | --------------------------------------------- |  | - | ------------------------------------------- | - |  | - | ------- | -
|                                     |  | Year endedDecember 31,2003 |         |   | Year endedDecember 31,2002 |   |         | Period fromApril 25, 2001 to December 31,2001 |  |   | Period from January 1,2001 to April 24,2001 |  
|                                     |  | (Successor)                |         |   | (Successor)                |   |         | (Successor)                                   |  |   | (Predecessor)                               |  
|Revenue:                             |  |                            |         |   |                            |   |         |                                               |  |   |                                             |   |  |   |         |  
|Casino                               |  | $                          | 230,135 |   |                            | $ | 259,208 |                                               |  | $ | 168,687                                     |   |  | $ | 72,417  |  
|Lodging                              |  |                            | 11,163  |   |                            |   | 13,031  |                                               |  |   | 10,083                                      |   |  |   | 3,996   |  
|Food and beverage                    |  |                            | 22,079  |   |                            |   | 24,649  |                                               |  |   | 17,880                                      |   |  |   | 6,977   |  
|Other                                |  |                            | 6,496   |   |                            |   | 6,488   |                                               |  |   | 4,169                                       |   |  |   | 1,523   |  
|Less: promotional allowances         |  |                            | (54,426 | ) |                            |   | (66,664 | )                                             |  |   | (42,564                                     | ) |  |   | (17,995 | )
|                                     |  |                            |         |   |                            |   |         |                                               |  |   |                                             |   |  |   |         |  
|Total net revenue                    |  |                            | 215,447 |   |                            |   | 236,712 |                                               |  |   | 158,255                                     |   |  |   | 66,918  |  
|                                     |  |                            |         |  
|Costs and expenses:                  |  |                            |         |   |                            |   |         |                                               |  |   |                                             |   |  |   |         |  
|Casino                               |  |                            | 117,156 |   |                            |   | 123,616 |                                               |  |   | 84,620                                      |   |  |   | 35,987  |  
|Lodging                              |  |                            | 1,318   |   |                            |   | 1,672   |                                               |  |   | 1,970                                       |   |  |   | 913     |  
|Food and beverage                    |  |                            | 11,721  |   |                            |   | 12,564  |                                               |  |   | 9,228                                       |   |  |   | 3,639   |  
|Other operating                      |  |                            | 25,686  |   |                            |   | 25,557  |                                               |  |   | 16,683                                      |   |  |   | 8,292   |  
|Selling, general, and administrative |  |                            | 30,983  |   |                            |   | 36,769  |                                               |  |   | 21,526                                      |   |  |   | 10,492  |  
|Depreciation and amortization        |  |                            | 9,993   |   |                            |   | 10,160  |                                               |  |   | 5,412                                       |   |  |   | 5,325   |  
|                                     |  |                            |         |   |                            |   |         |                                               |  |   |                                             |   |  |   |         |  
|Total costs and expenses             |  |                            | 196,857 |   |                            |   | 210,338 |                                               |  |   | 139,439                                     |   |  |   | 64,648  |  
|                                     |  |                            |         |  
|Income from operations               |  |                            | 18,590  |   |                            |   | 26,374  |                                               |  |   | 18,816                                      |   |  |   | 2,270   |  
|                                     |  |                            |         |  
|Interest income                      |  |                            | 1,295   |   |                            |   | 1,951   |                                               |  |   | 594                                         |   |  |   | 510     |  
|Interest expense                     |  |                            | (19,133 | ) |                            |   | (19,055 | )                                             |  |   | (6,219                                      | ) |  |   | (7,673  | )
|Other income (expense)               |  |                            | (281    | ) |                            |   | 182     |                                               |  |   | (408                                        | ) |  |   |        |  
|Loss on extinguishment of debt       |  |                            |        |   |                            |   | (3,378  | )                                             |  |   |                                            |   |  |   |        |  
|                                     |  |                            |         |   |                            |   |         |                                               |  |   |                                             |   |  |   |         |  
|Income (loss) before income taxes    |  |                            | 471     |   |                            |   | 6,074   |                                               |  |   | 12,783                                      |   |  |   | (4,893  | )
|                                     |  |                            |         |  
|Provision for income taxes           |  |                            | 1,727   |   |                            |   | 3,197   |                                               |  |   | 5,046                                       |   |  |   |        |  
|                                     |  |                            |         |   |                            |   |         |                                               |  |   |                                             |   |  |   |         |  
|Net income (loss)                    |  | $                          | (1,256  | ) |                            | $ | 2,877   |                                               |  | $ | 7,737                                       |   |  | $ | (4,893  | )
|                                     |  |                            |         |   |                            |   |         |                                               |  |   |                                             |   |  |   |         |  



See
accompanying notes.



49



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##### Table of Contents

RESORTS INTERNATIONAL HOTEL AND CASINO, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)



|                                                                                         |  |                             |         |   |                              |   |          |                                                |  |   |                                              |   |  |   |        |  
|---------------------------------------------------------------------------------------- |  | --------------------------- | ------- | - | ---------------------------- | - | -------- | ---------------------------------------------- |  | - | -------------------------------------------- | - |  | - | ------ | -
|                                                                                         |  | Year ended December 31,2003 |         |   | Year ended December 31, 2002 |   |          | Period from April 25, 2001 to December 31,2001 |  |   | Period from January 1, 2001 to April 24,2001 |  
|                                                                                         |  | (Successor)                 |         |   | (Successor)                  |   |          | (Successor)                                    |  |   | (Predecessor)                                |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                    |  |                             |         |   |                              |   |          |                                                |  |   |                                              |   |  |   |        |  
|Net income (loss)                                                                        |  | $                           | (1,256  | ) |                              | $ | 2,877    |                                                |  | $ | 7,737                                        |   |  | $ | (4,893 | )
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |                             |         |   |                              |   |          |                                                |  |   |                                              |   |  |   |        |  
|Loss on extinguishment of debt                                                           |  |                             |        |   |                              |   | 3,378    |                                                |  |   |                                             |   |  |   |       |  
|Depreciation and amortization                                                            |  |                             | 12,273  |   |                              |   | 9,614    |                                                |  |   | 4,752                                        |   |  |   | 5,038  |  
|Amortization of debt premiums, discounts and issuance costs                              |  |                             | 1,733   |   |                              |   | 1,397    |                                                |  |   | 340                                          |   |  |   | 203    |  
|Provision for doubtful receivables                                                       |  |                             | 468     |   |                              |   | 1,305    |                                                |  |   | 1,038                                        |   |  |   | 517    |  
|Provision for discount on CRDA obligations, net of amortization                          |  |                             | (2,280  | ) |                              |   | 551      |                                                |  |   | 660                                          |   |  |   | 287    |  
|Deferred income tax                                                                      |  |                             | 1,017   |   |                              |   | 1,455    |                                                |  |   | (784                                         | ) |  |   |       |  
|Paid in kind interest on Seller Note                                                     |  |                             |        |   |                              |   |         |                                                |  |   | 518                                          |   |  |   |       |  
|Other                                                                                    |  |                             | 38      |   |                              |   | (182     | )                                              |  |   | 88                                           |   |  |   |       |  
|Changes in operating assets and liabilities:                                             |  |                             |         |   |                              |   |          |                                                |  |   |                                              |   |  |   |        |  
|Net (increase) decrease in receivables                                                   |  |                             | (545    | ) |                              |   | 1,870    |                                                |  |   | (2,407                                       | ) |  |   | 684    |  
|Net (increase) decrease in inventories and prepaid expenses and other current assets     |  |                             | 360     |   |                              |   | (426     | )                                              |  |   | 1,515                                        |   |  |   | (1,600 | )
|Net (increase) decrease in deferred charges and other assets                             |  |                             | (1,309  | ) |                              |   | 1,083    |                                                |  |   | (1,218                                       | ) |  |   | 65     |  
|Net increase (decrease) in accounts payable and accrued expense                          |  |                             | (6,321  | ) |                              |   | (680     | )                                              |  |   | (6,394                                       | ) |  |   | 2,837  |  
|Net increase in interest payable                                                         |  |                             |        |   |                              |   | 4,761    |                                                |  |   |                                             |   |  |   | 5,700  |  
|                                                                                         |  |                             |         |   |                              |   |          |                                                |  |   |                                              |   |  |   |        |  
|Net cash provided by operating activities                                                |  |                             | 4,178   |   |                              |   | 27,003   |                                                |  |   | 5,845                                        |   |  |   | 8,838  |  
|                                                                                         |  |                             |         |   |                              |   |          |                                                |  |   |                                              |   |  |   |        |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                    |  |                             |         |   |                              |   |          |                                                |  |   |                                              |   |  |   |        |  
|Purchases (releases) of cash and cash equivalents  restricted                           |  |                             | 39,613  |   |                              |   | (89,971  | )                                              |  |   |                                             |   |  |   |       |  
|Purchases of property and equipment                                                      |  |                             | (53,490 | ) |                              |   | (21,642  | )                                              |  |   | (11,577                                      | ) |  |   | (1,229 | )
|CRDA deposits                                                                            |  |                             | (3,021  | ) |                              |   | (3,267   | )                                              |  |   | (1,658                                       | ) |  |   | (1,332 | )
|CRDA refunds                                                                             |  |                             | 9,189   |   |                              |   | 1,492    |                                                |  |   |                                             |   |  |   |       |  
|Purchase of RIH, net of cash acquired                                                    |  |                             |        |   |                              |   |         |                                                |  |   | (97,004                                      | ) |  |   |       |  
|                                                                                         |  |                             |         |   |                              |   |          |                                                |  |   |                                              |   |  |   |        |  
|Net cash used in investing activities                                                    |  |                             | (7,709  | ) |                              |   | (113,388 | )                                              |  |   | (110,239                                     | ) |  |   | (2,561 | )
|                                                                                         |  |                             |         |   |                              |   |          |                                                |  |   |                                              |   |  |   |        |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                    |  |                             |         |   |                              |   |          |                                                |  |   |                                              |   |  |   |        |  
|Proceeds of borrowings                                                                   |  |                             |        |   |                              |   | 180,835  |                                                |  |   | 92,084                                       |   |  |   |       |  
|Payments to secure borrowings                                                            |  |                             | (62     | ) |                              |   | (8,432   | )                                              |  |   | (2,810                                       | ) |  |   |       |  
|Capital contribution from Parent                                                         |  |                             |        |   |                              |   | 35,000   |                                                |  |   | 42,500                                       |   |  |   |       |  
|Other                                                                                    |  |                             |        |   |                              |   | 102      |                                                |  |   |                                             |   |  |   |       |  
|Prepayment penalty on long-term debt                                                     |  |                             |        |   |                              |   | (1,094   | )                                              |  |   |                                             |   |  |   |       |  
|Debt repayments                                                                          |  |                             | (979    | ) |                              |   | (102,400 | )                                              |  |   | (12,017                                      | ) |  |   | (234   | )
|                                                                                         |  |                             |         |   |                              |   |          |                                                |  |   |                                              |   |  |   |        |  
|Net cash provided by (used in) financing activities                                      |  |                             | (1,041  | ) |                              |   | 104,011  |                                                |  |   | 119,757                                      |   |  |   | (234   | )
|                                                                                         |  |                             |         |   |                              |   |          |                                                |  |   |                                              |   |  |   |        |  
|Net increase (decrease) in cash and cash equivalents                                     |  |                             | (4,572  | ) |                              |   | 17,626   |                                                |  |   | 15,363                                       |   |  |   | 6,043  |  
|Cash and cash equivalents at beginning of period                                         |  |                             | 32,989  |   |                              |   | 15,363   |                                                |  |   |                                             |   |  |   | 21,453 |  
|                                                                                         |  |                             |         |   |                              |   |          |                                                |  |   |                                              |   |  |   |        |  
|Cash and cash equivalents at end of period                                               |  | $                           | 28,417  |   |                              | $ | 32,989   |                                                |  | $ | 15,363                                       |   |  | $ | 27,496 |  
|                                                                                         |  |                             |         |   |                              |   |          |                                                |  |   |                                              |   |  |   |        |  



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|                                                                |  |   |        |   |  |   |        |  |   |        |  |   |  
|--------------------------------------------------------------- |  | - | ------ | - |  | - | ------ |  | - | ------ |  | - | -
|SUPPLEMENTAL CASH FLOW DISCLOSURES:                             |  |   |        |   |  |   |        |  |   |        |  |   |  
|Cash paid during the period for:                                |  |   |        |   |  |   |        |  |   |        |  |   |  
|Interest                                                        |  | $ | 21,023 |   |  | $ | 13,318 |  | $ | 4,621  |  | $ | 8
|Income taxes paid, net of refunds                               |  |   | (609   | ) |  |   | 4,350  |  |   | 4,525  |  |   | 
|Non-cash investment and financing transactions:                 |  |   |        |   |  |   |        |  |   |        |  |   |  
|Obligations incurred for the purchase of property and equipment |  |   | 645    |   |  |   |       |  |   |       |  |   | 
|Property and equipment acquired under capital lease obligations |  |   |       |   |  |   | 6,530  |  |   | 299    |  |   | 
|Note payable issued in connection with Acquisition              |  |   |       |   |  |   |       |  |   | 17,500 |  |   | 



See
accompanying notes.





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RESORTS INTERNATIONAL HOTEL AND CASINO, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY

(Dollars in thousands)



|                                                                      |  |              |       |                         |   |         |                                      |  |   |                                     |   |  |                          |      |   |  |   |        |  
|--------------------------------------------------------------------- |  | ------------ | ----- | ----------------------- | - | ------- | ------------------------------------ |  | - | ----------------------------------- | - |  | ------------------------ | ---- | - |  | - | ------ | -
|                                                                      |  | Common Stock |       | Capital inExcess of Par |   |         | RetainedEarningsAccumulated(Deficit) |  |   | AccumulatedOtherComprehensiveIncome |   |  | TotalShareholdersEquity |     
|PREDECESSOR:                                                          |  |              |       |                         |   |         |                                      |  |   |                                     |   |  |                          |      |   |  |   |        |  
|Balance at December 31, 2000                                          |  | $            | 1,000 |                         | $ | 123,660 |                                      |  | $ | (67,165                             | ) |  | $                        |     |   |  | $ | 57,495 |  
|Net loss for the period from January 1, 2001 to April 24, 2001        |  |              |      |                         |   |        |                                      |  |   | (4,893                              | ) |  |                          |     |   |  |   | (4,893 | )
|                                                                      |  |              |       |                         |   |         |                                      |  |   |                                     |   |  |                          |      |   |  |   |        |  
|Balance at April 24, 2001                                             |  | $            | 1,000 |                         | $ | 123,660 |                                      |  | $ | (72,058                             | ) |  | $                        |     |   |  | $ | 52,602 |  
|                                                                      |  |              |       |                         |   |         |                                      |  |   |                                     |   |  |                          |      |   |  |   |        |  
|SUCCESSOR:                                                            |  |              |       |                         |   |         |                                      |  |   |                                     |   |  |                          |      |   |  |   |        |  
|Capital contribution                                                  |  | $            |      |                         | $ | 42,500  |                                      |  | $ |                                    |   |  | $                        |     |   |  | $ | 42,500 |  
|Stock options granted to employees and consultants                    |  |              |      |                         |   | 379     |                                      |  |   |                                    |   |  |                          |     |   |  |   | 379    |  
|Net income from April 25, 2001 to December 31, 2001                   |  |              |      |                         |   |        |                                      |  |   | 7,737                               |   |  |                          |     |   |  |   | 7,737  |  
|Increase in fair value of hedges                                      |  |              |      |                         |   |        |                                      |  |   |                                    |   |  |                          | 151  |   |  |   | 151    |  
|                                                                      |  |              |       |                         |   |         |                                      |  |   |                                     |   |  |                          |      |   |  |   |        |  
|Comprehensive income                                                  |  |              |      |                         |   |        |                                      |  |   |                                    |   |  |                          |     |   |  |   | 7,888  |  
|                                                                      |  |              |       |                         |   |         |                                      |  |   |                                     |   |  |                          |      |   |  |   |        |  
|Balance at December 31, 2001                                          |  |              |      |                         |   | 42,879  |                                      |  |   | 7,737                               |   |  |                          | 151  |   |  |   | 50,767 |  
|                                                                      |  |              |       |                         |   |         |                                      |  |   |                                     |   |  |                          |      |   |  |   |        |  
|Capital contribution                                                  |  |              |      |                         |   | 35,000  |                                      |  |   |                                    |   |  |                          |     |   |  |   | 35,000 |  
|Change in value of stock options granted to employees and consultants |  |              |      |                         |   | (183    | )                                    |  |   |                                    |   |  |                          |     |   |  |   | (183   | )
|Net income                                                            |  |              |      |                         |   |        |                                      |  |   | 2,877                               |   |  |                          |     |   |  |   | 2,877  |  
|Termination of fair value hedge                                       |  |              |      |                         |   |        |                                      |  |   |                                    |   |  |                          | (151 | ) |  |   | (151   | )
|                                                                      |  |              |       |                         |   |         |                                      |  |   |                                     |   |  |                          |      |   |  |   |        |  
|Comprehensive income                                                  |  |              |      |                         |   |        |                                      |  |   |                                    |   |  |                          |     |   |  |   | 2,726  |  
|                                                                      |  |              |       |                         |   |         |                                      |  |   |                                     |   |  |                          |      |   |  |   |        |  
|Balance at December 31, 2002                                          |  |              |      |                         |   | 77,696  |                                      |  |   | 10,614                              |   |  |                          |     |   |  |   | 88,310 |  
|                                                                      |  |              |       |                         |   |         |                                      |  |   |                                     |   |  |                          |      |   |  |   |        |  
|Change in value of stock options granted to employees and consultants |  |              |      |                         |   | (23     | )                                    |  |   |                                    |   |  |                          |     |   |  |   | (23    | )
|Net loss                                                              |  |              |      |                         |   |        |                                      |  |   | (1,256                              | ) |  |                          |     |   |  |   | (1,256 | )
|                                                                      |  |              |       |                         |   |         |                                      |  |   |                                     |   |  |                          |      |   |  |   |        |  
|Balance at December 31, 2003                                          |  | $            |      |                         | $ | 77,673  |                                      |  | $ | 9,358                               |   |  | $                        |     |   |  | $ | 87,031 |  
|                                                                      |  |              |       |                         |   |         |                                      |  |   |                                     |   |  |                          |      |   |  |   |        |  



See
accompanying notes.



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RESORTS INTERNATIONAL HOTEL AND CASINO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



1. Basis of Presentation and Consolidation



Colony RIH Holdings, Inc., a Delaware corporation (CRH, the
Company, or the Successor), owns 100% of the outstanding common stock of Resorts International Hotel and Casino, Inc., a Delaware corporation (RIHC). RIHC, through its wholly-owned subsidiary, Resorts
International Hotel, Inc., a New Jersey corporation (RIH, or the Predecessor), owns and operates Resorts Atlantic City, a casino/hotel located in Atlantic City, NJ. Colony RIH Holdings, Inc, Resorts International Hotel and
Casino, Inc. and Resorts International Hotels, Inc. are referred to collectively as The Companies.



CRH was formed at the direction of Colony Investors IV, L.P. (Colony IV), a Delaware limited partnership, under the laws of the State of
Delaware on March 7, 2001. RIHC was formed at the direction of Colony IV on October 24, 2000.



RIHC, Kerzner International North America, Inc., a Delaware corporation (KINA), formerly Sun International North America, Inc., and GGRI, Inc., a Delaware corporation (GGRI), entered into a
purchase agreement, dated October 30, 2000, as amended (the Purchase Agreement). Pursuant to the Purchase Agreement, RIHC acquired all of the capital stock of RIH, the Warehouse Assets (as defined in the Purchase Agreement) and all of
the capital stock of New Pier Operating Company, Inc. (New Pier), a New Jersey corporation (collectively, the Acquisition) on April 25, 2001 for approximately $144.8 million.



The consolidated financial statements include the accounts of RIHC and its
wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. The Predecessors financial statements include the accounts of RIH.



2. Summary of Significant Accounting Policies



Use of Estimates



The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.



Allowances for doubtful accounts arising from casino, hotel and other services, are based upon a specific review of certain outstanding receivables. In
determining the amounts of the allowances, certain estimates and assumptions are made, and actual results may differ from those assumptions.



Cash Equivalents



Short-term money market securities purchased with original maturities of three months or less are considered to be cash equivalents. These securities are
classified as available-for-sale, which are carried at fair value with unrealized gains and losses, net of tax, reported in other comprehensive income. The carrying value of cash equivalents approximates fair value due to the short-term maturity of
these instruments.



Inventories



Inventories of provisions, supplies and spare parts are valued at the lower
of cost (first-in, first-out) or market.



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2. Summary of Significant Accounting Policies (continued)



Property and Equipment



Property and equipment are stated at cost and are depreciated over their estimated useful lives reported below using the
straight-line method. Interest costs incurred during the construction period are capitalized in accordance with Statement of Financial Accounting Standards No. 34, Capitalization of Interest Costs. Interest cost of $3.6 million and
$429,000 was capitalized for the years ended December 31, 2003 and 2002, respectively.



|                                 |  |              
|-------------------------------- |  | -------------
|Hotels and other buildings       |  | 35  40 years
|Furniture fixtures and equipment |  | 2  5 years  



The provisions of SFAS
No. 144 Accounting for the Impairment or Disposal of Long- Lived Assets requires, among other things, that an entity review its long-lived assets and certain intangibles for impairment whenever changes in circumstances indicate that the
carrying amount of an asset may not be fully recoverable. SFAS No. 144 requires an impairment loss to be recognized only if the carrying amounts of long-lived assets to be held and used are not recoverable from their expected undiscounted future
cash flows. There was no impairment recognized for the periods presented.



Goodwill



Goodwill for the Predecessor was
amortized on a straight-line basis over 40 years. Amortization of goodwill included in the accompanying statements of operations amounted to $836,000 in the 2001 Predecessor period.



Income Taxes



Prior to the Acquisition discussed in Note 1, RIHs taxable income (loss) was included in the consolidated Federal income tax returns of KINA.
Although RIH was a member of a consolidated group for Federal income tax purposes, RIH calculated its income tax provision on a separate return basis for financial reporting purposes.



CRH follows the provisions of SFAS No. 109, Accounting for Income Taxes. Accordingly, deferred tax assets and
liabilities are calculated as the difference between the financial statement carrying amounts and tax bases of assets and liabilities. These differences are affected by the tax rate for the year in which they are expected to be recovered or settled.
A valuation allowance is recognized, if necessary, to account for the likelihood that these differences will not be realized in the future. Note 12 further addresses the components of the deferred tax assets and liabilities.



Revenue Recognition



Gaming revenue is recorded as the net win from gaming activities, which represents the difference between amounts wagered
and amounts won by patrons. Revenues from hotel and related services and from theater ticket sales are recognized at the time the related service is performed.



Promotional Allowances



The retail value of hotel accommodations, food, beverage and other services provided to customers without charge is included in gross revenues and
deducted as promotional allowances. The estimated departmental costs of providing such promotional allowances are included in gaming costs and expenses as follows (in thousands):



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2. Summary of Significant Accounting Policies (continued)



|                        |  |                         |        |                                              |   |                                             |  |               |        |  |   |      
|----------------------- |  | ----------------------- | ------ | -------------------------------------------- | - | ------------------------------------------- |  | ------------- | ------ |  | - | -----
|                        |  | Year ended December 31, |        | Period from April 25,2001 toDecember 31,2001 |   | Period fromJanuary 1, 2001 to April 24,2001
|                        |  | 2003                    |        | 2002                                         |   |                                            
|                        |  | (Successor)             |        | (Successor)                                  |   | (Successor)                                 |  | (Predecessor)
|Rooms                   |  | $                       | 10,363 |                                              | $ | 10,277                                      |  | $             | 6,646  |  | $ | 2,760
|Food and beverage       |  |                         | 15,729 |                                              |   | 16,386                                      |  |               | 11,355 |  |   | 4,823
|Entertainment and other |  |                         | 3,390  |                                              |   | 3,224                                       |  |               | 2,084  |  |   | 949  
|                        |  |                         |        |                                              |   |                                             |  |               |        |  |   |      
|                        |  | $                       | 29,482 |                                              | $ | 29,887                                      |  | $             | 20,085 |  | $ | 8,532
|                        |  |                         |        |                                              |   |                                             |  |               |        |  |   |      



Cash discounts based
upon a negotiated amount with each customer are recognized as a promotional allowance on the date the related revenues is recorded. Cash-back awards given to a customer based upon earning points for future awards are accrued as the customer earns
the points. The amount is recorded as a promotional allowance in the statement of operations. When estimating the amount of the accrual, the Company calculates a redemption rate based on historical redemption rates.



The Company offers other incentive programs. These are gifts and other
promotional items, the type and distribution of which is determined by management. Since these awards are not cash awards, the Company records them as gaming expenses in the statement of operations. Such amounts are expensed on the date the award
can be utilized by the customer.



Stock Based Compensation



The Companies have elected to follow Accounting Principles Board Number
25, Accounting For Stock Issued to Employees, and related interpretations in accounting for employee stock options. The effect of applying the fair value method proscribed by Financial Accounting Standards Board Statement Number 123
would result in net income that is not materially different from the amount reported in the accompanying statement of operations. Pro forma results of operations may not be representative of the effects on pro forma results of operations for future
periods.



Equity instruments issued to non-employees in
exchange for goods or services are accounted for using the fair value method and expense is recorded based on the value determined.



New Accounting Pronouncements



Effective January 1, 2003, the Company adopted the Financial Accounting Standards Boards (FASB) interpretation No. 45,
Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, an Interpretation of FASB Statement No. 5, 57 and 107 and Rescission of FASB Interpretation No. 34
(FIN 45). The interpretation requires that upon issuance of a guarantee, the entity must recognize a liability for the fair value of the obligation it assumes under the guarantee. In addition, FIN 45 requires disclosures about the
guarantee that an entity has issued, including a roll-forward of the entitys product warranty liabilities. This interpretation is intended to improve the comparability of financial reporting by requiring identical accounting for guarantees
issued with separately identified consideration and guarantees issued without separately identified consideration. Adoption of this interpretation had no material impact on the Companys consolidated financial position, consolidated results of
operation, or liquidity.



In January 2003, the FASB issued
interpretation No. 46 (FIN 46), Consolidation of Variable Interest Entities, an interpretation of ARB 51. The primary objectives of this interpretation are to provide guidance on the identification of entities for which
control is achieved through means other than through voting rights (variable interest entities) and how to determine when and which business enterprise ( the primary beneficiary) should consolidate the variable interest
entity. This new model for consolidation applies to an entity which either (i) the equity investors (if any) do not have a controlling financial interest; or (ii) the equity investment at risk is insufficient to finance that entitys activities
without receiving additional subordinated financial support form other parties. In addition, FIN 46 requires that the primary beneficiary, as well as all other



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2. Summary of Significant Accounting Policies (continued)



enterprises with a significant variable interest in a variable interest entity, make
additional disclosures. Certain disclosure requirements of FIN 46 were effective for financial statements issued after January 31, 2003. In December 2003, The FASB issued FIN 46 (revised December 2003), Consolidation of Variable Interest
Entities (FIN 46-R) to address certain FIN 46 implementation issues. The effective dates and impact of FIN 46 and FIN 46-R are as follows: (i) Special-purpose entities (SPEs) created prior to February 1, 2003- the
company must apply either the provision of FIN 46 or early adopt the provisions of FIN 46-R at the end of the first interim or annual reporting period ending after December 15, 2003. (ii) Non-SPEs created prior to February 1, 2003- the company is
required to adopt FIN 46-R at the end of the first interim or annual reporting period ending after March 15, 2004. (iii) All entities, regardless of whether an SPE, that were created subsequent to January 31, 2003- the provisions of FIN 46 were
applicable for variable interests in entities obtained after January 31, 2003. The adoption of the provisions applicable to SPEs and all other variable interests obtained after January 31, 2003 did not have a material impact on the Companys
consolidated financial position, consolidated results of operations, or liquidity. The Company is currently evaluating the impact of adopting FIN 46-R applicable to non-SPEs created prior to February 1, 2003 but does not expect a material impact.



3. Acquisition



RIHC, KINA, and GGRI entered into the Purchase Agreement on October 30,
2000. Pursuant to the Purchase Agreement, RIHC acquired all of the capital stock of RIH, the Warehouse Assets (as defined in the Purchase Agreement) and all of the capital stock of New Pier Operating Company, Inc., a New Jersey corporation
(collectively, the Acquisition) on April 25, 2001 for approximately $144.8 million.



The Acquisition has been accounted for using the purchase method, and accordingly, the aggregate purchase price, including transaction fees and expenses,
has been allocated based on the estimated fair value of the assets acquired and liabilities assumed. As a result, the consolidated financial statements for the period subsequent to the Acquisition are presented on a different basis of accounting
than those for the periods prior to the Acquisition and, therefore, are not directly comparable.



CRH financed the Acquisition and paid related fees and expenses with: (i) proceeds of $42.5 million from the issuance of common stock, (ii) a $17.5
million note issued by CRH to KINA (the Seller Note), (iii) borrowings by RIHC, guaranteed by CRH under a $90 million credit agreement (the Credit Facility) and (iv) RIHs available cash.



Prior to the Acquisition, neither CRH nor RIHC conducted any business other
than in connection with the Purchase Agreement and the Credit Facility.



In connection with the Acquisition for approximately $144.8 million, CRH acquired assets with a fair value of $173.9 million and assumed liabilities of $29.1 million.



The pro forma unaudited results of operations for the year ended December 31, 2001, assuming consummation of the Acquisition
and issuance of CRHs common stock, Seller Note and Credit Facility as of the beginning of 2001 is as follows (in thousands):



|                   |  |                            |        
|------------------ |  | -------------------------- | -------
|                   |  | Year endedDecember 31,2001
|Total net revenues |  | $                          | 225,173
|Net income         |  | $                          | 8,616  



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4. Receivables



Components of receivables were as follows at December 31 (in thousands):



|                                      |  |      |        |   |      |   |        |  
|------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|                                      |  | 2003 |        |   | 2002 |  
|Gaming                                |  | $    | 5,733  |   |      | $ | 8,135  |  
|Less: allowance for doubtful accounts |  |      | (2,010 | ) |      |   | (4,161 | )
|                                      |  |      |        |   |      |   |        |  
|                                      |  |      | 3,723  |   |      |   | 3,974  |  
|Non-gaming:                           |  |      |        |   |      |   |        |  
|Hotel and related                     |  |      | 320    |   |      |   | 282    |  
|Other                                 |  |      | 1,173  |   |      |   | 883    |  
|                                      |  |      |        |   |      |   |        |  
|                                      |  |      | 1,493  |   |      |   | 1,165  |  
|Less: allowance for doubtful accounts |  |      | (41    | ) |      |   | (41    | )
|                                      |  |      |        |   |      |   |        |  
|                                      |  |      | 1,452  |   |      |   | 1,124  |  
|                                      |  |      |        |   |      |   |        |  
|Receivables, net                      |  | $    | 5,175  |   |      | $ | 5,098  |  
|                                      |  |      |        |   |      |   |        |  



5. Property and Equipment



Components of property and equipment were as follows at
December 31 (in thousands):



|                                  |  |      |         |   |      |   |         |  
|--------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                  |  | 2003 |         |   | 2002 |  
|Land and land rights              |  | $    | 34,698  |   |      | $ | 34,698  |  
|Hotels and other buildings        |  |      | 80,125  |   |      |   | 79,038  |  
|Furniture, fixtures and equipment |  |      | 39,091  |   |      |   | 30,435  |  
|Construction in progress          |  |      | 58,816  |   |      |   | 14,604  |  
|                                  |  |      |         |   |      |   |         |  
|                                  |  |      | 212,730 |   |      |   | 158,775 |  
|Less: accumulated depreciation    |  |      | (23,121 | ) |      |   | (12,934 | )
|                                  |  |      |         |   |      |   |         |  
|Net property and equipment        |  | $    | 189,609 |   |      | $ | 145,841 |  
|                                  |  |      |         |   |      |   |         |  



6. Other Assets



Components of deferred charges and other assets were as follows at December
31 (in thousands):



|                                                |  |      |        |      |   |        
|----------------------------------------------- |  | ---- | ------ | ---- | - | -------
|                                                |  | 2003 |        | 2002
|CRDA deposits, bonds and other investments, net |  | $    | 12,356 |      | $ | 18,530 
|Debt issuance costs, net                        |  |      | 6,299  |      |   | 7,521  
|Other                                           |  |      | 1,909  |      |   | 402    
|Restricted cash                                 |  |      | 50,358 |      |   | 89,971 
|                                                |  |      |        |      |   |        
|                                                |  | $    | 70,922 |      | $ | 116,424
|                                                |  |      |        |      |   |        



The New Jersey Casino
Control Act, as amended, requires RIH to purchase bonds issued by the Casino Reinvestment Development Authority (CRDA) or make other investments authorized by the CRDA, in an amount equal to 1.25% of RIHs gross gaming revenue, as defined.



The CRDA bonds have interest rates ranging from 3.5% to 7.0%
and have repayment terms of between 20 and 50 years. RIH records charges to expense to reflect the below-market interest rate payable on the bonds it may have to purchase to fulfill its investment obligation at the date the obligation arises. The
charges (credits) for the years 2003 and 2002, for the period from April 25, 2001 to December 31, 2001, and the period from January 1, 2001 to April 24, 2001 for discounts on obligations arising in those years were ($2,280,000), $547,000, $660,000
and $287,000, respectively. The current year credit is due to the reversal of approximately



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6. Other Assets (continued)



$3.0 million of amortization expense related to discounts on funds previously deposited with the CRDA in below-market bearing instruments.
This reversal resulted from the receipt from the CRDA of $9,189,000 of previously deposited funds as reimbursement

for costs incurred for the construction
of a new hotel tower. The discount on CRDA bonds purchased is amortized to interest income over the life of the bonds using the effective interest method.



From time to time RIH has donated certain funds it has had on deposit with the CRDA in return for either relief from its obligation to purchase CRDA bonds
or credits against future CRDA deposits. At December 31, 2002, RIH owned $7,165,000 face value of bonds issued by the CRDA and had $6,129,000 on deposit with the CRDA. The majority of RIHs deposits have been pledged for specific project.



Debt issuance costs consist of amounts incurred in connection
with obtaining long-term debt. The costs are amortized on a straight-line basis over the contractual life of the loan and amortization of such costs is included in interest expense.



Restricted cash represents funds received from the issuance of the First Mortgage Notes (see Note 9), which were deposited
into a construction disbursement account for use for construction of the new hotel tower.



7. Accrued Expenses and Other Current Liabilities



Components of accrued expenses and other current liabilities were as follows at December 31 (in thousands):



|                                         |  |      |        |      |   |       
|---------------------------------------- |  | ---- | ------ | ---- | - | ------
|                                         |  | 2003 |        | 2002
|Insurance and related costs              |  | $    | 1,720  |      | $ | 1,623 
|Payroll                                  |  |      | 6,496  |      |   | 9,293 
|Unredeemed chip liability                |  |      | 1,178  |      |   | 1,024 
|Liability for unredeemed cash incentives |  |      | 2,058  |      |   | 2,538 
|Other                                    |  |      | 5,057  |      |   | 6,300 
|                                         |  |      |        |      |   |       
|                                         |  | $    | 16,509 |      | $ | 20,778
|                                         |  |      |        |      |   |       



8. Notes Payable to Affiliates



In conjunction with the Acquisition, CRH issued a $17.5
million note to KINA (the Seller Note). The Seller Note was subordinated to the term loans under the Credit Facility and had a 7-year term. This loan had interest at 12.5% per annum of which 6.25% was payable in cash and 6.25% was paid
in kind. There was no amortization of principal on this loan. The Seller Note was repaid on March 22, 2002, with the proceeds from the sale of the First Mortgage Notes. In conjunction with the Acquisition, CRH issued a note to RIHC with terms that
mirror the Seller Note.



9. Long-Term Debt



Long-term debt is summarized as follows at December 31 (in thousands):



|                                                  |  |      |         |      |   |        
|------------------------------------------------- |  | ---- | ------- | ---- | - | -------
|                                                  |  | 2003 |         | 2002
|First Mortgage Notes, net of unamortized discount |  | $    | 176,599 |      | $ | 176,151
|Thermal Energy capital lease                      |  |      | 6,474   |      |   | 6,562  
|Other notes payable                               |  |      | 1,054   |      |   | 1,299  
|                                                  |  |      |         |      |   |        
|                                                  |  |      | 184,127 |      |   | 184,012
|Less: current portion                             |  |      | 846     |      |   | 1,004  
|                                                  |  |      |         |      |   |        
|                                                  |  | $    | 183,281 |      | $ | 183,008
|                                                  |  |      |         |      |   |        



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9. Long-Term Debt (continued)



On March 22, 2002, RIHC sold $180.0 million aggregate principal amount of First Mortgage Notes (the First Mortgage
Notes) at a price of 97.686% yielding $175.8 million. Interest on the First Mortgage Notes is payable on March 15 and September 15 of each year, and the First Mortgage Notes are due in full on March 15, 2009.



The First Mortgage Notes contain certain covenants that, among other things,
will limit RIHCs ability and the ability of its subsidiaries to pay dividends on, redeem or repurchase its or their capital stock, make investments, incur additional indebtedness, permit payment of or restrict dividends by certain of its
subsidiaries, enter into sale leaseback transactions, sell assets, guarantee indebtedness, create certain liens, engage in transactions with affiliates, and consolidate, merge or transfer all or substantially all our assets and the assets of its
subsidiaries on a consolidated basis.



In June 2002, RIH
entered into a Thermal Energy Services Agreement (the Thermal Agreement). The initial term of the Thermal Agreement is 20 years, renewable at RIHs option for two additional five-year terms. The Thermal Agreement has three
components: a monthly charge for operation and maintenance of the thermal energy facilities; a capital lease component for capital improvements whose value was estimated at $6.5 million on the date the Thermal Agreement was executed, and; a usage
fee for steam and chilled water, whose usage and rate will vary by month of the year. The outstanding balance of the capital lease was $6.5 million at December 31, 2003.



In June 2002, RIH entered into a Restated Loan and Security Agreement, as amended, with CIT Group/Equipment Financing, Inc
(CIT Facility). The CIT Facility permits RIH to borrow up to $20 million for the purchase of machinery, furniture, or equipment. Loans pursuant to the CIT Facility are repayable in up to a sixty- month amortization period from the date
the loan is made. Interest on outstanding loans bear interest at the rate of LIBOR plus three and one-half percent. RIH is required to pay an annual fee equal to one-half percent of the unused portion of the CIT Facility. The outstanding balance due
to CIT at December 31, 2003 was $1.1 million.



In November
2002, RIH entered into a Loan and Security Agreement with Commerce Bank, N.A (Commerce Facility). The Commerce Facility provides for working capital borrowings and letters of credit up to $10 million. The Commerce Facility expires on
December 31, 2004. There was no outstanding balance on the Commerce Facility at December 31, 2003.



In conjunction with the Acquisition, RIHC borrowed $82.0 million under an Amended and Restated Credit Agreement, dated April 25, 2001, from the lenders
named therein. The Credit Facility was comprised of $80.0 million in term loans and a $10.0 million revolving credit facility. Principal payments on the term loans were due quarterly, commencing on June 29, 2001. Interest on borrowings outstanding
was either at LIBOR or an alternative base rate, plus an applicable margin in each case. The outstanding balance on the Credit Facility was repaid on March 22, 2002, with the proceeds from the sale of the First Mortgage Notes. Additionally, RIHC
terminated its existing interest rate collar agreements.



In
connection with the repayment of the Credit Facility and the Seller Note, RIHC recorded a loss on extinguishment of debt, of $3,378,000 related to pre-payment penalties and the write-off of deferred financing costs associated with the Credit
Facility.



10. Related Party Transactions



For the year ended December 31, 2003 and 2002, the Company incurred expenses
of approximately $105,000 and $527,000, respectively, for fees and expenses incurred by affiliates of Colony Capital, the Companys principal shareholder, and the Companys directors.



11. Retirement Plans



RIH has a defined contribution plan in which substantially all non-union employees are eligible to participate. Employees of
certain other affiliated companies are also eligible to participate in this plan. Contributions are made to the plan based on a percentage of eligible employee contributions. Contribution expense for this plan was $609,000, $682,000, $436,000, and
$209,000 for the years ended December 31, 2003 and 2002, the period from April 25, 2001 to December 31, 2001, and the period from January 1, 2001 to April 24, 2001, respectively.



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11. Retirement Plans (continued)



Union employees are covered by various multi-employer pension plans to which contributions are made by RIH and other
unrelated employers. RIHs pension expense for these plans was $1,709,000, $1,665,000, $1,009,000, and $437,000 for the years ended December 31, 2003 and 2002, for the period from April 25, 2001 to December 31, 2001, and the period from January
1, 2001 to April 24, 2001, respectively.



12. Income Taxes



Income tax expense is comprised of the following for the period ended
December 31 (in thousands):



|          |  |      |       |   |      |   |       |  |   |       |  
|--------- |  | ---- | ----- | - | ---- | - | ----- |  | - | ----- | -
|          |  | 2003 |       |   | 2002 |   | 2001  | 
|Current:  |  |      |       |   |      |   |       |  |   |       |  
|Federal   |  | $    | (369  | ) |      | $ | 795   |  | $ | 5,830 |  
|State     |  |      | 1,079 |   |      |   | 947   |  |   |      |  
|          |  |      |       |   |      |   |       |  |   |       |  
|          |  |      | 710   |   |      |   | 1,742 |  |   | 5,830 |  
|Deferred: |  |      |       |   |      |   |       |  |   |       |  
|Federal   |  |      | 1,017 |   |      |   | 1,455 |  |   | (784  | )
|State     |  |      |      |   |      |   |      |  |   |      |  
|          |  |      |       |   |      |   |       |  |   |       |  
|          |  |      | 1,017 |   |      |   | 1,455 |  |   | (784  | )
|          |  |      |       |   |      |   |       |  |   |       |  
|          |  | $    | 1,727 |   |      | $ | 3,197 |  | $ | 5,046 |  
|          |  |      |       |   |      |   |       |  |   |       |  



The components of the
deferred tax assets and liabilities were as follows at December 31 (in thousands):



|                                                |  |      |        |   |      |   |        |  
|----------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|                                                |  | 2003 |        |   | 2002 |  
|Deferred tax liabilities:                       |  |      |        |   |      |   |        |  
|Basis differences on property and equipment     |  | $    | (5,033 | ) |      | $ | (3,702 | )
|Other                                           |  |      | (1,564 | ) |      |   | (1,809 | )
|                                                |  |      |        |   |      |   |        |  
|Total deferred tax liabilities                  |  |      | (6,597 | ) |      |   | (5,511 | )
|Deferred tax assets:                            |  |      |        |   |      |   |        |  
|NOL and capital loss carryforwards              |  |      | 8,477  |   |      |   | 8,477  |  
|Book reserves not yet deductible for tax        |  |      | 3,190  |   |      |   | 3,823  |  
|Tax credit carryforwards                        |  |      | 441    |   |      |   | 73     |  
|Other                                           |  |      | 1,832  |   |      |   | 1,361  |  
|                                                |  |      |        |   |      |   |        |  
|Total deferred tax assets                       |  |      | 13,940 |   |      |   | 13,734 |  
|Valuation allowance for deferred tax assets     |  |      | (8,640 | ) |      |   | (8,503 | )
|                                                |  |      |        |   |      |   |        |  
|Deferred tax assets, net of valuation allowance |  |      | 5,300  |   |      |   | 5,231  |  
|                                                |  |      |        |   |      |   |        |  
|Net deferred tax liabilities                    |  | $    | (1,297 | ) |      | $ | (280   | )
|                                                |  |      |        |   |      |   |        |  



The effective income
tax rate varies from the statutory Federal income tax rate as a result of the following factors (in thousands):



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12. Income Taxes (continued)



|                                                                                      |  |                         |   |  |                                              |   |  |                                            |    |  |               |   
|------------------------------------------------------------------------------------- |  | ----------------------- | - |  | -------------------------------------------- | - |  | ------------------------------------------ | -- |  | ------------- | --
|                                                                                      |  | Year ended December 31, |   |  | Period fromApril 25, 2001to December 31,2001 |   |  | Period fromJanuary 1, 2001to April 24,2001 |   
|                                                                                      |  | 2003                    |   |  | 2002                                         |   |  |                                           
|                                                                                      |  | (Successor)             |   |  | (Successor)                                  |   |  | (Successor)                                |    |  | (Predecessor) |   
|Statutory Federal income tax rate                                                     |  | 34.0                    | % |  | 34.0                                         | % |  | 35.0                                       | %  |  | 35.0          | % 
|NOL and temporary differences for which no taxes were provided or benefits recognized |  |                        |   |  |                                             |   |  |                                           |    |  | (25.6         | )%
|State taxes, net of federal benefit                                                   |  | 151.3                   | % |  | 10.3                                         | % |  |                                           |    |  |              |   
|Non-deductible provisions and expenses                                                |  | 181.7                   | % |  | 8.3                                          | % |  | (4.5                                       | )% |  | (9.4          | )%
|                                                                                      |  |                         |   |  |                                              |   |  |                                            |    |  |               |   
|Effective tax rate                                                                    |  | 367.0                   | % |  | 52.6                                         | % |  | 39.5                                       | %  |  | 0.0           | % 
|                                                                                      |  |                         |   |  |                                              |   |  |                                            |    |  |               |   



On June 30, 2003, the
State of New Jersey amended the New Jersey Casino Control Act, effective July 1, 2003, to impose or increase certain taxes and fees, including a tax at the rate of 7.5% on the adjusted net income of casino licensees in calendar year 2002, payable in
the states fiscal years 2004 though 2006. The amount of this tax for each licensee is limited to a maximum of $10.0 million annually and a minimum of $350,000 annually. For the year ended December 31, 2003, the company recorded a provision of
$175,000 for this tax.



On July 3, 2002, the State of New
Jersey passed the New Jersey Business Tax Reform Act which, among other things, requires the suspension of the use of the New Jersey net operating loss carryforwards for two years and the introduction of a new alternative minimum amount under the
New Jersey corporate business tax based on gross receipts or gross profits, as defined. The Tax Act was retroactive to January 1, 2002. In accordance with the Tax Act, the Company recorded a provision for current income tax of $712,000, net of
federal benefit, for the year ended December 31, 2003.



At
December 31, 2003, the Company has a state net operating loss carryforward of approximately $144.9 million. The carryforward will expire as follows: 2005, $32.8 million; 2006, $2.4 million; 2007, $40.2 million; 2008, $20.7 million; and 2009, $48.8
million. The Company has reported a full valuation allowance against the carryforward because it does not expect to realize the tax benefit.



13. Common Stock and Stock Based Compensation



In connection with the acquisition discussed in Note 3, CRH established the 2001 Omnibus Stock Incentive Plan (the Plan). Awards denominated
or payable in shares or options to purchase shares of CRHs common stock may be granted to officers and other key employees and consultants of CRH and its subsidiaries. The Plan permits the granting of up to 2,131 shares of Class A Common Stock
and 43,122 shares of Class B Common Stock. The Board of Directors has sole discretion concerning administration of the Plan, including the determination of award goals, individuals to receive awards, types of awards, the terms and conditions of the
awards, and the time at which awards will be granted. The Board of Directors may terminate the Plan at any time.



The exercise price for awards issued under the Plan is determined by the Board of Directors and is generally equal to the fair market value of the
underlying common stock at the date of the grant. During the period from April 25, 2001 to December 31, 2001, the Company granted 1,789 options to purchase Class A common shares and 36,204 options to purchase Class B common shares. All of the Class
A options were granted with an exercise price of $.0475 per share and all of the Class B common shares were granted with an exercise price of $100.00 per share. These exercise prices were determined to be the fair market value of the common stock on
the date of grant.



Of the options granted during the period
ended December 31, 2001, 555 options to purchase Class A common shares and 11,188 options to purchase Class B common shares were granted to an independent contractor and were immediately vested as a part of the closing of the Acquisition. The fair
value of these options was approximately $291,000 on the Acquisition date, and this amount has been recorded as a part of the cost of the Acquisition.



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13. Common Stock and Stock Based Compensation (continued)



An additional 550 options to purchase Class A common shares and 11,180
options to purchase Class B common shares were also issued to an independent contractor on the Acquisition date. A portion of these options (275 Class A and 5,590 Class B) vest in equal installments (55 Class A and 1,118 Class B) from April 2002 to
April 2006, and a portion of these options (275 Class A and 5,590 Class B) vest upon the Company meeting specified performance targets. All of these options may be put back to the Company or called by the Company in certain circumstances as defined
in the agreement; accordingly, for financial accounting purposes, these awards are re-measured at the end of each reporting period using the fair value method and changes in fair value are recorded as compensation expense until the options are
exercised.



The remaining Class A options (684) and Class B
options (13,836) were granted to employees during the period from April 25, 2001 to December 31, 2001. As of December 31, 2002, there were 684 Class A and 13,836 Class B options outstanding of which 274 Class A and 5,534 Class B options had vested
and were exercisable. During the year ended December 31, 2003, 325 Class A options and 6,571 Class B options were forfeited and 77 Class A options and 1,556 Class B options were granted. As of December 31, 2003, 436 Class A options and 8,821 Class B
options were outstanding, of which 174 Class A options and 3,528 Class B options have vested and are currently exercisable. All of these options may be called by the Company in certain circumstances as defined in the agreement. For financial
accounting purposes, these awards are re-measured at the end of each reporting period using the intrinsic value method and changes in intrinsic value are recorded as compensation expense at the end of each reporting period until the options are
exercised.



Compensation expense recognized on all stock option
awards for the years ended December 31, 2003 and 2002 and the period from April 25, 2001 to December 31, 2001 was approximately $(23,000), $(183,000) and $88,000.



14. Commitments and Contingencies



Litigation



RIHC is a defendant in certain litigation. In the opinion of management, based upon advice of counsel, the aggregate liability, if any, arising from such
litigation will not have a material adverse effect on the financial position, results of operations, or liquidity of RIHC.



License Renewal



On January 21, 2004, the New Jersey Casino Control Commission (the NJCCC) renewed RIHs license to operate its casino hotel complex in
Atlantic City for the four year period ending January 31, 2008. A casino license is not transferable, and must be renewed every four years by filing an application, which must be acted upon by the NJCCC no later than 30 days prior to the expiration
of the license then in force.



Commitments



The Company leases land, office space and certain equipment under
non-cancelable operating lease arrangements. These leases expire in various years. Rent expense under these lease agreements for the years ended December 31, 2003 and 2002, the period from April 25, 2001 to December 31, 2001, and the period from
January 1, 2001 to April 24, 2001 were approximately $3.5 million, $3.7 million, $3.1 million, and $433,000, respectively. Future minimum lease payments under noncancelable operating leases consist of the following at December 31, 2003 (in
thousands):



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##### Table of Contents

14. Commitments and Contingencies (continued)



|                    |  |   |       
|------------------- |  | - | ------
|2004                |  | $ | 3,973 
|2005                |  |   | 2,290 
|2006                |  |   | 1,841 
|2007                |  |   | 1,608 
|2008 and thereafter |  |   | 21,536
|                    |  |   |       
|Total               |  | $ | 31,248
|                    |  |   |       



Fair Value of Financial Instruments



The carrying values of cash and cash equivalents, and
restricted cash in other assets, are reasonable estimates of fair values because of the short term maturities of these investments. The carrying values of the capital leases and other notes payable approximate the fair market value of these
instruments based on their terms and rates. CRDA deposits, bonds, and other investments are stated net of a valuation allowance reflecting the below-market interest rates associated with these investments, therefore the carrying values approximate
their fair values. The fair value of the Companys First Mortgage Notes is estimated to be $195,525,000 as of December 31, 2003, based on the trading price as of that date, compared to the carrying value of $176,599,000.



15. Subsequent Events



In conjunction with the purchase of RIH from KINA in April 2001 by CRH and RIHC, CRH obtained an option to purchase
approximately 10.0 acres of real property immediately adjacent to the Resorts site and approximately 2.0 acres of real property located in the Atlantic City metropolitan area, pursuant to an option agreement (Option Agreement) for a
total purchase price of $40.0 million. Portions of the option property (the Option Land) are zoned for casino hotel use and are available for future expansion. Some of the option property was leased from KINA by RIH for use as a surface
parking lot under a lease agreement with terms running contemporaneous with the terms of the Option Agreement.



The Option Agreement had a two-year term, which could be extended for two additional one-year terms upon the payment of a $2.5 million extension fee
payable upon each extension. The initial term of the Option Agreement was to expire in April 2003. The expiration date of the initial term of the Option Agreement was initially extended to June 15, 2003, as negotiations between the Companies and
KINA for the purchase of the Option Land commenced. Subsequently, the expiration date of the initial term was further extended, upon the payment by RIH of one-half of the $2.5 million extension fee.



In January 2004, CRH announced that it had reached agreement with KINA to
acquire the Option Land, subject to the approval of the New Jersey Casino Control Commission, which approval was received on March 17, 2004. Following the approval, the Option Land was acquired by Resorts Real Estate Holdings, Inc.
(RREH) , a wholly-owned subsidiary of CRH, on March 18, 2004, in exchange for the issuance of a $40 million note by RREH to KINA. This $40 million note will mature immediately following the maturity, acceleration or refinancing (other
than permitted refinancing) of the First Mortgage Notes which are due March 22, 2009. Interest on the $40 million note will be payable semi-annually, and will be calculated at the following annual rates: 0% through September 2004, 4% from October
2004 through March 2006, 6% from April 2006 through March 2008, and 9% from April 2008 through March 2009. The note payable to KINA is guaranteed by CRH, RIHC and RIH, provided, however that the guarantee of RIHC and RIH does not become effective
until either the First Mortgage Notes have been paid in full or the fixed charge coverage ratio (the ratio of Consolidated EBITDA to Fixed Charges, all as further defined in the First Mortgage Notes Indenture) of RIHC is at least 2.0 to 1.0. In
addition, the amount guaranteed is initially limited to $20 million increasing by $5 million each year.



In conjunction with the option land purchase transaction, the Option Agreement between RIHC and KINA was terminated. With the termination of the Option
Agreement, the lease agreement between KINA and RIH converts to a month-to-month fair market value lease. As part of the option land purchase transaction, the lease was amended to be a triple-net lease and was assigned by KINA to RREH. The amended
agreement calls for the following payments: a $1.3 million security deposit paid upon closing, offset against lease payments of $205,000 per month through September 2004; $135,833 per month from October 2004 through March 2006; $202,500 per month
from April 2006 through March 2008; $302,500 per month from April 2008 through March 2009 and $402,500 per month thereafter. The lease agreement may be terminated by either party upon 30 days notice, with the remaining security deposit refunded to
RIH upon termination



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SCHEDULE II

RESORTS INTERNATIONAL HOTEL AND CASINO, INC.

VALUATION AND QUALIFYING ACCOUNTS

(In
Thousands)



|                                                |  |                              |        |                             |   |        |                          |  |   |                          |      |  |   |       
|----------------------------------------------- |  | ---------------------------- | ------ | --------------------------- | - | ------ | ------------------------ |  | - | ------------------------ | ---- |  | - | ------
|                                                |  | Balance atBeginningof Period |        | Charged toCosts andExpenses |   |        | OtherChanges(Deductions) |  |   | Balance at End of Period
|PREDECESSOR:                                    |  |                              |        |                             |   |        |                          |  |   |                          |      |  |   |       
|Period from January 1, 2001 to April 24, 2001   |  |                              |        |                             |   |        |                          |  |   |                          |      |  |   |       
|Allowances for doubtful accounts                |  | $                            | 2,926  |                             | $ | 517    |                          |  | $ | 4                        |      |  | $ | 3,447 
|Valuation allowance for CRDA investments        |  | $                            | 10,780 |                             | $ | 287    |                          |  | $ | (7                       | )    |  | $ | 11,060
|SUCCESSOR:                                      |  |                              |        |                             |   |        |                          |  |   |                          |      |  |   |       
|Period from April 25, 2001 to December 31, 2001 |  |                              |        |                             |   |        |                          |  |   |                          |      |  |   |       
|Allowances for doubtful accounts                |  | $                            | 3,447  |                             | $ | 1,038  |                          |  | $ | (591                     | )(a) |  | $ | 3,894 
|Valuation allowance for CRDA investments        |  | $                            | 11,060 |                             | $ | 660    |                          |  | $ | (1,827                   | )(b) |  | $ | 9,893 
|Year ended December 31, 2002                    |  |                              |        |                             |   |        |                          |  |   |                          |      |  |   |       
|Allowances for doubtful accounts                |  | $                            | 3,894  |                             | $ | 1,305  |                          |  | $ | (997                     | )(a) |  | $ | 4,202 
|Valuation allowance for CRDA investments        |  | $                            | 9,893  |                             | $ | 547    |                          |  | $ | 3                        |      |  | $ | 10,443
|Year ended December 31, 2003                    |  |                              |        |                             |   |        |                          |  |   |                          |      |  |   |       
|Allowances for doubtful accounts                |  | $                            | 4,202  |                             | $ | 468    |                          |  | $ | (2,618                   | )(a) |  | $ | 2,052 
|Valuation allowance for CRDA investments        |  | $                            | 10,443 |                             | $ | (2,280 | )(c)                     |  | $ | 154                      | (d)  |  | $ | 8,317 

---

|(a) | Write-off uncollectible amounts.
|--- | --------------------------------

|(b) | Includes the write-off of $991 of CRDA Convention Center Hotel Bonds.
|--- | ---------------------------------------------------------------------

|(c) | Includes a $3.0 million credit for CRDA reimbursement.
|--- | ------------------------------------------------------

|(d) | CRDA administration charge related to reimbursement.
|--- | ----------------------------------------------------



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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.



None.



Item 9A. Controls and Procedures.



CRHs management, including the Chief Executive Officer and Principal Financial Officer, conducted an evaluation of the effectiveness of the companys disclosure controls and procedures as of December 31, 2003. Based on this
evaluation, the Chief Executive Officer and Principal Financial Officer concluded that the disclosure controls and procedures are effective in ensuring that all material information required to be included in the periodic reports to be filed with
the Securities and Exchange Commission is made known to them in a timely fashion. There have been no significant changes in internal controls, or in factors that could significantly affect internal controls, subsequent to the date of this
evaluation.



During the quarter ended December 31, 2003, there
were no changes in CRHs internal controls over financial reporting that materially affected, or are reasonably likely to materially effect, CRHs internal control over financial reporting.



PART III



Item 10. Directors and Executive Officers of the Registrant.



Incorporated herein by reference to Colony RIH Holdings, Inc.s and Resorts International Hotel and Casino, Inc.s Proxy Statement for its Annual Meeting of Stockholders to be held in 2004.



The Company has adopted a code of ethics applicable to the Companys
Chief Executive Officer, Chief Financial Officers, and other financial professionals. A printed copy of the Companys code of ethics is available at no cost if requested in writing to: Chief Financial Officer, Resorts International Hotel and
Casino, Inc., 1133 Boardwalk, Atlantic City, New Jersey 08401.



Item 11. Executive Compensation.



Incorporated herein by reference to Colony RIH Holdings, Inc.s and Resorts International Hotel and Casino, Inc.s Proxy Statement for its Annual Meeting of Stockholders to be held in 2004.



Item 12. Security Ownership of Certain Beneficial Owners and Management.



Incorporated herein by reference to Colony RIH Holdings, Inc.s and Resorts International Hotel and Casino, Inc.s Proxy Statement for its
Annual Meeting of Stockholders to be held in 2004.



Item 13. Certain Relationships and Related Transactions.



Incorporated herein by reference to Colony RIH Holdings, Inc.s and Resorts International Hotel and Casino, Inc.s Proxy Statement for its Annual Meeting of Stockholders to be held in 2004.



Item 14. Principal Accountant Fees and Services.



Incorporated herein by reference to Colony RIH Holdings, Inc.s and Resorts International Hotel and Casino, Inc.s Proxy Statement for its Annual Meeting of Stockholders to be held in 2004.



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PART IV



Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.



|              |  |                                                                                                                                                                                                                                                                                                
|------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Exhibit                                                                                                                                                                                                                                                                                        
|3.1           |  | Amended and Restated Certificate of Incorporation of Colony RIH Holdings, Inc.*                                                                                                                                                                                                                
|              | 
|3.2           |  | By-Laws of Colony RIH Holdings, Inc.*                                                                                                                                                                                                                                                          
|              | 
|3.3           |  | Certificate of Incorporation of Colony RIH Acquisitions, Inc.*                                                                                                                                                                                                                                 
|              | 
|3.4           |  | Certificate of Amendment of Certificate of Incorporation of Colony RIH Acquisitions, Inc.*                                                                                                                                                                                                     
|              | 
|3.5           |  | By-Laws of Colony RIH Acquisitions, Inc.*                                                                                                                                                                                                                                                      
|              | 
|3.6           |  | Certificate of Amendment of Amended and Restated Certificate of Incorporation of Colony RIH Holdings, Inc. Incorporated by reference to Exhibit 3.6 of Form 10-K for the year ended December
31, 2002.                                                                                         
|              | 
|3.7           |  | Amended and Restated Certificate of Incorporation of Resorts Real Estate Holdings, Inc.                                                                                                                                                                                                        
|              | 
|4.1           |  | Form of Colony RIH Holdings, Inc. Stock Certificate.*                                                                                                                                                                                                                                          
|              | 
|4.2           |  | Form of Colony RIH Acquisitions, Inc. Stock Certificate.*                                                                                                                                                                                                                                      
|              | 
|10.1          |  | Purchase Agreement, dated October 30, 2000, by and among Colony RIH Acquisitions, Inc., Sun International North America, Inc. and GGRI, Inc.*                                                                                                                                                  
|              | 
|10.2          |  | First Amendment to the Purchase Agreement, dated February 28, 2001, among Colony RIH Acquisitions, Inc., Sun International North America, Inc. and GGRI, Inc.*                                                                                                                                 
|              | 
|10.3          |  | Second Amendment to the Purchase Agreement, dated April 5, 2001, among Colony RIH Acquisitions, Inc., Sun International North America, Inc. and GGRI, Inc.*                                                                                                                                    
|              | 
|10.4          |  | Third Amendment to the Purchase Agreement, dated April 24, 2001, among Colony RIH Acquisitions, Inc., Sun International North America, Inc, and GGRI, Inc.*                                                                                                                                    
|              | 
|10.5          |  | Second Amended and Restated Credit Agreement, dated May 18, 2001, among Colony RIH Acquisitions, Inc., the guarantors named therein, the lenders named therein, Merrill Lynch & Company,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and Bankers Trust Company.*                        
|              | 
|10.6          |  | Amendment No. 1 to the Second Amended and Restated Credit Agreement, dated June 27, 2001, among Colony RIH Acquisitions, Inc., the guarantors named therein, the lenders named therein, Merrill
Lynch & Company, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Bankers Trust Company.*
|              | 
|10.7          |  | Security Agreement, dated April 25, 2001, by Colony RIH Acquisitions, Inc., Colony RIH Holdings, Inc., Resorts International Hotel, Inc., New Pier Operating Company, Inc., the guarantors
named therein and Bankers Trust Company.*                                                           
|              | 
|10.8          |  | Option Agreement, dated April 25, 2001, by and between Colony RIH Acquisitions, Inc. and Sun International North America, Inc.*                                                                                                                                                                



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|      |  |                                                                                                                                                                                                                                                     
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      | 
|10.9  |  | Lease Agreement, dated April 25, 2001, by and between Sun International North America, Inc. and Colony RIH Acquisitions, Inc.*                                                                                                                      
|      | 
|10.10 |  | Form of Note.*                                                                                                                                                                                                                                      
|      | 
|10.11 |  | Form of Indemnification Agreement.*                                                                                                                                                                                                                 
|      | 
|10.12 |  | Securities Purchase Agreement, dated April 25, 2001, between Nicholas L. Ribis and Colony RIH Holdings, Inc.*                                                                                                                                       
|      | 
|10.13 |  | Securities Purchase Agreement, dated April 25, 2001, between Colony RIH Voteco, LLC and Colony RIH Holdings, Inc.*                                                                                                                                  
|      | 
|10.14 |  | Securities Purchase Agreement, dated April 25, 2001, between Colony Investors IV, L.P. and Colony RIH Holdings, Inc.*                                                                                                                               
|      | 
|10.15 |  | Stockholders Agreement, dated April 25, 2001, by and among Colony RIH Holdings, Inc., Colony RIH Voteco, LLC, Colony Investors IV, L.P. and Nicholas L. Ribis.*                                                                                     
|      | 
|10.16 |  | Vice Chairman Agreement, dated April 25, 2001, by and among Nicholas L. Ribis and Colony RIH Acquisitions, Inc.*                                                                                                                                    
|      | 
|10.17 |  | 2001 Omnibus Stock Incentive Plan, dated April 25, 2001, by and between Colony RIH Holdings, Inc. and Nicholas L. Ribis.**                                                                                                                          
|      | 
|10.18 |  | Employment Agreement, dated October 1, 2001, by and between Resorts International Hotel, Inc. and Audrey S. Oswell.**                                                                                                                               
|      | 
|10.20 |  | Employment Agreement, dated October 1, 2001, by and between Resorts International Hotel, Inc. and Nicholas Amato. **                                                                                                                                
|      | 
|10.23 |  | Employment Agreement, dated October 1, 2001, by and between Resorts International Hotel, Inc. and Alan J. Rivin. **                                                                                                                                 
|      | 
|10.25 |  | 2001 Omnibus Stock Incentive Plan. **                                                                                                                                                                                                               
|      | 
|10.26 |  | 2001 Omnibus Stock Incentive Plan, dated October 1, 2001, by and between Colony RIH Holdings, Inc. and Audrey S. Oswell. **                                                                                                                         
|      | 
|10.28 |  | 2001 Omnibus Stock Incentive Plan, dated October 1, 2001, by and between Colony RIH Holdings, Inc. and Nicholas Amato. **                                                                                                                           
|      | 
|10.31 |  | 2001 Omnibus Stock Incentive Plan, dated October 1, 2001, by and between Colony RIH Holdings, Inc. and Alan J. Rivin. **                                                                                                                            
|      | 
|10.32 |  | Amended and Restated Loan and Security Agreement, dated June 24, 2002, between CIT Group/Equipment Financing, Inc. and Resorts International Hotel, Inc. Incorporated by reference to Exhibit
10.1 of Form 10-Q for the quarter ended June 30, 2002.
|      | 
|10.33 |  | Guaranty and Suretyship Agreement, dated June 24, 2002, by Resorts International Hotel and Casino, Inc. for the benefit of CIT Group/ Financing Inc. Incorporated by reference to Exhibit 10.2
of Form 10-Q for the quarter ended June 30, 2002.    



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|      |  |                                                                                                                                                                                                                                                                                   
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      | 
|10.34 |  | Thermal Energy Services Agreement, dated June 16, 2002, between Marina Energy, LLC and Resorts International Hotel, Inc. Incorporated by reference to Exhibit 10.3 of Form 10-Q for the quarter
ended June 30, 2002.                                                              
|      | 
|10.35 |  | Loan and Security Agreement, dated November 4, 2002, between Resorts International Hotel, Inc. and Commerce Bank, N.A. Incorporated by reference to Exhibit 10.1 of Form 10-Q for the quarter
ended September 30, 2002.                                                           
|      | 
|10.36 |  | Employment Agreement, dated April 21, 2003, by and between Resorts International Hotel, Inc. and Joseph P. Weis. Incorporated by reference to Exhibit 10.36 of Form 10-Q for the quarter ended
June 30, 2003.                                                                     
|      | 
|10.37 |  | Amendment No. 1 to Amended and Restated Loan and Security Agreement, dated September 22, 2003, between CIT Group/Equipment Financing, Inc. and Resorts International Hotel, Inc. Incorporated
by reference to Exhibit 10.37 of Form 10-Q for the quarter ended September 30, 2003.
|      | 
|10.38 |  | Amendment No. 2 to Amended and Restated Loan and Security Agreement, dated January 16, 2004, between CIT Group/Equipment Financing, Inc. and Resorts International Hotel, Inc.                                                                                                    
|      | 
|10.39 |  | Amendment No. 3 to Amended and Restated Loan and Security Agreement, dated March 17, 2004, between CIT Group/Equipment Financing, Inc. and Resorts International Hotel, Inc.                                                                                                      
|      | 
|10.40 |  | Master Agreement Among Kerzner International North America, Inc., Colony RIH Holdings, Inc., Resorts International Hotel and Casino, Inc., Resorts Real Estate Holdings, Inc., Resorts
International Hotel, Inc. and New Pier Operating Company, Inc., dated March 18, 2004.      
|      | 
|10.41 |  | Secured Promissory Note, dated March 18, 2004, between Resorts Real Estate Holdings, Inc. and Kerzner International North America, Inc.                                                                                                                                           
|      | 
|10.42 |  | Purchase and Sale Agreement, dated March 18, 2004, between Kerzner International North America, Inc. as Seller and Resorts Real Estate Holdings, Inc. as Purchaser                                                                                                                
|      | 
|10.43 |  | Security Agreement, dated March 18, 2004, between Resorts Real Estate Holdings, Inc, Colony RIH Holdings, Inc. as Grantors and Kerzner International North America, Inc. as
Lender                                                                                                
|      | 
|10.44 |  | Second Amendment to Lease Agreement, dated March 18, 2004, between Resorts Real Estate Holdings, Inc. (successor in interest to Kerzner International North America, Inc.) and Resorts
International Hotel and Casino, Inc.                                                       
|      | 
|10.45 |  | Guaranty, dated March 18, 2004, by Colony RIH Holdings, Inc. in favor of Kerzner International North America, Inc.                                                                                                                                                                
|      | 
|10.46 |  | Guaranty, dated March 18, 2004, by Resorts International Hotel and Casino, Inc., Resorts International Hotel, Inc. and New Pier Operating Company, Inc. in favor of Kerzner International North
America, Inc.                                                                     
|      | 
|16.1  |  | Acknowledgment of Arthur Andersen, LLP.*                                                                                                                                                                                                                                          
|      | 
|21.1  |  | Subsidiaries of the registrant.*                                                                                                                                                                                                                                                  
|      | 
|31.1  |  | Certification of Audrey S. Oswell, President and Chief Executive Officer of CRH, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                       



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|     |  |                                                                                                                                                                                                                     
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | 
|31.2 |  | Certification of Audrey S. Oswell, President and Chief Executive Officer of RIHC, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                        
|     | 
|31.3 |  | Certification of Joseph P. Weis, Senior Vice President/CFO and Principal Financial Officer of CRH, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                       
|     | 
|31.4 |  | Certification of Joseph P. Weis, Senior Vice President/CFO and Principal Financial Officer of RIHC, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                      
|     | 
|32.1 |  | Certification of Audrey S. Oswell, President and Chief Executive Officer of CRH and RIHC, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.                  
|     | 
|32.2 |  | Certification of Joseph P. Weis, Senior Vice President/CFO and Principal Financial Officer of CRH and RIHC, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.

---

|* | Incorporated by reference to the Registrants Form 10 filed July 13, 2001 (File No. 0-32987), as amended by Amendment No. 1, filed August 24, 2001.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------

|** | Incorporated by reference to the Registrants Form 10-Q filed December 14, 2001, as amended by Amendment No. 1, filed February 20, 2002 (File No. 000-32987).
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------





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SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.



March 29, 2004



COLONY RIH HOLDINGS, INC.By:

/s/ Joseph P. WeisName: Joseph P. WeisTitle:   Senior Vice President




Pursuant to the
requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



|                                                 |  |                                                                     |  |               
|------------------------------------------------ |  | ------------------------------------------------------------------- |  | --------------
|Signature                                        |  | Title                                                               |  | Date          
|                                                 |  |                                                                    
|/s/ Audrey S. OswellAudrey S. Oswell             |  | President and Chief Executive Officer (Principal Executive Officer) |  | March 29, 2004
|                                                 |  |                                                                    
|/s/ Thomas J. Barrack, Jr.Thomas J. Barrack, Jr. |  | Director, Treasurer                                                 |  | March 29, 2004
|                                                 |  |                                                                    
|/s/ Nicholas L. RibisNicholas L. Ribis           |  | Director, Executive Vice President                                  |  | March 29, 2004
|                                                 |  |                                                                    
|/s/ Mark M. HedstromMark M. Hedstrom             |  | Director                                                            |  | March 29, 2004
|                                                 |  |                                                                    
|/s/ Joseph P. WeisJoseph P. Weis                 |  | Senior Vice President (Principal Financial Officer)                 |  | March 29, 2004



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SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.



March 29, 2004



RESORTS INTERNATIONAL HOTEL AND CASINO, INC.By:

/s/ Joseph P. WeisName: Joseph P. WeisTitle:   Senior Vice President




Pursuant to the
requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



|                                                 |  |                                                                     |  |               
|------------------------------------------------ |  | ------------------------------------------------------------------- |  | --------------
|Signature                                        |  | Title                                                               |  | Date          
|                                                 |  |                                                                    
|/s/ Audrey S. OswellAudrey S. Oswell             |  | President and Chief Executive Officer (Principal Executive Officer) |  | March 29, 2004
|                                                 |  |                                                                    
|/s/ Thomas J. Barrack, Jr.Thomas J. Barrack, Jr. |  | Director, Treasurer                                                 |  | March 29, 2004
|                                                 |  |                                                                    
|/s/ Nicholas L. RibisNicholas L. Ribis           |  | Director, Executive Vice President                                  |  | March 29, 2004
|                                                 |  |                                                                    
|/s/ Mark M. HedstromMark M. Hedstrom             |  | Director                                                            |  | March 29, 2004
|                                                 |  |                                                                    
|/s/ Joseph P. WeisJoseph P. Weis                 |  | Senior Vice President (Principal Financial Officer)                 |  | March 29, 2004



71