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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, 2004



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)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|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)



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



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|                                         |  |           
|---------------------------------------- |  | ----------
|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)



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 March 30, 2005, was $0.



As of March 30,
2005, 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 30, 2005, 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 2005 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, 2004.



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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                                                                            |  | 11  
|Item 3.  |  | Legal Proceedings                                                                     |  | 12  
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                   |  | 12  
|         |  |                                                                                      
|Part II  |  |                                                                                       |  |     
|Item 5.  |  | Market for Registrants Common Equity and Related Stockholder Matters                 |  | 12  
|Item 6.  |  | Selected Financial Data                                                               |  | 13  
|Item 7.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 14  
|Item 7A. |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 25  
|Item 8.  |  | Financial Statements and Supplementary Data                                           |  | 26  
|Item 9.  |  | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure  |  | 60  
|Item 9A. |  | Controls and Procedures                                                               |  | 60  
|         |  |                                                                                      
|Part III |  |                                                                                       |  |     
|Item 10. |  | Directors and Executive Officers of the Registrant                                    |  | 60  
|Item 11. |  | Executive Compensation                                                                |  | 60  
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management                        |  | 60  
|Item 13. |  | Certain Relationships and Related Transactions                                        |  | 60  
|Item 14. |  | Principal Accountant Fees and Services                                                |  | 60  
|         |  |                                                                                      
|Part IV  |  |                                                                                       |  |     
|Item 15. |  | Exhibits, Financial Statement Schedules, and Reports on Form 8-K                      |  | 61  



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 registrants press releases and registrants 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., a Delaware corporation (CRH, or the Company), owns 100% of the outstanding common stock of Resorts International Hotel and Casino, Inc. (RIHC). RIHC, through its wholly-owned subsidiary, Resorts
International Hotel, Inc., a New Jersey corporation (RIH), owns and operates Resorts Atlantic City (Resorts), a casino hotel located in Atlantic City, New Jersey. CRH also owns 100% of the common stock of Resorts Real Estate
Holdings, Inc. (RREH), a New Jersey corporation formed on April 1, 2003 to acquire certain land subject to an option agreement (Option Agreement) between Kerzner International North America, Inc. (KINA) and RIHC.
RIHC also owns 100% of the common stock of New Pier Operating Company, Inc., a New Jersey corporation (New Pier). Colony RIH Holdings, Inc., Resorts International Hotel and Casino, Inc., and Resorts International Hotel, Inc. are referred
to collectively as the Companies.



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). These debts were retired in March 2002 in conjunction with
the issuance of $180 million of first mortgage notes (see The Expansion).



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 Companies file 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
Companies file 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



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



In May 1978, Resorts
commenced operations as the first casino hotel 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 luxury casino hotel. Situated on
11.0 acres of land with approximately 310 feet of Boardwalk frontage, Resorts overlooks the Atlantic Ocean. On September 4, 2002, RIHC decommissioned the 166-room Atlantic City Tower to begin construction in November 2002 of a 27-story hotel tower
on the same site. The expansion was substantially completed on June 16, 2004. The expansion added 399 hotel rooms and suites in the Rendezvous Tower, the Grand Lobby (which replaced the former hotel lobby), 25,000 square feet of additional gaming
space (collectively, the New Tower), and increased the number of slot machines and table games by 840 machines and 11 tables, as compared to December 31, 2003 levels. RIHC opened the expanded gaming space on May 28, 2004, and began
opening hotel rooms in the New Tower to the public on June 16, 2004. The grand opening ceremony for the New Tower was held over the July 4, 2004 weekend.



Additional amenities of the casino facility during 2004 included 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 (the Taj Mahal), which is also adjoined by the Showboat Hotel and Casino (Showboat). These three properties have a total
of approximately 3,400 hotel rooms and approximately 360,000 square feet of gaming space in close proximity to each other. An enclosed pedestrian bridge between Resorts and the Taj Mahal 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 Atlantic City 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, to the west, in the Marina District of Atlantic City.



Facilities Overview



Gaming. The gaming floor has been greatly enhanced with the opening of the New Tower and related additional gaming
space and gaming positions. As of February 28, 2005, Resorts contains 2,931 slot machines, and 80 table games, which include thirty-nine blackjack tables, eight roulette tables, seven craps tables, and other specialty games such as Caribbean Stud,
Baccarat, Mini-Baccarat, Let It Ride, Three-Card Poker, Four-Card Poker, Pai Gow Poker, and Spanish Twenty-One. Additionally, there are three poker tables on the casino floor.



The redesign of the gaming floor affords customers more space to enhance their gaming experience. In addition to the space,
Resorts added newer themed slots based on customer preference and multi-denomination slots for ease of customer play. The Company is committed to meeting the demands of its customers and will continue to proactively enhance gaming options to retain
and attract customers. Additionally, the amount and type of table games on the gaming floor will continually be adjusted for 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.



Management believes the quality of its restaurants gives Resorts a 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 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, Don Rickles, Jerry Seinfield and Chaka Khan. During 2004, Resorts also operated two additional entertainment venues, the
300-seat Screening Room, used for off-Broadway-style shows, and a 200-seat room which was used to present a 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 is used for patrons self-parking and accommodates approximately 700 vehicles. Additional adjacent properties, consisting of approximately 7.9 acres, which are
owned by CRH, provide parking for approximately 700 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 First Mortgage 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 to finance a portion of the cost to develop, construct, and equip the New Tower.



On September 4, 2002, CRH decommissioned the 166-room Atlantic City Tower to begin construction in November 2002 of the New
Tower. 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 New Tower. Additionally, the New Jersey Casino Reinvestment Development Authority
(CRDA) agreed to reimburse RIHC for certain costs for the construction of the New Tower totaling approximately $13.1 million through 2008, of which $9.2 million was received in 2003, $0.8 million was received in 2004, and approximately
$3.1 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 Tower.
In June 2002, RIH entered into a $20.0 million credit facility, the proceeds of which were used for the acquisition of furniture, fixtures and equipment. RIHC has guaranteed the obligations of RIH under this equipment credit facility. As of December
31, 2004, the Companies had used $14.7 million of the equipment credit facility to purchase furniture, fixtures and equipment for the New Tower and $3.1 million to purchase additional slot machines. In November 2002, RIHC also entered into a $10.0
million revolving credit facility (the Commerce Facility). There was no outstanding balance on the Commerce Facility at December 31, 2004. However, $4.4 million of standby letters of credit have been issued against the Commerce Facility
related to insurance obligations of the Company, leaving an availability of $5.6 million as of December 31, 2004.



The expansion is a key component in continuing the Companys strategy of growing its core customer base. Prior to the opening of the New Tower,
management believed that there existed a significant disparity in the quality of amenities offered by the two existing hotel towers, which constrained its ability to attract and retain higher-margin, mid-level slot players and mid-level table game
players (see Business Strategy and Marketing Overview).



Hotel rooms and suites in the new Rendezvous Tower are among the largest in Atlantic City. 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.



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 March 2004, the Option Land was acquired by RREH 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. No
principal payments are required on the $40 million note until it reaches maturity. Interest on the $40 million note is payable semi-annually, and 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,



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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 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 converted 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: $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 any security deposit remaining upon termination to be refunded to RIH.



Business Strategy and Marketing Overview



Resorts offers its customers a full range of table games and slot machines. During the construction of the New Tower and in the months following, the mix of table games and slot machines has been modified and
expanded. Resorts remains committed to offering a wide variety of slot machine denominations and up-to-date themes. In conjunction with the construction of the New Tower, additional slot machines were installed and the existing floor was redesigned
and substantially replaced with new themed slots and multi-denominations that offer Ticket-In/Ticket-Out and EFT (Electronic Funds Transfer) compatibility. Management of the Company believes that having the correct slot machine mix is critical to
retaining the mid- to high-level slot player.



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.



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 marketing programs are focused to maintaining its loyal customer base, through the efficient use of player information. Additionally, Resorts continually looks to expand its core customer base through its marketing programs.
The New Tower has positioned Resorts to offer more high quality hotel rooms and suites to attract new customers. In addition, the development of supplemental services, such as increased entertainment options in 2004 are used to attract new customers
to the property.



In order to supplement the casino and hotel
amenities offered, Resorts remains committed to providing customer service that is superior to other casino properties. Resorts achieves this level of excellence by investing in its employees through on-going training programs that emphasize the
importance of providing outstanding customer service.



Resorts
is highly promoted through radio, outdoor, print advertising and direct mailings. With the opening of the New Tower, marketing efforts were focused on increasing Resorts market share of drive-in slot players. It is believed by management that
drive-in players tend to be higher income slot customers than customers who travel by bus. Additionally, it is believed that drive-in players tend to spend more time in the casino where they are staying.



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



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Atlantic City Market



Atlantic Citys strategic location, combined with its core demographics and steady market growth, makes it a viable 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. In addition, its beaches remain an attractive draw to many tourists and Resorts will continue to capitalize on and
attract this customer base.



The Atlantic City market has
demonstrated continued and steady growth, despite several recessions and the recent proliferation of new gaming jurisdictions, including those in Delaware and Connecticut. Atlantic City gaming revenues in 2004 increased 6.8% over 2003 levels.
Resorts competes directly with 11 other casino hotels in Atlantic City. The Atlantic City casino market, as of December 31, 2004, contained approximately 14,700 hotel rooms and suites and 1.41 million square feet of gaming area, including simulcast
betting and poker rooms.



The Atlantic City market has a strong
locals component, which includes gaming patrons that generally live within 200 miles of Atlantic City. As a result, management believes the Atlantic City customers tend to frequent the casinos in the market more often 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, it is believed
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 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, over the years, increased the number of slot machines. However, with the increased popularity of poker, table games play has begun to
make a comeback. This trend is evidenced by a 25-unit (2.1%) increase in table game units in the Atlantic City market from 1,198 units in 2003 to 1,223 units in 2004. The number of slot machines actually declined from 2003 levels by approximately
800 units (1.8%), to 41,605 units in 2004.



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.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------



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Several gaming operators have announced new development or expansion projects which management believes
will continue to attract new, higher-margin customers and alleviate hotel room and suite inventory constraints. The most significant addition to the Atlantic City market was the completion by Boyd Gaming Corporation and MGM Mirage, Inc. of a resort
complex located in the Marina District, the Borgata Hotel Casino and Spa (the Borgata), which opened in July 2003. The Borgata has helped attract a younger gaming customer and is expected to increase the size and profitability of the
overall market in the long term. In addition to the construction of the Borgata, several Atlantic City properties have recently completed, are currently undergoing renovations, or have recently announced projects including:



| |  |  | The Atlantic City Tropicanas $285.0 million expansion included construction of an additional 502 hotel rooms and a 200,000 square foot retail, dining and entertainment
complex, named The Quarter, which opened for business in the fourth quarter of 2004.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Showboat Atlantic City and the House of Blues formally announced plans for a $65 million project that will include complete renovations of the Boardwalk façade. The
project also includes a 2,200 seat concert venue, House of Blues-themed casino and poker areas, a House of Blues restaurant, a House of Blues night club, a House of Blues beach bar, a House of Blues retail store, and private House of Blues
Foundation Room club, and two floors of House of Blues-themed suites. The House of Blues is scheduled to open in the summer of 2005.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Caesars Entertainment (formerly Park Place Entertainment) is proceeding with the construction of 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 expected to be completed in the second quarter of 2006, and cost approximately $175 million.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Caesars Entertainment is also proceeding with the 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 summer 2005. There are preliminary plans to construct a 1,000 room hotel tower on top of the garage, however, no timetable is set for the hotel tower.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Harrahs Entertainment, Inc. announced preliminary plans for a $400 million expansion that will include two new hotel towers at its Atlantic City casinos. Major components of
the plan include a minimum of 700 room hotel towers at both Harrahs Atlantic City and Showboat Casino Hotel, additional casino space, entertainment attractions and new restaurants.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Borgata announced plans for a $350 million expansion project which would include a 45-story, 800-room hotel tower. The top floors would include 200 timeshare condominiums. In
addition, the expansion also calls for pools, a spa, and new convention and retail space. The project is scheduled to start in July 2005, and is expected to be completed in spring, 2007. The Borgata is also planning a $200 million expansion project,
which would span 500,000 square feet and include 600 slot machines, 92 gaming tables, four new restaurants, two night clubs, and six new retail shops. The project is expected to be completed in the second quarter of 2007.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Competition



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 gaming 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 in Atlantic City, as discussed above, continues to intensify the competitive pressure in the Atlantic City market.



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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. Minimally, Resorts faces competition from gaming facilities nationwide. Moreover, Resorts also faces competition from various
forms of internet gambling.



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.



Two
Native American-owned gaming properties in Connecticut that compete directly with Atlantic City for gaming patrons are the 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 expansion of gaming in the states
surrounding New Jersey, including the racinos (slot machine facilities located at existing racetracks) in Delaware and New York, and the development of gaming facilities in Pennsylvania and potentially Maryland. In 2004, the Pennsylvania
legislature passed a bill legalizing slots at a number of facilities around the state, including at least four in the Philadelphia region, which are scheduled to begin operations in 2007. In addition, there are recent indications that the New Jersey
legislature is pursuing the approval of the installation of video lottery terminals (VLTs) at the Meadowlands race track in northern New Jersey.



Competition in Atlantic City also extends to the employment market. The demand for qualified and experienced gaming
personnel was especially evident in 2004, as the opening of the Borgata in mid-2003 created thousands more jobs in the industry. The surplus of positions, many of which are required to be licensed by the New Jersey Casino Control Commission (the
NJCCC), results in increased labor costs as companies compete for the most qualified personnel.



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 approximately 21% of table game volume at Resorts in
2004, 22% in 2003 and 21% in 2002.RIHs gaming receivables, net of allowance for uncollectible amounts, were $3.9 million as of December 31, 2004, $3.7 million as of December 31, 2003, $4.0 million as of December 31, 2002. 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, 2004, Resorts had approximately 2,800 employees, including approximately 700 casino employees, 700 food and beverage employees, 170
security employees, 350 administrative support employees, 400 hotel employees, 350 marketing and entertainment employees, 100 facilities employees, 50 parking employees and a senior management team of approximately 12 members. All employees have
completed the Companys customer service program which reinforces high level of service and professionalism within their respective areas.



Management believes that its employee relations are now 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 November 2004, after a month-long strike, for a term of five years. 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 was
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 required by 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.



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



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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 (the Indenture) 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 was contributed to the AC Fund. Each licensees share of the amount contributed to the AC Fund was 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 requirement to contribute to the Atlantic City Fund ceased in 2003.



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On June 30, 2003 the NJCCA was amended, effective July 1, 2003, to impose or increase 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, included:



(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,
|                                                   |  | 2004                            |        | 2003 |   | 2002  
|                                                   |  | ($ in thousands)               
|Gaming tax                                         |  | $                               | 20,251 |      | $ | 18,608 |  | $ | 20,862
|License, investigation, inspection, and other fees |  |                                 | 4,580  |      |   | 4,951  |  |   | 4,780 
|Contribution to AC Fund                            |  |                                 |       |      |   | 256    |  |   | 444   
|Casino net profits tax                             |  |                                 | 350    |      |   | 175    |  |   |      
|New Jersey race track subsidy                      |  |                                 | 173    |      |   |       |  |   |      
|Other taxes and fees                               |  |                                 | 771    |      |   | 394    |  |   |      
|                                                   |  |                                 |        |      |   |        |  |   |       
|Total                                              |  | $                               | 26,125 |      | $ | 24,384 |  | $ | 26,086
|                                                   |  |                                 |        |      |   |        |  |   |       



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 $3.2 million for 2004, $3.0 million for 2003, and $3.3 million for 2002 and have been satisfied by deposits made with the CRDA.At December 31, 2004, RIH held $7.0 million face amount of bonds issued by the CRDA and
had $7.2 million on deposit with the CRDA, the majority of which has been pledged for specific projects. The CRDA bonds issued through 2004 have interest rates ranging from 3.5% to 7.0% and have repayment terms 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 received a lump sum payment of $1.5 million representing Resorts share of donations made to the Atlantic City Housing Fund.
Resorts utilized 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.



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.



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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 March 2004, the Option Land was acquired by RREH in exchange for the issuance of a $40 million note by RREH to KINA. See Item 1-Business: Option Land.



Other Properties. RIHC also owns land in Egg Harbor Township, New Jersey 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 Deutsche Bank Trust Company (formerly known as Bankers Trust Company) as collateral for RIHCs $180.0 million aggregate principal amount of 11 1/2% 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, 2004.



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 30, 2005, 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.



Neither CRH nor RIHC has ever paid a dividend on its common stock, nor do they anticipate paying any dividends in the foreseeable future. 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 Tower. Under the terms of the Disbursement Agreement, dated March 22, 2002, funds remaining in the liquidity disbursement account after the final Test Period (as defined in the
Indenture, the four fiscal quarter period ending December 31, 2004) , and upon certification by RIHC of certain conditions, would be returned to RIHC and could be distributed as a dividend to CRH. This certification was delivered by RIHC, and
accordingly on January 20, 2005 the $9.7 million remaining in the liquidity disbursement account was delivered to RIHC; as of March 30, 2005, the funds have not been distributed as a dividend to CRH. The Indenture 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.



12



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Item 6. Selected Financial Data.



The following table sets forth the selected financial data of CRH and its Predecessor, RIH, as of and for each of the periods indicated. The selected financial data of RIH as of December 31, 2000 and for the year then ended is derived from
RIHs financial statements, which have been audited by Arthur Andersen LLP. 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, 2004, 2003, 2002, and 2001 and for the years ended December 31, 2004, 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.



|                                    |  |                         |         |   |                                              |   |         |                                              |  |   |                        |   |      |               |         |   |               |   |         |   |  |   |         |  
|----------------------------------- |  | ----------------------- | ------- | - | -------------------------------------------- | - | ------- | -------------------------------------------- |  | - | ---------------------- | - | ---- | ------------- | ------- | - | ------------- | - | ------- | - |  | - | ------- | -
|                                    |  | Year ended December 31, |         |   | Period fromApril 25,2001 toDecember 31, 2001 |   |         | Period fromJanuary 1, 2001 to April 24, 2001 |  |   | Year endedDecember 31, |  
|                                    |  | 2004                    |         |   | 2003                                         |   |         | 2002                                         |  |   |                        |   | 2000 |              
|                                    |  | (Successor)             |         |   | (Successor)                                  |   |         | (Successor)                                  |  |   | (Successor)            |   |      | (Predecessor) |         |   | (Predecessor) |  
|                                    |  | ($ in thousands)        |        
|Revenues:                           |  |                         |         |   |                                              |   |         |                                              |  |   |                        |   |      |               |         |   |               |   |         |   |  |   |         |  
|Casino                              |  | $                       | 247,842 |   |                                              | $ | 230,135 |                                              |  | $ | 259,208                |   |      | $             | 168,687 |   |               | $ | 72,417  |   |  | $ | 235,827 |  
|Lodging                             |  |                         | 18,341  |   |                                              |   | 11,163  |                                              |  |   | 13,031                 |   |      |               | 10,083  |   |               |   | 3,996   |   |  |   | 16,412  |  
|Food and beverage                   |  |                         | 23,387  |   |                                              |   | 22,079  |                                              |  |   | 24,649                 |   |      |               | 17,880  |   |               |   | 6,977   |   |  |   | 26,039  |  
|Other                               |  |                         | 8,439   |   |                                              |   | 6,496   |                                              |  |   | 6,488                  |   |      |               | 4,169   |   |               |   | 1,523   |   |  |   | 4,973   |  
|Less: promotional allowances        |  |                         | (67,123 | ) |                                              |   | (54,426 | )                                            |  |   | (66,664                | ) |      |               | (42,564 | ) |               |   | (17,995 | ) |  |   | (62,993 | )
|                                    |  |                         |         |   |                                              |   |         |                                              |  |   |                        |   |      |               |         |   |               |   |         |   |  |   |         |  
|Total net revenues                  |  |                         | 230,886 |   |                                              |   | 215,447 |                                              |  |   | 236,712                |   |      |               | 158,255 |   |               |   | 66,918  |   |  |   | 220,258 |  
|Costs and expenses:                 |  |                         |         |   |                                              |   |         |                                              |  |   |                        |   |      |               |         |   |               |   |         |   |  |   |         |  
|Casino                              |  |                         | 117,425 |   |                                              |   | 117,156 |                                              |  |   | 123,616                |   |      |               | 84,620  |   |               |   | 35,987  |   |  |   | 120,393 |  
|Lodging                             |  |                         | 3,360   |   |                                              |   | 1,318   |                                              |  |   | 1,672                  |   |      |               | 1,970   |   |               |   | 913     |   |  |   | 4,186   |  
|Food and beverage                   |  |                         | 10,743  |   |                                              |   | 11,721  |                                              |  |   | 12,564                 |   |      |               | 9,228   |   |               |   | 3,639   |   |  |   | 14,716  |  
|Other operating                     |  |                         | 28,585  |   |                                              |   | 25,686  |                                              |  |   | 25,557                 |   |      |               | 16,683  |   |               |   | 8,292   |   |  |   | 25,667  |  
|Selling, general and administrative |  |                         | 39,085  |   |                                              |   | 30,983  |                                              |  |   | 36,769                 |   |      |               | 21,526  |   |               |   | 10,492  |   |  |   | 37,522  |  
|Depreciation and amortization       |  |                         | 16,837  |   |                                              |   | 9,993   |                                              |  |   | 10,160                 |   |      |               | 5,412   |   |               |   | 5,325   |   |  |   | 17,034  |  
|Pre-opening                         |  |                         | 2,722   |   |                                              |   |        |                                              |  |   |                       |   |      |               |        |   |               |   |        |   |  |   |        |  
|                                    |  |                         |         |   |                                              |   |         |                                              |  |   |                        |   |      |               |         |   |               |   |         |   |  |   |         |  
|Total costs and expenses            |  |                         | 218,757 |   |                                              |   | 196,857 |                                              |  |   | 210,338                |   |      |               | 139,439 |   |               |   | 64,648  |   |  |   | 219,518 |  
|Operating income                    |  |                         | 12,129  |   |                                              |   | 18,590  |                                              |  |   | 26,374                 |   |      |               | 18,816  |   |               |   | 2,270   |   |  |   | 740     |  
|Interest expense, net               |  |                         | (19,073 | ) |                                              |   | (17,838 | )                                            |  |   | (17,104                | ) |      |               | (5,625  | ) |               |   | (7,163  | ) |  |   | (23,146 | )
|Other (income) expenses, net        |  |                         | 1,255   |   |                                              |   | (281    | )                                            |  |   | 182                    |   |      |               | (408    | ) |               |   |        |   |  |   |        |  
|Loss on extinguishment of debt      |  |                         |        |   |                                              |   |        |                                              |  |   | (3,378                 | ) |      |               |        |   |               |   |        |   |  |   |        |  
|                                    |  |                         |         |   |                                              |   |         |                                              |  |   |                        |   |      |               |         |   |               |   |         |   |  |   |         |  
|Income (loss) before income taxes   |  |                         | (5,689  | ) |                                              |   | 471     |                                              |  |   | 6,074                  |   |      |               | 12,783  |   |               |   | (4,893  | ) |  |   | (22,406 | )
|Provision (credit) for income taxes |  |                         | (1,551  | ) |                                              |   | 1,727   |                                              |  |   | 3,197                  |   |      |               | 5,046   |   |               |   |        |   |  |   |        |  
|                                    |  |                         |         |   |                                              |   |         |                                              |  |   |                        |   |      |               |         |   |               |   |         |   |  |   |         |  
|Net income (loss)                   |  | $                       | (4,138  | ) |                                              | $ | (1,256  | )                                            |  | $ | 2,877                  |   |      | $             | 7,737   |   |               | $ | (4,893  | ) |  | $ | (22,406 | )
|                                    |  |                         |         |   |                                              |   |         |                                              |  |   |                        |   |      |               |         |   |               |   |         |   |  |   |         |  



|                          |  |                  |         |             |   |             |  |             |         |               |   |         |  |   |        
|------------------------- |  | ---------------- | ------- | ----------- | - | ----------- |  | ----------- | ------- | ------------- | - | ------- |  | - | -------
|                          |  | December 31,    
|                          |  | 2004             |         | 2003        |   | 2002        |  | 2001        |         | 2000         
|                          |  | (Successor)      |         | (Successor) |   | (Successor) |  | (Successor) |         | (Predecessor)
|                          |  | ($ in thousands)
|Balance Sheet Data:       |  |                  |         |             |   |             |  |             |         |               |   |         |  |   |        
|Cash and cash equivalents |  | $                | 31,975  |             | $ | 28,417      |  | $           | 32,989  |               | $ | 15,363  |  | $ | 21,453 
|Total assets              |  |                  | 363,157 |             |   | 302,686     |  |             | 309,354 |               |   | 179,144 |  |   | 410,971
|Long-term debt, net       |  |                  | 233,951 |             |   | 183,281     |  |             | 183,008 |               |   | 88,502  |  |   | 278,337
|Stockholders equity      |  |                  | 79,018  |             |   | 83,156      |  |             | 84,435  |               |   | 48,429  |  |   | 57,495 



13



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##### Table of Contents

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



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.



The following discussion and analysis as well as the associated tables are based on the financial statements of RIHC. The
financial statements of CRH and RIHC are materially similar with certain differences related to the following:



| |  |  | the financial statements of CRH include the financial statements of RREH, which acquired the Option Land on March 18, 2004 and issued a $40 million note to KINA in payment thereof;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the financial statements of CRH classify certain equity instruments 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; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the financial statements of RIHC include intercompany rent for the Option Land properties that RIHC pays to RREH. The intercompany rent is eliminated in the consolidation of RIHC
and RREH into CRHs financial statements.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



A
reconciliation of selected financial information between RIHC and CRH is as follows:



Assets



|                              |  |                   |         |   |                  |   |        
|----------------------------- |  | ----------------- | ------- | - | ---------------- | - | -------
|                              |  | December 31, 2004 |         |   | December 31,2003
|                              |  | ($ in thousands) 
|Total assets of RIHC          |  | $                 | 321,696 |   |                  | $ | 302,686
|Basis of Option Land acquired |  |                   | 41,616  |   |                  |   |       
|Other                         |  |                   | (155    | ) |                  |   |       
|                              |  |                   |         |   |                  |   |        
|Total assets of CRH           |  | $                 | 363,157 |   |                  | $ | 302,686
|                              |  |                   |         |   |                  |   |        



Liabilities



|                                    |  |                  |         |                   |   |        
|----------------------------------- |  | ---------------- | ------- | ----------------- | - | -------
|                                    |  | December 31,2004 |         | December 31, 2003
|                                    |  | ($ in thousands)
|Total liabilities of RIHC           |  | $                | 239,503 |                   | $ | 215,655
|Note payable, plus accrued interest |  |                  | 40,400  |                   |   |       
|Income taxes payable                |  |                  | 361     |                   |   |       
|Redeemable common stock             |  |                  | 3,875   |                   |   | 3,875  
|                                    |  |                  |         |                   |   |        
|Total liabilities of CRH            |  | $                | 284,139 |                   | $ | 219,530
|                                    |  |                  |         |                   |   |        



14



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##### Table of Contents

Equity



|                                   |  |                  |        |   |                   |   |        |  
|---------------------------------- |  | ---------------- | ------ | - | ----------------- | - | ------ | -
|                                   |  | December 31,2004 |        |   | December 31, 2003 |  
|                                   |  | ($ in thousands) |       
|Total shareholders equity of RIHC |  | $                | 82,193 |   |                   | $ | 87,031 |  
|Redeemable common stock            |  |                  | (3,875 | ) |                   |   | (3,875 | )
|Intercompany rent                  |  |                  | 1,460  |   |                   |   |       |  
|Interest expense                   |  |                  | (400   | ) |                   |   |       |  
|Income tax expense                 |  |                  | (360   | ) |                   |   |       |  
|                                   |  |                  |        |   |                   |   |        |  
|Total shareholders equity of CRH  |  | $                | 79,018 |   |                   | $ | 83,156 |  
|                                   |  |                  |        |   |                   |   |        |  



Net Income
(loss)



|                          |  |                         |        |   |      |   |        |      |  |   |      
|------------------------- |  | ----------------------- | ------ | - | ---- | - | ------ | ---- |  | - | -----
|                          |  | Year ended December 31,
|                          |  | 2004                    |        |   | 2003 |   |        | 2002
|                          |  | ($ in thousands)       
|Net income (loss) of RIHC |  | $                       | (4,838 | ) |      | $ | (1,256 | )    |  | $ | 2,877
|Intercompany rent         |  |                         | 1,460  |   |      |   |       |      |  |   |     
|Interest expense          |  |                         | (400   | ) |      |   |       |      |  |   |     
|Income tax expense        |  |                         | (360   | ) |      |   |       |      |  |   |     
|                          |  |                         |        |   |      |   |        |      |  |   |      
|Net income (loss) of CRH  |  | $                       | (4,138 | ) |      | $ | (1,256 | )    |  | $ | 2,877
|                          |  |                         |        |   |      |   |        |      |  |   |      



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.



On September 4, 2002, RIHC decommissioned the 166-room Atlantic City Tower to begin construction in November 2002 of a
27-story hotel tower on the same site. The expansion was substantially completed on June 16, 2004. The expansion added 399 hotel rooms and suites in the Rendezvous Tower, the Grand Lobby (which replaced the former hotel lobby), 25,000 square feet of
additional gaming space (collectively, the New Tower) and increased the number of slot machines and table games by 840 machines and 11 tables, as compared to December 31, 2003 levels. RIHC opened the expanded gaming space on May 28,
2004, and began opening hotel rooms in the New Tower to the public on June 16, 2004. The grand opening ceremony for the New Tower was held over the July 4, 2004 weekend.



15



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##### Table of Contents

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 construction of the New Tower and the resulting loss of hotel rooms and
gaming capacity during the construction. However, with the opening of the New Tower, operating results for 2004 were positively impacted. As such, management is focused on current efforts to position the Company to capitalize on that impact going
forward.



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 approximately 15% of table games drop, and its typical slot hold
percentage averages 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.



RIHC also considers EBITDA to be a key indicator of its
performance. EBITDA, as further defined in the Indenture, represents RIHCs earnings before interest expense, taxes, depreciation and amortization costs, pre-opening costs incurred in connection with the New Tower, 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. Not all companies 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, |       
|                                     |  | 2004                    |        |   | 2003 |   |        | 2002 | 
|                                     |  | ($ in thousands)        |       
|Net income (loss)                    |  | $                       | (4,838 | ) |      | $ | (1,256 | )    |  | $ | 2,877  |  
|Add: Interest expense                |  |                         | 19,195 |   |      |   | 19,133 |      |  |   | 19,055 |  
|Provision (benefit) for income taxes |  |                         | (1,912 | ) |      |   | 1,727  |      |  |   | 3,197  |  
|Depreciation and amortization        |  |                         | 16,837 |   |      |   | 9,993  |      |  |   | 10,160 |  
|Pre-opening expense                  |  |                         | 2,722  |   |      |   |       |      |  |   |       |  
|Loss on extinguishment of debt       |  |                         |       |   |      |   |       |      |  |   | 3,378  |  
|(Gain) loss on disposal of assets    |  |                         | (1,255 | ) |      |   | 61     |      |  |   |       |  
|Non-cash value of stock compensation |  |                         |       |   |      |   | (23    | )    |  |   | (182   | )
|                                     |  |                         |        |   |      |   |        |      |  |   |        |  
|EBITDA                               |  | $                       | 30,749 |   |      | $ | 29,635 |      |  | $ | 38,485 |  
|                                     |  |                         |        |   |      |   |        |      |  |   |        |  



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 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 impacted results during 2003, and a 33-day labor
strike during the fourth quarter of 2004; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Resorts construction and opening of the New Tower was successfully completed in the second quarter of 2004.
| | - |  | -----------------------------------------------------------------------------------------------------------



Revenues



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



|                                |  |                         |         |   |          |      |    |      |   |         |          |  |       |      |  |   |         |  
|------------------------------- |  | ----------------------- | ------- | - | -------- | ---- | -- | ---- | - | ------- | -------- |  | ----- | ---- |  | - | ------- | -
|                                |  | Year ended December 31, |        
|                                |  | 2004                    |         |   | % change |      |    | 2003 |   |         | % change |  |       | 2002 | 
|                                |  | ($ in thousands)        |        
|Casino revenues:                |  |                         |         |   |          |      |    |      |   |         |          |  |       |      |  |   |         |  
|Slots                           |  | $                       | 182,552 |   |          | 7.2  | %  |      | $ | 170,307 |          |  | (8.7  | )%   |  | $ | 186,610 |  
|Table games                     |  |                         | 63,868  |   |          | 9.5  | %  |      |   | 58,307  |          |  | (16.6 | )%   |  |   | 69,908  |  
|Other                           |  |                         | 1,422   |   |          | (6.5 | )% |      |   | 1,521   |          |  | (43.5 | )%   |  |   | 2,690   |  
|                                |  |                         |         |   |          |      |    |      |   |         |          |  |       |      |  |   |         |  
|Total casino revenues           |  |                         | 247,842 |   |          | 7.7  | %  |      |   | 230,135 |          |  | (11.2 | )%   |  |   | 259,208 |  
|Non-casino revenue:             |  |                         |         |   |          |      |    |      |   |         |          |  |       |      |  |   |         |  
|Food and beverage               |  |                         | 23,387  |   |          | 5.9  | %  |      |   | 22,079  |          |  | (10.4 | )%   |  |   | 24,649  |  
|Lodging                         |  |                         | 18,341  |   |          | 64.3 | %  |      |   | 11,163  |          |  | (14.3 | )%   |  |   | 13,031  |  
|Entertainment, retail and other |  |                         | 8,439   |   |          | 29.9 | %  |      |   | 6,496   |          |  | 0.1   | %    |  |   | 6,488   |  
|                                |  |                         |         |   |          |      |    |      |   |         |          |  |       |      |  |   |         |  
|Total non-casino revenues       |  |                         | 50,167  |   |          | 26.2 | %  |      |   | 39,738  |          |  | (10.0 | )%   |  |   | 44,168  |  
|Less: promotional allowances    |  |                         | (67,123 | ) |          | 23.3 | %  |      |   | (54,426 | )        |  | (18.4 | )%   |  |   | (66,664 | )
|                                |  |                         |         |   |          |      |    |      |   |         |          |  |       |      |  |   |         |  
|Total net revenues              |  | $                       | 230,886 |   |          | 7.2  | %  |      | $ | 215,447 |          |  | (9.0  | )%   |  | $ | 236,712 |  
|                                |  |                         |         |   |          |      |    |      |   |         |          |  |       |      |  |   |         |  



The increase in slot
revenues in 2004 was due to a $122 million (6%) increase in slot handle to $2.3 billion in 2004. The increase in slot handle was a direct result of the New Tower and related gaming floor expansion that included the addition of new themed slot
machines and improved slot technologies, including cashless slots.



The decrease in slot revenues in 2003 was due to a $295 million (12%) decrease in slot handle to $2.2 billion from $2.5 billion 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 related to the New Tower, and the impact of the openings of the Showboats hotel expansion in May 2003 and the Borgata in July 2003.



The increase in table games revenues in 2004 was due to a $30
million (8%) increase in table games drop to $414 million from $384 million in 2003, along with an improved table games hold of 15.4% from 15.2% in 2003. The increase in table drop was a direct result of the opening of the New Tower and related
gaming floor expansion that included the addition of new table games.



The decrease in table games revenues in 2003 resulted from a $48 million (11%) decrease in table games drop to $384 million from $432 million in 2002, combined with a lower hold of 15.2% compared to 16.2% in 2002. The decrease in table drop
was a direct result of the loss of hotel rooms, on-going construction related to the New Tower, and the impact of the opening of the Borgata.



17



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##### Table of Contents

The decrease in other gaming revenues in 2004 and 2003 was due to the relocation and subsequent reduction
in the size of Resorts simulcast room in August 2002.



The increase in food and beverage revenues in 2004 was due to increased traffic throughout the property and occupied room nights due to the opening of the New Tower.



The decrease in food and beverage revenues in 2003 was due to a 10% 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, related to the construction of the New Tower.



The increase in lodging revenues in 2004 was a result of the opening of the New Tower, which increased the number of available hotel rooms by 38% over
prior year levels. The number of rooms occupied during 2004 increased 26% over 2003 levels, while the average daily room rate increased to $89 in 2004, from $68 in 2003.



The decrease in lodging revenues in 2003 was a result of the loss of hotel rooms during the construction of the New Tower.
Resorts had an 18% decrease in available rooms in 2003 and a 15% decline in the number of occupied rooms from prior year levels. The average daily room rate of $68 in 2003 was comparable to the average daily rate in 2002.



The increase in entertainment, retail, and other revenue in 2004 was largely
due to the offering of more headliner acts targeted to our gaming patron. Additionally, other revenue experienced a 21% increase due to miscellaneous income, ATM commissions and parking revenues as a result of increased volumes throughout the
property in conjunction with the opening of the New Tower.



Promotional allowances are expenses incurred by Resorts for complimentary services (goods and services, including rooms, food, beverage and admission, provided free of charge to gaming patrons) and cash incentives given to gaming patrons.
In addition to an increase in promotional rooms expense of approximately $4 million as a result of the opening of the New Tower, the increased expense in 2004 resulted from higher cash incentives earned by slot machine patrons (which accounted for
approximately $5 million of the increase), attributable to cash incentives including cash complimentaries, mailings, acquisition and hotel coin, and are a direct result of increased gaming volumes.



Operating Results



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



|                                    |  |                         |         |          |       |    |      |   |          |  |       |      |  |   |        
|----------------------------------- |  | ----------------------- | ------- | -------- | ----- | -- | ---- | - | -------- |  | ----- | ---- |  | - | -------
|                                    |  | Year ended December 31,
|                                    |  | 2004                    |         | % change |       |    | 2003 |   | % change |  |       | 2002
|                                    |  | ($ in thousands)       
|Total net revenues                  |  | $                       | 230,886 |          | 7.2   | %  |      | $ | 215,447  |  | (9.0  | )%   |  | $ | 236,712
|Costs and expenses:                 |  |                         |         |          |       |    |      |   |          |  |       |      |  |   |        
|Casino and hotel operations         |  |                         | 160,113 |          | 2.7   | %  |      |   | 155,881  |  | (4.6  | )%   |  |   | 163,409
|Selling, general and administrative |  |                         | 40,546  |          | 30.9  | %  |      |   | 30,983   |  | (15.7 | )%   |  |   | 36,769 
|Pre-opening expenses                |  |                         | 2,722   |          | 100.0 | %  |      |   |         |  |      |      |  |   |       
|Depreciation and amortization       |  |                         | 16,837  |          | 68.5  | %  |      |   | 9,993    |  | (1.6  | )%   |  |   | 10,160 
|                                    |  |                         |         |          |       |    |      |   |          |  |       |      |  |   |        
|Total costs and expenses            |  |                         | 220,218 |          | 11.9  | %  |      |   | 196,857  |  | (6.4  | )%   |  |   | 210,338
|                                    |  |                         |         |          |       |    |      |   |          |  |       |      |  |   |        
|Income from operations              |  | $                       | 10,668  |          | (42.6 | )% |      | $ | 18,590   |  | (29.5 | )%   |  | $ | 26,374 
|                                    |  |                         |         |          |       |    |      |   |          |  |       |      |  |   |        



18



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##### Table of Contents

The completion of the New Tower during 2004 contributed to increased volumes throughout the property. As
a result, the costs associated with providing the services in the expanded facility also increased, as reflected in the increased casino and hotel operating costs. The largest increase in selling, general and administrative expenses in 2004 was a
52% increase in real estate taxes from $6.5 million in 2003 to $10 million in 2004, primarily resulting from the increase in assessments due to the opening of the New Tower.



For the twelve months ended December 31, 2004, the Company recorded $2.7 million of pre-opening expenses, primarily
advertising and related costs, to promote the opening of the expanded casino and hotel facility.



The increase in depreciation and amortization expense resulted from a $2.0 million increase in depreciation due to the opening of the New Tower on June
16, 2004. Additionally, the 2003 expense included the reversal of approximately $3.0 million of amortization expense related to discounts on funds previously deposited with the Casino Reinvestment Development Authority (CRDA) in below
market interest bearing instruments. This reversal resulted from the receipt from the CRDA of $9.2 million of previously deposited funds as reimbursement for costs incurred for the construction of the New Tower.



The construction of the New Tower during 2003 contributed to decreased
volumes throughout the property and associated decreases in operating costs. The largest reduction in expenses in 2003 was a 7% decrease in labor and related charges, which represent approximately half of the casino, hotel, and selling, general, and
administrative expenses. Management continuously monitored and reduced staffing levels in response to the declines in business in order to offset the reductions in revenues.



Also contributing to the 2003 expense reductions were reductions in gaming fees and taxes due to reduced gaming revenues,
reduced promotional expenses due to reduced gaming volumes and decreased real estate taxes due to the demolition of the old hotel tower.



Non-Operating Results



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



|                               |  |                         |        |   |      |   |        |      |  |   |        |  
|------------------------------ |  | ----------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                               |  | Year ended December 31, |       
|                               |  | 2004                    |        |   | 2003 |   |        | 2002 | 
|                               |  | ($ in thousands)        |       
|Interest income                |  | $                       | 522    |   |      | $ | 1,295  |      |  | $ | 1,951  |  
|Interest expense:              |  |                         |        |   |      |   |        |      |  |   |        |  
|Total interest cost            |  | $                       | 23,255 |   |      | $ | 22,755 |      |  | $ | 19,484 |  
|Less: capitalized interest     |  |                         | (4,060 | ) |      |   | (3,622 | )    |  |   | (429   | )
|                               |  |                         |        |   |      |   |        |      |  |   |        |  
|Interest expense, net          |  | $                       | 19,195 |   |      | $ | 19,133 |      |  | $ | 19,055 |  
|Other (income) expense, net    |  | $                       | (1,255 | ) |      | $ | 281    |      |  | $ | (182   | )
|Loss on extinguishment of debt |  | $                       |       |   |      | $ |       |      |  | $ | 3,378  |  



The 2004 and 2003
decreases in interest income are related to the decrease in Resorts restricted cash balance for the construction of the New Tower as the project was funded during the course of the construction.



Other income for 2004 represents gains from the sale of fixed assets. During
the year, RIHC disposed of a warehouse located in Atlantic City, billboards, and slot machines which have been replaced by new, state-of-the-art slot machines.



The increase in interest expense in 2004 is due to increased borrowings throughout the year under the equipment credit facility. 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.



19



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##### Table of Contents

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 previous credit facility.



Income Taxes



The following table presents information related to the RIHCs income tax expense (benefit) for the years noted:



|                                      |  |                         |        |   |      |   |       |  |   |      
|------------------------------------- |  | ----------------------- | ------ | - | ---- | - | ----- |  | - | -----
|                                      |  | Year ended December 31,
|                                      |  | 2004                    |        |   | 2003 |   | 2002 
|                                      |  | ($ in thousands)       
|Federal income tax expense (benefit)  |  | $                       | (1,974 | ) |      | $ | 648   |  | $ | 2,250
|NJ state income tax expense (benefit) |  |                         | (288   | ) |      |   | 904   |  |   | 947  
|NJ Casino net profits tax             |  |                         | 350    |   |      |   | 175   |  |   |     
|                                      |  |                         |        |   |      |   |       |  |   |      
|Total income tax expense (benefit)    |  | $                       | (1,912 | ) |      | $ | 1,727 |  | $ | 3,197
|                                      |  |                         |        |   |      |   |       |  |   |      



On June 30, 2003, the
State of New Jersey amended the NJCCA, 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 years ended December 31, 2004 and 2003, RIHC recorded provisions of $350,000 and $175,000
for this tax, respectively.



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 assessment
(NJAMA) 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, 2004, RIHC has a net operating loss carryforward for federal purposes of $11.0 million. No valuation
allowance has been provided against this, as RIHC expects to fully use it before it expires in 2024.



At December 31, 2004, RIHC 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. RIHC has reported a full valuation allowance against the carryforward because it does not expect to realize the tax benefit, primarily due to the
limited expiration period. However, RIHC has approximately $1.8 million of state tax credits resulting from the NJAMA which may be applied to offset future taxable income without expiration; these credits have been recorded as an asset on
RIHCs balance sheet at December 31, 2004.



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##### Table of Contents

Liquidity and Capital Resources



RIHCs cash flows consisted of the following:



|                                                     |  |                         |         |   |      |   |         |      |  |   |          |  
|---------------------------------------------------- |  | ----------------------- | ------- | - | ---- | - | ------- | ---- |  | - | -------- | -
|                                                     |  | Year ended December 31, |        
|                                                     |  | 2004                    |         |   | 2003 |   |         | 2002 | 
|                                                     |  | ($ in thousands)        |        
|Net cash provided by operations                      |  | $                       | 14,560  |   |      | $ | 4,178   |      |  | $ | 27,003   |  
|                                                     |  |                         |        
|Cash flows from investing activities:                |  |                         |         |   |      |   |         |      |  |   |          |  
|Purchases of property and equipment                  |  |                         | (67,937 | ) |      |   | (53,490 | )    |  |   | (21,642  | )
|Purchases of restricted cash, net of releases        |  |                         | 49,910  |   |      |   | 39,613  |      |  |   | (89,971  | )
|Proceeds from sale of fixed assets                   |  |                         | 1,724   |   |      |   |        |      |  |   |         |  
|CRDA refunds (deposits), net                         |  |                         | (2,295  | ) |      |   | 6,168   |      |  |   | (1,775   | )
|                                                     |  |                         |         |   |      |   |         |      |  |   |          |  
|Net cash used in investing activities                |  |                         | (18,598 | ) |      |   | (7,709  | )    |  |   | (113,388 | )
|                                                     |  |                         |        
|Cash flows from financing activities:                |  |                         |         |   |      |   |         |      |  |   |          |  
|Proceeds of borrowings                               |  |                         | 10,160  |   |      |   |        |      |  |   | 180,835  |  
|Debt repayments                                      |  |                         | (2,892  | ) |      |   | (979    | )    |  |   | (102,400 | )
|Proceeds from issuance of common stock               |  |                         |        |   |      |   |        |      |  |   | 35,000   |  
|Other                                                |  |                         | (135    | ) |      |   | (62     | )    |  |   | (9,424   | )
|                                                     |  |                         |         |   |      |   |         |      |  |   |          |  
|Net cash provided by (used in) financing activities  |  |                         | 7,133   |   |      |   | (1,041  | )    |  |   | 104,011  |  
|                                                     |  |                         |         |   |      |   |         |      |  |   |          |  
|Net increase (decrease) in cash and cash equivalents |  | $                       | 3,095   |   |      | $ | (4,572  | )    |  | $ | 17,626   |  
|                                                     |  |                         |         |   |      |   |         |      |  |   |          |  



Cash flows from Operating
Activities



The improvement in cash flow from operations
in 2004 over 2003 resulted primarily from the improved results following the opening of the New Tower, as well as favorable working capital changes, including a $2.4 million increase in accounts payable and accrued expenses, compared to a $6.3
million decrease in those items in 2003.



At December 31, 2004,
RIHC had cash and cash equivalents of $31.5 million, as compared to $28.4 million at December 31, 2003. Included in this balance at December 31, 2004 and 2003 is approximately $20.0 million and $17.6 million, respectively, representing cash on hand,
which is needed to operate the business.



Cash Flows from Investing
Activities



During the year ended December 31, 2004, the
Company expended $67.9 million for the purchase of property and equipment, which includes $60.1 million for the construction of the new hotel tower, (including $4.1 million of capitalized interest related to the construction of the new hotel tower),
and $7.8 million for other expenditures, such as the purchase of new slot machines and related equipment, computer upgrades, and other facility improvements.



During the year ended December 31, 2003, the Company expended $53.5 million for the purchase of property and equipment, which included $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 $8.8 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.



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##### Table of Contents

At December 31, 2004, RIHC had a restricted cash balance of $0.5 million, which is included in other
assets on RIHCs Consolidated Balance Sheet. The restricted cash consists of the unexpended portion of the proceeds of an asset sale, as required by the Indenture. Under the terms of the Disbursement Agreement, dated March 22, 2002, funds
remaining in the liquidity disbursement account after the final Test Period (as defined in the Indenture, the four fiscal quarter period ending December 31, 2004), and upon certification by RIHC of certain conditions, would be returned to RIHC and
could be distributed as a dividend to CRH. This certification was delivered by RIHC, and accordingly on January 20, 2005 the $9.7 million remaining in the liquidity disbursement account was delivered to RIHC; as of December 31, 2004, these funds are
included in cash on RIHCs Consolidated Balance Sheet.



The CRDA agreed to reimburse certain costs associated with the hotel tower construction, totaling approximately $13.1 million through 2008. Approximately $0.8 million of these reimbursements was received by RIHC in 2004, and $9.2 million
was received 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 to finance the costs associated with the construction of the New Tower.



Other Factors Affecting Liquidity



In June 2002, RIH entered into a $20.0 million credit facility, the proceeds
of which were intended to be used for the acquisition of furniture, fixtures, and equipment. RIHC has guaranteed the obligations of RIH under this equipment credit facility. As of December 31, 2004, RIHC had borrowed $14.7 million of the equipment
credit facility to purchase furniture, fixtures, and equipment for the New Tower and $3.1 million to purchase additional slot machines to replace existing equipment. The outstanding balance due under this credit facility at December 31, 2004 was
$15.5 million. On March 30, 2005, this credit facility was amended to provide for the suspension of principal payments for one year, commencing April 1, 2005; the outstanding principal balance as of March 31, 2005 will be paid in equal monthly
installments commencing April 2006 and ending February 2009.



In November 2002, RIHC also entered into a $10.0 million revolving credit facility (the Commerce Facility). There was no outstanding balance on the Commerce Facility at December 31, 2004. However, $4.4 million of standby letters
of credit have been issued against the Commerce Facility related to insurance obligations of the Company, leaving an availability of $5.6 million as of December 31, 2004.



In June 2002, RIHC 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 2004 were $124,900, 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.



In March 2004, the Option Land was acquired by RREH in exchange for the issuance of a $40 million note by RREH to KINA. No principal payments are required
on the $40 million note until it reaches maturity. 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 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 converted to a month-



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##### Table of Contents

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: $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 any security deposit remaining upon termination to be refunded to RIH.



Commitments and Contractual Obligations



The following table summarizes the Companies contractual commitments as of December 31, 2004:



|                         |  |                  |         |                 |   |            |  |             |        |              |   |         |  |   |       
|------------------------ |  | ---------------- | ------- | --------------- | - | ---------- |  | ----------- | ------ | ------------ | - | ------- |  | - | ------
|                         |  | Total            |         | Less than1 year |   | 1  3years |  | 4  5 years |        | After 5years
|                         |  | ($ in thousands)
|Long-term debt:          |  |                  |         |                 |   |            |  |             |        |              |   |         |  |   |       
|Principal                |  | $                | 195,871 |                 | $ | 4,786      |  | $           | 8,156  |              | $ | 182,929 |  | $ |      
|Interest                 |  |                  | 88,501  |                 |   | 21,345     |  |             | 42,061 |              |   | 25,095  |  |   |      
|Capital leases           |  |                  | 8,632   |                 |   | 498        |  |             | 996    |              |   | 996     |  |   | 6,142 
|Operating leases         |  |                  | 23,507  |                 |   | 3,013      |  |             | 4,255  |              |   | 3,864   |  |   | 12,375
|Other obligations:       |  |                  |         |                 |   |            |  |             |        |              |   |         |  |   |       
|Construction commitments |  |                  | 14,458  |                 |   | 14,458     |  |             |       |              |   |        |  |   |      
|Purchase obligations     |  |                  | 2,906   |                 |   | 2,906      |  |             |       |              |   |        |  |   |      
|                         |  |                  |         |                 |   |            |  |             |        |              |   |         |  |   |       
|                         |  | $                | 333,875 |                 | $ | 47,006     |  | $           | 55,468 |              | $ | 212,884 |  | $ | 18,517
|                         |  |                  |         |                 |   |            |  |             |        |              |   |         |  |   |       



Construction
commitments represent the balance due on the contract for the construction of the New Tower. 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.



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.



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 Companies significant accounting policies are more fully described in Note 2 (Summary of Significant Accounting Policies) to the Companies 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 the Companies consolidated financial statements, and requires management to make difficult, subjective, or complex
judgments that could have a material effect on the Companies 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.



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##### Table of Contents

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
Companies collection policy, and the judgment and expertise of management. Management believes that past experience has indicated that the Companies 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 Companies 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 Companies 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 long-lived 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 Companies assets periodically.



Adoption of Recent Accounting Pronouncements



On December 16, 2004, the FASB issued Statement 123 (revised 2004),
Share Based Payment (FAS 123R). FAS 123R supersedes APB 25, Account for Stock issued to Employees, and is effective for the Company at the beginning of the first interim or annual period after January 1, 2006. FAS 123R
requires that the fair value of equity based awards be recognized in the financial statements for new awards and previously granted awards that are not yet fully vested on the adoption date. The Company is currently evaluating the impact of adopting
FAS 123R, but does not expect a material impact.



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##### Table of Contents

Quarterly Results of Operations



The following table sets forth certain of the Companies unaudited financial information on a quarterly basis:



|                        |  |                  |        |   |               |   |               |  |               |        |  |   |        |  
|----------------------- |  | ---------------- | ------ | - | ------------- | - | ------------- |  | ------------- | ------ |  | - | ------ | -
|                        |  | FirstQuarter     |        |   | SecondQuarter |   | Third Quarter |  | FourthQuarter |       
|                        |  | ($ in thousands) |       
|2004                    |  |                  |        |   |               |   |               |  |               |        |  |   |        |  
|Revenues                |  | $                | 51,160 |   |               | $ | 58,071        |  | $             | 71,048 |  | $ | 50,607 |  
|Operating income (loss) |  |                  | 1,875  |   |               |   | 3,141         |  |               | 8,362  |  |   | (1,249 | )
|Net income (loss)       |  | $                | (1,567 | ) |               | $ | 34            |  | $             | 1,742  |  | $ | (4,347 | )
|                        |  |                  |        |  
|                        |  | FirstQuarter     |        |   | SecondQuarter |   | ThirdQuarter  |  | FourthQuarter |       
|                        |  | ($ 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 | )



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 Companies long-term debt is fixed rate. See
Note 8 of the Notes to the Consolidated Financial Statements of the Companies for the components of 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 Registered Public Accounting Firm                                                         |  | 27
|                                             |  |                                                                                                                
|                                             |  | Consolidated Balance Sheets at December 31, 2004 and 2003                                                       |  | 28
|                                             |  |                                                                                                                
|                                             |  | Consolidated Statements of Operations for the years ended December 31, 2004, 2003 and 2002                      |  | 29
|                                             |  |                                                                                                                
|                                             |  | Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002                      |  | 30
|                                             |  |                                                                                                                
|                                             |  | Consolidated Statements of Changes of Shareholders Equity for the years ended December 31, 2004, 2003 and 2002 |  | 31
|                                             |  |                                                                                                                
|                                             |  | Notes to Consolidated Financial Statements                                                                      |  | 32
|                                             |  |                                                                                                                
|                                             |  | Financial Statement ScheduleSchedule II Valuation and Qualifying Accounts                                      |  | 43
|                                             | 
|Resorts International Hotel and Casino, Inc. |  |                                                                                                                
|                                             |  |                                                                                                                
|                                             |  | Report of Independent Registered Public Accounting Firm                                                         |  | 44
|                                             |  |                                                                                                                
|                                             |  | Consolidated Balance Sheets at December 31, 2004 and 2003                                                       |  | 45
|                                             |  |                                                                                                                
|                                             |  | Consolidated Statements of Operations for the years ended December 31, 2004, 2003 and 2002                      |  | 46
|                                             |  |                                                                                                                
|                                             |  | Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002                      |  | 47
|                                             |  |                                                                                                                
|                                             |  | Consolidated Statements of Changes of Shareholders Equity for the years ended December 31, 2004, 2003 and 2002 |  | 48
|                                             |  |                                                                                                                
|                                             |  | Notes to Consolidated Financial Statements                                                                      |  | 49
|                                             |  |                                                                                                                
|                                             |  | Financial Statement ScheduleSchedule II Valuation and Qualifying Accounts                                      |  | 59



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 Registered Public Accounting Firm



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, 2004 and 2003, and the related
consolidated statements of operations, shareholders equity, and cash flows for each of the three years in the period ended December 31, 2004. 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 the standards of the Public Company Accounting
Oversight Board (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. We were not engaged to perform an audit of the
Companys internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and significant estimates made by management, and 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, 2004 and 2003, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31,
2004, in conformity with U.S. generally accepted accounting principles. 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 28, 2005, except for Note 15,

as to which the date is March 30, 2005



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##### Table of Contents

COLONY RIH HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share amounts)



|                                                                                                                |  |              |         |      |   |        
|--------------------------------------------------------------------------------------------------------------- |  | ------------ | ------- | ---- | - | -------
|                                                                                                                |  | December 31,
|                                                                                                                |  | 2004         |         | 2003
|Assets                                                                                                          |  |              |         |      |   |        
|Current assets                                                                                                  |  |              |         |      |   |        
|Cash and cash equivalents                                                                                       |  | $            | 31,975  |      | $ | 28,417 
|Receivables, net                                                                                                |  |              | 5,530   |      |   | 5,175  
|Inventories                                                                                                     |  |              | 2,332   |      |   | 1,503  
|Prepaid expenses and other current assets                                                                       |  |              | 3,060   |      |   | 2,766  
|Deferred income taxes, net                                                                                      |  |              | 4,804   |      |   | 4,294  
|                                                                                                                |  |              |         |      |   |        
|Total current assets                                                                                            |  |              | 47,701  |      |   | 42,155 
|Property and equipment, net                                                                                     |  |              | 297,859 |      |   | 189,609
|Other assets (including $500 and $50,358 of restricted cash and cash equivalents in 2004 and 2003, respectively |  |              | 17,597  |      |   | 70,922 
|                                                                                                                |  |              |         |      |   |        
|Total assets                                                                                                    |  | $            | 363,157 |      | $ | 302,686
|                                                                                                                |  |              |         |      |   |        
|Liabilities and Shareholders Equity                                                                            |  |              |         |      |   |        
|Current liabilities                                                                                             |  |              |         |      |   |        
|Current maturities of long-term debt                                                                            |  | $            | 5,525   |      | $ | 846    
|Accounts payable                                                                                                |  |              | 10,957  |      |   | 3,390  
|Accrued interest payable                                                                                        |  |              | 6,439   |      |   | 6,038  
|Accrued expenses and other current liabilities                                                                  |  |              | 16,901  |      |   | 16,509 
|                                                                                                                |  |              |         |      |   |        
|Total current liabilities                                                                                       |  |              | 39,822  |      |   | 26,783 
|Long-term debt, less current portion                                                                            |  |              | 233,951 |      |   | 183,281
|Deferred income taxes, net                                                                                      |  |              | 6,491   |      |   | 5,591  
|Redeemable common stock                                                                                         |  |              | 3,875   |      |   | 3,875  
|                                                                                                                |  |              |         |      |   |        
|Total liabilities                                                                                               |  |              | 284,139 |      |   | 219,530
|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  |      |   | 73,790 
|Retained earnings                                                                                               |  |              | 5,220   |      |   | 9,358  
|                                                                                                                |  |              |         |      |   |        
|Total shareholders equity                                                                                      |  |              | 79,018  |      |   | 83,156 
|                                                                                                                |  |              |         |      |   |        
|Total liabilities and shareholders equity                                                                      |  | $            | 363,157 |      | $ | 302,686
|                                                                                                                |  |              |         |      |   |        



See accompanying notes.



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COLONY RIH HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands)



|                                     |  |                         |         |   |      |   |         |      |  |   |         |  
|------------------------------------ |  | ----------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                     |  | Year ended December 31, |        
|                                     |  | 2004                    |         |   | 2003 |   |         | 2002 | 
|Revenues:                            |  |                         |         |   |      |   |         |      |  |   |         |  
|Casino                               |  | $                       | 247,842 |   |      | $ | 230,135 |      |  | $ | 259,208 |  
|Lodging                              |  |                         | 18,341  |   |      |   | 11,163  |      |  |   | 13,031  |  
|Food and beverage                    |  |                         | 23,387  |   |      |   | 22,079  |      |  |   | 24,649  |  
|Other                                |  |                         | 8,439   |   |      |   | 6,496   |      |  |   | 6,488   |  
|Less: promotional allowances         |  |                         | (67,123 | ) |      |   | (54,426 | )    |  |   | (66,664 | )
|                                     |  |                         |         |   |      |   |         |      |  |   |         |  
|Total net revenue                    |  |                         | 230,886 |   |      |   | 215,447 |      |  |   | 236,712 |  
|                                     |  |                         |        
|Costs and expenses:                  |  |                         |         |   |      |   |         |      |  |   |         |  
|Casino                               |  |                         | 117,425 |   |      |   | 117,156 |      |  |   | 123,616 |  
|Lodging                              |  |                         | 3,360   |   |      |   | 1,318   |      |  |   | 1,672   |  
|Food and beverage                    |  |                         | 10,743  |   |      |   | 11,721  |      |  |   | 12,564  |  
|Other operating                      |  |                         | 28,585  |   |      |   | 25,686  |      |  |   | 25,557  |  
|Selling, general, and administrative |  |                         | 39,085  |   |      |   | 30,983  |      |  |   | 36,769  |  
|Depreciation and amortization        |  |                         | 16,837  |   |      |   | 9,993   |      |  |   | 10,160  |  
|Pre-opening                          |  |                         | 2,722   |   |      |   |        |      |  |   |        |  
|                                     |  |                         |         |   |      |   |         |      |  |   |         |  
|Total costs and expenses             |  |                         | 218,757 |   |      |   | 196,857 |      |  |   | 210,338 |  
|                                     |  |                         |         |   |      |   |         |      |  |   |         |  
|Income from operations               |  |                         | 12,129  |   |      |   | 18,590  |      |  |   | 26,374  |  
|                                     |  |                         |        
|Interest income                      |  |                         | 522     |   |      |   | 1,295   |      |  |   | 1,951   |  
|Interest expense                     |  |                         | (19,595 | ) |      |   | (19,133 | )    |  |   | (19,055 | )
|Other income (expense), net          |  |                         | 1,255   |   |      |   | (281    | )    |  |   | 182     |  
|Loss on extinguishment of debt       |  |                         |        |   |      |   |        |      |  |   | (3,378  | )
|                                     |  |                         |         |   |      |   |         |      |  |   |         |  
|Income (loss) before income taxes    |  |                         | (5,689  | ) |      |   | 471     |      |  |   | 6,074   |  
|Provision (benefit) for income taxes |  |                         | (1,551  | ) |      |   | 1,727   |      |  |   | 3,197   |  
|                                     |  |                         |         |   |      |   |         |      |  |   |         |  
|Net income (loss)                    |  | $                       | (4,138  | ) |      | $ | (1,256  | )    |  | $ | 2,877   |  
|                                     |  |                         |         |   |      |   |         |      |  |   |         |  



See accompanying notes.



29



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COLONY RIH HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)



|                                                                                         |  |                         |         |   |      |   |         |      |  |   |          |  
|---------------------------------------------------------------------------------------- |  | ----------------------- | ------- | - | ---- | - | ------- | ---- |  | - | -------- | -
|                                                                                         |  | Year ended December 31, |        
|                                                                                         |  | 2004                    |         |   | 2003 |   |         | 2002 | 
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                    |  |                         |         |   |      |   |         |      |  |   |          |  
|Net income (loss)                                                                        |  | $                       | (4,138  | ) |      | $ | (1,256  | )    |  | $ | 2,877    |  
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |                         |         |   |      |   |         |      |  |   |          |  
|Loss on extinguishment of debt                                                           |  |                         |        |   |      |   |        |      |  |   | 3,378    |  
|Depreciation and amortization                                                            |  |                         | 15,328  |   |      |   | 12,273  |      |  |   | 9,614    |  
|Amortization of debt premiums, discounts and issuance costs                              |  |                         | 1,858   |   |      |   | 1,733   |      |  |   | 1,397    |  
|Provision for doubtful receivables                                                       |  |                         | 138     |   |      |   | 468     |      |  |   | 1,305    |  
|Gain on disposal of fixed assets                                                         |  |                         | (1,255  | ) |      |   |        |      |  |   |         |  
|Provision for discount on CRDA obligations, net of amortization                          |  |                         | 1,510   |   |      |   | (2,280  | )    |  |   | 551      |  
|Deferred income taxes                                                                    |  |                         | 390     |   |      |   | 1,017   |      |  |   | 1,455    |  
|Other                                                                                    |  |                         |        |   |      |   | 38      |      |  |   | (182     | )
|Changes in operating assets and liabilities:                                             |  |                         |         |   |      |   |         |      |  |   |          |  
|Net (increase) decrease in receivables                                                   |  |                         | (493    | ) |      |   | (545    | )    |  |   | 1,870    |  
|Net (increase) decrease in inventories and prepaid expenses and other current assets     |  |                         | (1,123  | ) |      |   | 360     |      |  |   | (426     | )
|Net (increase) decrease in deferred charges and other assets                             |  |                         | 1,150   |   |      |   | (1,309  | )    |  |   | 1,083    |  
|Net increase (decrease) in accounts payable and accrued expense                          |  |                         | 2,873   |   |      |   | (6,321  | )    |  |   | (680     | )
|Net increase in interest payable                                                         |  |                         | 401     |   |      |   |        |      |  |   | 4,761    |  
|                                                                                         |  |                         |         |   |      |   |         |      |  |   |          |  
|Net cash provided by operating activities                                                |  |                         | 16,639  |   |      |   | 4,178   |      |  |   | 27,003   |  
|                                                                                         |  |                         |         |   |      |   |         |      |  |   |          |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                    |  |                         |         |   |      |   |         |      |  |   |          |  
|Purchases of cash and cash equivalents  restricted, net of releases                     |  |                         | 49,910  |   |      |   | 39,613  |      |  |   | (89,971  | )
|Purchases of property and equipment                                                      |  |                         | (69,553 | ) |      |   | (53,490 | )    |  |   | (21,642  | )
|Proceeds from sale of fixed assets                                                       |  |                         | 1,724   |   |      |   |        |      |  |   |         |  
|CRDA deposits                                                                            |  |                         | (3,051  | ) |      |   | (3,021  | )    |  |   | (3,267   | )
|CRDA refunds                                                                             |  |                         | 756     |   |      |   | 9,189   |      |  |   | 1,492    |  
|                                                                                         |  |                         |         |   |      |   |         |      |  |   |          |  
|Net cash used in investing activities                                                    |  |                         | (20,214 | ) |      |   | (7,709  | )    |  |   | (113,388 | )
|                                                                                         |  |                         |         |   |      |   |         |      |  |   |          |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                    |  |                         |         |   |      |   |         |      |  |   |          |  
|Proceeds of borrowings                                                                   |  |                         | 10,160  |   |      |   |        |      |  |   | 180,835  |  
|Payments to secure borrowings                                                            |  |                         | (135    | ) |      |   | (62     | )    |  |   | (8,432   | )
|Proceeds from the issuance of common stock                                               |  |                         |        |   |      |   |        |      |  |   | 33,250   |  
|Proceeds from the issuance of redeemable common stock                                    |  |                         |        |   |      |   |        |      |  |   | 1,750    |  
|Other                                                                                    |  |                         |        |   |      |   |        |      |  |   | 102      |  
|Prepayment penalty on long-term debt                                                     |  |                         |        |   |      |   |        |      |  |   | (1,094   | )
|Debt repayments                                                                          |  |                         | (2,892  | ) |      |   | (979    | )    |  |   | (102,400 | )
|                                                                                         |  |                         |         |   |      |   |         |      |  |   |          |  
|Net cash provided by (used in) financing activities                                      |  |                         | 7,133   |   |      |   | (1,041  | )    |  |   | 104,011  |  
|                                                                                         |  |                         |         |   |      |   |         |      |  |   |          |  
|Net increase (decrease) in cash and cash equivalents                                     |  |                         | 3,558   |   |      |   | (4,572  | )    |  |   | 17,626   |  
|Cash and cash equivalents at beginning of year                                           |  |                         | 28,417  |   |      |   | 32,989  |      |  |   | 15,363   |  
|                                                                                         |  |                         |         |   |      |   |         |      |  |   |          |  
|Cash and cash equivalents at end of year                                                 |  | $                       | 31,975  |   |      | $ | 28,417  |      |  | $ | 32,989   |  
|                                                                                         |  |                         |         |   |      |   |         |      |  |   |          |  
|SUPPLEMENTAL CASH FLOW DISCLOSURES:                                                      |  |                         |         |   |      |   |         |      |  |   |          |  
|Cash paid during the year for:                                                           |  |                         |         |   |      |   |         |      |  |   |          |  
|Interest                                                                                 |  | $                       | 21,395  |   |      | $ | 21,023  |      |  | $ | 13,318   |  
|Income taxes paid (refunded), net                                                        |  |                         | (519    | ) |      |   | (609    | )    |  |   | 4,350    |  
|Non-cash investment and financing transactions:                                          |  |                         |         |   |      |   |         |      |  |   |          |  
|Obligations incurred for the purchase of property and equipment                          |  |                         | 7,577   |   |      |   | 645     |      |  |   |         |  
|Notes payable issued in connection with option land purchase                             |  |                         | 40,000  |   |      |   |        |      |  |   |         |  
|Property and equipment acquired under capital lease obligations                          |  |                         |        |   |      |   |        |      |  |   | 6,530    |  



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 |  |   | AccumulatedOtherComprehensiveIncome |   |  | Total Shareholders Equity |     
|Balance at January 1, 2002                                            |  | $           | 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 |  
|                                                                      |  |             |   |                         |   |        |                             |  |   |                                     |   |  |                            |      |   |  |   |        |  
|Net loss                                                              |  |             |  |                         |   |       |                             |  |   | (4,138                              | ) |  |                            |     |   |  |   | (4,138 | )
|                                                                      |  |             |   |                         |   |        |                             |  |   |                                     |   |  |                            |      |   |  |   |        |  
|Balance at December 31, 2004                                          |  | $           | 8 |                         | $ | 73,790 |                             |  | $ | 5,220                               |   |  | $                          |     |   |  | $ | 79,018 |  
|                                                                      |  |             |   |                         |   |        |                             |  |   |                                     |   |  |                            |      |   |  |   |        |  



See accompanying notes.



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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 or the
Company), 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), owns and operates Resorts Atlantic City (Resorts), 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.



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.



Under the terms of the Disbursement Agreement, dated March 22, 2002, funds remaining in the liquidity disbursement account after the final Test Period (as
defined in the Indenture, the four fiscal quarter period ending December 31, 2004), and upon certification by RIHC of certain conditions, would be returned to RIHC and could be distributed as a dividend to CRH. This certification was delivered by
RIHC, and accordingly on January 20, 2005 the $9.7 million remaining in the liquidity disbursement account was delivered to RIHC; as of December 31, 2004, these funds are included in cash and cash equivalents on the Companys Consolidated
Balance Sheet.



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##### Table of Contents

2. Summary of Significant Accounting Policies (continued)



Inventories



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



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 expense of $4.1 million and $3.6 million was capitalized for the years ended December 31, 2004 and 2003, 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 (SFAS No. 144) 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.



Income Taxes



The Company 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.



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,
|                        |  | 2004                    |        | 2003 |   | 2002  
|Rooms                   |  | $                       | 9,849  |      | $ | 10,363 |  | $ | 10,277
|Food and beverage       |  |                         | 16,115 |      |   | 15,729 |  |   | 16,386
|Entertainment and other |  |                         | 3,678  |      |   | 3,390  |  |   | 3,224 
|                        |  |                         |        |      |   |        |  |   |       
|                        |  | $                       | 29,642 |      | $ | 29,482 |  | $ | 29,887
|                        |  |                         |        |      |   |        |  |   |       



Cash discounts based
upon a negotiated amount with each customer are recognized as a promotional allowance on the date the related revenues are 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.



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##### Table of Contents

2. Summary of Significant Accounting Policies (continued)



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.



Advertising



The Company expenses advertising costs as incurred. These costs are included
in Selling, General and Administrative costs on the Companys Consolidated Statements of Operations.



Pre-Opening Expenses



For the year ended December 31, 2004, the Company recorded $2.7 million of pre-opening expenses, primarily advertising and related costs, to promote the opening of the New Tower.



Stock Based Compensation



As allowed under the provisions of Financial Accounting Standards Board Statement Number 123 (SFAS No. 123), Accounting for Stock-Based
Compensation, the Company applies the provisions of Accounting Principles Board Opinion Number 25, Accounting for Stock Issued to Employees, and related interpretations in accounting for employee stock options, and accordingly,
does not recognize compensation expense. Had compensation expense for the employee stock option plan been determined in accordance with SFAS No. 123, total stock-based employee compensation expense, net of tax effects, would have been $30,000,
$30,000 and $48,000 for the years ended December 31, 2004, 2003, and 2002, respectively. The fair value for these options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions:



|                        |  |         |   |  |         |   |  |         |  
|----------------------- |  | ------- | - |  | ------- | - |  | ------- | -
|                        |  | 2004    |   |  | 2003    |   |  | 2002    |  
|Risk free interest rate |  | 4.66    | % |  | 5.07    | % |  | 4.79    | %
|Volatility factors      |  | 10      | % |  | 10      | % |  | 10      | %
|Expected life           |  | 5 years |   |  | 5 years |   |  | 5 years |  
|Dividends               |  | None    |   |  | None    |   |  | None    |  



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



On December 16, 2004, the FASB issued Statement 123 (revised 2004), Share Based Payment (FAS 123R). FAS 123R supersedes APB 25,
Accounting for Stock Issued to Employees, and is effective for the Company at the beginning of the first interim or annual period after January 1, 2006. FAS 123R requires that the fair value of equity based awards be recognized in the
financial statements for new awards and previously granted awards that are not yet fully vested on the adoption date. The Company is currently evaluating the impact of adopting FAS 123R, 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.



34



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##### Table of Contents

4. Receivables



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



|                                      |  |      |        |   |      |   |        |  
|------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|                                      |  | 2004 |        |   | 2003 |  
|Gaming                                |  | $    | 5,315  |   |      | $ | 5,733  |  
|Less: allowance for doubtful accounts |  |      | (1,415 | ) |      |   | (2,010 | )
|                                      |  |      |        |   |      |   |        |  
|                                      |  |      | 3,900  |   |      |   | 3,723  |  
|Non-gaming:                           |  |      |        |   |      |   |        |  
|Hotel and related                     |  |      | 642    |   |      |   | 320    |  
|Other                                 |  |      | 1,020  |   |      |   | 1,173  |  
|                                      |  |      |        |   |      |   |        |  
|                                      |  |      | 1,662  |   |      |   | 1,493  |  
|Less: allowance for doubtful accounts |  |      | (32    | ) |      |   | (41    | )
|                                      |  |      |        |   |      |   |        |  
|                                      |  |      | 1,630  |   |      |   | 1,452  |  
|                                      |  |      |        |   |      |   |        |  
|Receivables, net                      |  | $    | 5,530  |   |      | $ | 5,175  |  
|                                      |  |      |        |   |      |   |        |  



5. Property and Equipment



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



|                                  |  |      |         |   |      |   |         |  
|--------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                  |  | 2004 |         |   | 2003 |  
|Land and land rights              |  | $    | 76,314  |   |      | $ | 34,698  |  
|Hotels and other buildings        |  |      | 193,306 |   |      |   | 80,125  |  
|Furniture, fixtures and equipment |  |      | 62,582  |   |      |   | 39,091  |  
|Construction in progress          |  |      | 1,816   |   |      |   | 58,816  |  
|                                  |  |      |         |   |      |   |         |  
|                                  |  |      | 334,018 |   |      |   | 212,730 |  
|Less: accumulated depreciation    |  |      | (36,159 | ) |      |   | (23,121 | )
|                                  |  |      |         |   |      |   |         |  
|Net property and equipment        |  | $    | 297,859 |   |      | $ | 189,609 |  
|                                  |  |      |         |   |      |   |         |  



6. Other Assets



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



|                                                |  |      |        |      |   |       
|----------------------------------------------- |  | ---- | ------ | ---- | - | ------
|                                                |  | 2004 |        | 2003
|CRDA deposits, bonds and other investments, net |  | $    | 11,085 |      | $ | 12,356
|Debt issuance costs, net                        |  |      | 5,104  |      |   | 6,299 
|Other                                           |  |      | 908    |      |   | 1,909 
|Restricted cash                                 |  |      | 500    |      |   | 50,358
|                                                |  |      |        |      |   |       
|                                                |  | $    | 17,597 |      | $ | 70,922
|                                                |  |      |        |      |   |       



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 2004, 2003 and 2002, for discounts on obligations arising in those years were $1.5 million, ($2.3 million), and $547,000, respectively. The 2003 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 the New Tower. The discount on CRDA bonds purchased is amortized to interest income over the life of the bonds using the effective interest method.



35



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##### Table of Contents

6. Other Assets (continued)



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, 2004 and 2003, RIH owned $7.0 million and $7.2 million face value of bonds, respectively, issued by the CRDA and had $7.2 million and $6.1 million,
respectively, 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 in 2004 represents proceeds from an asset sale which must be used to purchase Replacement Assets per terms of the First Mortgage Notes Indenture. Restricted cash in 2003 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):



|                                         |  |      |        |      |   |       
|---------------------------------------- |  | ---- | ------ | ---- | - | ------
|                                         |  | 2004 |        | 2003
|Insurance and related costs              |  | $    | 1,799  |      | $ | 1,720 
|Payroll                                  |  |      | 7,655  |      |   | 6,496 
|Unredeemed chip liability                |  |      | 1,091  |      |   | 1,178 
|Liability for unredeemed cash incentives |  |      | 2,011  |      |   | 2,058 
|Other                                    |  |      | 4,345  |      |   | 5,057 
|                                         |  |      |        |      |   |       
|                                         |  | $    | 16,901 |      | $ | 16,509
|                                         |  |      |        |      |   |       



8. Long-Term Debt



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



|                                                  |  |      |         |      |   |        
|------------------------------------------------- |  | ---- | ------- | ---- | - | -------
|                                                  |  | 2004 |         | 2003
|First Mortgage Notes, net of unamortized discount |  | $    | 177,103 |      | $ | 176,599
|Thermal Energy capital lease                      |  |      | 6,280   |      |   | 6,474  
|CIT/FF&E Financing                                |  |      | 15,543  |      |   | 1,054  
|KINA Note                                         |  |      | 40,000  |      |   |       
|Other notes payable                               |  |      | 550     |      |   |       
|                                                  |  |      |         |      |   |        
|                                                  |  |      | 239,476 |      |   | 184,127
|Less: current portion                             |  |      | 5,525   |      |   | 846    
|                                                  |  |      |         |      |   |        
|                                                  |  | $    | 233,951 |      | $ | 183,281
|                                                  |  |      |         |      |   |        



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. Beginning March 15, 2007, the Company may redeem all or a part of the First Mortgage Notes at the following redemption prices (expressed as a percentage of principal amount), plus
accrued and unpaid interest: March 15, 2007 through March 14, 2008, 106.0%; March 15, 2008 through March 14, 2009, 103.0%; and on or after March 15, 2009, 100.0%.



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 of its assets and the assets of its subsidiaries on a consolidated basis.



36



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##### Table of Contents

8. Long-Term Debt (continued)



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 $6.3 million at December 31, 2004.



In
June 2002, RIH entered into a Restated Loan and Security Agreement 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. The 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, 2004 was $15.5 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 June 30, 2005. There was no outstanding balance on the Commerce Facility at December 31, 2004; however, $4.4 million of standby letters of
credit have been issued against the Commerce Facility, leaving an availability of $5.6 million as of December 31, 2004.



During 2004, RREH purchased 2.0 acres of land adjacent to the Resorts site (see Note 14). The land was acquired 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 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.



9. Related Party Transactions



For the year ended December 31, 2004, 2003 and 2002, the Company incurred expenses of approximately $380,000, $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.



In June 2004, RIHC and RIH entered into agreements with Colony Resorts LVH Acquisitions, LLC (LVH), which operates the Las Vegas Hilton. Under
the terms of the agreements, if either company incurs costs in excess of its direct share or any expenses which are directly allocable to or incurred on behalf of the other company, those will be reimbursed by that company.



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 $592,000, $609,000, and $682,000, for the years
ended December 31, 2004, 2003, and 2002, respectively.



37



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##### Table of Contents

10. 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 $1,919,000, $1,709,000, and $1,665,000 for the years ended December 31, 2004, 2003 and 2002, respectively.



11. Income Taxes



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



|          |  |      |        |   |      |   |       |      |  |   |      
|--------- |  | ---- | ------ | - | ---- | - | ----- | ---- |  | - | -----
|          |  | 2004 |        |   | 2003 |   |       | 2002
|Current:  |  |      |        |   |      |   |       |      |  |   |      
|Federal   |  | $    | (3,229 | ) |      | $ | (369  | )    |  | $ | 795  
|State     |  |      | 1,288  |   |      |   | 1,079 |      |  |   | 947  
|          |  |      |        |   |      |   |       |      |  |   |      
|          |  |      | (1,941 | ) |      |   | 710   |      |  |   | 1,742
|Deferred: |  |      |        |   |      |   |       |      |  |   |      
|Federal   |  |      | 2,246  |   |      |   | 1,017 |      |  |   | 1,455
|State     |  |      | (1,856 | ) |      |   |      |      |  |   |     
|          |  |      |        |   |      |   |       |      |  |   |      
|          |  |      | 390    |   |      |   | 1,017 |      |  |   | 1,455
|          |  |      |        |   |      |   |       |      |  |   |      
|          |  | $    | (1,551 | ) |      | $ | 1,727 |      |  | $ | 3,197
|          |  |      |        |   |      |   |       |      |  |   |      



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



|                                                |  |      |         |   |      |   |        |  
|----------------------------------------------- |  | ---- | ------- | - | ---- | - | ------ | -
|                                                |  | 2004 |         |   | 2003 |  
|Deferred tax liabilities:                       |  |      |         |   |      |   |        |  
|Basis differences on property and equipment     |  | $    | (12,725 | ) |      | $ | (5,033 | )
|Other                                           |  |      | (1,443  | ) |      |   | (1,564 | )
|                                                |  |      |         |   |      |   |        |  
|Total deferred tax liabilities                  |  |      | (14,168 | ) |      |   | (6,597 | )
|                                                |  |     
|Deferred tax assets:                            |  |      |         |   |      |   |        |  
|NOL and capital loss carryforwards              |  |      | 12,671  |   |      |   | 8,477  |  
|Book reserves not yet deductible for tax        |  |      | 3,174   |   |      |   | 3,190  |  
|Tax credit carryforwards                        |  |      | 1,225   |   |      |   | 441    |  
|Other                                           |  |      | 2,629   |   |      |   | 1,832  |  
|                                                |  |      |         |   |      |   |        |  
|Total deferred tax assets                       |  |      | 19,699  |   |      |   | 13,940 |  
|Valuation allowance for deferred tax assets     |  |      | (7,218  | ) |      |   | (8,640 | )
|                                                |  |      |         |   |      |   |        |  
|Deferred tax assets, net of valuation allowance |  |      | 12,481  |   |      |   | 5,300  |  
|                                                |  |      |         |   |      |   |        |  
|Net deferred tax liabilities                    |  | $    | (1,687  | ) |      | $ | (1,297 | )
|                                                |  |      |         |   |      |   |        |  



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



|                                                     |  |                         |    |  |       |   |  |      |  
|---------------------------------------------------- |  | ----------------------- | -- |  | ----- | - |  | ---- | -
|                                                     |  | Year ended December 31, |   
|                                                     |  | 2004                    |    |  | 2003  |   |  | 2002 |  
|Statutory Federal income tax rate                    |  | (34.0                   | )% |  | 34.0  | % |  | 34.0 | %
|Change in Federal income tax rate for deferred taxes |  | (1.4                    | )% |  |      |   |  |     |  
|State taxes, net of Federal benefit                  |  | (6.6                    | )% |  | 151.3 | % |  | 10.3 | %
|Non-deductible provisions and expenses               |  | 14.7                    | %  |  | 181.7 | % |  | 8.3  | %
|                                                     |  |                         |    |  |       |   |  |      |  
|Effective tax rate                                   |  | (27.3                   | )% |  | 367.0 | % |  | 52.6 | %
|                                                     |  |                         |    |  |       |   |  |      |  



38



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##### Table of Contents

11. Income Taxes (continued)



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 years ended December 31, 2004 and 2003, the Company recorded a provision of $350,000 and $175,000, respectively, 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 assessment (NJAMA) 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 $619,000 and $597,000, net of Federal benefit, for the years ended December 31, 2004 and 2002, respectively.



At December 31, 2004, the Company has a net operating loss carryforward for Federal purposes of $11.0 million. No valuation allowance has been provided
against this, as the Company expects to use it fully before it expires in 2024.



At December 31, 2004, 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, primarily due to the limited expiration period. However, the Company
has approximately $1.8 million of state tax credits resulting from the NJAMA which may be applied to offset future taxable income without expiration; these credits have been recorded as an asset on the Companys balance sheet at December 31,
2004.



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



39



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##### Table of Contents

12. Common Stock and Stock Based Compensation (continued)



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. These options vest only if the Company meets specified annual performance targets. The Company met the financial targets for the period ended December 31,
2002; accordingly, 135 Class A options and 2,767 Class B options became vested on that date. During the year ended December 31, 2002, no options were granted or forfeited; accordingly, at December 31, 2002, there are 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 a result, as of December 31, 2004, 436 Class A options and 8,821 Class B options were outstanding, of which 287 Class A options and 7,057 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.



The Company intends to issue stock options to certain employees pursuant to employment agreements with these employees. The actual grants and terms of
such grants are expected to occur in 2005.



Compensation
valuation credits recognized on all stock option awards for the years ended December 31, 2004, 2003 and 2002 was approximately $0, $(23,000), and $(183,000).



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, 2004, 2003 and 2002 were approximately $3.1 million, $3.5 million, and $3.7 million,
respectively. Future minimum lease payments under non-cancelable operating leases consist of the following at December 31, 2004 (in thousands):



|                    |  |   |       
|------------------- |  | - | ------
|2005                |  | $ | 3,013 
|2006                |  |   | 2,323 
|2007                |  |   | 1,932 
|2008                |  |   | 1,932 
|2009 and thereafter |  |   | 14,307



40



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##### Table of Contents

13. Commitments and Contingencies (continued)



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 $210,600,000
as of December 31, 2004, based on the trading price as of that date, compared to the carrying value of $177,103,000.



14. Option Land Purchase



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 March, 2004, the Option Land was acquired by RREH 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 is payable semi-annually, and 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 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 converted 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: $1.312 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 any security deposit remaining upon termination to be refunded to RIH.



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##### Table of Contents

15. Subsequent Events



On March 28, 2005, the Company filed a Certificate of Second Amendment of Amended and Restated Certificate of Incorporation with the Secretary of the
State of Delaware. The purpose of the amendment was to increase the number of shares of Class B Common Stock of the Company to 1,600,000.



On March 30, 2005, the CIT Facility was amended to provide for the suspension of principal payments for one year, commencing April 1, 2005; the
outstanding principal balance as of March 31, 2005 will be paid in equal monthly installments commencing April 2006 and ending February 2009. Interest on the outstanding loans will continue to accrue and be paid monthly.



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##### Table of Contents

SCHEDULE II

COLONY RIH HOLDINGS, INC.

VALUATION AND QUALIFYING ACCOUNTS

(In Thousands)



|                                         |  |                            |        |                             |   |        |                          |  |   |                       |      |  |   |       
|---------------------------------------- |  | -------------------------- | ------ | --------------------------- | - | ------ | ------------------------ |  | - | --------------------- | ---- |  | - | ------
|                                         |  | Balance atBeginning ofYear |        | Charged toCosts andExpenses |   |        | OtherChanges(Deductions) |  |   | Balance atEnd of Year
|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 | )(b)                     |  | $ | 154                   | (c)  |  | $ | 8,317 
|Year ended December 31, 2004             |  |                            |        |                             |   |        |                          |  |   |                       |      |  |   |       
|Allowances for doubtful accounts         |  | $                          | 2,052  |                             | $ | 138    |                          |  | $ | (743                  | )(a) |  | $ | 1,447 
|Valuation allowance for CRDA investments |  | $                          | 8,317  |                             | $ | 1,510  |                          |  | $ | (1,242                | )(d) |  | $ | 8,585 

---

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

|(b) | Includes a $3.1 million reversal of discount.
|--- | ---------------------------------------------

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

|(d) | Includes write-off of funds donated.
|--- | ------------------------------------



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Report of Independent Registered Public Accounting Firm



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, 2004 and 2003, and the related consolidated statements of operations, shareholders equity, and cash flows for each of the three years in the period ended December 31, 2004. 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 the standards of the Public Company
Accounting Oversight Board (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. We were not engaged to perform an audit
of the Companys internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and 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, 2004 and 2003, and the consolidated results of its operations and its cash flows for each of the three
years in the period ended December 31, 2004, in conformity with U.S. generally accepted accounting principles. 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 28, 2005, except for Note 15,

as to which the date is March 30, 2005



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RESORTS INTERNATIONAL HOTEL AND CASINO, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share amounts)



|                                                                                                                |  |              |         |      |   |        
|--------------------------------------------------------------------------------------------------------------- |  | ------------ | ------- | ---- | - | -------
|                                                                                                                |  | December 31,
|                                                                                                                |  | 2004         |         | 2003
|Assets                                                                                                          |  |              |         |      |   |        
|Current assets                                                                                                  |  |              |         |      |   |        
|Cash and cash equivalents                                                                                       |  | $            | 31,512  |      | $ | 28,417 
|Receivables, net                                                                                                |  |              | 5,530   |      |   | 5,175  
|Inventories                                                                                                     |  |              | 2,332   |      |   | 1,503  
|Prepaid expenses and other current assets                                                                       |  |              | 3,060   |      |   | 2,766  
|Deferred income taxes, net                                                                                      |  |              | 4,804   |      |   | 4,294  
|                                                                                                                |  |              |         |      |   |        
|Total current assets                                                                                            |  |              | 47,238  |      |   | 42,155 
|Property and equipment, net                                                                                     |  |              | 256,243 |      |   | 189,609
|Other assets (including $500 and $50,358 of restricted cash and cash equivalents in 2004 and 2003, respectively |  |              | 18,215  |      |   | 70,922 
|                                                                                                                |  |              |         |      |   |        
|Total assets                                                                                                    |  | $            | 321,696 |      | $ | 302,686
|                                                                                                                |  |              |         |      |   |        
|Liabilities and Shareholders Equity                                                                            |  |              |         |      |   |        
|Current liabilities                                                                                             |  |              |         |      |   |        
|Current maturities of long-term debt                                                                            |  | $            | 5,525   |      | $ | 846    
|Accounts payable                                                                                                |  |              | 10,957  |      |   | 3,390  
|Accrued interest payable                                                                                        |  |              | 6,039   |      |   | 6,038  
|Accrued expenses and other current liabilities                                                                  |  |              | 16,449  |      |   | 16,509 
|                                                                                                                |  |              |         |      |   |        
|Total current liabilities                                                                                       |  |              | 38,970  |      |   | 26,783 
|Long-term debt, less current portion                                                                            |  |              | 193,951 |      |   | 183,281
|Deferred income taxes, net                                                                                      |  |              | 6,582   |      |   | 5,591  
|                                                                                                                |  |              |         |      |   |        
|Total liabilities                                                                                               |  |              | 239,503 |      |   | 215,655
|                                                                                                                |  |             
|Shareholders equity                                                                                            |  |              |         |      |   |        
|Common stock - $0.01 par value, 10,000 shares authorized issued and outstanding                                 |  |              |        |      |   |       
|Capital in excess of par                                                                                        |  |              | 77,673  |      |   | 77,673 
|Retained earnings                                                                                               |  |              | 4,520   |      |   | 9,358  
|                                                                                                                |  |              |         |      |   |        
|Total shareholders equity                                                                                      |  |              | 82,193  |      |   | 87,031 
|                                                                                                                |  |              |         |      |   |        
|Total liabilities and shareholders equity                                                                      |  | $            | 321,696 |      | $ | 302,686
|                                                                                                                |  |              |         |      |   |        



See accompanying notes.



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RESORTS INTERNATIONAL HOTEL AND CASINO, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands)



|                                     |  |                         |         |   |      |   |         |      |  |   |         |  
|------------------------------------ |  | ----------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                     |  | Year ended December 31, |        
|                                     |  | 2004                    |         |   | 2003 |   |         | 2002 | 
|Revenues:                            |  |                         |         |   |      |   |         |      |  |   |         |  
|Casino                               |  | $                       | 247,842 |   |      | $ | 230,135 |      |  | $ | 259,208 |  
|Lodging                              |  |                         | 18,341  |   |      |   | 11,163  |      |  |   | 13,031  |  
|Food and beverage                    |  |                         | 23,387  |   |      |   | 22,079  |      |  |   | 24,649  |  
|Other                                |  |                         | 8,439   |   |      |   | 6,496   |      |  |   | 6,488   |  
|Less: promotional allowances         |  |                         | (67,123 | ) |      |   | (54,426 | )    |  |   | (66,664 | )
|                                     |  |                         |         |   |      |   |         |      |  |   |         |  
|Total net revenue                    |  |                         | 230,886 |   |      |   | 215,447 |      |  |   | 236,712 |  
|                                     |  |                         |        
|Costs and expenses:                  |  |                         |         |   |      |   |         |      |  |   |         |  
|Casino                               |  |                         | 117,425 |   |      |   | 117,156 |      |  |   | 123,616 |  
|Lodging                              |  |                         | 3,360   |   |      |   | 1,318   |      |  |   | 1,672   |  
|Food and beverage                    |  |                         | 10,743  |   |      |   | 11,721  |      |  |   | 12,564  |  
|Other operating                      |  |                         | 28,585  |   |      |   | 25,686  |      |  |   | 25,557  |  
|Selling, general, and administrative |  |                         | 40,546  |   |      |   | 30,983  |      |  |   | 36,769  |  
|Depreciation and amortization        |  |                         | 16,837  |   |      |   | 9,993   |      |  |   | 10,160  |  
|Pre-opening                          |  |                         | 2,722   |   |      |   |        |      |  |   |        |  
|                                     |  |                         |         |   |      |   |         |      |  |   |         |  
|Total costs and expenses             |  |                         | 220,218 |   |      |   | 196,857 |      |  |   | 210,338 |  
|                                     |  |                         |         |   |      |   |         |      |  |   |         |  
|Income from operations               |  |                         | 10,668  |   |      |   | 18,590  |      |  |   | 26,374  |  
|                                     |  |                         |        
|Interest income                      |  |                         | 522     |   |      |   | 1,295   |      |  |   | 1,951   |  
|Interest expense                     |  |                         | (19,195 | ) |      |   | (19,133 | )    |  |   | (19,055 | )
|Other income (expense), net          |  |                         | 1,255   |   |      |   | (281    | )    |  |   | 182     |  
|Loss on extinguishment of debt       |  |                         |        |   |      |   |        |      |  |   | (3,378  | )
|                                     |  |                         |         |   |      |   |         |      |  |   |         |  
|Income (loss) before income taxes    |  |                         | (6,750  | ) |      |   | 471     |      |  |   | 6,074   |  
|                                     |  |                         |        
|Provision (benefit) for income taxes |  |                         | (1,912  | ) |      |   | 1,727   |      |  |   | 3,197   |  
|                                     |  |                         |         |   |      |   |         |      |  |   |         |  
|Net income (loss)                    |  | $                       | (4,838  | ) |      | $ | (1,256  | )    |  | $ | 2,877   |  
|                                     |  |                         |         |   |      |   |         |      |  |   |         |  



See accompanying notes.



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RESORTS INTERNATIONAL HOTEL AND CASINO, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)



|                                                                                         |  |                         |         |   |      |   |         |      |  |   |          |  
|---------------------------------------------------------------------------------------- |  | ----------------------- | ------- | - | ---- | - | ------- | ---- |  | - | -------- | -
|                                                                                         |  | Year ended December 31, |        
|                                                                                         |  | 2004                    |         |   | 2003 |   |         | 2002 | 
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                    |  |                         |         |   |      |   |         |      |  |   |          |  
|Net income (loss)                                                                        |  | $                       | (4,838  | ) |      | $ | (1,256  | )    |  | $ | 2,877    |  
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |                         |         |   |      |   |         |      |  |   |          |  
|Loss on extinguishment of debt                                                           |  |                         |        |   |      |   |        |      |  |   | 3,378    |  
|Depreciation and amortization                                                            |  |                         | 15,328  |   |      |   | 12,273  |      |  |   | 9,614    |  
|Amortization of debt premiums, discounts and issuance costs                              |  |                         | 1,858   |   |      |   | 1,733   |      |  |   | 1,397    |  
|Provision for doubtful receivables                                                       |  |                         | 138     |   |      |   | 468     |      |  |   | 1,305    |  
|Gain on disposal of fixed assets                                                         |  |                         | (1,255  | ) |      |   |        |      |  |   |         |  
|Provision for discount on CRDA obligations, net of amortization                          |  |                         | 1,510   |   |      |   | (2,280  | )    |  |   | 551      |  
|Deferred income tax                                                                      |  |                         | 481     |   |      |   | 1,017   |      |  |   | 1,455    |  
|Other                                                                                    |  |                         |        |   |      |   | 38      |      |  |   | (182     | )
|Changes in operating assets and liabilities:                                             |  |                         |         |   |      |   |         |      |  |   |          |  
|Net (increase) decrease in receivables                                                   |  |                         | (493    | ) |      |   | (545    | )    |  |   | 1,870    |  
|Net (increase) decrease in inventories and prepaid expenses and other current assets     |  |                         | (1,123  | ) |      |   | 360     |      |  |   | (426     | )
|Net (increase) decrease in deferred charges and other assets                             |  |                         | 532     |   |      |   | (1,309  | )    |  |   | 1,083    |  
|Net increase (decrease) in accounts payable and accrued expense                          |  |                         | 2,421   |   |      |   | (6,321  | )    |  |   | (680     | )
|Net increase in interest payable                                                         |  |                         | 1       |   |      |   |        |      |  |   | 4,761    |  
|                                                                                         |  |                         |         |   |      |   |         |      |  |   |          |  
|Net cash provided by operating activities                                                |  |                         | 14,560  |   |      |   | 4,178   |      |  |   | 27,003   |  
|                                                                                         |  |                         |         |   |      |   |         |      |  |   |          |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                    |  |                         |         |   |      |   |         |      |  |   |          |  
|Purchases of cash and cash equivalents  restricted, net of releases                     |  |                         | 49,910  |   |      |   | 39,613  |      |  |   | (89,971  | )
|Proceeds from sale of fixed assets                                                       |  |                         | 1,724   |   |      |   |        |      |  |   |         |  
|Purchase of property and equipment                                                       |  |                         | (67,937 | ) |      |   | (53,490 | )    |  |   | (21,642  | )
|CRDA deposits                                                                            |  |                         | (3,051  | ) |      |   | (3,021  | )    |  |   | (3,267   | )
|CRDA refunds                                                                             |  |                         | 756     |   |      |   | 9,189   |      |  |   | 1,492    |  
|                                                                                         |  |                         |         |   |      |   |         |      |  |   |          |  
|Net cash used in investing activities                                                    |  |                         | (18,598 | ) |      |   | (7,709  | )    |  |   | (113,388 | )
|                                                                                         |  |                         |         |   |      |   |         |      |  |   |          |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                    |  |                         |         |   |      |   |         |      |  |   |          |  
|Proceeds of borrowings                                                                   |  |                         | 10,160  |   |      |   |        |      |  |   | 180,835  |  
|Payments to secure borrowings                                                            |  |                         | (135    | ) |      |   | (62     | )    |  |   | (8,432   | )
|Capital contribution from Parent                                                         |  |                         |        |   |      |   |        |      |  |   | 35,000   |  
|Other                                                                                    |  |                         |        |   |      |   |        |      |  |   | 102      |  
|Prepayment penalty on long-term debt                                                     |  |                         |        |   |      |   |        |      |  |   | (1,094   | )
|Debt repayments                                                                          |  |                         | (2,892  | ) |      |   | (979    | )    |  |   | (102,400 | )
|                                                                                         |  |                         |         |   |      |   |         |      |  |   |          |  
|Net cash provided by (used in) financing activities                                      |  |                         | 7,133   |   |      |   | (1,041  | )    |  |   | 104,011  |  
|                                                                                         |  |                         |         |   |      |   |         |      |  |   |          |  
|Net increase (decrease) in cash and cash equivalents                                     |  |                         | 3,095   |   |      |   | (4,572  | )    |  |   | 17,626   |  
|Cash and cash equivalents at beginning of year                                           |  |                         | 28,417  |   |      |   | 32,989  |      |  |   | 15,363   |  
|                                                                                         |  |                         |         |   |      |   |         |      |  |   |          |  
|Cash and cash equivalents at end of year                                                 |  | $                       | 31,512  |   |      | $ | 28,417  |      |  | $ | 32,989   |  
|                                                                                         |  |                         |         |   |      |   |         |      |  |   |          |  
|SUPPLEMENTAL CASH FLOW DISCLOSURES:                                                      |  |                         |         |   |      |   |         |      |  |   |          |  
|Cash paid during the year for:                                                           |  |                         |         |   |      |   |         |      |  |   |          |  
|Interest                                                                                 |  | $                       | 21,395  |   |      | $ | 21,023  |      |  | $ | 13,318   |  
|Income taxes paid (refunded), net                                                        |  |                         | (519    | ) |      |   | (609    | )    |  |   | 4,350    |  
|Non-cash investment and financing transactions:                                          |  |                         |         |   |      |   |         |      |  |   |          |  
|Obligations incurred for the purchase of property and equipment                          |  |                         | 7,577   |   |      |   | 645     |      |  |   |         |  
|Property and equipment acquired under capital lease obligations                          |  |                         |        |   |      |   |        |      |  |   | 6,530    |  



See accompanying notes.



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RESORTS INTERNATIONAL HOTEL AND CASINO, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY

(Dollars in thousands)



|                                                                      |  |             |   |                         |   |        |                             |  |   |                                     |   |  |                            |      |   |  |   |        |  
|--------------------------------------------------------------------- |  | ----------- | - | ----------------------- | - | ------ | --------------------------- |  | - | ----------------------------------- | - |  | -------------------------- | ---- | - |  | - | ------ | -
|                                                                      |  | CommonStock |   | Capital inExcess of Par |   |        | RetainedEarningsAccumulated |  |   | AccumulatedOtherComprehensiveIncome |   |  | Total Shareholders Equity |     
|Balance at January 1, 2002                                            |  | $           |  |                         | $ | 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 |  
|                                                                      |  |             |   |                         |   |        |                             |  |   |                                     |   |  |                            |      |   |  |   |        |  
|Net loss                                                              |  |             |  |                         |   |       |                             |  |   | (4,838                              | ) |  |                            |     |   |  |   | (4,838 | )
|                                                                      |  |             |   |                         |   |        |                             |  |   |                                     |   |  |                            |      |   |  |   |        |  
|Balance at December 31, 2004                                          |  | $           |  |                         | $ | 77,673 |                             |  | $ | 4,520                               |   |  | $                          |     |   |  | $ | 82,193 |  
|                                                                      |  |             |   |                         |   |        |                             |  |   |                                     |   |  |                            |      |   |  |   |        |  



See accompanying notes.



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##### Table of Contents

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), owns
100% of the outstanding common stock of Resorts International Hotel and Casino, Inc., a Delaware corporation (RIHC or the Company). RIHC, through its wholly-owned subsidiary, Resorts International Hotel, Inc., a New Jersey
corporation (RIH), owns and operates Resorts Atlantic City (Resorts), 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.



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.



Under the
terms of the Disbursement Agreement, dated March 22, 2002, funds remaining in the liquidity disbursement account after the final Test Period (as defined in the Indenture, the four fiscal quarter period ending December 31, 2004), and upon
certification by RIHC of certain conditions, would be returned to RIHC and could be distributed as a dividend to CRH. This certification was delivered by RIHC, and accordingly on January 20, 2005 the $9.7 million remaining in the liquidity
disbursement account was delivered to RIHC; as of December 31, 2004, these funds are included in cash and cash equivalents on RIHCs Consolidated Balance Sheet.



49



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##### Table of Contents

2. Summary of Significant Accounting Policies (continued)



Inventories



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



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 expense of $4.1 million and $3.6 million was capitalized for the years ended December 31, 2004 and 2003, 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 (SFAS No. 144) 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.



Income Taxes



The Company 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):



|                        |  |                         |        |      |   |        |  |   |       
|----------------------- |  | ----------------------- | ------ | ---- | - | ------ |  | - | ------
|                        |  | Year ended December 31,
|                        |  | 2004                    |        | 2003 |   | 2002  
|Rooms                   |  | $                       | 9,849  |      | $ | 10,363 |  | $ | 10,277
|Food and beverage       |  |                         | 16,115 |      |   | 15,729 |  |   | 16,386
|Entertainment and other |  |                         | 3,678  |      |   | 3,390  |  |   | 3,224 
|                        |  |                         |        |      |   |        |  |   |       
|                        |  | $                       | 29,642 |      | $ | 29,482 |  | $ | 29,887
|                        |  |                         |        |      |   |        |  |   |       



Cash discounts based
upon a negotiated amount with each customer are recognized as a promotional allowance on the date the related revenues are 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.



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2. Summary of Significant Accounting Policies (continued)



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.



Advertising



The Company expenses advertising costs as incurred. These costs are included
in Selling, General and Administrative costs on the Companys Consolidated Statements of Operations.



Pre-Opening Expenses



For the year ended December 31, 2004, the Company recorded $2.7 million of pre-opening expenses, primarily advertising and related costs, to promote the opening of the New Tower.



Stock Based Compensation



As allowed under the provisions of Financial Accounting Standards Board Statement Number 123 (SFAS No. 123), Accounting for Stock-Based
Compensation, the Company applies the provisions of Accounting Principles Board Opinion Number 25, Accounting for Stock Issued to Employees, and related interpretations in accounting for employee stock options, and accordingly,
does not recognize compensation expense. Had compensation expense for the employee stock option plan been determined in accordance with SFAS No. 123, total stock-based employee compensation expense, net of tax effects, would have been $30,000,
$30,000 and $48,000 for the years ended December 31, 2004, 2003, and 2002, respectively. The fair value for these options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions:



|                        |  |         |   |  |         |   |  |         |  
|----------------------- |  | ------- | - |  | ------- | - |  | ------- | -
|                        |  | 2004    |   |  | 2003    |   |  | 2002    |  
|Risk free interest rate |  | 4.66    | % |  | 5.07    | % |  | 4.79    | %
|Volatility factors      |  | 10      | % |  | 10      | % |  | 10      | %
|Expected life           |  | 5 years |   |  | 5 years |   |  | 5 years |  
|Dividends               |  | None    |   |  | None    |   |  | None    |  



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



On December 16, 2004, the FASB issued Statement 123 (revised 2004), Share Based Payment (FAS 123R). FAS 123R supersedes APB 25,
Accounting for Stock Issued to Employees, and is effective for the Company at the beginning of the first interim or annual period after January 1, 2006. FAS 123R requires that the fair value of equity based awards be recognized in the
financial statements for new awards and previously granted awards that are not yet fully vested on the adoption date. The Company is currently evaluating the impact of adopting FAS 123R, 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.



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4. Receivables



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



|                                      |  |      |        |   |      |   |        |  
|------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|                                      |  | 2004 |        |   | 2003 |  
|Gaming                                |  | $    | 5,315  |   |      | $ | 5,733  |  
|Less: allowance for doubtful accounts |  |      | (1,415 | ) |      |   | (2,010 | )
|                                      |  |      |        |   |      |   |        |  
|                                      |  |      | 3,900  |   |      |   | 3,723  |  
|Non-gaming:                           |  |      |        |   |      |   |        |  
|Hotel and related                     |  |      | 642    |   |      |   | 320    |  
|Other                                 |  |      | 1,020  |   |      |   | 1,173  |  
|                                      |  |      |        |   |      |   |        |  
|                                      |  |      | 1,662  |   |      |   | 1,493  |  
|Less: allowance for doubtful accounts |  |      | (32    | ) |      |   | (41    | )
|                                      |  |      |        |   |      |   |        |  
|                                      |  |      | 1,630  |   |      |   | 1,452  |  
|                                      |  |      |        |   |      |   |        |  
|Receivables, net                      |  | $    | 5,530  |   |      | $ | 5,175  |  
|                                      |  |      |        |   |      |   |        |  



5. Property and Equipment



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



|                                  |  |      |         |   |      |   |         |  
|--------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                  |  | 2004 |         |   | 2003 |  
|Land and land rights              |  | $    | 34,698  |   |      | $ | 34,698  |  
|Hotels and other buildings        |  |      | 193,306 |   |      |   | 80,125  |  
|Furniture, fixtures and equipment |  |      | 62,582  |   |      |   | 39,091  |  
|Construction in progress          |  |      | 1,816   |   |      |   | 58,816  |  
|                                  |  |      |         |   |      |   |         |  
|                                  |  |      | 292,402 |   |      |   | 212,730 |  
|Less: accumulated depreciation    |  |      | (36,159 | ) |      |   | (23,121 | )
|                                  |  |      |         |   |      |   |         |  
|Net property and equipment        |  | $    | 256,243 |   |      | $ | 189,609 |  
|                                  |  |      |         |   |      |   |         |  



6. Other Assets



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



|                                                |  |      |        |      |   |       
|----------------------------------------------- |  | ---- | ------ | ---- | - | ------
|                                                |  | 2004 |        | 2003
|CRDA deposits, bonds and other investments, net |  | $    | 11,085 |      | $ | 12,356
|Debt issuance costs, net                        |  |      | 5,104  |      |   | 6,299 
|Other                                           |  |      | 1,526  |      |   | 1,909 
|Restricted cash                                 |  |      | 500    |      |   | 50,358
|                                                |  |      |        |      |   |       
|                                                |  | $    | 18,215 |      | $ | 70,922
|                                                |  |      |        |      |   |       



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 2004, 2003 and 2002 for discounts on obligations arising in those years were $1.5 million, ($2,280,000), and $547,000, respectively. The 2003 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 the New Tower. The discount on CRDA bonds purchased is amortized to interest income over the life of the bonds using the effective interest method.



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6. Other Assets (continued)



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, 2004 and 2003, RIH owned $7.0 million and $7.2 million face value of bonds, respectively, issued by the CRDA and had $7.2 million and $6.1million,
respectively, 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 in 2004 represents proceeds from an asset sale which must be used to purchase Replacement Assets per terms of the First Mortgage Notes Indenture. 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):



|                                         |  |      |        |      |   |       
|---------------------------------------- |  | ---- | ------ | ---- | - | ------
|                                         |  | 2004 |        | 2003
|Insurance and related costs              |  | $    | 1,799  |      | $ | 1,720 
|Payroll                                  |  |      | 7,655  |      |   | 6,496 
|Unredeemed chip liability                |  |      | 1,091  |      |   | 1,178 
|Liability for unredeemed cash incentives |  |      | 2,011  |      |   | 2,058 
|Other                                    |  |      | 3,893  |      |   | 5,057 
|                                         |  |      |        |      |   |       
|                                         |  | $    | 16,449 |      | $ | 16,509
|                                         |  |      |        |      |   |       



8. Long-Term Debt



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



|                                                  |  |      |         |      |   |        
|------------------------------------------------- |  | ---- | ------- | ---- | - | -------
|                                                  |  | 2004 |         | 2003
|First Mortgage Notes, net of unamortized discount |  | $    | 177,103 |      | $ | 176,599
|Thermal Energy capital lease                      |  |      | 6,280   |      |   | 6,474  
|CIT/FF&E Financing                                |  |      | 15,543  |      |   | 1,054  
|Other notes payable                               |  |      | 550     |      |   |       
|                                                  |  |      |         |      |   |        
|                                                  |  |      | 199,476 |      |   | 184,127
|Less: current portion                             |  |      | 5,525   |      |   | 846    
|                                                  |  |      |         |      |   |        
|                                                  |  | $    | 193,951 |      | $ | 183,281
|                                                  |  |      |         |      |   |        



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. Beginning March 15, 2007, the Company may redeem all or a part of the First Mortgage Notes at the following redemption prices (expressed as a percentage of principal amount), plus
accrued and unpaid interest: March 15, 2007 through March 14, 2008, 106.0%; March 15, 2008 through March 14, 2009, 103.0%; and on or after March 15, 2009, 100.0%.



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 of its assets and the assets of its subsidiaries on a consolidated basis.



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8. Long-Term Debt (continued)



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 $6.3 million at December 31, 2004.



In
June 2002, RIH entered into a Restated Loan and Security Agreement 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, 2004 was $15.5 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 June 30, 2005. There was no outstanding balance on the Commerce Facility at December 31, 2004; however, $4.4 million of standby letters of
credit have been issued against the Commerce Facility, leaving an availability of $5.6 million as of December 31, 2004.



9. Related Party Transactions



For the years ended December 31, 2004, 2003 and 2002, the Company incurred expenses of approximately $380,000, $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.



In June 2004, RIHC and RIH entered into agreements with Colony Resorts LVH Acquisitions, LLC (LVH), which operates the Las Vegas Hilton. Under
the terms of the agreements, if either company incurs costs in excess of its direct share or any expenses which are directly allocable to or incurred on behalf of the other company those costs will be reimbursed by that company.



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 $592,000, $609,000, and $682,000
for the years ended December 31, 2004, 2003, and 2002, 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 $1,919,000, $1,709,000, and $1,665,000 for the years
ended December 31, 2004, 2003, and 2002, respectively.



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11. Income Taxes



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



|          |  |      |        |   |      |   |       |      |  |   |      
|--------- |  | ---- | ------ | - | ---- | - | ----- | ---- |  | - | -----
|          |  | 2004 |        |   | 2003 |   |       | 2002
|Current:  |  |      |        |   |      |   |       |      |  |   |      
|Federal   |  | $    | (3,681 | ) |      | $ | (369  | )    |  | $ | 795  
|State     |  |      | 1,288  |   |      |   | 1,079 |      |  |   | 947  
|          |  |      |        |   |      |   |       |      |  |   |      
|          |  |      | (2,393 | ) |      |   | 710   |      |  |   | 1,742
|Deferred: |  |      |        |   |      |   |       |      |  |   |      
|Federal   |  |      | 2,337  |   |      |   | 1,017 |      |  |   | 1,455
|State     |  |      | (1,856 | ) |      |   |      |      |  |   |     
|          |  |      |        |   |      |   |       |      |  |   |      
|          |  |      | 481    |   |      |   | 1,017 |      |  |   | 1,455
|          |  |      |        |   |      |   |       |      |  |   |      
|          |  | $    | (1,912 | ) |      | $ | 1,727 |      |  | $ | 3,197
|          |  |      |        |   |      |   |       |      |  |   |      



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



|                                                |  |      |         |   |      |   |        |  
|----------------------------------------------- |  | ---- | ------- | - | ---- | - | ------ | -
|                                                |  | 2004 |         |   | 2003 |  
|Deferred tax liabilities:                       |  |      |         |   |      |   |        |  
|Basis differences on property and equipment     |  | $    | (12,725 | ) |      | $ | (5,033 | )
|Other                                           |  |      | (1,443  | ) |      |   | (1,564 | )
|                                                |  |      |         |   |      |   |        |  
|Total deferred tax liabilities                  |  |      | (14,168 | ) |      |   | (6,597 | )
|                                                |  |     
|Deferred tax assets:                            |  |      |         |   |      |   |        |  
|NOL and capital loss carryforwards              |  |      | 12,671  |   |      |   | 8,477  |  
|Book reserves not yet deductible for tax        |  |      | 3,174   |   |      |   | 3,190  |  
|Tax credit carryforwards                        |  |      | 1,225   |   |      |   | 441    |  
|Other                                           |  |      | 2,538   |   |      |   | 1,832  |  
|                                                |  |      |         |   |      |   |        |  
|Total deferred tax assets                       |  |      | 19,608  |   |      |   | 13,940 |  
|Valuation allowance for deferred tax assets     |  |      | (7,218  | ) |      |   | (8,640 | )
|                                                |  |      |         |   |      |   |        |  
|Deferred tax assets, net of valuation allowance |  |      | 12,390  |   |      |   | 5,300  |  
|                                                |  |      |         |   |      |   |        |  
|Net deferred tax liabilities                    |  | $    | (1,778  | ) |      | $ | (1,297 | )
|                                                |  |      |         |   |      |   |        |  



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



|                                                     |  |                         |    |  |       |   |  |      |  
|---------------------------------------------------- |  | ----------------------- | -- |  | ----- | - |  | ---- | -
|                                                     |  | Year ended December 31, |   
|                                                     |  | 2004                    |    |  | 2003  |   |  | 2002 |  
|Statutory Federal income tax rate                    |  | (34.0                   | )% |  | 34.0  | % |  | 34.0 | %
|Change in Federal income tax rate for deferred taxes |  | (1.2                    | )% |  |      |   |  |     |  
|State taxes, net of Federal benefit                  |  | (5.5                    | )% |  | 151.3 | % |  | 10.3 | %
|Non-deductible provisions and expenses               |  | 12.4                    | %  |  | 181.7 | % |  | 8.3  | %
|                                                     |  |                         |    |  |       |   |  |      |  
|Effective tax rate                                   |  | (28.3                   | )% |  | 367.0 | % |  | 52.6 | %
|                                                     |  |                         |    |  |       |   |  |      |  



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 years ended December 31, 2004 and 2003, the Company recorded a
provision of $350,000 and $175,000, respectively, 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



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##### Table of Contents

11. Income Taxes (continued)



alternative minimum assessment (NJAMA) 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 $619,000 and $597,000, net of Federal benefit, for the years ended December 31, 2004 and 2003,
respectively.



At December 31, 2004, the Company has a net
operating loss carryforward for Federal purposes of $11.0 million. No valuation allowance has been provided against this, as the Company expects to use it fully before it expires in 2024.



At December 31, 2004, 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, primarily due to the limited expiration period. However, the Company has approximately $1.8 million of state tax credits resulting from the NJAMA which may be applied to offset future taxable income without expiration;
these credits have been recorded as an asset on the Companys balance sheet at December 31, 2004.



12. 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.



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. These options vest only if the Company meets specified annual
performance targets. The Company met the financial targets for the period ended December 31, 2002; accordingly, 135 Class A options and 2,767 Class B options became vested on that date. During the year ended December 31, 2002, no options were
granted or forfeited; accordingly, at December 31, 2002, there are 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



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##### Table of Contents

12. Common Stock and Stock Based Compensation (continued)



options were forfeited, and 77 Class A options and 1,556 Class B options were granted. As a
result, as of December 31, 2004, 436 Class A options and 8,821 Class B options were outstanding, of which 287 Class A options and 7,057 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.



The Company intends to issue stock options to certain employees pursuant to employment agreements with these employees. The actual grants and terms of such grants are expected to occur in 2005.



Compensation valuation credits recognized on all stock option awards for the
years ended December 31, 2004, 2003 and 2002 was approximately $0, $(23,000), and $(183,000).



13. 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, 2004, 2003 and 2002 were approximately $5.4 million, $3.5 million, and $3.7 million, respectively. Future minimum lease payments under noncancelable operating leases consist of
the following at December 31, 2004 (in thousands):



|                    |  |   |       
|------------------- |  | - | ------
|2005                |  | $ | 4,643 
|2006                |  |   | 4,588 
|2007                |  |   | 4,362 
|2008                |  |   | 5,316 
|2009 and thereafter |  |   | 15,137



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 $210,600,000 as of December 31, 2004, based on the trading price as of that date, compared to the carrying value of $177,103,000.



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14. Option Land Purchase



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 March 2004, the Option Land was acquired by Resorts Real Estate Holdings, Inc. (RREH), a wholly-owned subsidiary of CRH, 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 is payable semi-annually, and 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 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 converted 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: $1.312 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 any security deposit remaining upon
termination to be refunded to RIH.



15. Subsequent Events



In March 2005, the CIT Facility was amended to provide for the suspension of
principal payments for one year, commencing April 1, 2005; the outstanding principal balance as of March 31, 2005 will be paid in equal monthly installments commencing April 2006 and ending February 2009. Interest on the outstanding loans will
continue to accrue and be paid monthly.



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SCHEDULE II

RESORTS INTERNATIONAL HOTEL AND CASINO, INC.

VALUATION AND QUALIFYING ACCOUNTS

(In
Thousands)



|                                         |  |                            |        |                             |   |        |                          |  |   |                       |      |  |   |       
|---------------------------------------- |  | -------------------------- | ------ | --------------------------- | - | ------ | ------------------------ |  | - | --------------------- | ---- |  | - | ------
|                                         |  | Balance atBeginning ofYear |        | Charged toCosts andExpenses |   |        | OtherChanges(Deductions) |  |   | Balance atEnd of Year
|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 | )(b)                     |  | $ | 154                   | (c)  |  | $ | 8,317 
|Year ended December 31, 2004             |  |                            |        |                             |   |        |                          |  |   |                       |      |  |   |       
|Allowances for doubtful accounts         |  | $                          | 2,052  |                             | $ | 138    |                          |  | $ | (743                  | )(a) |  | $ | 1,447 
|Valuation allowance for CRDA investments |  | $                          | 8,317  |                             | $ | 1,510  |                          |  | $ | (1,242                | )(d) |  | $ | 8,585 

---

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

|(b) | Includes a $3.1 million reversal of discount.
|--- | ---------------------------------------------

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

|(d) | Includes the write-off of donated funds.
|--- | ----------------------------------------



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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, 2004. 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 year ended December 31, 2004, there
were no changes in CRHs internal controls over financial reporting that materially affected, or are reasonably likely to materially affect, CRHs internal controls 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 2005.



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 2005.



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 2005.



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 2005.



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 2005.



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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           |  | Certificate of Second Amendment of Amended and Restated Certificate of Incorporation of Colony RIH 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. Incorporated by
reference to Exhibit 10.38 of Form 10-K for the year ended December 31, 2003.                                                                                             
|      | 
|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. Incorporated by
reference to Exhibit 10.38 of Form 10-K for the year ended December 31, 2003.                                                                                               
|      | 
|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. Incorporated by reference to Exhibit 10.40 of Form 10-K for the year ended December 31, 2003.
|      | 
|10.41 |  | Secured Promissory Note, dated March 18, 2004, between Resorts Real Estate Holdings, Inc. and Kerzner International North America, Inc. Incorporated by reference to Exhibit 10.41 of Form 10-K
for the year ended December 31, 2003.                                                                                                                                    
|      | 
|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. Incorporated by reference
to Exhibit 10.42 of Form 10-K for the year ended December 31, 2003.                                                                                                        
|      | 
|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.
Incorporated by reference to Exhibit 10.43 of Form 10-K for the year ended December 31, 2003.                                                                                        
|      | 
|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. 31, 2003. Incorporated by reference to Exhibit 10.44 of Form 10-K for the year ended December 31, 2003.                                      
|      | 
|10.45 |  | Guaranty, dated March 18, 2004, by Colony RIH Holdings, Inc. in favor of Kerzner International North America, Inc. Incorporated by reference to Exhibit 10.45 of Form 10-K for the year ended
December 31, 2003.                                                                                                                                                         



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|      |  |                                                                                                                                                                                                                                                                                                            
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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. Incorporated by reference to Exhibit 10.46 of Form 10-K for the year ended December 31, 2003.
|      | 
|10.47 |  | Employment Agreement, dated May 26, 2004, by and between Resorts International Hotel, Inc. and Mark B. Lefever. Incorporated by reference to Exhibit 10.47 of Form 10-Q for the three months
ended June 30, 2004.                                                                                          
|      | 
|10.48 |  | First Amendment to Vice Chairman Agreement, dated June 18, 2004, by and among Nicholas L. Ribis and Resorts International Hotel and Casino, Inc. Incorporated by reference to Exhibit 10.48 of
Form 10-Q for the three months ended June 30, 2004.                                                         
|      | 
|10.49 |  | Services Agreement, dated June 18, 2004, between Resorts International Hotel and Casino, Inc. and Colony Resorts LVH Acquisitions, LLC. Incorporated by reference to Exhibit 10.49 of Form 10-Q
for the three months ended June 30, 2004.                                                                  
|      | 
|10.50 |  | Amendment No. 4 to Amended and Restated Loan and Security Agreement, dated September 14, 2004, between CIT Group/Equipment Financing, Inc. and Resorts International Hotel, Inc. Incorporated
by reference to Exhibit 10.50 of Form 8-K, Current Report, filed September 17, 2004.                         
|      | 
|10.51 |  | Amendment No. 1 to Loan and Security Agreement, dated September 24, 2004, between Commerce Bank, N.A. and Resorts International Hotel, Inc. Incorporated by reference to Exhibit 10.51 of Form
8-K, Current Report, filed September 27, 2004.                                                              
|      | 
|10.52 |  | Amendment No. 1 to Employment Agreement, dated June 17, 2004, by and between Resorts International Hotel, Inc. and Audrey S. Oswell. Incorporated by reference to Exhibit 10.52 of Form 8-K,
Current Report, filed October 5, 2004.                                                                        
|      | 
|10.53 |  | Amendment No. 2 to Loan and Security Agreement, dated September 30, 2004, between Commerce Bank, N.A. and Resorts International Hotel, Inc. Incorporated by reference to Exhibit 10.53 of Form
8-K, Current Report, filed November 1, 2004.                                                                
|      | 
|10.54 |  | Amendment No. 5 to Amended and Restated Loan and Security Agreement, dated March 30, 2005, between CIT Group/Equipment Financing, Inc. and Resorts International Hotel, 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.                                                                                                                                                                
|      | 
|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 Mark B. Lefever, 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 Mark B. Lefever, Senior Vice President/CFO and Principal Financial Officer of RIHC, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                            



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|     |  |                                                                                                                                                                                                                      
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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 Mark B. Lefever, 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).
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------



65



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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 30, 2005



COLONY RIH HOLDINGS, INC.By:

/s/ Mark B. LefeverName:

Mark B. LefeverTitle:

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. Oswell       |  | President and Chief Executive Officer (Principal Executive Officer) |  | March 30, 2005
|Audrey S. Oswell           |  |                                                                     | 
|                           |  |                                                                    
|/s/ Thomas J. Barrack, Jr. |  | Director, Treasurer                                                 |  | March 30, 2005
|Thomas J. Barrack, Jr.     |  |                                                                     |  |               
|                           |  |                                                                    
|/s/ Nicholas L. Ribis      |  | Director, Executive Vice President                                  |  | March 30, 2005
|Nicholas L. Ribis          |  |                                                                     |  |               
|                           |  |                                                                    
|/s/ Mark M. Hedstrom       |  | Director                                                            |  | March 30, 2005
|Mark M. Hedstrom           |  |                                                                     |  |               
|                           |  |                                                                    
|/s/ Mark B. Lefever        |  | Senior Vice President (Principal Financial
Officer)                 |  | March 30, 2005
|Mark B. Lefever            |  |                                                                     | 



66



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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 30, 2005



RESORTS INTERNATIONAL HOTEL AND CASINO, INC.By:

/s/ Mark B. LefeverName:

Mark B. LefeverTitle:

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. Oswell       |  | President and Chief Executive Officer (Principal Executive Officer) |  | March 30, 2005
|Audrey S. Oswell           |  |                                                                     | 
|                           |  |                                                                    
|/s/ Thomas J. Barrack, Jr. |  | Director, Treasurer                                                 |  | March 30, 2005
|Thomas J. Barrack, Jr.     |  |                                                                     |  |               
|                           |  |                                                                    
|/s/ Nicholas L. Ribis      |  | Director, Executive Vice President                                  |  | March 30, 2005
|Nicholas L. Ribis          |  |                                                                     |  |               
|                           |  |                                                                    
|/s/ Mark M. Hedstrom       |  | Director                                                            |  | March 30, 2005
|Mark M. Hedstrom           |  |                                                                     |  |               
|                           |  |                                                                    
|/s/ Mark B. Lefever        |  | Senior Vice President (Principal Financial
Officer)                 |  | March 30, 2005
|Mark B. Lefever            |  |                                                                     | 



67