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FORM 10-Q



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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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



For the quarterly period ended September 30, 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)



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



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RESORTS INTERNATIONAL HOTEL AND CASINO, INC.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|DELAWARE                                                       |  | 95-4828297                          
|(State or Other Jurisdiction of Incorporation or Organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|1133 Boardwalk Atlantic City, NJ                               |  | 08401                               
|(Address of principal executive offices)                       |  | (Zip Code)                          



Registrants
telephone number, including area code:

(609) 344-6000



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



The number of shares outstanding of Colony RIH Holdings, Inc.s Class A Common Stock, $0.01 par value, was 38,295 and the number of shares outstanding of Colony RIH Holdings, Inc.s Class B Common Stock,
$0.01 par value, was 774,982, each as of November 12, 2004.



The number of
shares outstanding of Resorts International Hotel and Casino, Inc.s Common Stock, $0.01 par value, was 100 as of November 12, 2004.



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##### Table of Contents

COLONY RIH HOLDINGS, INC.

AND

RESORTS INTERNATIONAL HOTEL AND CASINO, INC.



INDEX



|         |  |                                                                                                                                                                 |  |     
|-------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|         |  |                                                                                                                                                                 |  | PAGE
|PART I.  |  | FINANCIAL INFORMATION                                                                                                                                           |  |     
|         |  |                                                                                                                                                                
|Item 1.  |  | Unaudited Financial Statements                                                                                                                                  |  |     
|         |  |                                                                                                                                                                
|         |  | Condensed Consolidated Balance Sheets of Colony RIH Holdings, Inc. at September 30, 2004 and December 31, 2003                                                  |  | 2   
|         |  |                                                                                                                                                                
|         |  | Condensed Consolidated Statements of Operations of Colony RIH Holdings, Inc. for the three and nine months ended September 30, 2004 and 2003                    |  | 3   
|         |  |                                                                                                                                                                
|         |  | Condensed Consolidated Statements of Cash Flows of Colony RIH Holdings, Inc. for the nine months ended September 30, 2004 and 2003                              |  | 4   
|         |  |                                                                                                                                                                
|         |  | Notes to Condensed Consolidated Financial Statements of Colony RIH Holdings, Inc.                                                                               |  | 5   
|         |  |                                                                                                                                                                
|         |  | Condensed Consolidated Balance Sheets of Resorts International Hotel and Casino, Inc. at September 30, 2004 and December 31, 2003                               |  | 8   
|         |  |                                                                                                                                                                
|         |  | Condensed Consolidated Statements of Operations of Resorts International Hotel and Casino, Inc. for the three and nine months ended September 30, 2004 and 2003 |  | 9   
|         |  |                                                                                                                                                                
|         |  | Condensed Consolidated Statements of Cash Flows of Resorts International Hotel and Casino, Inc. for the nine months ended September 30, 2004 and 2003           |  | 10  
|         |  |                                                                                                                                                                
|         |  | Notes to Condensed Consolidated Financial Statements of Resorts International Hotel and Casino, Inc.                                                            |  | 11  
|         |  |                                                                                                                                                                
|Item 2.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                                           |  | 13  
|         |  |                                                                                                                                                                
|Item 3.  |  | Quantitative and Qualitative Disclosures About Market Risk                                                                                                      |  | 21  
|         |  |                                                                                                                                                                
|Item 4.  |  | Controls and Procedures                                                                                                                                         |  | 21  
|         |  |                                                                                                                                                                
|PART II. |  | OTHER INFORMATION                                                                                                                                               |  |     
|         |  |                                                                                                                                                                
|Item 1.  |  | Legal Proceedings                                                                                                                                               |  | 22  
|         |  |                                                                                                                                                                
|Item 2.  |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                     |  | 22  
|         |  |                                                                                                                                                                
|Item 3.  |  | Defaults Upon Senior Securities                                                                                                                                 |  | 22  
|         |  |                                                                                                                                                                
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                                                                                             |  | 22  
|         |  |                                                                                                                                                                
|Item 5.  |  | Other Information                                                                                                                                               |  | 22  
|         |  |                                                                                                                                                                
|Item 6.  |  | Exhibits                                                                                                                                                        |  | 22  



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##### Table of Contents

PART I-FINANCIAL INFORMATION



ITEM 1. FINANCIAL STATEMENTS



COLONY RIH HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(Dollars in thousands)



|                                                                                                                    |  |                   |         |                   |   |        
|------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------- | ----------------- | - | -------
|                                                                                                                    |  | September 30,2004 |         | December 31, 2003
|ASSETS                                                                                                              |  |                   |         |                   |   |        
|Current assets                                                                                                      |  |                   |         |                   |   |        
|Cash and cash equivalents                                                                                           |  | $                 | 21,638  |                   | $ | 28,417 
|Receivables, net                                                                                                    |  |                   | 7,167   |                   |   | 5,175  
|Inventories                                                                                                         |  |                   | 1,980   |                   |   | 1,503  
|Prepaid expenses and other current assets                                                                           |  |                   | 3,069   |                   |   | 2,766  
|Deferred income taxes                                                                                               |  |                   | 4,294   |                   |   | 4,294  
|                                                                                                                    |  |                   |         |                   |   |        
|Total current assets                                                                                                |  |                   | 38,148  |                   |   | 42,155 
|Property and equipment, net                                                                                         |  |                   | 290,873 |                   |   | 189,609
|Other assets (including $10,216 and $50,358 of restricted cash and cash equivalents in 2004 and 2003, respectively) |  |                   | 27,905  |                   |   | 70,922 
|                                                                                                                    |  |                   |         |                   |   |        
|Total assets                                                                                                        |  | $                 | 356,926 |                   | $ | 302,686
|                                                                                                                    |  |                   |         |                   |   |        
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                |  |                   |         |                   |   |        
|Current liabilities                                                                                                 |  |                   |         |                   |   |        
|Current maturities of long-term debt                                                                                |  | $                 | 4,858   |                   | $ | 846    
|Accounts payable                                                                                                    |  |                   | 5,640   |                   |   | 3,390  
|Accrued interest payable                                                                                            |  |                   | 877     |                   |   | 6,038  
|Accrued expenses and other current liabilities                                                                      |  |                   | 19,738  |                   |   | 16,509 
|                                                                                                                    |  |                   |         |                   |   |        
|Total current liabilities                                                                                           |  |                   | 31,113  |                   |   | 26,783 
|                                                                                                                    |  |                   |         |                   |   |        
|Long-term debt, less current portion                                                                                |  |                   | 232,982 |                   |   | 183,281
|Deferred income taxes                                                                                               |  |                   | 5,591   |                   |   | 5,591  
|Redeemable common stock                                                                                             |  |                   | 3,875   |                   |   | 3,875  
|                                                                                                                    |  |                   |         |                   |   |        
|Total liabilities                                                                                                   |  |                   | 273,561 |                   |   | 219,530
|                                                                                                                    |  |                   |         |                   |   |        
|Shareholders equity                                                                                                |  |                   |         |                   |   |        
|Common stock:                                                                                                       |  |                   |         |                   |   |        
|Class A                                                                                                             |  |                   |        |                   |   |       
|Class B                                                                                                             |  |                   | 8       |                   |   | 8      
|Capital in excess of par                                                                                            |  |                   | 73,790  |                   |   | 73,790 
|Retained earnings                                                                                                   |  |                   | 9,567   |                   |   | 9,358  
|                                                                                                                    |  |                   |         |                   |   |        
|Total shareholders equity                                                                                          |  |                   | 83,365  |                   |   | 83,156 
|                                                                                                                    |  |                   |         |                   |   |        
|Total liabilities and shareholders equity                                                                          |  | $                 | 356,926 |                   | $ | 302,686
|                                                                                                                    |  |                   |         |                   |   |        



See accompanying notes



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##### Table of Contents

COLONY RIH HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Dollars in thousands)



|                                     |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|------------------------------------ |  | ------------------------------- | ------- | - | ------------------------------ | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                     |  | Three months endedSeptember 30, |         |   | Nine months endedSeptember 30, |  
|                                     |  | 2004                            |         |   | 2003                           |   |         | 2004 |  |   | 2003    |  
|Revenue:                             |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Casino                               |  | $                               | 75,360  |   |                                | $ | 64,220  |      |  | $ | 193,064 |   |  | $ | 183,252 |  
|Lodging                              |  |                                 | 6,604   |   |                                |   | 2,907   |      |  |   | 13,451  |   |  |   | 8,099   |  
|Food and beverage                    |  |                                 | 7,792   |   |                                |   | 6,481   |      |  |   | 18,748  |   |  |   | 17,154  |  
|Other                                |  |                                 | 2,206   |   |                                |   | 1,924   |      |  |   | 6,848   |   |  |   | 4,980   |  
|Less: promotional allowances         |  |                                 | (20,914 | ) |                                |   | (15,236 | )    |  |   | (51,832 | ) |  |   | (42,071 | )
|                                     |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Total net revenue                    |  |                                 | 71,048  |   |                                |   | 60,296  |      |  |   | 180,279 |   |  |   | 171,414 |  
|Costs and expenses:                  |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Casino                               |  |                                 | 33,891  |   |                                |   | 30,826  |      |  |   | 90,903  |   |  |   | 90,673  |  
|Lodging                              |  |                                 | 1,323   |   |                                |   | 300     |      |  |   | 2,372   |   |  |   | 789     |  
|Food and beverage                    |  |                                 | 3,190   |   |                                |   | 3,420   |      |  |   | 9,035   |   |  |   | 9,017   |  
|Other operating                      |  |                                 | 7,938   |   |                                |   | 6,757   |      |  |   | 21,705  |   |  |   | 19,432  |  
|Selling, general, and administrative |  |                                 | 10,819  |   |                                |   | 7,860   |      |  |   | 27,597  |   |  |   | 24,575  |  
|Depreciation and amortization        |  |                                 | 4,965   |   |                                |   | 746     |      |  |   | 12,565  |   |  |   | 6,540   |  
|Pre-opening                          |  |                                 | 560     |   |                                |   |        |      |  |   | 2,722   |   |  |   |        |  
|                                     |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Total costs and expenses             |  |                                 | 62,686  |   |                                |   | 49,909  |      |  |   | 166,899 |   |  |   | 151,026 |  
|                                     |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Income from operations               |  |                                 | 8,362   |   |                                |   | 10,387  |      |  |   | 13,380  |   |  |   | 20,388  |  
|Interest income                      |  |                                 | 119     |   |                                |   | 238     |      |  |   | 400     |   |  |   | 1,088   |  
|Interest expense                     |  |                                 | (5,859  | ) |                                |   | (4,590  | )    |  |   | (13,283 | ) |  |   | (14,819 | )
|Other income (expense)               |  |                                 | 441     |   |                                |   | (45     | )    |  |   | 1,201   |   |  |   | (265    | )
|                                     |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Income before income taxes           |  |                                 | 3,063   |   |                                |   | 5,990   |      |  |   | 1,698   |   |  |   | 6,392   |  
|Provision for income taxes           |  |                                 | (1,321  | ) |                                |   | (2,488  | )    |  |   | (1,489  | ) |  |   | (3,331  | )
|                                     |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Net income                           |  | $                               | 1,742   |   |                                | $ | 3,502   |      |  | $ | 209     |   |  | $ | 3,061   |  
|                                     |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  



See accompanying notes.



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COLONY RIH HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Dollars in thousands)



|                                                                                  |  |                                |         |   |      |   |         |  
|--------------------------------------------------------------------------------- |  | ------------------------------ | ------- | - | ---- | - | ------- | -
|                                                                                  |  | Nine months endedSeptember 30, |        
|                                                                                  |  | 2004                           |         |   | 2003 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                             |  |                                |         |   |      |   |         |  
|Net income                                                                        |  | $                              | 209     |   |      | $ | 3,061   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                                |         |   |      |   |         |  
|Depreciation and amortization                                                     |  |                                | 11,172  |   |      |   | 8,934   |  
|Amortization of debt premiums, discounts and issuance costs                       |  |                                | 1,375   |   |      |   | 1,294   |  
|Provision for doubtful receivables                                                |  |                                | 58      |   |      |   | 528     |  
|Gain on disposal of fixed assets                                                  |  |                                | (1,148  | ) |      |   |        |  
|Other                                                                             |  |                                |        |   |      |   | 26      |  
|Provision for (reversal of) discount on CRDA obligations, net of amortization     |  |                                | (1,393  | ) |      |   | (2,394  | )
|Changes in operating assets and liabilities:                                      |  |                                |         |   |      |   |         |  
|Net (increase) decrease in receivables                                            |  |                                | (2,050  | ) |      |   | 6       |  
|Net increase in inventories and prepaid expenses and other current assets         |  |                                | (780    | ) |      |   | (1,822  | )
|Net (increase) decrease in deferred charges and other assets                      |  |                                | 3,773   |   |      |   | (1,358  | )
|Net increase in accounts payable and accrued expenses                             |  |                                | 5,109   |   |      |   | 1,139   |  
|Net decrease in interest payable                                                  |  |                                | (5,161  | ) |      |   | (5,175  | )
|                                                                                  |  |                                |         |   |      |   |         |  
|Net cash provided by operating activities                                         |  |                                | 11,164  |   |      |   | 4,239   |  
|                                                                                  |  |                                |         |   |      |   |         |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                             |  |                                |         |   |      |   |         |  
|Releases of cash and cash equivalents  restricted                                |  |                                | 40,194  |   |      |   | 25,040  |  
|Proceeds from sale of fixed assets                                                |  |                                | 1,638   |   |      |   |        |  
|Purchases of property and equipment                                               |  |                                | (66,370 | ) |      |   | (35,713 | )
|CRDA deposits                                                                     |  |                                | (2,091  | ) |      |   | (2,209  | )
|CRDA refunds                                                                      |  |                                | 579     |   |      |   | 9,189   |  
|                                                                                  |  |                                |         |   |      |   |         |  
|Net cash used in investing activities                                             |  |                                | (26,050 | ) |      |   | (3,693  | )
|                                                                                  |  |                                |         |   |      |   |         |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                             |  |                                |         |   |      |   |         |  
|Proceeds from borrowings                                                          |  |                                | 10,161  |   |      |   |        |  
|Payments to secure borrowings                                                     |  |                                | (135    | ) |      |   | (62     | )
|Debt repayments                                                                   |  |                                | (1,919  | ) |      |   | (743    | )
|                                                                                  |  |                                |         |   |      |   |         |  
|Net cash provided by (used in) financing activities                               |  |                                | 8,107   |   |      |   | (805    | )
|                                                                                  |  |                                |         |   |      |   |         |  
|Net decrease in cash and cash equivalents                                         |  |                                | (6,779  | ) |      |   | (259    | )
|Cash and cash equivalents at beginning of period                                  |  |                                | 28,417  |   |      |   | 32,989  |  
|                                                                                  |  |                                |         |   |      |   |         |  
|Cash and cash equivalents at end of period                                        |  | $                              | 21,638  |   |      | $ | 32,730  |  
|                                                                                  |  |                                |         |   |      |   |         |  
|SUPPLEMENTAL CASH FLOW DISCLOSURES:                                               |  |                                |         |   |      |   |         |  
|Cash paid during the period for:                                                  |  |                                |         |   |      |   |         |  
|Interest                                                                          |  | $                              | 21,128  |   |      | $ | 20,944  |  
|Income taxes, net of refunds                                                      |  |                                | 1,038   |   |      |   | 50      |  
|Non-cash transactions:                                                            |  |                                |         |   |      |   |         |  
|Note payable issued in connection with option land purchase                       |  |                                | 40,000  |   |      |   |        |  
|Note payable issued in connection with warehouse purchase                         |  |                                | 600     |   |      |   |        |  
|Obligations incurred for the purchase of property & equipment                     |  |                                | 4,500   |   |      |   | 645     |  



See accompanying notes.



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##### Table of Contents

COLONY RIH HOLDINGS, INC.



NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)



1. SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES



Colony RIH Holdings, Inc., a
Delaware corporation (CRH, 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, 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., Resorts Real Estate Holdings Inc., Resorts International Hotels,
Inc., and New Pier Operating Company, 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.



The consolidated financial statements include the accounts of CRH and its wholly owned subsidiaries. CRH is a voluntary filer with the Securities and Exchange Commission. The accounts of CRH include RIHC, a publicly
traded debt registrant, and RREH, a wholly owned subsidiary that includes $40 million of assets and liabilities related to the purchase of property. All significant intercompany accounts and transactions have been eliminated.



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. In the
opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation of the financial statements for these interim periods have been included.



For further information, refer to the consolidated financial statements and
notes thereto included in CRHs annual report on Form 10-K for the year ended December 31, 2003.



2. OPTION LAND ACQUISITION



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 property (the Option Land) are zoned for casino hotel use and are available for future
expansion. A portion of the option property was leased from KINA by RIH for use as a surface parking lot under a lease agreement whose terms ran contemporaneous with the terms of the Option Agreement. On March 18, 2004, RREH acquired the Option Land
from KINA in exchange for issuance of a $40 million note by RREH to KINA. In conjunction with the acquisition of the Option Land, the Option Agreement was terminated. With the termination of the Option Agreement the lease agreement between KINA and
RIHC converted to a month-to-month fair market value lease, which was amended and assigned by KINA to RREH as part of the option land purchase transaction.



3. LONG TERM DEBT



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



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



5



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##### Table of Contents

In January 2004, CRH announced that it had reached agreement with KINA to acquire the Option Land,
subject to the approval of the New Jersey Casino Control Commission, which approval was received on March 17, 2004. Following the approval, the Option Land was acquired by RREH on March 18, 2004 in exchange for the issuance of a $40 million note by
RREH to KINA. This $40 million note will mature immediately following the maturity, acceleration or refinancing (other than permitted refinancing) of the First Mortgage Notes which are due March 22, 2009. No principal payments are required on the
$40 million note until it reaches maturity. Interest on the $40 million note will be payable semi-annually, and will be calculated at the following annual rates: 0% through September 2004, 4% from October 2004 through March 2006, 6% from April 2006
through March 2008, and 9% from April 2008 through March 2009. The note payable to KINA is guaranteed by CRH, RIHC and RIH, provided, however that the guarantee of RIHC and RIH does not become effective until either the First Mortgage Notes have
been paid in full or the fixed charge coverage ratio (the ratio of Consolidated EBITDA to Fixed Charges, all as further defined in the First Mortgage Notes Indenture) of RIHC is at least 2.0 to 1.0. In addition, the amount guaranteed is initially
limited to $20 million increasing by $5 million each year.



In
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 September 30, 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. 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 September 30,
2004 was $13.9 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 September 30, 2004; however, there have been $4.4 million of standby letters of credit issued against the Commerce Facility, leaving an availability of $5.6 million as of September 30, 2004.



4. REDEEMABLE COMMON STOCK



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.



5. INCOME TAXES



The provision for income taxes for the three and nine months ended September
30, 2004 is different than the amount computed at the United States statutory rate due to certain non-deductible items and state income taxes, which are calculated under an alternative minimum assessment of a percentage of gross revenues.



Effective July 2003, the State of New Jersey passed a state
budget which requires each casino licensee to pay an annual tax equal to 7.5% of net income (as defined) subject to a minimum tax of $350,000. This tax is in effect for three years beginning with the fiscal year of July 1, 2003 to June 30, 2004. In
connection with this tax, the Company recorded provisions for income taxes of $263,000 and $88,000 for the nine months ended September 30, 2004 and 2003, 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 amount under the New Jersey corporate business tax based on gross receipts or gross profits, as defined. The
Tax Act was retroactive to January 1, 2002. In accordance with the Tax Act, the Company recorded provisions for current state income tax of $721,000 and $685,000, net of federal benefit, for the nine months ended September 30, 2004 and 2003,
respectively.



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##### Table of Contents

6. PRE-OPENING EXPENSES



For the three and nine months ended September 30, 2004, the Company recorded $560,000 and $2.7 million, respectively, of pre-opening expenses, primarily
advertising and related costs, to promote the opening of the expanded casino and hotel facility.



7



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##### Table of Contents

RESORTS INTERNATIONAL HOTEL AND CASINO, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(Dollars in thousands)



|                                                                                                                    |  |                   |         |                   |   |        
|------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------- | ----------------- | - | -------
|                                                                                                                    |  | September 30,2004 |         | December 31, 2003
|ASSETS                                                                                                              |  |                   |         |                   |   |        
|Current assets                                                                                                      |  |                   |         |                   |   |        
|Cash and cash equivalents                                                                                           |  | $                 | 21,583  |                   | $ | 28,417 
|Receivables, net                                                                                                    |  |                   | 7,167   |                   |   | 5,175  
|Inventories                                                                                                         |  |                   | 1,980   |                   |   | 1,503  
|Prepaid expenses and other current assets                                                                           |  |                   | 3,069   |                   |   | 2,766  
|Deferred income taxes                                                                                               |  |                   | 4,294   |                   |   | 4,294  
|                                                                                                                    |  |                   |         |                   |   |        
|Total current assets                                                                                                |  |                   | 38,093  |                   |   | 42,155 
|Property and equipment, net                                                                                         |  |                   | 249,257 |                   |   | 189,609
|Other assets (including $10,216 and $50,358 of restricted cash and cash equivalents in 2004 and 2003, respectively) |  |                   | 28,579  |                   |   | 70,922 
|                                                                                                                    |  |                   |         |                   |   |        
|Total assets                                                                                                        |  | $                 | 315,929 |                   | $ | 302,686
|                                                                                                                    |  |                   |         |                   |   |        
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                |  |                   |         |                   |   |        
|Current liabilities                                                                                                 |  |                   |         |                   |   |        
|Current maturities of long-term debt                                                                                |  | $                 | 4,858   |                   | $ | 846    
|Accounts payable                                                                                                    |  |                   | 5,640   |                   |   | 3,390  
|Accrued interest payable                                                                                            |  |                   | 877     |                   |   | 6,038  
|Accrued expenses and other current liabilities                                                                      |  |                   | 19,738  |                   |   | 16,509 
|                                                                                                                    |  |                   |         |                   |   |        
|Total current liabilities                                                                                           |  |                   | 31,113  |                   |   | 26,783 
|Long-term debt, less current portion                                                                                |  |                   | 192,982 |                   |   | 183,281
|Deferred income taxes                                                                                               |  |                   | 5,591   |                   |   | 5,591  
|                                                                                                                    |  |                   |         |                   |   |        
|Total liabilities                                                                                                   |  |                   | 229,686 |                   |   | 215,655
|                                                                                                                    |  |                   |         |                   |   |        
|Shareholders equity                                                                                                |  |                   |         |                   |   |        
|Common stock                                                                                                        |  |                   |        |                   |   |       
|Capital in excess of par                                                                                            |  |                   | 77,673  |                   |   | 77,673 
|Retained earnings                                                                                                   |  |                   | 8,570   |                   |   | 9,358  
|                                                                                                                    |  |                   |         |                   |   |        
|Total shareholders equity                                                                                          |  |                   | 86,243  |                   |   | 87,031 
|                                                                                                                    |  |                   |         |                   |   |        
|Total liabilities and shareholders equity                                                                          |  | $                 | 315,929 |                   | $ | 302,686
|                                                                                                                    |  |                   |         |                   |   |        



See accompanying notes



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RESORTS INTERNATIONAL HOTEL AND CASINO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Dollars in thousands)



|                                     |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|------------------------------------ |  | ------------------------------- | ------- | - | ------------------------------ | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                     |  | Three months endedSeptember 30, |         |   | Nine months endedSeptember 30, |  
|                                     |  | 2004                            |         |   | 2003                           |   |         | 2004 |  |   | 2003    |  
|Revenue:                             |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Casino                               |  | $                               | 75,360  |   |                                | $ | 64,220  |      |  | $ | 193,064 |   |  | $ | 183,252 |  
|Lodging                              |  |                                 | 6,604   |   |                                |   | 2,907   |      |  |   | 13,451  |   |  |   | 8,099   |  
|Food and beverage                    |  |                                 | 7,792   |   |                                |   | 6,481   |      |  |   | 18,748  |   |  |   | 17,154  |  
|Other                                |  |                                 | 2,206   |   |                                |   | 1,924   |      |  |   | 6,848   |   |  |   | 4,980   |  
|Less: promotional allowances         |  |                                 | (20,914 | ) |                                |   | (15,236 | )    |  |   | (51,832 | ) |  |   | (42,071 | )
|                                     |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Total net revenue                    |  |                                 | 71,048  |   |                                |   | 60,296  |      |  |   | 180,279 |   |  |   | 171,414 |  
|Costs and expenses:                  |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Casino                               |  |                                 | 33,891  |   |                                |   | 30,826  |      |  |   | 90,903  |   |  |   | 90,673  |  
|Lodging                              |  |                                 | 1,323   |   |                                |   | 300     |      |  |   | 2,372   |   |  |   | 789     |  
|Food and beverage                    |  |                                 | 3,190   |   |                                |   | 3,420   |      |  |   | 9,035   |   |  |   | 9,017   |  
|Other operating                      |  |                                 | 7,938   |   |                                |   | 6,757   |      |  |   | 21,705  |   |  |   | 19,432  |  
|Selling, general, and administrative |  |                                 | 11,281  |   |                                |   | 7,860   |      |  |   | 28,594  |   |  |   | 24,575  |  
|Depreciation and amortization        |  |                                 | 4,965   |   |                                |   | 746     |      |  |   | 12,565  |   |  |   | 6,540   |  
|Pre-opening                          |  |                                 | 560     |   |                                |   |        |      |  |   | 2,722   |   |  |   |        |  
|                                     |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Total costs and expenses             |  |                                 | 63,148  |   |                                |   | 49,909  |      |  |   | 167,896 |   |  |   | 151,026 |  
|                                     |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Income from operations               |  |                                 | 7,900   |   |                                |   | 10,387  |      |  |   | 12,383  |   |  |   | 20,388  |  
|Interest income                      |  |                                 | 119     |   |                                |   | 238     |      |  |   | 400     |   |  |   | 1,088   |  
|Interest expense                     |  |                                 | (5,859  | ) |                                |   | (4,590  | )    |  |   | (13,283 | ) |  |   | (14,819 | )
|Other income (expense)               |  |                                 | 441     |   |                                |   | (45     | )    |  |   | 1,201   |   |  |   | (265    | )
|                                     |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Income before income taxes           |  |                                 | 2,601   |   |                                |   | 5,990   |      |  |   | 701     |   |  |   | 6,392   |  
|Provision for income taxes           |  |                                 | (1,321  | ) |                                |   | (2,488  | )    |  |   | (1,489  | ) |  |   | (3,331  | )
|                                     |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Net income (loss)                    |  | $                               | 1,280   |   |                                | $ | 3,502   |      |  | $ | (788    | ) |  | $ | 3,061   |  
|                                     |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  



See accompanying notes



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RESORTS INTERNATIONAL HOTEL AND CASINO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Dollars in thousands)



|                                                                                         |  |                                |         |   |      |   |         |  
|---------------------------------------------------------------------------------------- |  | ------------------------------ | ------- | - | ---- | - | ------- | -
|                                                                                         |  | Nine months endedSeptember 30, |        
|                                                                                         |  | 2004                           |         |   | 2003 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                    |  |                                |         |   |      |   |         |  
|Net income (loss)                                                                        |  | $                              | (788    | ) |      | $ | 3,061   |  
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |                                |         |   |      |   |         |  
|Depreciation and amortization                                                            |  |                                | 11,172  |   |      |   | 8,934   |  
|Amortization of debt premiums, discounts and issuance costs                              |  |                                | 1,375   |   |      |   | 1,294   |  
|Provision for doubtful receivables                                                       |  |                                | 58      |   |      |   | 528     |  
|Gain on disposal of fixed assets                                                         |  |                                | (1,148  | ) |      |   |        |  
|Other                                                                                    |  |                                |        |   |      |   | 26      |  
|Provision for (reversal of) discount on CRDA obligations, net of amortization            |  |                                | (1,393  | ) |      |   | (2,394  | )
|Changes in operating assets and liabilities:                                             |  |                                |         |   |      |   |         |  
|Net (increase) decrease in receivables                                                   |  |                                | (2,050  | ) |      |   | 6       |  
|Net increase in inventories and prepaid expenses and other current assets                |  |                                | (780    | ) |      |   | (1,822  | )
|Net decrease in deferred charges and other assets                                        |  |                                | 3,099   |   |      |   | (1,358  | )
|Net increase in accounts payable and accrued expenses                                    |  |                                | 5,109   |   |      |   | 1,139   |  
|Net decrease in interest payable                                                         |  |                                | (5,161  | ) |      |   | (5,175  | )
|                                                                                         |  |                                |         |   |      |   |         |  
|Net cash provided by operating activities                                                |  |                                | 9,493   |   |      |   | 4,239   |  
|                                                                                         |  |                                |         |   |      |   |         |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                    |  |                                |         |   |      |   |         |  
|Releases of cash and cash equivalents-restricted                                         |  |                                | 40,194  |   |      |   | 25,040  |  
|Proceeds from sale of fixed assets                                                       |  |                                | 1,638   |   |      |   |        |  
|Purchases of property and equipment                                                      |  |                                | (64,754 | ) |      |   | (35,713 | )
|CRDA deposits                                                                            |  |                                | (2,091  | ) |      |   | (2,209  | )
|CRDA refunds                                                                             |  |                                | 579     |   |      |   | 9,189   |  
|                                                                                         |  |                                |         |   |      |   |         |  
|Net cash used in investing activities                                                    |  |                                | (24,434 | ) |      |   | (3,693  | )
|                                                                                         |  |                                |         |   |      |   |         |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                    |  |                                |         |   |      |   |         |  
|Proceeds from borrowings                                                                 |  |                                | 10,161  |   |      |   |        |  
|Payments to secure borrowings                                                            |  |                                | (135    | ) |      |   | (62     | )
|Debt repayments                                                                          |  |                                | (1,919  | ) |      |   | (743    | )
|                                                                                         |  |                                |         |   |      |   |         |  
|Net cash provided by (used in) financing activities                                      |  | $                              | 8,107   |   |      | $ | (805    | )
|                                                                                         |  |                                |         |   |      |   |         |  
|Net decrease in cash and cash equivalents                                                |  |                                | (6,834  | ) |      |   | (259    | )
|Cash and cash equivalents at beginning of period                                         |  |                                | 28,417  |   |      |   | 32,989  |  
|                                                                                         |  |                                |         |   |      |   |         |  
|Cash and cash equivalents at end of period                                               |  | $                              | 21,583  |   |      | $ | 32,730  |  
|                                                                                         |  |                                |         |   |      |   |         |  
|SUPPLEMENTAL CASH FLOW DISCLOSURES:                                                      |  |                                |         |   |      |   |         |  
|Cash paid during the period for:                                                         |  |                                |         |   |      |   |         |  
|Interest                                                                                 |  | $                              | 21,128  |   |      | $ | 20,944  |  
|Income taxes, net of refunds                                                             |  |                                | 1,038   |   |      |   | 50      |  
|Non-cash transactions:                                                                   |  |                                |         |   |      |   |         |  
|Note payable issued in connection with warehouse purchase                                |  |                                | 600     |   |      |   |        |  
|Obligations incurred for the purchase of property & equipment                            |  |                                | 4,500   |   |      |   | 645     |  



See accompanying notes.



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RESORTS INTERNATIONAL HOTEL AND CASINO, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)



1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



Colony RIH Holdings, Inc., a Delaware corporation (CRH, 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, a casino/hotel located in Atlantic City, NJ. 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., Resorts International Hotels, Inc., and New Pier Operating Company,
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.



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



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. In the opinion of management, all adjustments (consisting solely of normal recurring
adjustments) necessary for a fair presentation of the financial statements for these interim periods have been included.



For the further information, refer to the consolidated financial statements and notes thereto included in RIHCs annual report on Form 10-K for the
year ended December 31, 2003.



2. LONG TERM DEBT



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



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



In June 2002, RIH entered into a Thermal Energy Services Agreement (the Thermal Agreement). The initial term of the Thermal Agreement is 20 years, renewable at RIHs option for two additional
five-year terms. The Thermal Agreement has three components: a monthly charge for operation and maintenance of the thermal energy facilities; a capital lease component for capital improvements whose value was estimated at $6.5 million on the date
the Thermal Agreement was executed, and; a usage fee for steam and chilled water, whose usage and rate will vary by month of the year. The outstanding balance of the capital lease was $6.3 million at September 30, 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. 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 September 30, 2004 was $13.9 million.



11



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##### Table of Contents

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 September 30, 2004;
however, there have been $4.4 million of standby letters of credit issued against the Commerce Facility, leaving an availability of $5.6 million as of September 30, 2004.



In January 2004, CRH announced that it had reached agreement with KINA to acquire the Option Land, subject to the approval
of the New Jersey Casino Control Commission, which approval was received on March 17, 2004. Following the approval, the Option Land was acquired by RREH on March 18, 2004 in exchange for the issuance of a $40 million note by RREH to KINA. The note
payable to KINA is guaranteed by CRH, RIHC and RIH, provided, however that the guarantee of RIHC and RIH does not become effective until either the First Mortgage Notes have been paid in full or the fixed charge coverage ratio (the ratio of
Consolidated EBITDA to Fixed Charges, all as further defined in the First Mortgage Notes Indenture) of RIHC is at least 2.0 to 1.0. In addition, the amount guaranteed is initially limited to $20 million increasing by $5 million each year.



3. INCOME TAXES



The benefit for income taxes for the three and nine months ended September 30, 2004 is different than the amount computed at
the United States statutory rate due to certain non-deductible items and state income taxes, which are calculated under an alternative minimum assessment of a percentage of gross revenues.



Effective July 2003, the State of New Jersey passed a state budget which
requires each casino licensee to pay an annual tax equal to 7.5% of net income (as defined) subject to a minimum tax of $350,000. This tax is in effect for three years beginning with the fiscal year of July 1, 2003 to June 30, 2004. In connection
with this tax, the Company recorded provisions for income taxes of $263,000 and $88,000 for the nine months ended September 30, 2004 and 2003, 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 amount under the New Jersey corporate business tax based on gross receipts or gross profits, as defined. The Tax Act was retroactive to
January 1, 2002. In accordance with the Tax Act, the Company recorded provisions for current state income tax of $721,000 and $685,000, net of federal benefit, for the nine months ended September 30, 2004 and 2003, respectively.



4. PRE-OPENING EXPENSES



For the three and nine months ended September 30, 2004, the Company recorded $560,000 and $2.7 million, respectively, of
pre-opening expenses, primarily advertising and related costs, to promote the opening of the expanded casino and hotel facility.



12



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##### Table of Contents

ITEM 2. 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:



| | (i) | 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;
and
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) | 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
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iii) | 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 statements.
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



Assets



|                              |  |                    |         |   |                  |   |        
|----------------------------- |  | ------------------ | ------- | - | ---------------- | - | -------
|                              |  | September 30, 2004 |         |   | December 31,2003
|                              |  | ($ in thousands)  
|Total assets of RIHC          |  | $                  | 315,929 |   |                  | $ | 302,686
|Basis of Option Land acquired |  |                    | 41,616  |   |                  |   |       
|Other                         |  |                    | (619    | ) |                  |   |       
|                              |  |                    |         |   |                  |   |        
|Total assets of CRH           |  | $                  | 356,926 |   |                  | $ | 302,686
|                              |  |                    |         |   |                  |   |        



Liabilities



|                          |  |                    |         |                  |   |        
|------------------------- |  | ------------------ | ------- | ---------------- | - | -------
|                          |  | September 30, 2004 |         | December 31,2003
|                          |  | ($ in thousands)  
|Total liabilities of RIHC |  | $                  | 229,686 |                  | $ | 215,655
|Note payable              |  |                    | 40,000  |                  |   |       
|Redeemable common stock   |  |                    | 3,875   |                  |   | 3,875  
|                          |  |                    |         |                  |   |        
|Total liabilities of CRH  |  | $                  | 273,561 |                  | $ | 219,530
|                          |  |                    |         |                  |   |        



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Equity



|                                   |  |                   |        |   |                   |   |        |  
|---------------------------------- |  | ----------------- | ------ | - | ----------------- | - | ------ | -
|                                   |  | September 30,2004 |        |   | December 31, 2003 |  
|                                   |  | ($ in thousands)  |       
|Total shareholders equity of RIHC |  | $                 | 86,243 |   |                   | $ | 87,031 |  
|Redeemable common stock            |  |                   | (3,875 | ) |                   |   | (3,875 | )
|Intercompany rent                  |  |                   | 997    |   |                   |   |       |  
|                                   |  |                   |        |   |                   |   |        |  
|Total shareholders equity of CRH  |  | $                 | 83,365 |   |                   | $ | 83,156 |  
|                                   |  |                   |        |   |                   |   |        |  



Net Income (loss)



|                          |  |                                 |       |                                |   |       |  |   |      |   |  |   |      
|------------------------- |  | ------------------------------- | ----- | ------------------------------ | - | ----- |  | - | ---- | - |  | - | -----
|                          |  | Three months endedSeptember 30, |       | Nine months endedSeptember 30,
|                          |  | 2004                            |       | 2003                           |   | 2004  |  |   | 2003
|                          |  | ($ in thousands)               
|Net income (loss) of RIHC |  | $                               | 1,280 |                                | $ | 3,502 |  | $ | (788 | ) |  | $ | 3,061
|Intercompany rent         |  |                                 | 462   |                                |   |      |  |   | 997  |   |  |   |     
|                          |  |                                 |       |                                |   |       |  |   |      |   |  |   |      
|Net income of CRH         |  | $                               | 1,742 |                                | $ | 3,502 |  | $ | 209  |   |  | $ | 3,061
|                          |  |                                 |       |                                |   |       |  |   |      |   |  |   |      



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 CRH, RIHC and RREH. RIHC and RREH are wholly-owned subsidiaries of CRH and were formed at the direction of Colony IV on October 24, 2000 and April 1, 2003, respectively. RIH is RIHCs
wholly-owned subsidiary. RIH owns and operates Resorts Atlantic City, a casino hotel in Atlantic City.



On September 4, 2002, RIHC decommissioned the 166-room Atlantic City Tower in anticipation of beginning construction in November 2002 of a 27-story hotel
tower on the same site. The expansion was substantially completed in the second quarter of 2004. The expansion added approximately 400 hotel rooms and suites, 25,000 square feet of additional gaming space, 840 slot machines and 11 table games as
compared to prior year levels. In addition, the expansion included the relocation and expansion of the hotel lobby and porte cochere. RIHC opened the expanded gaming space on May 28, 2004, and began opening hotel rooms to the public on June 16,
2004. The grand opening ceremony for the new tower was held over the July 4, 2004 weekend. Management anticipates that the opening of the hotel expansion will have a positive impact on operating results in the coming year, and are focusing current
efforts on positioning RIH to capitalize on that impact.



Key Performance
Indicators



RIHC generates the majority of its 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); RIHC typical table games hold percentage is in the range of 15% to 17% of table games drop, and its typical slot hold
percentage is in the range of 7% to 8% of slot handle.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



RIHC also considers EBITDA to be a key indicator of its
performance. EBITDA is income from operations before deducting depreciation and amortization. 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



14



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##### Table of Contents

alternative to operating income (as determined in accordance with generally accepted accounting principles, or
GAAP) as an indicator of operating performance, or to cash flows from operating activities (as determined in accordance with GAAP) as a measure of liquidity, or to other consolidated income or cash flow statement data, as are determined
in accordance with GAAP. All companies do not calculate EBITDA in the same manner. The following table reflects a reconciliation of EBITDA to net income as determined in accordance with GAAP for the periods indicated:



|                              |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |         |  
|----------------------------- |  | ------------------------------- | ------ | - | ------------------------------ | - | ------ | ---- |  | - | ------- | - |  | - | ------- | -
|                              |  | Three months endedSeptember 30, |        |   | Nine months endedSeptember 30, |  
|                              |  | 2004                            |        |   | 2003                           |   |        | 2004 |  |   | 2003    |  
|                              |  | ($ in thousands)                |       
|Total net revenues            |  | $                               | 71,048 |   |                                | $ | 60,296 |      |  | $ | 180,279 |   |  | $ | 171,414 |  
|Operating expenses            |  |                                 | 57,623 |   |                                |   | 49,163 |      |  |   | 152,609 |   |  |   | 144,486 |  
|Pre-opening expenses          |  |                                 | 560    |   |                                |   |       |      |  |   | 2,722   |   |  |   |        |  
|                              |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |         |  
|EBITDA                        |  |                                 | 12,865 |   |                                |   | 11,133 |      |  |   | 24,948  |   |  |   | 26,928  |  
|Depreciation and amortization |  |                                 | 4,965  |   |                                |   | 746    |      |  |   | 12,565  |   |  |   | 6,540   |  
|                              |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |         |  
|Income from operations        |  |                                 | 7,900  |   |                                |   | 10,387 |      |  |   | 12,383  |   |  |   | 20,388  |  
|Interest income               |  |                                 | 119    |   |                                |   | 238    |      |  |   | 400     |   |  |   | 1,088   |  
|Interest expense              |  |                                 | (5,859 | ) |                                |   | (4,590 | )    |  |   | (13,283 | ) |  |   | (14,819 | )
|Other income (expense)        |  |                                 | 441    |   |                                |   | (45    | )    |  |   | 1,201   |   |  |   | (265    | )
|Income tax expense            |  |                                 | (1,321 | ) |                                |   | (2,488 | )    |  |   | (1,489  | ) |  |   | (3,331  | )
|                              |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |         |  
|Net income (loss)             |  | $                               | 1,280  |   |                                | $ | 3,502  |      |  | $ | (788    | ) |  | $ | 3,061   |  
|                              |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |         |  



Operating Results



Revenues



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



|                                |  |                                         |         |   |                                        |       |    |      |   |         |      |  |   |          |   |  |      |    |  |   |         |  
|------------------------------- |  | --------------------------------------- | ------- | - | -------------------------------------- | ----- | -- | ---- | - | ------- | ---- |  | - | -------- | - |  | ---- | -- |  | - | ------- | -
|                                |  | For the three months endedSeptember 30, |         |   | For the nine months endedSeptember 30, |      
|                                |  | 2004                                    |         |   | % change                               |       |    | 2003 |   |         | 2004 |  |   | % change |   |  | 2003 |   
|                                |  | ($ in thousands)                        |        
|Casino revenues:                |  |                                         |         |   |                                        |       |    |      |   |         |      |  |   |          |   |  |      |    |  |   |         |  
|Slots                           |  | $                                       | 56,434  |   |                                        | 20.3  | %  |      | $ | 46,910  |      |  | $ | 142,296  |   |  | 5.5  | %  |  | $ | 134,843 |  
|Table games                     |  |                                         | 18,535  |   |                                        | 9.6   | %  |      |   | 16,909  |      |  |   | 49,638   |   |  | 5.1  | %  |  |   | 47,214  |  
|Other                           |  |                                         | 391     |   |                                        | (2.5  | )% |      |   | 401     |      |  |   | 1,130    |   |  | (5.4 | )% |  |   | 1,195   |  
|                                |  |                                         |         |   |                                        |       |    |      |   |         |      |  |   |          |   |  |      |    |  |   |         |  
|Total casino revenues           |  |                                         | 75,360  |   |                                        | 17.3  | %  |      |   | 64,220  |      |  |   | 193,064  |   |  | 5.4  | %  |  |   | 183,252 |  
|                                |  |                                         |         |   |                                        |      
|Non-casino revenue:             |  |                                         |         |   |                                        |       |    |      |   |         |      |  |   |          |   |  |      |    |  |   |         |  
|Food and beverage               |  |                                         | 7,792   |   |                                        | 20.2  | %  |      |   | 6,481   |      |  |   | 18,748   |   |  | 9.3  | %  |  |   | 17,154  |  
|Lodging                         |  |                                         | 6,604   |   |                                        | 127.2 | %  |      |   | 2,907   |      |  |   | 13,451   |   |  | 66.1 | %  |  |   | 8,099   |  
|Entertainment, retail and other |  |                                         | 2,206   |   |                                        | 14.7  | %  |      |   | 1,924   |      |  |   | 6,848    |   |  | 37.5 | %  |  |   | 4,980   |  
|                                |  |                                         |         |   |                                        |       |    |      |   |         |      |  |   |          |   |  |      |    |  |   |         |  
|Total non-casino revenues       |  |                                         | 16,602  |   |                                        | 46.8  | %  |      |   | 11,312  |      |  |   | 39,047   |   |  | 29.2 | %  |  |   | 30,233  |  
|                                |  |                                         |         |   |                                        |      
|Less: promotional allowances    |  |                                         | (20,914 | ) |                                        | 37.3  | %  |      |   | (15,236 | )    |  |   | (51,832  | ) |  | 23.2 | %  |  |   | (42,071 | )
|                                |  |                                         |         |   |                                        |       |    |      |   |         |      |  |   |          |   |  |      |    |  |   |         |  
|Total net revenues              |  | $                                       | 71,048  |   |                                        | 17.8  | %  |      | $ | 60,296  |      |  | $ | 180,279  |   |  | 5.2  | %  |  | $ | 171,414 |  
|                                |  |                                         |         |   |                                        |       |    |      |   |         |      |  |   |          |   |  |      |    |  |   |         |  



15



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Three months ended September 30, 2004 and 2003



The increase in slot revenues for the three months ended September 30, 2004 was due to a $112.9 million (19.1%) increase in
slot handle to $703.2 million from $590.3 million for the same period of 2003. The increase in slot handle resulted from the addition of 804 slot machines and the opening of the new tower in June 2004.



The increase in table games revenues for the three months ended September 30,
2004 was due to a $21.4 million (19.7%) increase in table drop to $130.1 million from $108.7 million in 2003, partially offset by a table games hold decrease to 14.2% from 15.6% in same period of 2003.



The increase in food and beverage revenues for the three months ended
September 30, 2004 was due to increased traffic throughout the property following the opening of the new hotel tower. Food covers for the three months ended September 30, 2004 increased by 48,000 (12.0%) to 447,000 compared to 399,000 in the same
period of 2003. The average check also increased by $0.86 (6.2%) to $14.70 for the three months ended September 30, 2004 from $13.84 for the same period of 2003.



The increase in lodging revenues for the three months ended September 30, 2004 resulted from the opening of the new hotel
tower in the second quarter of 2004. The number of available room nights for the three months ended September 30, 2004 increased by 35,000 (80.3%) to 78,600 from 43,600 for the same period of 2003. The average room rate during the third quarter of
2004 was $92.90, an increase of $24.43 (35.7%) from $68.47 in 2003. The occupancy for the three months ended September 30, 2004 was 90.5% as compared to 97.3% during the same period in 2003.



The increase in entertainment, retail, and other revenue in 2004 was
primarily due to headliner performances during the quarter that led to a $207,000 (26.9%) increase in entertainment revenue.



Promotional allowances are expenses incurred by RIHC for complimentary services (goods and services provided free of charge to gaming patrons) and cash
incentives given to gaming patrons. The increase in cash promotions given to patrons accounted for a $2.3 million (27.1%) increase and complimentary expenses accounted for a $3.4 million (50.7%) increase, both resulting from increased traffic
through the property as a result of the additional rooms available from the new tower.



Nine months ended September 30, 2004 and 2003



The increase in slot revenues for the nine months ended September 30, 2004 was due to a $64.8 million (3.8%) increase in slot handle to $1,790.9 million from $1,726.1 million for the same period of 2003. The increase in slot handle resulted
from the impact of the opening of the new tower during the second quarter of 2004.



The increase in table games revenues for the nine months ended September 30, 2004 was due to a $14.2 million (4.7%) increase in table drop to $314.8 million from $300.6 million in 2003.



The increase in food and beverage revenues for the nine months ended
September 30, 2004 was due to increased traffic throughout the property following the opening of the new hotel tower. Food covers for the nine months ended September 30, 2004 increased by 43,000 (4.2%) to 1,077,000 compared to 1,034,000 in the same
period of 2003. The average check also increased by $0.49 (3.5%) to $14.57 for the nine months ended September 30, 2004 from $14.08 for the same period of 2003.



The increase in lodging revenues for the nine months ended September 30, 2004 resulted from the opening of the new hotel tower at the end of the second
quarter of 2004. The number of available room nights for the nine months ended September 30, 2004 increased by 38,200 (29.5%) to 167,700 from 129,500 for the same period of 2003. The average room rate for the nine months ended September 30, 2004 was
$88.62, an increase of $23.80 (36.7%) from $64.82 in 2003. The occupancy for the nine months ended September 30, 2004 was 90.5% as compared to 96.5% during the same period in 2003.



The increase in entertainment, retail, and other revenue for the nine months ended September 30, 2004 was due to the opening
of The Screening Room, and The Improv, two new entertainment venues that contributed to the 60.0% increase in entertainment revenue.



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##### Table of Contents

The increase in cash promotions given to patrons accounted for a $5.1 million (21.9%) increase and
complimentary expenses accounted for a $4.6 million (24.5%) increase, both resulting from increased traffic through the property due to the hotel tower opening.



Operating Results



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



|                                    |  |                                         |        |                                        |       |    |      |   |        |  |          |         |  |       |    |  |   |        
|----------------------------------- |  | --------------------------------------- | ------ | -------------------------------------- | ----- | -- | ---- | - | ------ |  | -------- | ------- |  | ----- | -- |  | - | -------
|                                    |  | For the three months endedSeptember 30, |        | For the nine months endedSeptember 30,
|                                    |  | 2004                                    |        | %change                                |       |    | 2003 |   | 2004   |  | % change |         |  | 2003 
|                                    |  | ($ in thousands)                       
|Total net revenues                  |  | $                                       | 71,048 |                                        | 17.8  | %  |      | $ | 60,296 |  | $        | 180,279 |  | 5.2   | %  |  | $ | 171,414
|Cost and expenses:                  |  |                                         |        |                                        |       |    |      |   |        |  |          |         |  |       |    |  |   |        
|Casino and hotel operations         |  |                                         | 46,342 |                                        | 12.2  | %  |      |   | 41,303 |  |          | 124,015 |  | 3.4   | %  |  |   | 119,911
|Selling, general and administrative |  |                                         | 11,281 |                                        | 43.5  | %  |      |   | 7,860  |  |          | 28,594  |  | 16.4  | %  |  |   | 24,575 
|Depreciation and amortization       |  |                                         | 4,965  |                                        | 565.5 | %  |      |   | 746    |  |          | 12,565  |  | 92.1  | %  |  |   | 6,540  
|Pre-opening                         |  |                                         | 560    |                                        | 100.0 | %  |      |   |       |  |          | 2,722   |  | 100.0 | %  |  |   |       
|                                    |  |                                         |        |                                        |       |    |      |   |        |  |          |         |  |       |    |  |   |        
|Total cost and expenses             |  |                                         | 63,148 |                                        | 26.5  | %  |      |   | 49,909 |  |          | 167,896 |  | 11.2  | %  |  |   | 151,026
|                                    |  |                                         |        |                                        |       |    |      |   |        |  |          |         |  |       |    |  |   |        
|Income from operations              |  | $                                       | 7,900  |                                        | (23.9 | )% |      | $ | 10,387 |  | $        | 12,383  |  | (39.3 | )% |  | $ | 20,388 
|                                    |  |                                         |        |                                        |       |    |      |   |        |  |          |         |  |       |    |  |   |        



Three months ended September 30,
2004 and 2003



The increase in casino and hotel operating
expenses relates to the opening of the new hotel tower and the associated expansion of the gaming floor. The percentage of casino and hotel operating expenses to net revenues decreased to 65.2% in 2004 from 68.5% in 2003.



The increase in selling, general, and administrative costs is primarily due
to a $1.5 million increase in real estate taxes related to the construction of the new hotel tower and the purchase of the Option Land. Other cost increases relate to insurance costs and increased land rent resulting from the Option Land acquisition
by RREH.



The increase in depreciation and amortization
resulted from a $1.3 million increase in depreciation in 2004 due to the opening of the new hotel tower as well as reversal of approximately $3.0 million of amortization expense in 2003 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 hotel tower.



Nine months ended September 30,
2004 and 2003



The increase in casino and hotel operating
expenses relates to the opening of the new hotel tower and the associated expansion of the gaming floor in the second quarter of 2004. The percentage of casino and hotel operating expenses to net revenues decreased to 68.8% in 2004 from 70.0% in
2003.



The increase in selling, general, and administrative
costs for the nine months ended September 30, 2004 is due to increased real estate taxes due to the opening of the new hotel tower and the purchase of the Option Land as well as increased occupancy and complimentary fees which were imposed by New
Jersey on July 1, 2003. Other increases relate to increased insurance costs and increased land rent resulting from the Option Land acquisition by RREH.



The increase in depreciation and amortization resulted from a $2.0 million increase in depreciation in 2004 due to the opening of the new hotel tower as
well as reversal of approximately $3.0 million of amortization expense in 2003 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 hotel tower.



17



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##### Table of Contents

Non-Operating Results



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



|                           |  |                                 |       |      |                                |        |      |  |   |        |   |  |   |        |  
|-------------------------- |  | ------------------------------- | ----- | ---- | ------------------------------ | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                           |  | Three months endedSeptember 30, |       |      | Nine months endedSeptember 30, |       
|                           |  | 2004                            |       | 2003 |                                |        | 2004 |  |   | 2003   |  
|                           |  | ($ in thousands)                |      
|Interest income            |  | $                               | 119   |      | $                              | 238    |      |  | $ | 400    |   |  | $ | 1,088  |  
|Interest expense:          |  |                                 |       |      |                                |        |      |  |   |        |   |  |   |        |  
|Total interest cost        |  |                                 | 5,859 |      |                                | 5,690  |      |  |   | 17,343 |   |  |   | 17,064 |  
|Less: capitalized interest |  |                                 | 0     |      |                                | (1,100 | )    |  |   | (4,060 | ) |  |   | (2,245 | )
|Interest expense, net      |  |                                 | 5,859 |      |                                | 4,590  |      |  |   | 13,283 |   |  |   | 14,819 |  
|Other income (expense)     |  |                                 | 441   |      |                                | (45    | )    |  |   | 1,201  |   |  |   | (265   | )



The reductions in
interest income for the three and nine month periods ended September 30, 2004 result from the decrease in the restricted cash balance for the Hotel Expansion Project. RIHC received an influx of cash with the sale of the First Mortgage Notes on March
22, 2002. From the proceeds of the sale of the First Mortgage Notes, $89.4 million was deposited in a construction disbursement account for use in construction of the hotel tower. In addition, $10.0 million of the restricted cash was deposited in a
liquidity disbursement account to be used for working capital in the event RIHCs Consolidated EBITDA, as defined in the First Mortgage Notes Indenture (the Indenture), for any four fiscal quarters ending on or prior to December 31,
2004, is less than $28 million. Draws on the construction disbursement account since that time have decreased the restricted cash balance to $10.2 million as of September 30, 2004 from $64.9 million at September 30, 2003.



Total interest costs for 2004 are in line with 2003 levels. The differences
in net interest expense for the three and nine month periods ended September 30, 2004 as compared to 2003 are due to changes in capitalized interest during the construction of the hotel tower. Capitalization of interest related to the Hotel
Expansion Project ceased in June 2004 with the opening of the hotel tower.



The increase in other income for 2004 is mainly a result of the sale of assets during 2004. During the second quarter 2004, RIHC sold its warehouse for $1.2 million, recording a gain on the sale of $767,000. The
proceeds of the sale were used to purchase a new warehouse outside Atlantic City. In the third quarter 2004, RIHC sold billboard assets for $450,000, which had minimal value on RIHCs books. The proceeds of the sale are being held in escrow,
which, under the terms of the Indenture, must be used to purchase Replacement Assets (as further defined in the Indenture).



Income Taxes



The following table presents information related to RIHCs income tax benefit for the periods noted:



|                          |  |                                 |       |                                |   |       |  |      |       |  |   |      
|------------------------- |  | ------------------------------- | ----- | ------------------------------ | - | ----- |  | ---- | ----- |  | - | -----
|                          |  | Three months endedSeptember 30, |       | Nine months endedSeptember 30,
|                          |  | 2004                            |       | 2003                           |   | 2004  |  | 2003
|                          |  | ($ in thousands)               
|Federal income tax        |  | $                               | 949   |                                | $ | 2,159 |  | $    | 505   |  | $ | 2,558
|NJ state income tax       |  |                                 | 284   |                                |   | 241   |  |      | 721   |  |   | 685  
|NJ casino net profits tax |  |                                 | 88    |                                |   | 88    |  |      | 263   |  |   | 88   
|                          |  |                                 |       |                                |   |       |  |      |       |  |   |      
|Total income tax          |  | $                               | 1,321 |                                | $ | 2,488 |  | $    | 1,489 |  | $ | 3,331
|                          |  |                                 |       |                                |   |       |  |      |       |  |   |      



On June 30, 2003, the
State of New Jersey amended the Casino Control Act, effective July 1, 2003, to impose or increase certain taxes and fees, including a tax at the rate of 7.5% on the adjusted net income of casino licensees in calendar year 2002, payable in the
states fiscal years 2004 through 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 nine months ended September 30, 2004, the Company recorded provisions
of $263,000 and $88,000, respectively, for this tax.



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



Liquidity
and Capital Resources



RIHCs cash flows consisted of
the following:



|                                                    |  |                                 |         |   |      |   |         |  
|--------------------------------------------------- |  | ------------------------------- | ------- | - | ---- | - | ------- | -
|                                                    |  | Nine months ended September 30, |        
|                                                    |  | 2004                            |         |   | 2003 |  
|                                                    |  | ($ in thousands)                |        
|Net cash provided by operations                     |  | $                               | 9,493   |   |      | $ | 4,239   |  
|                                                    |  |                                
|Cash flows from investing activities:               |  |                                 |         |   |      |   |         |  
|Purchases of property and equipment                 |  |                                 | (64,754 | ) |      |   | (35,713 | )
|Releases of cash and cash equivalents-restricted    |  |                                 | 40,194  |   |      |   | 25,040  |  
|Proceeds from sale of fixed assets                  |  |                                 | 1,638   |   |      |   |        |  
|CRDA refunds (deposits), net                        |  |                                 | (1,512  | ) |      |   | 6,980   |  
|                                                    |  |                                 |         |   |      |   |         |  
|Net cash used in investing activities               |  |                                 | (24,434 | ) |      |   | (3,693  | )
|                                                    |  |                                
|Cash flows from financing activities:               |  |                                 |         |   |      |   |         |  
|Proceeds from borrowings                            |  |                                 | 10,161  |   |      |   |        |  
|Payments to secure borrowings                       |  |                                 | (135    | ) |      |   | (62     | )
|Debt repayments                                     |  |                                 | (1,919  | ) |      |   | (743    | )
|                                                    |  |                                 |         |   |      |   |         |  
|Net cash provided by (used in) financing activities |  |                                 | 8,107   |   |      |   | (805    | )
|                                                    |  |                                
|Net decrease in cash and cash equivalents           |  | $                               | (6,834  | ) |      | $ | (259    | )
|                                                    |  |                                 |         |   |      |   |         |  



Cash flows from Operating
Activities



The improvement in cash flow from operations
over last year resulted primarily from improved results following the opening of the new hotel tower as well as favorable working capital changes, including a $5.1 million increase in accounts payable and accrued expenses, compared to a $1.1 million
increase in those items in 2003.



Cash Flows from Investing Activities



During the nine months ended September 30, 2004, RIHC
expended $64.8 million for the purchase of property and equipment, which includes $52.1 million for the construction of the new hotel tower, $4.1 million of capitalized interest related to the construction of the new hotel tower, and $8.6 million
for other expenditures, such as the purchase of new slot machines and related equipment, computer upgrades, and other facility improvements.



At September 30, 2004, RIHC had a restricted cash balance of $10.2 million, which is included in other assets on RIHCs Consolidated Balance Sheet.
Approximately $9.7 million of the restricted cash is deposited in a liquidity disbursement account to be used for working capital in the event RIHCs EBITDA, as defined in the Indenture, for any four fiscal quarters ending on or prior to
December 31, 2004, is less than $28 million. At the end of the measurement period referred to in the previous sentence, RIHC will be permitted to secure a release of any unutilized amount in the liquidity disbursement account for use in its business
or to fund a dividend to CRH to return such unutilized amount to CRHs stockholders. At June 30, 2004, RIHCs EBITDA, as defined in the Indenture, was approximately $27.7 million leading RIHC to request disbursement of approximately
$300,000 from the liquidity disbursement account. At September 30, 2004, RIHCs EBITDA, as defined in the Indenture, exceeded $28 million, thus no further disbursement from the liquidity disbursement account was required. Also included in the
restricted cash balance is approximately $450,000 in proceeds from the sale of property, which occurred in the third quarter 2004, held in escrow, which under the terms of the Indenture, must be used to purchase Replacement Assets (as
further defined in the Indenture).



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The CRDA will reimburse certain costs associated with the hotel tower construction, totaling
approximately $13.1 million through 2008. Approximately $9.2 million of these reimbursements were received by RIHC in 2003 and $579,000 of these reimbursements have been received by RIHC during the nine months ended September 30, 2004.



In the second quarter of 2004, RIHC completed a like-kind exchange of its
warehouse for a new warehouse facility. The transaction included the receipt of approximately $1.2 million from the sale of the old warehouse, the proceeds of which were combined with a $600,000 note (the Warehouse Note) to purchase the
new facility. The Warehouse Note has an interest rate of 6% with fixed payments of principal and interest due in December 2004, February 2005, and February 2006.



Cash Flows from Financing Activities



Cash received from financing activities are mainly borrowings against the CIT Facility for furniture, fixtures, and equipment related to the new tower as
well as the issuance of the Warehouse Note. Cash used in financing activities represents principal payments required on outstanding long term debt, as well as costs incurred to acquire and/or amend new debt.



Other Factors Affecting Liquidity



In June 2002, RIH entered into a $20.0 million credit facility, the proceeds
of which are to be used for the acquisition of furniture, fixtures, and equipment. RIHC has guaranteed the obligations of RIH under this equipment credit facility. RIH used $14.7 million of the equipment credit facility to purchase furniture,
fixtures, and equipment for the new hotel tower and the expanded gaming facility, of which $879,000 was drawn during the third quarter of 2004. The outstanding balance due to CIT at September 30, 2004 was $13.9 million. In November 2002, RIH also
entered into a $10.0 million revolving credit facility, against which standby letters of credit in the amount of $4.4 million have been issued, leaving an availability of $5.6 million as of September 30, 2004.



In June 2002, RIH entered into a Thermal Energy Services Agreement (the
Agreement) with an energy supplier. The initial term of the Agreement is 20 years, renewable at RIHs 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 $6.5 million, for which payments during the nine month period ending September 30, 2004 were $320,000 including interest, with the total
payments over the 20 year initial term estimated at $9.6 million including interest, and; a usage fee for steam and chilled water, whose usage and rate will vary by month of the year.



In January 2004, CRH announced that it had reached agreement with KINA to acquire the Option Land, subject to the approval
of the New Jersey Casino Control Commission, which approval was received on March 17, 2004. Following the approval, the Option Land was acquired by RREH on March 18, 2004 in exchange for the issuance of a $40 million note by RREH to KINA. 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 (the ratio of Consolidated EBITDA to Fixed Charges, all as further defined in the First Mortgage Notes Indenture) of RIHC is at least 2.0 to 1.0. In addition, the amount
guaranteed is initially limited to $20 million increasing by $5 million each year.



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



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Off Balance Sheet Arrangements



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



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.



Interest Rate Risk



The
Company has exposure to interest rate risk from its short-term and long-term debt. In general, the Companys long-term debt bears a fixed interest rate. 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 of the Company.



ITEM 4. CONTROLS AND PROCEDURES.



Within the 90 day period prior to the filing of this report, the Companies management, including the Chief Executive Officer and Principal Financial Officer, conducted an evaluation of the effectiveness of the Companies
disclosure controls and procedures. 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
filed 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.



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
Sections 21E of the Securities Exchange Act of 1934, as amended, which represent the Companies expectations or beliefs concerning future events. Statements containing expressions such as believes, anticipates, or
expects used in the Companies press releases and periodic reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission are intended to identify forward-looking statements. All forward-looking statements involve
risks and uncertainties. Although the Companies 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 Companies caution that these and similar statements included in this report and in previously filed periodic reports, including reports filed on Forms 10-K and 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 Companies 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 Companies officers, directors or key employees; loss or retirement of key executives; significant increases in fuel or transportation prices; adverse economic conditions in the Companies key markets;
severe and unusual weather in the Companies key markets; adverse results of significant litigation matters. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date thereof. The Companies
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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PART II - OTHER INFORMATION



ITEM 1. LEGAL PROCEEDINGS



Not
applicable.



ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS



None.



ITEM 3. DEFAULTS UPON SENIOR SECURITIES



Not applicable.



ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS



None.



ITEM 5. OTHER INFORMATION



None.



ITEM 6. EXHIBITS



|              |  |                                                                                                                                                                                                                              
|------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Exhibit                                                                                                                                                                                                                      
|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.                                                              
|              | 
|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 Finance/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.



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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.



November 12, 2004



COLONY RIH HOLDINGS, INC.By:

/s/ MARK B. LEFEVERName:

Mark B. LefeverTitle:

Senior Vice President Finance/CFO (Duly Authorized Officer and Principal Financial Officer)RESORTS INTERNATIONAL HOTEL AND CASINO, INC.By:

/s/ MARK B. LEFEVERName:

Mark B. LefeverTitle:

Senior Vice President Finance/CFO (Duly Authorized Officer and Principal Financial Officer)




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