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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 June 30, 2005



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 August 9, 2005.



The number of shares outstanding of Resorts International Hotel and Casino, Inc.s
Common Stock, $0.01 par value, was 100 as of August 9, 2005.



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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 June 30, 2005 and December 31, 2004                                                 |  | 2   
|         |  |                                                                                                                                                          
|         |  | Condensed Consolidated Statements of Operations of Colony RIH Holdings, Inc. for the three and six months ended June 30, 2005 and 2004                    |  | 3   
|         |  |                                                                                                                                                          
|         |  | Condensed Consolidated Statements of Cash Flows of Colony RIH Holdings, Inc. for the six months ended June 30, 2005 and 2004                              |  | 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 June 30, 2005 and December 31, 2004                              |  | 8   
|         |  |                                                                                                                                                          
|         |  | Condensed Consolidated Statements of Operations of Resorts International Hotel and Casino, Inc. for the three and six months ended June 30, 2005 and 2004 |  | 9   
|         |  |                                                                                                                                                          
|         |  | Condensed Consolidated Statements of Cash Flows of Resorts International Hotel and Casino, Inc. for the six months ended June 30, 2005 and 2004           |  | 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                                                                     |  | 14  
|         |  |                                                                                                                                                          
|Item 3.  |  | Quantitative and Qualitative Disclosures About Market Risk                                                                                                |  | 22  
|         |  |                                                                                                                                                          
|Item 4.  |  | Controls and Procedures                                                                                                                                   |  | 22  
|         |  |                                                                                                                                                          
|PART II. |  | OTHER INFORMATION                                                                                                                                         |  |     
|         |  |                                                                                                                                                          
|Item 1.  |  | Legal Proceedings                                                                                                                                         |  | 23  
|         |  |                                                                                                                                                          
|Item 2.  |  | Changes in Securities                                                                                                                                     |  | 23  
|         |  |                                                                                                                                                          
|Item 3.  |  | Defaults Upon Senior Securities                                                                                                                           |  | 23  
|         |  |                                                                                                                                                          
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                                                                                       |  | 23  
|         |  |                                                                                                                                                          
|Item 5.  |  | Other Information                                                                                                                                         |  | 23  
|         |  |                                                                                                                                                          
|Item 6.  |  | Exhibits and Reports on Form 8-K                                                                                                                          |  | 24  



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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)



|                                                                                                              |  |               |         |                  |   |        
|------------------------------------------------------------------------------------------------------------- |  | ------------- | ------- | ---------------- | - | -------
|                                                                                                              |  | June 30, 2005 |         | December 31,2004
|ASSETS                                                                                                        |  |               |         |                  |   |        
|Current assets                                                                                                |  |               |         |                  |   |        
|Cash and cash equivalents                                                                                     |  | $             | 24,463  |                  | $ | 31,975 
|Receivables, net                                                                                              |  |               | 6,358   |                  |   | 5,530  
|Inventories                                                                                                   |  |               | 2,490   |                  |   | 2,332  
|Due from affiliates                                                                                           |  |               | 2,472   |                  |   |       
|Prepaid expenses and other current assets                                                                     |  |               | 3,661   |                  |   | 3,060  
|Deferred income taxes                                                                                         |  |               | 4,804   |                  |   | 4,804  
|                                                                                                              |  |               |         |                  |   |        
|Total current assets                                                                                          |  |               | 44,248  |                  |   | 47,701 
|Property and equipment, net                                                                                   |  |               | 304,122 |                  |   | 297,859
|Other assets (including $103 and $500 of restricted cash and cash equivalents in 2005 and 2004, respectively) |  |               | 16,799  |                  |   | 17,597 
|                                                                                                              |  |               |         |                  |   |        
|Total assets                                                                                                  |  | $             | 365,169 |                  | $ | 363,157
|                                                                                                              |  |               |         |                  |   |        
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                          |  |               |         |                  |   |        
|Current liabilities                                                                                           |  |               |         |                  |   |        
|Current maturities of long-term debt                                                                          |  | $             | 1,935   |                  | $ | 5,525  
|Accounts payable                                                                                              |  |               | 11,103  |                  |   | 10,957 
|Accrued interest payable                                                                                      |  |               | 6,509   |                  |   | 6,439  
|Accrued expenses and other current liabilities                                                                |  |               | 20,893  |                  |   | 16,901 
|                                                                                                              |  |               |         |                  |   |        
|Total current liabilities                                                                                     |  |               | 40,440  |                  |   | 39,822 
|                                                                                                              |  |               |         |                  |   |        
|Long-term debt, less current portion                                                                          |  |               | 237,802 |                  |   | 233,951
|Deferred income taxes                                                                                         |  |               | 5,919   |                  |   | 6,491  
|Redeemable common stock                                                                                       |  |               | 3,875   |                  |   | 3,875  
|                                                                                                              |  |               |         |                  |   |        
|Total liabilities                                                                                             |  |               | 288,036 |                  |   | 284,139
|                                                                                                              |  |               |         |                  |   |        
|Shareholders equity                                                                                          |  |               |         |                  |   |        
|Common stock:                                                                                                 |  |               |         |                  |   |        
|Class A                                                                                                       |  |               |        |                  |   |       
|Class B                                                                                                       |  |               | 8       |                  |   | 8      
|Capital in excess of par                                                                                      |  |               | 73,790  |                  |   | 73,790 
|Retained earnings                                                                                             |  |               | 3,335   |                  |   | 5,220  
|                                                                                                              |  |               |         |                  |   |        
|Total shareholders equity                                                                                    |  |               | 77,133  |                  |   | 79,018 
|                                                                                                              |  |               |         |                  |   |        
|Total liabilities and shareholders equity                                                                    |  | $             | 365,169 |                  | $ | 363,157
|                                                                                                              |  |               |         |                  |   |        



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 endedJune 30, |         |   | Six months ended June 30, |  
|                                     |  | 2005                       |         |   | 2004                      |   |         | 2005 |  |   | 2004    |  
|Revenue:                             |  |                            |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Casino                               |  | $                          | 67,290  |   |                           | $ | 62,492  |      |  | $ | 128,547 |   |  | $ | 117,704 |  
|Lodging                              |  |                            | 5,837   |   |                           |   | 3,775   |      |  |   | 10,395  |   |  |   | 6,847   |  
|Food and beverage                    |  |                            | 5,936   |   |                           |   | 5,972   |      |  |   | 10,806  |   |  |   | 10,956  |  
|Other                                |  |                            | 1,231   |   |                           |   | 2,792   |      |  |   | 2,588   |   |  |   | 4,642   |  
|Less: promotional allowances         |  |                            | (17,533 | ) |                           |   | (16,960 | )    |  |   | (33,184 | ) |  |   | (30,918 | )
|                                     |  |                            |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Total net revenue                    |  |                            | 62,761  |   |                           |   | 58,071  |      |  |   | 119,152 |   |  |   | 109,231 |  
|                                     |  |                            |         |  
|Costs and expenses:                  |  |                            |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Casino                               |  |                            | 30,923  |   |                           |   | 29,142  |      |  |   | 60,983  |   |  |   | 57,012  |  
|Lodging                              |  |                            | 1,271   |   |                           |   | 684     |      |  |   | 2,117   |   |  |   | 1,049   |  
|Food and beverage                    |  |                            | 2,218   |   |                           |   | 3,315   |      |  |   | 3,799   |   |  |   | 5,845   |  
|Other operating                      |  |                            | 6,501   |   |                           |   | 7,227   |      |  |   | 13,686  |   |  |   | 13,767  |  
|Selling, general, and administrative |  |                            | 8,455   |   |                           |   | 8,254   |      |  |   | 18,672  |   |  |   | 16,778  |  
|Depreciation and amortization        |  |                            | 4,795   |   |                           |   | 4,161   |      |  |   | 9,489   |   |  |   | 7,600   |  
|Pre-opening                          |  |                            |        |   |                           |   | 2,145   |      |  |   |        |   |  |   | 2,162   |  
|                                     |  |                            |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Total costs and expenses             |  |                            | 54,163  |   |                           |   | 54,928  |      |  |   | 108,746 |   |  |   | 104,213 |  
|                                     |  |                            |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Income from operations               |  |                            | 8,598   |   |                           |   | 3,143   |      |  |   | 10,406  |   |  |   | 5,018   |  
|Interest income                      |  |                            | 138     |   |                           |   | 112     |      |  |   | 275     |   |  |   | 281     |  
|Interest expense                     |  |                            | (6,491  | ) |                           |   | (3,626  | )    |  |   | (12,801 | ) |  |   | (7,424  | )
|Other income                         |  |                            | 7       |   |                           |   | 816     |      |  |   | 28      |   |  |   | 760     |  
|                                     |  |                            |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Income (loss) before income taxes    |  |                            | 2,252   |   |                           |   | 445     |      |  |   | (2,092  | ) |  |   | (1,365  | )
|Benefit (provision) for income taxes |  |                            | (1,030  | ) |                           |   | (411    | )    |  |   | 207     |   |  |   | (168    | )
|                                     |  |                            |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Net income (loss)                    |  | $                          | 1,222   |   |                           | $ | 34      |      |  | $ | (1,885  | ) |  | $ | (1,533  | )
|                                     |  |                            |         |   |                           |   |         |      |  |   |         |   |  |   |         |  



See accompanying notes.



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COLONY RIH HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Dollars in thousands)



|                                                                                |  |                           |         |   |      |   |         |  
|------------------------------------------------------------------------------- |  | ------------------------- | ------- | - | ---- | - | ------- | -
|                                                                                |  | Six months ended June 30, |        
|                                                                                |  | 2005                      |         |   | 2004 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                           |  |                           |         |   |      |   |         |  
|Net loss                                                                        |  | $                         | (1,885  | ) |      | $ | (1,533  | )
|Adjustments to reconcile net loss to net cash provided by operating activities: |  |                           |         |   |      |   |         |  
|Depreciation and amortization                                                   |  |                           | 9,088   |   |      |   | 6,521   |  
|Amortization of debt premiums, discounts and issuance costs                     |  |                           | 893     |   |      |   | 941     |  
|Provision for doubtful receivables                                              |  |                           | 108     |   |      |   | (61     | )
|Gain on disposal of fixed assets                                                |  |                           | (28     | ) |      |   | (759    | )
|Provision for discount on CRDA obligations, net of amortization                 |  |                           | 401     |   |      |   | 1,079   |  
|Deferred taxes                                                                  |  |                           | (572    | ) |      |   |        |  
|Changes in operating assets and liabilities:                                    |  |                           |         |   |      |   |         |  
|Net increase in advances to affiliates                                          |  |                           | (2,472  | ) |      |   |        |  
|Net increase in receivables                                                     |  |                           | (936    | ) |      |   | (509    | )
|Net increase in inventories and prepaid expenses and other current assets       |  |                           | (759    | ) |      |   | (1,841  | )
|Net decrease in deferred charges and other assets                               |  |                           | 188     |   |      |   | 764     |  
|Net increase in accounts payable and accrued expenses                           |  |                           | 2,777   |   |      |   | 4,343   |  
|Net increase in interest payable                                                |  |                           | 70      |   |      |   | 5       |  
|                                                                                |  |                           |         |   |      |   |         |  
|Net cash provided by operating activities                                       |  |                           | 6,873   |   |      |   | 8,950   |  
|                                                                                |  |                           |         |   |      |   |         |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                           |  |                           |         |   |      |   |         |  
|Releases of cash and cash equivalents  restricted                              |  |                           | 398     |   |      |   | 33,085  |  
|Proceeds from sale of fixed assets                                              |  |                           | 28      |   |      |   | 1,249   |  
|Purchases of property and equipment                                             |  |                           | (11,862 | ) |      |   | (55,200 | )
|CRDA deposits                                                                   |  |                           | (1,478  | ) |      |   | (1,296  | )
|CRDA refunds                                                                    |  |                           |        |   |      |   | 433     |  
|                                                                                |  |                           |         |   |      |   |         |  
|Net cash used in investing activities                                           |  |                           | (12,914 | ) |      |   | (21,729 | )
|                                                                                |  |                           |         |   |      |   |         |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                           |  |                           |         |   |      |   |         |  
|Proceeds from borrowings                                                        |  |                           | 5,000   |   |      |   | 9,282   |  
|Payments to secure borrowings                                                   |  |                           | (52     | ) |      |   | (135    | )
|Debt repayments                                                                 |  |                           | (6,419  | ) |      |   | (938    | )
|                                                                                |  |                           |         |   |      |   |         |  
|Net cash provided by (used in) financing activities                             |  |                           | (1,471  | ) |      |   | 8,209   |  
|                                                                                |  |                           |         |   |      |   |         |  
|Net decrease in cash and cash equivalents                                       |  |                           | (7,512  | ) |      |   | (4,570  | )
|Cash and cash equivalents at beginning of period                                |  |                           | 31,975  |   |      |   | 28,417  |  
|                                                                                |  |                           |         |   |      |   |         |  
|Cash and cash equivalents at end of period                                      |  | $                         | 24,463  |   |      | $ | 23,847  |  
|                                                                                |  |                           |         |   |      |   |         |  
|SUPPLEMENTAL CASH FLOW DISCLOSURES:                                             |  |                           |         |   |      |   |         |  
|Cash paid during the period for:                                                |  |                           |         |   |      |   |         |  
|Interest                                                                        |  | $                         | 11,102  |   |      | $ | 10,537  |  
|Income taxes (net of refunds)                                                   |  |                           | (709    | ) |      |   | 650     |  
|Non-cash transactions:                                                          |  |                           |         |   |      |   |         |  
|Obligations incurred for the purchase of property and equipment                 |  |                           | 1,404   |   |      |   | 4,500   |  
|Note payable issued in connection with option land purchase                     |  |                           |        |   |      |   | 40,000  |  
|Note payable issued in connection with warehouse purchase                       |  |                           |        |   |      |   | 600     |  



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), owns 100% of the outstanding common stock of Resorts International Hotel and Casino, Inc., a Delaware corporation (RIHC or the Company). RIHC, through its wholly-owned subsidiary,
Resorts International Hotel, Inc., a New Jersey corporation (RIH), owns and operates Resorts Atlantic City (Resorts), a casino/hotel located in Atlantic City, NJ. On April 1, 2003, Resorts Real Estate Holdings, Inc.
(RREH) was formed as a wholly owned subsidiary of CRH. RREH, which was incorporated as a New Jersey corporation, was formed to acquire certain land. RREH had no substantive business operations prior to January 2004 (see Note 2). Colony
RIH Holdings, Inc, Resorts International Hotel and Casino, Inc. and Resorts International Hotel, Inc. are referred to collectively as the Companies.



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



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



The consolidated financial statements include the accounts of CRH and its
wholly owned subsidiaries. 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 approximately $40 million of
assets and liabilities related to the purchase of property. All significant intercompany accounts and transactions have been eliminated. Certain reclasses have been made to prior reporting periods to conform with the current presentation.



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, 2004.



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.



5



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##### Table of Contents

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



The First Mortgage Notes
contain certain covenants that, among other things, 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 its subsidiaries on a consolidated basis.



In June 2002, RIH entered into a Thermal Energy Services Agreement (the Thermal Agreement). The initial term of the Thermal Agreement is 20 years, renewable at RIHs option for two additional
five-year terms. The Thermal Agreement has three components: a monthly charge for operation and maintenance of the thermal energy facilities; a capital lease component for capital improvements whose value was estimated at $6.5 million on the date
the Thermal Agreement was executed, and; a usage fee for steam and chilled water, whose usage and rate will vary by month of the year. The outstanding balance of the capital lease was $6.2 million at June 30, 2005.



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. On
March 30, 2005, the CIT Facility was amended to provide for the suspension of principal payments for one year, commencing April 1, 2005; the outstanding principal balance as of March 31, 2005 will be paid in equal monthly installments commencing
April 2006 and ending February 2009. Interest on the outstanding loans will continue to accrue and be paid monthly. The outstanding balance due to CIT at June 30, 2005 was $16.0 million.



In November 2002, RIH entered into a Loan and Security Agreement with Commerce Bank, N.A (Commerce Facility) as
amended. The Commerce Facility provides for working capital borrowings and letters of credit up to $10 million. The Commerce Facility expires on June 30, 2006. 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 June 30, 2005. There was no outstanding balance on the Commerce Facility at June 30, 2005.



During 2004, RREH purchased 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 (see Note 2). The land was acquired in exchange for the issuance of a $40 million note by RREH to KINA. This $40 million note will mature immediately following the maturity, acceleration or
refinancing (other than permitted refinancing) of the First Mortgage Notes which are due March 22, 2009. Interest on the $40 million note is payable semi-annually, and is calculated at the following annual rates: 0% through September 2004, 4% from
October 2004 through March 2006, 6% from April 2006 through March 2008, and 9% from April 2008 through March 2009. The note payable to KINA is guaranteed by CRH, RIHC and RIH, provided, however that the guarantee of RIHC and RIH does not become
effective until either the First Mortgage Notes have been paid in full or the fixed charge coverage ratio of RIHC is at least 2.0 to 1.0. In addition, the amount guaranteed was initially limited to $20 million increasing by $5 million each year
totaling $25 million at June 30, 2005.



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.



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##### Table of Contents

5. INCOME TAXES



The benefit for income taxes for the three and six months ended June 30, 2005 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.



On June 30, 2003, the State of New Jersey amended the New Jersey Casino Control Act, effective July 1, 2003, to impose or increase certain taxes and fees,
including a tax at the rate of 7.5% on the adjusted net income of casino licensees in calendar year 2002, payable in the states fiscal years 2004 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. In connection with this tax, the Company recorded provisions for income taxes of $88,000 and $175,000, respectively, in each of the three-month and six-month periods ended June 30, 2005 and 2004.



On July 3, 2002, the State of New Jersey passed the New Jersey
Business Tax Reform Act which, among other things, requires the suspension of the use of the New Jersey net operating loss carryforwards for two years and the introduction of a new alternative minimum assessment (NJAMA) under the New
Jersey corporate business tax based on gross receipts or gross profits, as defined. The Tax Act was retroactive to January 1, 2002. Since amounts paid under the alternative minimum assessment have an unlimited expiration date to offset state taxable
income upon suspension of the NJAMA, the Company has a tax credit recorded on the balance sheet at June 30, 2005 for the cumulative amount of the future tax credits related to payments under the NJAMA since the inception of the NJAMA.



6. PRE-OPENING EXPENSES



For the three and six months ended June 30, 2004, the Company recorded $2.1 million and $2.2 million, respectively, of
pre-opening expenses, primarily advertising and related costs, to promote the opening of the expanded casino and hotel facility.



7. RELATED PARTY TRANSACTIONS



An affiliate of the Companys parent company, Colony Capital LLC, acquired properties from Harrahs Entertainment, Inc. and Caesars
Entertainment, Inc. on April 26, 2005. Certain employees of the Company assisted the affiliate during the acquisition period, and therefore a portion of the cost of their salaries, as well as additional costs incurred as a direct result of these
activities, were charged back to the affiliate, and are recorded as a receivable as of June 30, 2005. The total amount of this receivable as of June 30, 2005 was approximately $1.6 million. The effect on the Companys Consolidated Statement of
Operations for the three and six months ended June 30, 2005 as a result of the chargeback was a reduction in selling, general and administrative expenses of approximately $1.7 million and $2.2 million, respectively.



Since the acquisition of the new properties, certain departments for the
Company have become shared services for the new properties, and the labor and certain other associated costs are allocated accordingly. For the three and six months ended June 30, 2005, the shared service allocations have reduced
selling, general, and administrative expenses by approximately $932,000. At June 30, 2005, $579,000 of such amount has not been paid by the affiliated entities and is recorded as an asset on the Companys balance sheet.



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RESORTS INTERNATIONAL HOTEL AND CASINO, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(Dollars in thousands)



|                                                                                                              |  |               |         |                  |   |        
|------------------------------------------------------------------------------------------------------------- |  | ------------- | ------- | ---------------- | - | -------
|                                                                                                              |  | June 30, 2005 |         | December 31,2004
|                                                                                                              |  | (Unaudited)   |         |                 
|ASSETS                                                                                                        |  |               |         |                  |   |        
|Current assets                                                                                                |  |               |         |                  |   |        
|Cash and cash equivalents                                                                                     |  | $             | 23,922  |                  | $ | 31,512 
|Receivables, net                                                                                              |  |               | 6,358   |                  |   | 5,530  
|Inventories                                                                                                   |  |               | 2,490   |                  |   | 2,332  
|Due from affiliates                                                                                           |  |               | 2,472   |                  |   |       
|Prepaid expenses and other current assets                                                                     |  |               | 4,011   |                  |   | 3,060  
|Deferred income taxes                                                                                         |  |               | 4,804   |                  |   | 4,804  
|                                                                                                              |  |               |         |                  |   |        
|Total current assets                                                                                          |  |               | 44,057  |                  |   | 47,238 
|Property and equipment, net                                                                                   |  |               | 262,506 |                  |   | 256,243
|Other assets (including $103 and $500 of restricted cash and cash equivalents in 2005 and 2004, respectively) |  |               | 16,957  |                  |   | 18,215 
|                                                                                                              |  |               |         |                  |   |        
|Total assets                                                                                                  |  | $             | 323,520 |                  | $ | 321,696
|                                                                                                              |  |               |         |                  |   |        
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                          |  |               |         |                  |   |        
|Current liabilities                                                                                           |  |               |         |                  |   |        
|Current maturities of long-term debt                                                                          |  | $             | 1,935   |                  | $ | 5,525  
|Accounts payable                                                                                              |  |               | 11,103  |                  |   | 10,957 
|Accrued interest payable                                                                                      |  |               | 6,045   |                  |   | 6,039  
|Accrued expenses and other current liabilities                                                                |  |               | 20,442  |                  |   | 16,449 
|                                                                                                              |  |               |         |                  |   |        
|Total current liabilities                                                                                     |  |               | 39,525  |                  |   | 38,970 
|Long-term debt, less current portion                                                                          |  |               | 197,802 |                  |   | 193,951
|Deferred income taxes                                                                                         |  |               | 6,010   |                  |   | 6,582  
|                                                                                                              |  |               |         |                  |   |        
|Total liabilities                                                                                             |  |               | 243,337 |                  |   | 239,503
|                                                                                                              |  |               |         |                  |   |        
|Shareholders equity                                                                                          |  |               |         |                  |   |        
|Common stock                                                                                                  |  |               |        |                  |   |       
|Capital in excess of par                                                                                      |  |               | 77,673  |                  |   | 77,673 
|Retained earnings                                                                                             |  |               | 2,510   |                  |   | 4,520  
|                                                                                                              |  |               |         |                  |   |        
|Total shareholders equity                                                                                    |  |               | 80,183  |                  |   | 82,193 
|                                                                                                              |  |               |         |                  |   |        
|Total liabilities and shareholders equity                                                                    |  | $             | 323,520 |                  | $ | 321,696
|                                                                                                              |  |               |         |                  |   |        



See accompanying notes



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RESORTS INTERNATIONAL HOTEL AND CASINO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Dollars in thousands)



|                                     |  |                            |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|------------------------------------ |  | -------------------------- | ------- | - | ------------------------- | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                     |  | Three months endedJune 30, |         |   | Six months ended June 30, |  
|                                     |  | 2005                       |         |   | 2004                      |   |         | 2005 |  |   | 2004    |  
|Revenue:                             |  |                            |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Casino                               |  | $                          | 67,290  |   |                           | $ | 62,492  |      |  | $ | 128,547 |   |  | $ | 117,704 |  
|Lodging                              |  |                            | 5,837   |   |                           |   | 3,775   |      |  |   | 10,395  |   |  |   | 6,847   |  
|Food and beverage                    |  |                            | 5,936   |   |                           |   | 5,972   |      |  |   | 10,806  |   |  |   | 10,956  |  
|Other                                |  |                            | 1,121   |   |                           |   | 2,792   |      |  |   | 2,478   |   |  |   | 4,642   |  
|Less: promotional allowances         |  |                            | (17,533 | ) |                           |   | (16,960 | )    |  |   | (33,184 | ) |  |   | (30,918 | )
|                                     |  |                            |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Total net revenue                    |  |                            | 62,651  |   |                           |   | 58,071  |      |  |   | 119,042 |   |  |   | 109,231 |  
|                                     |  |                            |         |  
|Costs and expenses:                  |  |                            |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Casino                               |  |                            | 30,923  |   |                           |   | 29,142  |      |  |   | 60,983  |   |  |   | 57,012  |  
|Lodging                              |  |                            | 1,271   |   |                           |   | 684     |      |  |   | 2,117   |   |  |   | 1,049   |  
|Food and beverage                    |  |                            | 2,218   |   |                           |   | 3,315   |      |  |   | 3,799   |   |  |   | 5,845   |  
|Other operating                      |  |                            | 6,501   |   |                           |   | 7,227   |      |  |   | 13,686  |   |  |   | 13,767  |  
|Selling, general, and administrative |  |                            | 8,808   |   |                           |   | 8,717   |      |  |   | 19,487  |   |  |   | 17,313  |  
|Depreciation and amortization        |  |                            | 4,795   |   |                           |   | 4,161   |      |  |   | 9,489   |   |  |   | 7,600   |  
|Pre-opening                          |  |                            |        |   |                           |   | 2,145   |      |  |   |        |   |  |   | 2,162   |  
|                                     |  |                            |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Total costs and expenses             |  |                            | 54,516  |   |                           |   | 55,391  |      |  |   | 109,561 |   |  |   | 104,748 |  
|                                     |  |                            |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Income from operations               |  |                            | 8,135   |   |                           |   | 2,680   |      |  |   | 9,481   |   |  |   | 4,483   |  
|Interest income                      |  |                            | 138     |   |                           |   | 112     |      |  |   | 275     |   |  |   | 281     |  
|Interest expense                     |  |                            | (6,091  | ) |                           |   | (3,626  | )    |  |   | (12,001 | ) |  |   | (7,424  | )
|Other income                         |  |                            | 7       |   |                           |   | 816     |      |  |   | 28      |   |  |   | 760     |  
|                                     |  |                            |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Income (loss) before income taxes    |  |                            | 2,189   |   |                           |   | (18     | )    |  |   | (2,217  | ) |  |   | (1,900  | )
|Benefit (provision) for income taxes |  |                            | (1,030  | ) |                           |   | (411    | )    |  |   | 207     |   |  |   | (168    | )
|                                     |  |                            |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Net income (loss)                    |  | $                          | 1,159   |   |                           | $ | (429    | )    |  | $ | (2,010  | ) |  | $ | (2,068  | )
|                                     |  |                            |         |   |                           |   |         |      |  |   |         |   |  |   |         |  



See accompanying notes



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RESORTS INTERNATIONAL HOTEL AND CASINO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Dollars in thousands)



|                                                                                |  |                           |         |   |      |   |         |  
|------------------------------------------------------------------------------- |  | ------------------------- | ------- | - | ---- | - | ------- | -
|                                                                                |  | Six months ended June 30, |        
|                                                                                |  | 2005                      |         |   | 2004 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                           |  |                           |         |   |      |   |         |  
|Net loss                                                                        |  | $                         | (2,010  | ) |      | $ | (2,068  | )
|Adjustments to reconcile net loss to net cash provided by operating activities: |  |                           |         |   |      |   |         |  
|Depreciation and amortization                                                   |  |                           | 9,088   |   |      |   | 6,521   |  
|Amortization of debt premiums, discounts and issuance costs                     |  |                           | 893     |   |      |   | 941     |  
|Provision for doubtful receivables                                              |  |                           | 108     |   |      |   | (61     | )
|Gain on disposal of fixed assets                                                |  |                           | (28     | ) |      |   | (759    | )
|Provision for discount on CRDA obligations, net of amortization                 |  |                           | 401     |   |      |   | 1,079   |  
|Deferred taxes                                                                  |  |                           | (572    | ) |      |   |        |  
|Changes in operating assets and liabilities:                                    |  |                           |         |   |      |   |         |  
|Advances to affiliates                                                          |  |                           | (2,472  | ) |      |   |        |  
|Net increase in receivables                                                     |  |                           | (936    | ) |      |   | (509    | )
|Net increase in inventories and prepaid expenses and other current assets       |  |                           | (1,109  | ) |      |   | (2,442  | )
|Net decrease in deferred charges and other assets                               |  |                           | 648     |   |      |   | 588     |  
|Net increase in accounts payable and accrued expenses                           |  |                           | 2,778   |   |      |   | 4,343   |  
|Net increase in interest payable                                                |  |                           | 6       |   |      |   | 5       |  
|                                                                                |  |                           |         |   |      |   |         |  
|Net cash provided by operating activities                                       |  |                           | 6,795   |   |      |   | 7,638   |  
|                                                                                |  |                           |         |   |      |   |         |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                           |  |                           |         |   |      |   |         |  
|Releases of cash and cash equivalents-restricted                                |  |                           | 398     |   |      |   | 33,085  |  
|Proceeds from sale of fixed assets                                              |  |                           | 28      |   |      |   | 1,249   |  
|Purchases of property and equipment                                             |  |                           | (11,862 | ) |      |   | (53,961 | )
|CRDA deposits                                                                   |  |                           | (1,478  | ) |      |   | (1,296  | )
|CRDA refunds                                                                    |  |                           |        |   |      |   | 433     |  
|                                                                                |  |                           |         |   |      |   |         |  
|Net cash used in investing activities                                           |  |                           | (12,914 | ) |      |   | (20,490 | )
|                                                                                |  |                           |         |   |      |   |         |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                           |  |                           |         |   |      |   |         |  
|Proceeds from borrowings                                                        |  |                           | 5,000   |   |      |   | 9,282   |  
|Payments to secure borrowings                                                   |  |                           | (52     | ) |      |   | (135    | )
|Debt repayments                                                                 |  |                           | (6,419  | ) |      |   | (938    | )
|                                                                                |  |                           |         |   |      |   |         |  
|Net cash provided by (used in) financing activities                             |  | $                         | (1,471  | ) |      | $ | 8,209   |  
|                                                                                |  |                           |         |   |      |   |         |  
|Net decrease in cash and cash equivalents                                       |  |                           | (7,590  | ) |      |   | (4,643  | )
|Cash and cash equivalents at beginning of period                                |  |                           | 31,512  |   |      |   | 28,417  |  
|                                                                                |  |                           |         |   |      |   |         |  
|Cash and cash equivalents at end of period                                      |  | $                         | 23,922  |   |      | $ | 23,774  |  
|                                                                                |  |                           |         |   |      |   |         |  
|SUPPLEMENTAL CASH FLOW DISCLOSURES:                                             |  |                           |         |   |      |   |         |  
|Cash paid during the period for:                                                |  |                           |         |   |      |   |         |  
|Interest                                                                        |  | $                         | 11,102  |   |      | $ | 10,537  |  
|Income taxes, net of refunds                                                    |  |                           | (709    | ) |      |   | 650     |  
|Non-cash transactions:                                                          |  |                           |         |   |      |   |         |  
|Obligations incurred for the purchase of property and equipment                 |  | $                         | 1,404   |   |      | $ | 4,500   |  
|Note payable issued in connection with warehouse purchase                       |  |                           |        |   |      |   | 600     |  



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), owns 100% of the outstanding common stock of Resorts International Hotel and Casino, Inc., a Delaware corporation (RIHC or the
Company). RIHC, through its wholly-owned subsidiary, Resorts International Hotel, Inc., a New Jersey corporation (RIH), owns and operates Resorts Atlantic City (Resorts), a casino/hotel located in Atlantic City,
NJ. On April 1, 2003, Resorts Real Estate Holdings, Inc. (RREH) was formed as a wholly owned subsidiary of CRH. RREH, which was incorporated as a New Jersey corporation, was formed to acquire certain land. RREH had no substantive
business operations prior to January 2004 (see Note 2). Colony RIH Holdings, Inc, Resorts International Hotel and Casino, Inc. and Resorts International Hotel, 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. Certain reclasses have been made to prior reporting periods to conform with the current presentation.



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 RIHCs annual report on Form 10-K for the year
ended December 31, 2004.



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



The First Mortgage Notes contain certain covenants that, among other things, 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 $6.2 million at June 30, 2005.



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##### Table of Contents

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. On March 30, 2005, the CIT
Facility was amended to provide for the suspension of principal payments for one year, commencing April 1, 2005; the outstanding principal balance as of March 31, 2005 will be paid in equal monthly installments commencing April 2006 and ending
February 2009. Interest on the outstanding loans will continue to accrue and be paid monthly. The outstanding balance due to CIT at June 30, 2005 was $16.0 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, 2006. 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 June 30, 2005. There was no outstanding balance on the Commerce Facility at June 30, 2005.



During 2004, RREH purchased 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. The land was acquired in exchange for the issuance of a $40 million note by RREH to KINA. This $40 million note will mature immediately following the maturity, acceleration or refinancing (other than permitted
refinancing) of the First Mortgage Notes which are due March 22, 2009. Interest on the $40 million note is payable semi-annually, and is calculated at the following annual rates: 0% through September 2004, 4% from October 2004 through March 2006, 6%
from April 2006 through March 2008, and 9% from April 2008 through March 2009. The note payable to KINA is guaranteed by CRH, RIHC and RIH, provided, however that the guarantee of RIHC and RIH does not become effective until either the First
Mortgage Notes have been paid in full or the fixed charge coverage ratio of RIHC is at least 2.0 to 1.0. In addition, the amount guaranteed was initially limited to $20 million increasing by $5 million each year totaling $25 million at June 30,
2005.



3. INCOME TAXES



The benefit for income taxes for the three and six months ended June 30,
2005 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.



On June 30, 2003, the State of New Jersey amended the New Jersey Casino
Control Act, effective July 1, 2003, to impose or increase certain taxes and fees, including a tax at the rate of 7.5% on the adjusted net income of casino licensees in calendar year 2002, payable in the states fiscal years 2004 though 2006.
The amount of this tax for each licensee is limited to a maximum of $10.0 million annually and a minimum of $350,000 annually. In connection with this tax, the Company recorded provisions for income taxes of $88,000 and $175,000 in each of the
three-month and six-month periods ended June 30, 2005 and 2004.



On July 3, 2002, the State of New Jersey passed the New Jersey Business Tax Reform Act which, among other things, requires the suspension of the use of the New Jersey net operating loss carryforwards for two years and the introduction of a
new alternative minimum assessment (NJAMA) under the New Jersey corporate business tax based on gross receipts or gross profits, as defined. The Tax Act was retroactive to January 1, 2002. Since amounts paid under the alternative minimum
assessment have an unlimited expiration date to offset state taxable income upon suspension of the NJAMA, the Company has a tax credit recorded on the balance sheet at June 30, 2005 for the cumulative amount of the future tax credits related to
payments under the NJAMA since the inception of the NJAMA.



4. PRE-OPENING
EXPENSES



For the three and six months ended June 30, 2004,
the Company recorded $2.1 million and $2.2 million, respectively, of pre-opening expenses, primarily advertising and related costs, to promote the opening of the expanded casino and hotel facility.



5. RELATED PARTY TRANSACTIONS



An affiliate of the Companys parent company, Colony Capital LLC, acquired properties from Harrahs Entertainment,
Inc. and Caesars Entertainment, Inc. on April 26, 2005. Certain employees of the Company assisted the affiliate during the acquisition period, and therefore a portion of the cost of their salaries, as well as additional costs incurred as a direct
result of these activities, were charged back to



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##### Table of Contents

the affiliate, and are recorded as a receivable as of June 30, 2005. The total amount of this receivable as of June 30, 2005 was approximately $1.6 million.
The effect on the Companys Consolidated Statement of Operations for the three and six months ended June 30, 2005 as a result of the chargeback was a reduction in selling, general and administrative expenses of approximately $1.7 million and
$2.2 million, respectively.



Since the acquisition of the new
properties, certain departments for the Company have become shared services for the new properties, and the labor and certain other associated costs are allocated accordingly. For the three and six months ended June 30, 2005, the shared
service allocations have reduced selling, general, and administrative expenses by approximately $932,000. At June 30, 2005, $579,000 of such amount has not been paid by the affiliated entities and is recorded as an asset on the Companys
balance sheet.



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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:



| |  |  | 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
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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 consolidations of RIHC
and RREH into CRHs financial statements.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



Assets



|                              |  |                  |         |                   |   |         |  
|----------------------------- |  | ---------------- | ------- | ----------------- | - | ------- | -
|                              |  | June 30,2005     |         | December 31, 2004 |  
|                              |  | ($ in thousands) |        
|Total assets of RIHC          |  | $                | 323,520 |                   | $ | 321,696 |  
|Basis of Option Land acquired |  |                  | 41,616  |                   |   | 41,616  |  
|Other                         |  |                  | 33      |                   |   | (155    | )
|                              |  |                  |         |                   |   |         |  
|Total assets of CRH           |  | $                | 365,169 |                   | $ | 363,157 |  
|                              |  |                  |         |                   |   |         |  



Liabilities



|                                    |  |                  |         |                  |   |        
|----------------------------------- |  | ---------------- | ------- | ---------------- | - | -------
|                                    |  | June 30, 2005    |         | December 31,2004
|                                    |  | ($ in thousands)
|Total liabilities of RIHC           |  | $                | 243,337 |                  | $ | 239,503
|Note payable, plus accrued interest |  |                  | 40,463  |                  |   | 40,400 
|Income taxes payable                |  |                  | 361     |                  |   | 361    
|Redeemable common stock             |  |                  | 3,875   |                  |   | 3,875  
|                                    |  |                  |         |                  |   |        
|Total liabilities of CRH            |  | $                | 288,036 |                  | $ | 284,139
|                                    |  |                  |         |                  |   |        



14



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Equity



|                                   |  |                  |        |   |                   |   |        |  
|---------------------------------- |  | ---------------- | ------ | - | ----------------- | - | ------ | -
|                                   |  | June 30,2005     |        |   | December 31, 2004 |  
|                                   |  | ($ in thousands) |       
|Total shareholders equity of RIHC |  | $                | 80,183 |   |                   | $ | 82,193 |  
|Redeemable common stock            |  |                  | (3,875 | ) |                   |   | (3,875 | )
|Intercompany rent                  |  |                  | 2,385  |   |                   |   | 1,460  |  
|Interest expense                   |  |                  | (1,200 | ) |                   |   | (400   | )
|Income tax expense                 |  |                  | (360   | ) |                   |   | (360   | )
|                                   |  |                  |        |   |                   |   |        |  
|Total shareholders equity of CRH  |  | $                | 77,133 |   |                   | $ | 79,018 |  
|                                   |  |                  |        |   |                   |   |        |  



Net Loss



|                  |  |                           |        |   |      |   |        |  
|----------------- |  | ------------------------- | ------ | - | ---- | - | ------ | -
|                  |  | Six months ended June 30, |       
|                  |  | 2005                      |        |   | 2004 |  
|                  |  | ($ in thousands)          |       
|Net loss of RIHC  |  | $                         | (2,010 | ) |      | $ | (2,068 | )
|Intercompany rent |  |                           | 925    |   |      |   | 535    |  
|Interest expense  |  |                           | (800   | ) |      |   |       |  
|                  |  |                           |        |   |      |   |        |  
|Net loss of CRH   |  | $                         | (1,885 | ) |      | $ | (1,533 | )
|                  |  |                           |        |   |      |   |        |  



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 to begin 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 June 30,
2003 levels. In addition, the expansion included the relocation and expansion of the hotel lobby and porte cochere (collectively, the New Tower). RIHC opened the expanded gaming space on May 28, 2004, and began opening rooms to the
public on June 16, 2004. The grand opening ceremony for the New Tower was held over the 2004 July 4thweekend.



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); Resorts typical table games hold percentage is in the 15% range and its typical slot hold percentage is in the 8%
range.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



RIHC also considers EBITDA to be a key indicator of its performance. EBITDA, as further defined in the First Mortgage Notes indenture (the
Indenture), represents RIHCs earnings before interest expense, taxes, depreciation and amortization costs, pre-opening



15



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##### Table of Contents

costs incurred in connection with the New Tower, and other non-cash items. Management believes that EBITDA is a commonly
used measure of performance in the gaming industry, and uses it as the primary measurement in evaluating managements operating performance. EBITDA should not be considered as an alternative to operating income (as determined in accordance with
generally accepted accounting principles, or GAAP) as an indicator of operating performance, or to cash flows from operating activities (as determined in accordance with GAAP) as a measure of liquidity, or to other consolidated income or
cash flow statement data, as are determined in accordance with GAAP. Not all companies calculate EBITDA in the same manner. The following table reflects a reconciliation of EBITDA, as defined in the Indenture, to net income as determined in
accordance with GAAP for the periods noted:



|                               |  |                             |        |   |                           |   |       |      |  |   |        |   |  |   |        |  
|------------------------------ |  | --------------------------- | ------ | - | ------------------------- | - | ----- | ---- |  | - | ------ | - |  | - | ------ | -
|                               |  | Three months ended June 30, |        |   | Six months ended June 30, |  
|                               |  | 2005                        |        |   | 2004                      |   |       | 2005 |  |   | 2004   |  
|                               |  | ($ in thousands)            |       
|Net income (loss)              |  | $                           | 1,159  |   |                           | $ | (429  | )    |  | $ | (2,010 | ) |  | $ | (2,068 | )
|Add: Interest expense          |  |                             | 6,091  |   |                           |   | 3,626 |      |  |   | 12,001 |   |  |   | 7,424  |  
|Income tax provision (benefit) |  |                             | 1,030  |   |                           |   | 411   |      |  |   | (207   | ) |  |   | 168    |  
|Depreciation and amortization  |  |                             | 4,795  |   |                           |   | 4,161 |      |  |   | 9,489  |   |  |   | 7,600  |  
|Pre-opening                    |  |                             |       |   |                           |   | 2,145 |      |  |   |       |   |  |   | 2,162  |  
|Other non-operating income     |  |                             | (7     | ) |                           |   | (816  | )    |  |   | (28    | ) |  |   | (760   | )
|                               |  |                             |        |   |                           |   |       |      |  |   |        |   |  |   |        |  
|EBITDA                         |  | $                           | 13,068 |   |                           | $ | 9,098 |      |  | $ | 19,245 |   |  | $ | 14,526 |  
|                               |  |                             |        |   |                           |   |       |      |  |   |        |   |  |   |        |  



Operating Results



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



| |  |  | The decommissioning of the 166-room Atlantic City Tower in September 2002 for the construction of the new 27-story hotel tower. The construction and opening of the New Tower,
consisting of 399 hotel rooms and suites, the Grand Lobby, and 25,000 square feet of additional gaming space, was successfully completed in the second quarter of 2004; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Certain regional and national events, including severe weather conditions, the war in Iraq, and the general economic conditions.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------



16



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##### Table of Contents

Revenues



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



|                                |  |                                     |         |   |                                   |       |    |      |   |         |      |  |   |         |   |  |       |    |  |   |         |  
|------------------------------- |  | ----------------------------------- | ------- | - | --------------------------------- | ----- | -- | ---- | - | ------- | ---- |  | - | ------- | - |  | ----- | -- |  | - | ------- | -
|                                |  | For the three months ended June 30, |         |   | For the six months ended June 30, |      
|                                |  | 2005                                |         |   | % change                          |       |    | 2004 |   |         | 2005 |  |   | %change |   |  | 2004  |   
|                                |  | ($ in thousands)                    |        
|Casino revenues:                |  |                                     |         |   |                                   |       |    |      |   |         |      |  |   |         |   |  |       |    |  |   |         |  
|Slots                           |  | $                                   | 50,034  |   |                                   | 7.1   | %  |      | $ | 46,733  |      |  | $ | 94,077  |   |  | 9.6   | %  |  | $ | 85,862  |  
|Table games                     |  |                                     | 16,935  |   |                                   | 10.1  | %  |      |   | 15,380  |      |  |   | 33,844  |   |  | 8.8   | %  |  |   | 31,103  |  
|Other                           |  |                                     | 321     |   |                                   | (15.3 | )% |      |   | 379     |      |  |   | 626     |   |  | (15.3 | )% |  |   | 739     |  
|                                |  |                                     |         |   |                                   |       |    |      |   |         |      |  |   |         |   |  |       |    |  |   |         |  
|Total casino revenues           |  |                                     | 67,290  |   |                                   | 7.7   | %  |      |   | 62,492  |      |  |   | 128,547 |   |  | 9.2   | %  |  |   | 117,704 |  
|                                |  |                                     |         |   |                                   |      
|Non-casino revenue:             |  |                                     |         |   |                                   |       |    |      |   |         |      |  |   |         |   |  |       |    |  |   |         |  
|Food and beverage               |  |                                     | 5,936   |   |                                   | (0.6  | )% |      |   | 5,972   |      |  |   | 10,806  |   |  | (1.4  | )% |  |   | 10,956  |  
|Lodging                         |  |                                     | 5,837   |   |                                   | 54.6  | %  |      |   | 3,775   |      |  |   | 10,395  |   |  | 51.8  | %  |  |   | 6,847   |  
|Entertainment, retail and other |  |                                     | 1,121   |   |                                   | (59.8 | )% |      |   | 2,792   |      |  |   | 2,478   |   |  | (46.6 | )% |  |   | 4,642   |  
|                                |  |                                     |         |   |                                   |       |    |      |   |         |      |  |   |         |   |  |       |    |  |   |         |  
|Total non-casino revenues       |  |                                     | 12,894  |   |                                   | 2.8   | %  |      |   | 12,539  |      |  |   | 23,679  |   |  | 5.5   | %  |  |   | 22,445  |  
|                                |  |                                     |         |   |                                   |      
|Less: promotional allowances    |  |                                     | (17,533 | ) |                                   | 3.4   | %  |      |   | (16,960 | )    |  |   | (33,184 | ) |  | 7.3   | %  |  |   | (30,918 | )
|                                |  |                                     |         |   |                                   |       |    |      |   |         |      |  |   |         |   |  |       |    |  |   |         |  
|Total net revenues              |  | $                                   | 62,651  |   |                                   | 7.9   | %  |      | $ | 58,071  |      |  | $ | 119,042 |   |  | 9.0   | %  |  | $ | 109,231 |  
|                                |  |                                     |         |   |                                   |       |    |      |   |         |      |  |   |         |   |  |       |    |  |   |         |  



Three months ended June 30, 2005
and 2004



The increase in slot revenues for the three
months ended June 30, 2005 was due to a $27 million increase in slot handle to $612 million from $585 million for the same period of 2004. The increase in slot handle was a direct result of the New Tower and related gaming floor expansion that
included the addition of new themed slot machines and improved slot technologies, including cashless slots. The new gaming space opened on May 29, 2004 and the New Tower opened June 16, 2004.



The increase in table games revenues for the three months ended June 30, 2005
was due to a $26 million increase in table drop to $120 million for the three months ended June 30, 2005 from $94 million in 2004, partially offset by a table games hold decrease to 13.9% from 16.4% in same period of 2004. The increase in table drop
was a direct result of the New Tower and related gaming floor expansion that included the addition of new games and a new high-end table area.



The increase in lodging revenues for the three months ended June 30, 2005 was a result of the opening of the New Tower, which increased the number of
available hotel rooms by 58% over prior year levels. The number of rooms occupied during the three months ended June 30, 2005 increased 51% over 2004 levels, while the average daily room rate increased to $88 in 2005, from $86 in 2004.



The decrease in entertainment, retail, and other revenue in 2005 was
primarily due to lower entertainment revenues as a result of the closing of The Screening Room, and the comedy club, two entertainment venues that were only used for a portion of the second quarter of 2005, but were used extensively
during the same period of 2004, as well as a slight reduction in headliner entertainment.



Promotional allowances are expenses incurred by Resorts for complimentary services (goods and services, including rooms, food, beverage and admission, provided free of charge to gaming patrons) and cash incentives
given to gaming patrons. The main increase in promotional allowances are a result of an increase in promotional rooms expense of approximately $1.2 million as a result of the opening of the New Tower, partially offset by a $600,000 decrease in
promotional entertainment expense as a result of the reduced entertainment during the quarter.



17



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##### Table of Contents

Six months ended June 30, 2005 and 2004



The increase in slot revenues for the six months ended June 30, 2005 was due to an $81 million increase in slot handle to
$1,169 million from $1,088 million for the same period of 2004. The increase in slot handle was a direct result of the New Tower and related gaming floor expansion that included the addition of new themed slot machines and improved slot
technologies, including cashless slots.



The
increase in table games revenues for the six months ended June 30, 2005 was due to a $37 million increase in table drop to $222 million for the six months ended June 30, 2005 from $185 million in 2004, partially offset by a table games hold decrease
to 15.1% from 16.8% in same period of 2004. The increase in table drop was a direct result of the New Tower and related gaming floor expansion that included the addition of new games and a new high-end table area.



The decrease in food and beverage revenues for the six months ended June 30,
2005 was due to a decrease in the hours of operations for the Buffet. During the first six months of 2005, the Buffet was primarily open only on the weekends as opposed to everyday operations in 2004. This change in hours lead to a $2.4 million
decrease in food revenues, partially offset by increases in all of Resorts other food and beverage outlets, due to increased traffic from the New Tower.



The increase in lodging revenues for the six months ended June 30, 2005 was a result of the opening of the New Tower, which increased the number of
available hotel rooms by 58% over prior year levels. The number of rooms occupied during the six months ended June 30, 2005 increased 45% over 2004 levels, while the average daily room rate increased to $88 in 2005, from $85 in 2004.



The decrease in entertainment, retail, and other revenue in 2005 was
primarily due to lower entertainment revenues as a result of the closing of The Screening Room, and the comedy club, two entertainment venues that were only used for a portion of 2005, but were used extensively during the same period of
2004, as well as a slight reduction in headliner entertainment.



The primary increase in promotional allowances resulted from an increase in promotional rooms expense of approximately $2.0 million as a result of the opening of the New Tower.



Operating Results



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



|                                   |  |                                     |        |                                   |        |    |      |   |        |  |          |         |  |        |    |  |   |        
|---------------------------------- |  | ----------------------------------- | ------ | --------------------------------- | ------ | -- | ---- | - | ------ |  | -------- | ------- |  | ------ | -- |  | - | -------
|                                   |  | For the three months ended June 30, |        | For the six months ended June 30,
|                                   |  | 2005                                |        | %change                           |        |    | 2004 |   | 2005   |  | % change |         |  | 2004  
|                                   |  | ($ in thousands)                   
|Total net revenues                 |  | $                                   | 62,651 |                                   | 7.9    | %  |      | $ | 58,071 |  | $        | 119,042 |  | 9.0    | %  |  | $ | 109,231
|Cost and expenses:                 |  |                                     |        |                                   |        |    |      |   |        |  |          |         |  |        |    |  |   |        
|Casino and hotel operations        |  |                                     | 40,913 |                                   | 1.4    | %  |      |   | 40,368 |  |          | 80,585  |  | 3.7    | %  |  |   | 77,673 
|Selling general and administrative |  |                                     | 8,808  |                                   | 1.0    | %  |      |   | 8,717  |  |          | 19,487  |  | 12.6   | %  |  |   | 17,313 
|Depreciation and amortization      |  |                                     | 4,795  |                                   | 15.2   | %  |      |   | 4,161  |  |          | 9,489   |  | 24.9   | %  |  |   | 7,600  
|Pre-opening                        |  |                                     |       |                                   | (100.0 | )% |      |   | 2,145  |  |          |        |  | (100.0 | )% |  |   | 2,162  
|                                   |  |                                     |        |                                   |        |    |      |   |        |  |          |         |  |        |    |  |   |        
|Total cost and expenses            |  |                                     | 54,516 |                                   | (1.6   | )% |      |   | 55,391 |  |          | 109,561 |  | 4.6    | %  |  |   | 104,748
|                                   |  |                                     |        |                                   |        |    |      |   |        |  |          |         |  |        |    |  |   |        
|Income from operations             |  | $                                   | 8,135  |                                   | 203.5  | %  |      | $ | 2,680  |  | $        | 9,481   |  | 111.5  | %  |  | $ | 4,483  
|                                   |  |                                     |        |                                   |        |    |      |   |        |  |          |         |  |        |    |  |   |        



The completion of the
New Tower during 2004 contributed to increased volumes throughout the property. As a result, the costs associated with providing the services in the expanded facility also increased.



The decrease in selling, general and administrative expenses for the three months ended June 30, 2005 resulted from
allocations of expenses to affiliates. An affiliate of the Companys parent company, Colony Capital LLC, acquired properties from Harrahs Entertainment, Inc. and Caesars Entertainment, Inc. on April 26, 2005. Certain employees of the
Company assisted the affiliate during the acquisition period, and therefore a portion of the cost of their salaries, as well as additional costs incurred as a direct result of these



18



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activities, were charged back to the affiliate, and are recorded as a receivable as of June 30, 2005. The total amount of this receivable as of June 30, 2005
was approximately $1.6 million. The effect on the Companys Consolidated Statement of Operations for the three months ended June 30, 2005 as a result of the chargeback was a reduction in selling, general and administrative expenses of
approximately $1.7 million respectively. Since the acquisition of the new properties, certain departments for the Company have become shared services for the new properties, and the labor and certain other associated costs are allocated
accordingly. For the three and six months ended June 30, 2005, the shared service allocations have reduced selling, general, and administrative expenses by approximately $932,000.



For the six months ended June 30, 2005, the increase in selling, general, and administrative expenses resulted from a 64%
increase in real estate taxes from $3.6 million in 2004 to $5.9 million in 2005, primarily due to the increase in assessments due to the opening of the New Tower. Also contributing to the increase is a 31% increase in advertising expenses, partially
offset by the labor allocations previously discussed, which totaled approximately $2.2 million for the six months ended June 30, 2005.



The increases in depreciation and amortization expense for the three and six months periods ended June 30, 2005 were due to increases in depreciable
assets related to the New Tower, which officially opened, and began to be depreciated, in June 2004.



Non-Operating Results



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



|                           |  |                             |       |      |                           |        |      |  |      |        |  |   |        |  
|-------------------------- |  | --------------------------- | ----- | ---- | ------------------------- | ------ | ---- |  | ---- | ------ |  | - | ------ | -
|                           |  | Three months ended June 30, |       |      | Six months ended June 30. |       
|                           |  | 2005                        |       | 2004 |                           |        | 2005 |  | 2004 |       
|                           |  | ($ in thousands)            |      
|Interest income            |  | $                           | 138   |      | $                         | 112    |      |  | $    | 275    |  | $ | 281    |  
|Interest expense:          |  |                             |       |      |                           |        |      |  |      |        |  |   |        |  
|Total interest cost        |  |                             | 6,091 |      |                           | 5,762  |      |  |      | 12,001 |  |   | 11,484 |  
|Less: capitalized interest |  |                             |      |      |                           | (2,136 | )    |  |      |       |  |   | (4,060 | )
|                           |  |                             |       |      |                           |        |      |  |      |        |  |   |        |  
|Interest expense, net      |  |                             | 6,091 |      |                           | 3,626  |      |  |      | 12,001 |  |   | 7,424  |  
|Other income               |  |                             | 7     |      |                           | 816    |      |  |      | 28     |  |   | 760    |  



The reductions in
interest income for the three and six month periods ended June 30, 2005 are related to the decrease in Resorts restricted cash balance for the construction of the New Tower as the project was funded during the course of construction.



The increase in total interest cost for the three and six
months ended June 30, 2005 is due to increased borrowings under, and the suspension of principal payments for, the equipment credit facility. Capitalization of interest in 2004 was related to the construction of the New Tower, and ceased upon its
opening in the second quarter of 2004.



Income Taxes



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



|                             |  |                             |       |                           |   |      |  |   |      |   |  |   |      |  
|---------------------------- |  | --------------------------- | ----- | ------------------------- | - | ---- |  | - | ---- | - |  | - | ---- | -
|                             |  | Three months ended June 30, |       | Six months ended June 30, |  
|                             |  | 2005                        |       | 2004                      |   | 2005 |  |   | 2004 |  
|                             |  | ($ in thousands)            |      
|Federal income tax (benefit) |  | $                           | 942   |                           | $ | 91   |  | $ | (382 | ) |  | $ | (444 | )
|NJ state income tax          |  |                             |      |                           |   | 232  |  |   |     |   |  |   | 437  |  
|NJ casino net profits tax    |  |                             | 88    |                           |   | 88   |  |   | 175  |   |  |   | 175  |  
|                             |  |                             |       |                           |   |      |  |   |      |   |  |   |      |  
|Total income tax             |  | $                           | 1,030 |                           | $ | 411  |  | $ | (207 | ) |  | $ | 168  |  
|                             |  |                             |       |                           |   |      |  |   |      |   |  |   |      |  



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 three- and six-month periods ended June 30, 2005 and 2004, the
Company recorded provisions of $88,000 and $175,000, 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 assessment (NJAMA) under the New Jersey corporate business tax based on gross
receipts or gross profits, as defined. Amounts paid under this alternative minimum assessment can be used as a credit to offset future taxable income and such credit has an unlimited expiration period. As such, the Company has recorded a deferred
tax asset of $1.5 million, net of federal tax benefit, at June 30, 2005.



At June 30, 2005, RIHC has a net operating loss carryforward for Federal purposes of $11.0 million. No valuation allowance has been provided against this, as RIHC expects to fully use it before it expires in 2024.



At June 30, 2005, RIHC has a state net operating loss
carryforward of approximately $144.9 million. The carryforward will expire as follows: 2005, $32.8 million; 2006, $2.4 million; 2007, $40.2 million; 2008, $20.7 million; and 2009, $48.8 million. RIHC has reported a full valuation allowance against
the carryforward because it does not expect to realize the tax benefit, primarily due to the limited expiration period.



Liquidity and Capital Resources



RIHCs cash flows consisted of the following:



|                                                    |  |                           |         |   |      |   |         |  
|--------------------------------------------------- |  | ------------------------- | ------- | - | ---- | - | ------- | -
|                                                    |  | Six months ended June 30, |        
|                                                    |  | 2005                      |         |   | 2004 |  
|                                                    |  | ($ in thousands)          |        
|Net cash provided by operations                     |  | $                         | 6,795   |   |      | $ | 7,638   |  
|                                                    |  |                          
|Cash flows from investing activities:               |  |                           |         |   |      |   |         |  
|Purchases of property and equipment                 |  |                           | (11,862 | ) |      |   | (53,961 | )
|Releases of restricted cash                         |  |                           | 398     |   |      |   | 33,085  |  
|Proceeds from sale of fixed assets                  |  |                           | 28      |   |      |   | 1,249   |  
|CRDA refunds (deposits), net                        |  |                           | (1,478  | ) |      |   | (863    | )
|                                                    |  |                           |         |   |      |   |         |  
|Net cash used in investing activities               |  |                           | (12,914 | ) |      |   | (20,490 | )
|                                                    |  |                          
|Cash flows from financing activities:               |  |                           |         |   |      |   |         |  
|Proceeds from borrowings                            |  |                           | 5,000   |   |      |   | 9,282   |  
|Debt repayments                                     |  |                           | (6,419  | ) |      |   | (938    | )
|Payments to secure borrowings                       |  |                           | (52     | ) |      |   | (135    | )
|                                                    |  |                           |         |   |      |   |         |  
|Net cash provided by (used in) financing activities |  |                           | (1,471  | ) |      |   | 8,209   |  
|                                                    |  |                          
|Net decrease in cash and cash equivalents           |  | $                         | (7,590  | ) |      | $ | (4,643  | )
|                                                    |  |                           |         |   |      |   |         |  



Cash flows from Operating
Activities



The decrease in cash flow from operations from
last year resulted primarily from unfavorable working capital changes, including a $2.8 million increase in receivables, compared to a $0.5 million increase in receivables in 2004, partially offset by increased operating incomes following the
opening of the New Tower.



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Cash Flows from Investing Activities



During the six months ended June 30, 2005, the Company expended $11.9 million for the purchase of property and equipment,
which includes $8.2 million for property and equipment for various construction projects and $3.7 million for other expenditures, such as the purchase of new slot machines and related equipment, computer upgrades, and other facility improvements.



At June 30, 2005, RIHC had a restricted cash balance of
$103,000, which is included in other assets on the Companys Condensed Consolidated Balance Sheet. The restricted cash consists of the unexpended portion of the proceeds of an asset sale, as required by the Indenture. Under the terms of the
Disbursement Agreement, dated March 22, 2002, funds remaining in the liquidity disbursement account after the final Test Period (as defined in the Indenture, the four fiscal quarter period ending December 31, 2004), and upon certification by RIHC of
certain conditions, would be returned to RIHC and could be distributed as a dividend to CRH. This certification was delivered by RIHC, and accordingly on January 20, 2005 the $9.7 million remaining in the liquidity disbursement account was delivered
to RIHC. Funds related to the liquidity disbursement account have been earmarked for short term construction projects during 2005, and may be returned to Colony Capital, LLC in 2006.



The CRDA agreed to reimburse certain costs associated with the hotel tower construction, totaling approximately $13.1
million through 2008. Approximately $10.0 million of these reimbursements has been received by RIHC as of June 30, 2005.



Cash Flows from Financing Activities



During the six months ended June 30, 2005, RIHC borrowed $5.0 million against the Commerce Facility, which was entirely repaid by June 30, 2005. Other
debt repayments during the first quarter of 2005 primarily represent payments to CIT on loans outstanding under the equipment credit facility.



Other Factors Affecting Liquidity



In June 2002, RIH entered into a $20.0 million credit facility, the proceeds of which were intended to be used for the acquisition of furniture, fixtures,
and equipment. RIHC has guaranteed the obligations of RIH under this equipment credit facility. As of June 30, 2005, RIHC had borrowed $14.7 million of the equipment credit facility to purchase furniture, fixtures, and equipment for the New Tower
and $4.4 million to purchase additional slot machines to replace existing equipment. The outstanding balance due under this credit facility at June 30, 2005 was $16.0 million. In March 2005, this credit facility was amended to provide for the
suspension of principal payments for one year, commencing April 1, 2005; the outstanding principal balance as of June 30, 2005 will be paid in equal monthly installments commencing April 2006 and ending February 2009.



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, 2006. 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 June 30, 2005. During the six months ended June 30, 2005, RIHC borrowed $5.0 million against the Commerce Facility. There was no outstanding
balance as of June 30, 2005.



In June 2002, RIHC entered into a
Thermal Energy Services Agreement (the Agreement) with an energy supplier. The initial term of the Agreement is 20 years, renewable at the Companies option for two additional five year terms. The Agreement has three components: a
monthly charge for operation and maintenance of the thermal energy facilities; a capital lease component for capital improvements whose value is estimated at $6.5 million, for which payments during the first six months of 2005 were approximately
$127,000, 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. The outstanding
balance of the capital lease at June 30, 2005 is approximately $6.2 million.



In March 2004, the Option Land was acquired by RREH in exchange for the issuance of a $40 million note by RREH to KINA. No principal payments are required on the $40 million note until it reaches maturity. The note
payable to KINA is guaranteed by CRH, RIHC and RIH, provided, however that the guarantee of RIHC and RIH does not become effective until either the First Mortgage Notes have been paid in full or the fixed charge coverage ratio of RIHC is at least
2.0 to 1.0. In addition, the amount guaranteed was initially limited to $20 million increasing by $5 million each year, totaling $25 million at June 30, 2005. 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



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



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 majority of 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.



During
the six months ended June 30, 2005, there were no changes in CRHs internal controls over financial reporting that materially affected, or are reasonably likely to materially affect, CRHs internal controls over financial reporting.



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. CHANGES IN SECURITIES



None.



ITEM 3. DEFAULTS UPON SENIOR SECURITIES



Not applicable.



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



The annual meetings of shareholders for CRH and RIHC were each held on May 11, 2005. The matters voted on at the meeting were: (1) to elect three directors for both CRH and RIHC to one-year terms until the 2006 Annual
Meeting or until their successors are duly elected and qualified and (2) to ratify the appointment of Ernst & Young LLP as independent auditors of both CRH and RIHC for the fiscal year ending December 31, 2005.



Thomas J. Barrack, Jr., Nicholas L. Ribis, and Mark M. Hedstrom were elected
as directors of CRH and RIHC until the 2006 Annual Meeting of Shareholders, with the following results of voting as follows:



|                       |  |        |  |          |  |     |  |         
|---------------------- |  | ------ |  | -------- |  | --- |  | --------
|                       |  | CRH    |  | RIHC    
|                       |  | For    |  | Withheld |  | For |  | Withheld
|Thomas J. Barrack, Jr. |  | 38,295 |  | 0        |  | 100 |  | 0       
|Nicholas L. Ribis      |  | 38,295 |  | 0        |  | 100 |  | 0       
|Mark M. Hedstrom       |  | 38,295 |  | 0        |  | 100 |  | 0       



The appointment of
Ernst & Young LLP as independent auditors of CRH and RIHC was ratified, with the results of voting as follows:



|        |  |        |  |     
|------- |  | ------ |  | ----
|        |  | CRH    |  | RIHC
|For     |  | 38,295 |  | 100 
|Against |  | 0      |  | 0   
|Abstain |  | 0      |  | 0   



ITEM 5. OTHER INFORMATION



None.



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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



A. EXHIBITS



|               |  |                                                                                                                                                                                                                              
|-------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | 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.



B. REPORTS ON FORM 8-K



On May 11, 2005, the Company filed Form 8-K pursuant to Item 12.
Results of Operations and Financial Condition, accompanied by a copy of the press release announcing the Companys financial results for the quarter ended March 31, 2005.



On June 30, 2005, the Company filed Form 8-K for the Third Amendment to Loan and Security Agreement dated June 28, 2005, by
and between Resorts International Hotel, Inc. and Commerce Bank, N.A.



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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.



August 11, 2005





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)




25