10-Q 2 d10q.htm FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2010
   UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549  FORM 10-Q   x
     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2010 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 000-50635  COLONY RESORTS LVH ACQUISITIONS, LLC (Exact Name of Registrant as Specified in its Charter)  NEVADA
     
     41-2120123(State or Other Jurisdiction
of Incorporation)
     
     (I.R.S. Employer
Identification Number)3000 PARADISE ROAD
LAS VEGAS, NEVADA
     
     89109(Address of Principal Executive Offices)
     
     (Zip Code)
 702-732-5111 (Registrants Telephone Number, Including Area Code)  Indicate by check mark whether the Registrant (1) has filed all reports required 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.    YesxNo ̈ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes ̈No ̈ Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer ̈
     Accelerated filer ̈Non-accelerated filerx(Do not check if a smaller reporting company)
     Smaller reporting company ̈
  Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ̈YesxNo As of August 13, 2010 there were 1.5 Class A Membership Units outstanding and there were 1,500,000 Class B Membership Units outstanding.









COLONY RESORTS LVH ACQUISITIONS, LLC FORM 10-Q TABLE OF CONTENTS
   PagePART I.
     FINANCIAL INFORMATIONITEM 1.
     FINANCIAL STATEMENTSCOLONY RESORTS LVH ACQUISITIONS, LLCUNAUDITED CONDENSED INTERIM FINANCIAL  STATEMENTS:CONDENSED BALANCE SHEETS
     1UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
     2UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
     4NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
     5ITEM 2.
     
     MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
     12ITEM 3.
     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
     21ITEM 4.
     CONTROLS AND PROCEDURES
     22PART II.
     OTHER INFORMATION
     23ITEM 6.
     EXHIBITS
     23SIGNATURES
     26


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COLONY RESORTS LVH ACQUISITIONS, LLC UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS (in thousands) **** ****
 June 30,
2010
     
     
     December 31, 2009*(Unaudited)AssetsCURRENT ASSETS:Cash and equivalents
     
     $
     8,445
     
     $
     13,901Restricted cash
     
     
     1,845
     
     
     2,407Accounts receivable, net of allowance for doubtfulaccounts of $6,122 at June 30, 2010 and $6,248 at December 31, 2009
     
     
     11,552
     
     
     9,013Inventories
     
     
     2,498
     
     
     2,541Prepaid expenses and other current assets
     
     
     4,831
     
     
     4,559Total current assets
     
     
     29,171
     
     
     32,421PROPERTY AND EQUIPMENT, NET
     
     
     319,564
     
     
     327,315RESTRICTED CASH
     
     
     3,335
     
     
     5,290OTHER ASSETS, NET
     
     
     1,650
     
     
     1,978Total assets
     
     $
     353,720
     
     $
     367,004Liabilities and Members EquityCURRENT LIABILITIES:Accounts payable
     
     $
     9,767
     
     $
     9,547Accrued expenses
     
     
     27,274
     
     
     28,722Due to affiliates
     
     
     1,866
     
     
     2,085Total current liabilities
     
     
     38,907
     
     
     40,354TERM LOAN
     
     
     230,000
     
     
     230,000LONG TERM DEPOSITS
     
     
     63
     
     
     68Total liabilities
     
     
     268,970
     
     
     270,422COMMITMENTS AND CONTINGENCIESREDEEMABLE MEMBERS EQUITY
     
     
     61,800
     
     
     61,800MEMBERS EQUITY
     
     
     22,950
     
     
     34,782Total liabilities and members equity
     
     $
     353,720
     
     $
     367,004
  ___________ *Condensed from audited financial statements.  See notes to the unaudited condensed financial statements. -1-


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COLONY RESORTS LVH ACQUISITIONS, LLC UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS (in thousands) ****  **For the three
months ended
June 30, 2010
     
     
     
     For the three
months ended
June 30, 2009Revenues:Casino
     
     $
     15,629
     
     
     $
     17,128Rooms
     
     
     19,436
     
     
     
     17,295Food and beverage
     
     
     15,739
     
     
     
     14,081Other revenue
     
     
     2,657
     
     
     
     2,743Total revenue
     
     
     53,461
     
     
     
     51,247Less: promotional allowances
     
     
     (5,920
     )
     
     
     (5,748
     )Net revenues
     
     
     47,541
     
     
     
     45,499Expenses:Casino
     
     
     14,716
     
     
     
     15,769Rooms
     
     
     7,449
     
     
     
     7,146Food and beverage
     
     
     11,036
     
     
     
     10,007Other expense
     
     
     1,877
     
     
     
     2,222General and administrative
     
     
     13,129
     
     
     
     13,435Depreciation and amortization
     
     
     4,924
     
     
     
     5,252Total expense
     
     
     53,131
     
     
     
     53,831Operating loss
     
     
     (5,590
     )
     
     
     (8,332
     )Interest expense
     
     
     4,261
     
     
     
     2,220Net loss
     
     $
     (9,851
     )
     
     $
     (10,552
     )Net loss allocationAllocable to Class A
     
     $
     -
     
     
     $
     -Allocable to Class B
     
     $
     (9,851
     )
     
     $
     (10,552
     )Basic weighted average Class A membership units outstanding
     
     
     1.50
     
     
     
     1.50Basic weighted average Class B membership units outstanding
     
     
     1,500,000.00
     
     
     
     1,500,000.00Diluted weighted average membership units outstanding
     
     
     1,500,001.50
     
     
     
     1,500,001.50Net loss per Class A membership unit-basic
     
     $
     (6.57
     )
     
     $
     (7.03
     )Net loss income per Class B membership unit-basic
     
     $
     (6.57
     )
     
     $
     (7.03
     )Per membership unit-diluted
     
     $
     (6.57
     )
     
     $
     (7.03
     )**
   See notes to the unaudited condensed financial statements. -2-




COLONY RESORTS LVH ACQUISITIONS, LLC UNAUDITED CONDENSED STATEMENTS OF OPERATIONS (in thousands, except unit data) **** ****
 For the six
months ended
June 30, 2010
     
     
     
     For the six
months ended
June 30, 2009Revenues:Casino
     
     $
     35,268
     
     
     $
     40,909Rooms
     
     
     40,232
     
     
     
     40,038Food and beverage
     
     
     31,791
     
     
     
     30,564Other revenue
     
     
     6,181
     
     
     
     6,683Total revenue
     
     
     113,472
     
     
     
     118,194Less: promotional allowances
     
     
     (11,978
     )
     
     
     (12,277
     )Net revenues
     
     
     101,494
     
     
     
     105,917Expenses:Casino
     
     
     29,747
     
     
     
     32,193Rooms
     
     
     14,713
     
     
     
     14,053Food and beverage
     
     
     21,988
     
     
     
     20,634Other expense
     
     
     3,794
     
     
     
     4,680General and administrative
     
     
     25,976
     
     
     
     26,920Depreciation and amortization
     
     
     9,843
     
     
     
     10,490Total expense
     
     
     106,061
     
     
     
     108,970Operating loss
     
     
     (4,567
     )
     
     
     (3,053
     )Interest expense
     
     
     7,345
     
     
     
     4,473Net loss
     
     $
     (11,912
     )
     
     $
     (7,526
     )Net loss AllocationAllocable to Class A
     
     $
     -
     
     
     $
     -Allocable to Class B
     
     $
     (11,912
     )
     
     $
     (7,526
     )Basic weighted average Class A membership units outstanding
     
     
     1.50
     
     
     
     1.50Basic weighted average Class B membership units outstanding
     
     
     1,500,000.00
     
     
     
     1,500,000.00Diluted weighted average membership units outstanding
     
     
     1,500,001.50
     
     
     
     1,500,001.50Net loss per Class A membership unit-basic
     
     $
     (7.94
     )
     
     $
     (5.02
     )Net loss per Class B membership unit-basic
     
     $
     (7.94
     )
     
     $
     (5.02
     )Per membership unit-diluted
     
     $
     (7.94
     )
     
     $
     (5.02
     )
   See notes to the unaudited condensed financial statements. -3-


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COLONY RESORTS LVH ACQUISITIONS, LLC UNAUDITED CONDENSED STATEMENTS OF OPERATIONS (in thousands, except unit data)
  CONDENSED STATEMENTS OF CASH FLOWS For the six
months ended
June 30, 2010
     
     
     
     For the six
months ended
June 30, 2009CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
     
     $
     (11,912
     )
     
     $
     (7,526
     )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
     
     
     9,843
     
     
     
     10,490Amortization of deferred financing costs
     
     
     428
     
     
     
     334Provision for doubtful accounts
     
     
     (398
     )
     
     
     14Stock based compensation
     
     
     80
     
     
     
     -Changes in assets and liabilities:Accounts receivable
     
     
     (2,142
     )
     
     
     2,605Inventories
     
     
     43
     
     
     
     58Prepaid expenses and other current assets
     
     
     (271
     )
     
     
     (1,012
     )Other assets
     
     
     38
     
     
     
     234Accounts payable
     
     
     219
     
     
     
     (2,940
     )Accrued expenses
     
     
     (1,448
     )
     
     
     (4,019
     )Due to affiliates
     
     
     (218
     )
     
     
     40Long term deposits
     
     
     (5
     )
     
     
     -Net cash used in operating activities
     
     
     (5,743
     )
     
     
     (1,722
     )CASH FLOWS FROM INVESTING ACTIVITIES:Additions to property and equipment
     
     
     (2,093
     )
     
     
     (3,695
     )Decrease / (Increase) in restricted cash
     
     
     2,517
     
     
     
     (706
     )Net cash provided by / (used in) investing activities
     
     
     424
     
     
     
     (4,401
     )CASH FLOWS FROM FINANCING ACTIVITIES:Debt issuance costs
     
     
     (137
     )
     
     
     (5
     )Net cash used in financing activities
     
     
     (137
     )
     
     
     (5
     )Decrease in cash and equivalents
     
     
     (5,456
     )
     
     
     (6,128
     )Cash and equivalents at beginning of year
     
     
     13,901
     
     
     
     32,444Cash and equivalents at end of period
     
     $
     8,445
     
     
     $
     26,316Supplemental Cash Flow Disclosure:Cash paid for interest
     
     $
     4,798
     
     
     $
     3,552
 See notes to the unaudited condensed financial statements.   -4-


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COLONY RESORTS LVH ACQUISITIONS, LLC NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
 1.  ORGANIZATION AND BASIS OF PRESENTATION Colony Resorts LVH Acquisitions, LLC, a Nevada limited liability company (the Company), was formed under the laws of the State of Nevada on December 18, 2003.  The Company owns and operates the Las Vegas Hilton, a casino resort located in Las Vegas, Nevada (the Hotel or the Property).  The Company licenses from HLT Existing Franchise Holding, LLC, an affiliate of Hilton Hotels Corporation (Hilton) the right to participate in Hiltons reservation system and Hiltons HHonors Programs. The Companys members consist of  (1) Colony Resorts LVH Holdings, LLC (Holdings), which is a wholly owned subsidiary of Colony VI, a discrete investment fund managed by an affiliate of Colony Capital, (2) Colony Resorts LVH Co-Investment Partners, L.P. (Co-Investment Partners), (3) Colony Resorts LVH Coinvestment Voteco, LLC (Coinvestment Voteco) and (4) Colony Resorts LVH Voteco, LLC (Voteco), each of which purchased Class A or Class B Membership Units on June 18, 2004 in connection with the equity financing described in Note 5, (5) WH/LVH Managers Voteco, LLC (Whitehall Voteco) which acquired certain Class A Membership Units from Co-Investment Voteco on July 19, 2006 and (6) Nicholas L. Ribis (Mr. Ribis) who acquired certain Class A and Class B Membership Units from Voteco and Holdings, respectively, on November 21, 2006.  Collectively these members are referred to as the members. Prior to June 18, 2004, the Company had conducted no business other than in connection with the execution of the Purchase and Sale Agreement, relating to the acquisition of substantially all of the assets and certain liabilities of LVH Corporation, a Nevada corporation (LVH) (the Acquisition). LVH is a wholly owned subsidiary of Caesars Entertainment, Inc., formerly Park Place Entertainment Corporation (Caesars), that prior to the Acquisition operated the Hotel. Commencing June 18, 2004, the operations, assets and liabilities of the Property are included in the Companys financial statements. Interim Financial Statements The accompanying condensed financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The Company believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary for the fair presentation of the financial position, results of operations and cash flows for the interim periods have been made. The results for the six-months ended June 30, 2010, are not necessarily indicative of results to be expected for the full fiscal year. These financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2009, included in the Companys Annual Report on Form 10-K for the year ended December 31, 2009. In preparing the accompanying unaudited condensed consolidated financial statements, the Company has reviewed and evaluated, as determined necessary by the Companys management, events that have occurred after June 30, 2010, up until the issuance of the financial statements which occurred on August 13, 2010. Use of Estimates The preparation of the unaudited condensed financial statements in accordance with U.S. generally accepted accounting principles requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses; including related disclosure of contingent assets and liabilities. On an on-going basis, management evaluates those estimates, including those related to asset impairments, accruals for slot and table game marketing points, compensation and related benefits, revenue recognition, allowance for doubtful accounts, and contingencies and litigation. The Company bases its estimates 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.  -5-


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COLONY RESORTS LVH ACQUISITIONS, LLC NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
 Reclassification Certain reclassifications have been made to the 2010 and 2009 financial statements due to clarification on the presentation of certain gaming related expenses.  These reclassifications had no effect on net income or loss or on working capital or members equity.  Recent Accounting Pronouncements  In the third quarter of 2009, the Company adopted the Accounting Standards Codification (ASC).  The ASC is the single official source of authoritative, nongovernmental GAAP, other than guidance issued by the SEC.  The adoption of the ASC did not have a material impact on the financial Statements included herein. In June 2009, ASC Topic 810 was expanded.  Among other items, the related sections of Topic 810 respond to concerns about the application of certain key provisions of FIN 46(R), including those regarding the transparency of the involvement with variable interest entities.  The related sections of Topic 810 are effective for calendar year companies beginning on January 1, 2010.  The related sections did not have a significant impact on the Companys financial positions, results of operations, cash flows or disclosures. In January 2010, the FASB issued Accounting Standards Update (ASU) No. 2010-06, Improving Disclosures about Fair Value Measurements an amendment to ASC Topic 820, Fair Value Measurements and Disclosures.  This amendment requires an entity to: (i) disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers and (ii) present separate information for Level 3 activity pertaining to gross purchases, sales, issuances, and settlements.  ASU No. 2010-06 is effective for the Company for interim and annual reporting beginning after December 15, 2009, with one new disclosure effective after December 15, 2010. The Company has adopted this ASU in full with respect to the interim period ended March 31, 2010, and the adoption did not have a significant impact on the Companys financial positions, results of operations, cash flows or disclosure.  A variety of proposed or otherwise potential accounting standards are currently under review and study by standard-setting organizations and certain regulatory agencies.  Because of the tentative and preliminary nature of such proposed standards, we have not yet determined the effect, if any, that the implementation of any such proposed or revised standards would have on our unaudited condensed financial statements.  2.  GOING CONCERN The accompanying condensed financial statements are prepared assuming that the Company will continue as a going concern. As shown in the financial statements, the Company generated net losses for the three months and six months ended June 30, 2010 and the Company had an accumulated deficit and a working capital deficiency at June 30, 2010.  The conditions and events described above raise substantial doubt about the Companys ability to continue as a going concern.  The accompanying condensed financial statements do not include any adjustment to reflect the possible future effects on the recoverability and classification of assets or the amount and classification of liabilities that may result from the outcome of this uncertainty.  On July 30, 2010, the Company entered into an agreement with its lender which improves the Companys ability to meet its debt requirements, to fund operations, and to make capital improvements.  The terms of the agreement are reflected in Note 3  Term Loan. 3. TERM LOAN On May 11, 2006, the Company entered into a Loan Agreement with Goldman Sachs Commercial Mortgage Capital, L.P. (the Term Loan).  The Term Loan was for an initial principal amount of $209.2 million and for an initial term of two years.  The Company has drawn an additional $40.8 million againstthe Term Loan, the maximum funding of the Term Loan.  Covenants under the Term Loan restrict the Companys future borrowing capacity.  The loan had an original two-year term and three, one-year extensions. -6-


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COLONY RESORTS LVH ACQUISITIONS, LLC NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
 On August 14, 2009, the Company extended the First Amendment to the Term Loan which extended the loan until June 1, 2011. The Company was required to 1) pay an initial principal payment of $15 million, 2) pay an extension fee of $1.175 million, 3) pay an exit fee of $75,000 for the initial principal payment, 4) purchase an interest rate cap at a cost of $37,500, and 5) pay any out-of-pocket expenses incurred by the lender. On October 30, 2009 the Company was required to pay an additional principal payment of $5.0 million and an exit fee of $25,000 for the additional principal payment. Interest on the loan is based on LIBOR plus 2.9% with a minimum LIBOR rate of 1.5%. Interest will increment to LIBOR plus 3.5% from July 2009 through May 2010 and LIBOR plus 4.0% from June 2010 through May 2011. On July 30, 2010, the Company executed the Second Amendment to the Term Loan, which extended the loan until December 31, 2012 and provided the Company with additional loan advances of $22 million.  The Company received an initial advance on July 30, 2010 of $6.7 million offset by $3.1 million in accrued interest and $0.8 million in closing and loan costs which include an interest rate cap in the amount of $124,000.  As of June 30, 2010, interest totaling $1.1 million was accrued at the default interest rate of 5.0%.  The remaining funding of the advance, $15.3 million, will be funded on or before August 20, 2010 and will be partially offset by $1.5 million in lender fees.  Upon funding of the loan advances, the Companys debt will increase to $252 million.  The Second Amendment to the Term Loan provides that interest on the loan will be based on LIBOR plus a 4% spread with a minimum LIBOR rate of 1.5%.  The spread will increase 0.5% beginning in July 2011 and will increment 0.5% every six months to a maximum of 5.5%.  The Company can, if needed, defer making interest payments to a maximum of $10 million. The Second Amendment to the Term Loan provides for additional liquidity to be provided by the Companys members above the loan advances made by the lender.  Members of the Company are required to make capital contributions, if necessary, up to a maximum of $20 million. 4.  RELATED PARTY TRANSACTIONS The Company entered into a Services Agreement, Joint Services Agreement and Joint Marketing Agreement with Resorts International Hotel, Inc. (Resorts) an affiliate of the Company (through common control) on June 18, 2004.  On April 25, 2005, the Joint Services Agreement and the Joint Marketing Agreement were amended and restated to add RIH Resorts, LLC, an affiliate of the Company (through common control), as a party to the agreements.  These agreements provide for an initial term of three years with automatic one year renewal periods.  The agreements provide that the Company and Resorts will cooperatively develop and implement joint services and marketing programs.  The Company provides and/or receives services from affiliated companies.  The total net value of services received from the affiliated companies and which was included in expenses was approximately $924,000 for the six month ended June 30, 2010 and $1,131,000 for the six months ended June 30, 2009.  5.  REDEEMABLE MEMBERS EQUITY In connection with the closing of the Acquisition, the Company, Voteco, Co-Investment Voteco, Co-Investment Partners and Holdings entered into a Sale Right Agreement, dated June 18, 2004 (the Sale Right Agreement).   Pursuant to the terms of Co-Investment Partners partnership agreement, at any time after May 23, 2008, Whitehall (a limited partner in Co-Investment Partners and an affiliate of Goldman Sachs Commercial Mortgage Capital, L.P., the lender under the new Term Loan) has the right to request that Co-Investment Partners purchase all of Whitehalls interest in Co-Investment Partners at a purchase price determined by Whitehall.  Pursuant to the Sale Right Agreement, upon receiving notice from Whitehall that it has exercised the sale right the Company must, within forty-five days elect to either (i) purchase that portion of the Class B Membership Units which represent Whitehalls interest in Co-Investment Partners or (ii) sell the Company in its entirety.  If the Company elects not to redeem the Class B Membership Units, it must appoint Goldman Sachs & Co. as its sole and exclusive agent for a period of one year to seek to sell the Company at a price extrapolated from the price Whitehall established for its interest in Co-Investment Partners.  The Sale Right Agreement further provides that on June 18, 2010, if the Company has not been sold pursuant to sale right above or otherwise, the Company shall appoint Goldman Sachs & Co. as its sole agent to seek to sell the Company at the best price obtainable unless Whitehall and Co-Investment Partners both agree not to sell the Company or to postpone such sale.  For purposes of the diluted membership unit calculation, it is assumed that the redemption of Whitehallsinterest or sale of the property will be consummated at fair value.  To date, Whitehall has chosen not to exercise its sale right and Goldman Sachs & Co. has declined to serve as the sole agent to seek the sale of the Company.  -7-


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COLONY RESORTS LVH ACQUISITIONS, LLC NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
  6.  MEMBERSHIP INTERESTS In connection with and immediately prior to the Acquisition, the Company issued Class A Membership Units (Class A Units) to Co-Investment Voteco and Voteco on a pro rata basis in proportion to the equity contributions made by each entity.  In addition, the Company issued Class B Membership Units (Class B Units and together with the Class A Units, the Membership Units) to Co-Investment Partners and to Holdings, on a pro rata basis in proportion to the equity contributions made by each entity.  All of these entities are existing affiliates of the Company.  Pursuant to the Operating Agreement and following receipt of all required approvals from the Nevada Gaming Commission, Co-Investment Voteco transferred certain Class A Units to Whitehall Voteco, and as a result, Whitehall Voteco joined the Company as a member and became a party to the Operating Agreement effective July 19, 2006.  Pursuant to an Option Agreement between Mr. Ribis, Voteco and Holdings, Mr. Ribis exercised options to acquire Class A Units and Class B Units directly from Voteco and Holdings, respectively, and as a result, Mr. Ribis joined the Company as a member and became a party to the Operating Agreement effective November 21, 2006. As of June 30, 2009, Voteco owns 0.585 Class A Units, Co-Investment Voteco owns 0.30 Class A Units,Whitehall Voteco owns 0.60 Class A Units and Mr. Ribis owns 0.015 Class A Units.  In addition, as of June 30, 2008, Holdings owns 585,000 Class B Units, Co-Investment Partners owns 900,000 Class B Units and Mr. Ribis owns 15,000 Class B Units.  Pursuant to the Companys Operating Agreement, holders of Class A Units are entitled to one vote per unit in all matters to be voted on by voting members of the Company.  Holders of Class B Units are not entitled to vote, except as otherwise expressly required by law. At the time of the closing of the Acquisition, a Transfer Restriction Agreement was executed by and among Thomas J. Barrack, Jr. (Mr. Barrack), Mr. Ribis, Co-Investment Partners and Co-Investment Voteco (the Co-Investment Transfer Restriction Agreement) and a Transfer Restriction Agreement was executed by and among Mr. Barrack, Voteco and Holdings (the Voteco Transfer Restriction Agreement).  At the time of the transfer of certain Class A Units to Whitehall Voteco from Co-Investment Voteco, a Transfer Restriction Agreement was executed by and among Stuart Rothenberg (Mr. Rothenberg), Brahm Cramer (Mr. Cramer) and Jonathan Langer (Mr. Langer) and together with Mr. Rothenberg and Mr. Cramer, the Whitehall Voteco Members, Whitehall Voteco and Co-Investment Partners (the Whitehall Voteco Transfer Restriction Agreement). The Companys Class A Units issued to Co-Investment Voteco are subject to the Co-Investment Transfer Restriction Agreement, which provides, among other things, that: ·Co-Investment Partners has the right to acquire Class A Units from Co-Investment Voteco on each occasion that Class B Units held by Co-Investment Partners would be transferred to a proposed purchaser who, in connection with such proposed sale, has obtained all licenses, permits, registrations, authorizations, consents, waivers, orders, findings of suitability or other approvals required to be obtained from, and has made all findings, notices or declarations required to be made with, all gaming authorities under all applicable gaming laws; ·A specific purchase price, as determined in accordance with the Co-Investment Transfer Restriction Agreement, will be paid to acquire the Class A Units from Coinvestment Voteco; and ·Co-Investment Voteco will not transfer ownership of Class A Units owned by it except pursuant to such option of Co-Investment Partners. The Companys Class A Units issued to Voteco are subject to the Voteco Transfer Restriction Agreement, which provides, among other things, that: ·Holdings has the right to acquire Class A Units from Voteco on each occasion that Class B Units held by Holdings would be transferred to a proposed purchaser who, in connection with such proposed sale, has obtained all licenses, permits, registrations, authorizations, consents, waivers, orders, findings of suitability or other approvals required to be obtained from, and has made all findings, notices or declarations required to be made with, all gaming authorities under all applicable gaming laws; -8-


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COLONY RESORTS LVH ACQUISITIONS, LLC NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
 ·A specific purchase price, as determined in accordance with the Voteco Transfer Restriction Agreement, will be paid to acquire the Class A Units from Voteco; and ·Voteco will not transfer ownership of Class A Units owned by it except pursuant to such option of Holdings. The Companys Class A Units issued to Whitehall Voteco are subject to the Whitehall Voteco Transfer Restriction Agreement, which provides, among other things, that: ·Co-Investment Partners has the right to acquire Class A Units from Whitehall Voteco on each occasion that Class B Units held by Co-Investment Partners would be transferred to a proposed purchaser who, in connection with such proposed sale, has obtained all licenses, permits, registrations, authorizations, consents, waivers, orders, findings of suitability or other approvals required to be obtained from, and has made all findings, notices or declarations required to be made with, all gaming authorities under all applicable gaming laws; ·A specific purchase price, as determined in accordance with the Whitehall Voteco Transfer Restriction Agreement, will be paid to acquire the Class A Units from Whitehall Voteco; and ·Whitehall Voteco will not transfer ownership of Class A Units owned by it except pursuant to such option of Co-Investment Partners. It is currently anticipated that any future holders of the Companys Membership Units will become a party to the Operating Agreement. 7.  2004 INCENTIVE PLAN In connection with the acquisition of the Hotel, the Companys board and members approved the Companys 2004 Incentive Plan (the Plan).  As of June 18, 2004, the Company had a total of 0.167 Class A Units and 166,667 Class B units reserved for issuance under the Plan.  The Plan was amended by the board on May 16, 2006 in order to (1) comply with Section 409A of the Internal Revenue Code of 1986, as amended from time to time, and (2) eliminate the provision that excludes the value attributable to the Development Parcels (as defined in the Plan).  Subsequent to the closing of the acquisition of the Hotel, the Company granted 0.167 options of Class A Units and 166,667 options of Class B Units to certain executives, in accordance with the Plan.  The options have a 10 year life, vest over three years and have an exercise price of $100 per unit in both classes which was equal to, or greater than, the fair market value of the membership units at the date of grant.  As a result of the amendment on May 16, 2006 which eliminated the exclusion of the value of the Development Parcels (as defined in the Plan), the options increased in value. Effective January 1, 2006, the Company adopted the provisions of Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment (SFAS No. 123(R)) (ASC Topic 718 and 505) requiring that compensation cost relating to share-based payment transactions be recognized in the financial statements.  The cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employees estimated requisite service period (generally the vesting period of equity award) on a straight-line basis.  Estimates are revised if key elements of the options change.  The cumulative effect on compensation cost as a result of changes to key elements or forfeiture estimates are recognized in the period of the change.  The amendment on May 16, 2006 triggered a revaluation of the options.  The increase in value was recorded on a straight-line basis over the remaining vesting period of the options. Prior to January 1, 2006, the Company accounted for share-based compensation to employees in accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB No.25), and related interpretations.  The Company adopted SFAS No. 123(R) using the modified prospective method and accordingly, financial statement amounts for prior periods presented in the Form 10-K have not been restated to reflect the fair value method of recognizing compensation cost relating to these options. The fair value of the option awards is estimated on the date of grant using an appraisal of the value of the Company and its membership units.  In September 2009 the number of options available for distribution was increased by the Companys Board.  During 2009 the board of directors authorized and issued an additional 0.167 Class A Membership Units and an additional 16,667 Class B Membership Units. -9-


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COLONY RESORTS LVH ACQUISITIONS, LLC NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
 There was approximately $80,000 of compensation cost related to the 16,667 options recognized in general and administrative expenses for the six months ended June 30, 2010.  The estimated fair value of the options at the date of grant was $19.15 per membership unit and was computed using the Black-Scholes-Merton option pricing model with the following weighted average assumptions: risk free interest rate of 3.66%; no expected dividend yields; and expected vesting periods of 36 months.  The following table sets forth the assumptions used to determine compensation cost for these options consistent with the requirements of ASC Topic 718. Weighted-average assumptions:Model
     
     Black-ScholesNumber of options
     
     16,667 optionsMembership unit price
     
     $100Exercise unit price
     
     $100Dividend Yield
     
     N/AVolatility
     
     5%Risk-Free rate
     
     3.66%Valuation Date
     
     September 29, 2009Expiration Date
     
     September 29, 2012
  8.  COMMITMENTS AND CONTINGENCIES  Letters of Credit  Beginning in 2005 and annually thereafter, the Company was required to deliver irrevocable standby letters of credit in connection with its workers compensation insurance policies issued by its insurance carriers. In March 2009, the Company was required to deliver an irrevocable standby letter of credit to a new credit card processor.  The letters of credit are secured by certificates of deposits in the same notional amounts as the corresponding letters of credit. The initial expiration dates of these letters of credit are for one year and are automatically extended for 90 days from their expiration date unless the issuing bank notifies the Company sixty days prior to such expiration dates that the letters of credit will not be renewed. As of June 30, 2010 and December 31, 2009, the certificates of deposit which secure the letters of credit total $3,325,000 and $3,538,750, respectively, and are included in restricted cash. As of June 30, 2010 and December 31, 2009, there were no amounts outstanding on the letters of credit.  Litigation In the normal course of business, the Company is subject to various litigation, claims and assessments.  The Company is not currently a party to any material litigation and, it is not aware of any material action, suit or proceeding against it that has been threatened by any person. Sales and Use Tax on Complimentary Meals In March 2008, the Nevada Supreme Court ruled, in the matter captioned Sparks Nugget, Inc. vs. The State of Nevada Ex Rel. Department of Taxation, that food and non-alcoholic beverages purchased for use in providing complimentary meals to customers and to employees was exempt from sales and use tax. In July 2008, the Court denied the States motion for rehearing. For the three year period ended February 2008, the Company paid use tax on these items and has filed for refunds for the periods March 2005 through February 2008.  The amount subject to these refunds, excluding interest, is approximately $1.1 million. As of June 30, 2010, the Company had not recorded a receivable related to this matter. 9.  Subsequent Event The Company entered into a Second Amendment to the Loan Agreement dated July 30, 2010 which amended the Term Loan originally entered into on May 11, 2006.  The modified loan will increase the principal amount of the loan by $22 million subject to terms and conditions of the Loan Agreement.  At the date of signing the lender advanced $6.7 million net of $3.1 million to cure default interest accrued from June 1, 2010 and certain fees and expenses.  On or before August 20, 2010 the second advance totaling $15.3 million will be provided.  The Second Amendment to the Loan Agreement extended the due date of the term loan to December 31, 2012 and calls for interest to be paid at LIBOR plus 4.0% through June2011.  The LIBOR rate has a minimum rate of 1.5%.  The LIBOR spread increases 0.5% at six month increments beginning July 2011 through December 2012. -10-


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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS  This Quarterly Report on Form 10-Q contains forward-looking statements relating to future events and future performance of the Company within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including, without limitation, statements regarding the Companys expectations, beliefs, intentions or future strategies that are signified by the words expects, anticipates, intends, believes or similar language. Actual results could differ materially from those anticipated in such forward-looking statements.  All forward-looking statements included in this document are based on information available to the Company on the date hereof, and the Company assumes no obligation to update any forward-looking statements. The Company cautions investors that its business and financial performance are subject to substantial risks and uncertainties.  ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  The following discussion and analysis of the Companys financial condition and results of operations should be read in conjunction with the financial statements, the related notes to financial statements and Managements Discussion and Analysis of Financial Condition and Results of Operations included in the Companys Annual Report on Form 10-K for the year ended December 31, 2009 and the unaudited interim condensed financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q.  Overview  The following discussion of the Companys results of operations compares the three months and six months ended June 30, 2010, to the three months and six months ended June 30, 2009, respectively.  Casino revenue is derived primarily from patrons wagering on slot machines, table games and other gaming activities. Table games generally include Blackjack or Twenty One, Craps, Baccarat and Roulette. Other gaming activities include the Race and Sports Book. Casino revenue is defined as the win from gaming activities, computed as the net difference between gaming wins and losses, not the total amounts wagered. Table game volume, table game drop (terms which are used interchangeably), and slot handle are casino industry specific terms that are used to identify the amount wagered by patrons for a casino table game or slot machine, respectively. Table game hold and slot hold represent the percentage of the total amount wagered by patrons that the casino has won. Hold is derived by dividing the amount won by the casino by the amount wagered by patrons. Casino revenue is recognized at the end of each gaming day.  Casino revenues vary from time to time due to general economic conditions, popularity of entertainment offerings, table game hold, slot hold, and occupancy percentages in the Hotel. Casino revenues also vary depending upon the amount of gaming activity as well as variations in the odds for different games of chance. The Hotel also uses technology, such as cashless wagering on slot machines, to increase revenues and/or decrease expenses. Casino revenues, room revenues, food and beverage revenues and other revenues vary due to general economic conditions and competition.  Room revenue is derived from rooms and suites rented to guests. Average daily rate is an industry specific term used to define the average amount of revenue per rented room per day. Occupancy percentage defines the total percentage of rooms occupied, and is computed by dividing the number of rooms occupied by the total number of rooms available. Room revenue is recognized at the time the room is provided to the guest.  Food and beverage revenues are derived from food and beverage sales in the food outlets of the Hotel, including restaurants, room service and banquets. Food and beverage revenue is recognized at the time the food and/or beverage is provided to the guest.  Other revenue includes retail sales, entertainment sales, telephone and other miscellaneous income at the Hotel. Such revenue is recognized at the time the goods or services are provided to the guest.   -12-


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Comparison of the Three Months Ended June 30, 2010 with the Three Months Ended June 30, 2009 Summary Financial Information  The Hotel offers hotel, gaming, dining, entertainment, retail and spa amenities at one location in Las Vegas and under one operating segment.  Approximately 29% of the Hotels gross revenue is derived from gaming, while 36% is derived from room revenue.  Room revenue is significant because of the Hotels location next to the Las Vegas Convention Center and its related emphasis on the group, convention, and trade show business.  The following table summarizes the Hotels results of operations (dollars in thousands):  Three Months Ended June 30,2010
     
     
     
     2009Net revenues
     
     $
     47,541
     
     
     $
     45,499Operating loss
     
     
     (5,590
     )
     
     
     (8,332
     )Net loss
     
     
     (9,851
     )
     
     
     (10,552
     )
  Revenue Information  The breakdown of the Propertys net revenue is as follows (in thousands):  Three Months Ended June 30,2010
     
     
     
     2009
     
     
     Percent
ChangeCasino
     $
     15,629
     
     
     $
     17,128
     
     
     (8.8)
     )%Rooms
     
     19,436
     
     
     
     17,295
     
     
     12.4
     %Food and beverage
     
     15,739
     
     
     
     14,081
     
     
     11.8
     %Other revenue
     
     2,657
     
     
     
     2,743
     
     
     (3.1)
     )%53,461
     
     
     
     51,247
     
     
     4.3
     %Less: promotional allowance
     
     (5,920
     )
     
     
     (5,748
     )
     
     3.0
     %Net revenues
     $
     47,541
     
     
     $
     45,499
     
     
     4.5
     %
   Casino Casino revenue decreased $1.5 million, or 8.8%, to $15.6 million for the quarter ended June 30, 2010, compared to $17.1 million for the quarter ended June 30, 2009. The decrease in casino revenue was due to a $0.1 million increase in table game win, a $1.0 million decrease in slot win and a $0.6 million decrease in  race and sportsbook win.  The increase in table games revenue basically unchanged between the quarter ended June 30, 2010 compared to the quarter ended June 30, 2009.  The decrease in slot win is primarily the result of lower drop for the quarter ended June 30, 2010 compared to the quarter ended June 30, 2009.  The decrease in volume is due to the general economic downturn and fierce competition.   The decrease in race and sportsbook win is primarily due to a lower hold for the quarter ended June 30, 2010 compared to the quarter ended June 30, 2009. The Casino operating department margin was 5.8% for the quarter ended June 30, 2010.  The operating department margin was 7.9% for the quarter ended June 30, 2009.  The decrease in operating margin was primarily due to declining revenues. Rooms For the quarter ended June 30, 2010, room revenue was $19.4 million, an increase of $2.1 million from the quarter ended June 30, 2009. The increase is attributable to a $6 increase in the average daily room rate and approximately 11,000 additional rented room nights for the quarter ended June 30, 2010 compared to the quarter ended June 30, 2009. The rooms operating department margin was 61.7% for the quarter ended June 30, 2010.  The operating department margin was 58.7% for the quarter ended June 30, 2009.  The increased operating margin was primarily due to efficiencies in labor for the quarter ended June 30, 2010.  -13-


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Food and Beverage
 Food and beverage revenue for the quarter ended June 30, 2010 was $15.7 million compared to $14.1 million for the quarter ended June 30, 2009 - an increase of $1.7 million or 11.8%. The increase in revenue was primarily due to a more favorable convention calendar in the quarter ended June 30, 2010 compared to the quarter ended June 30, 2009.  The operating margins were slightly higher with an operating margin of 29.9% for the quarter ended June 30, 2010 compared to an operating margin of 28.9% for the quarter ended June 30, 2009. Other Other Revenue includes retail sales, entertainment sales and miscellaneous income. Other Revenue was approximately $2.7 million for the quarter ended June 30, 2010 and also for the quarter ended June 30, 2009.  Entertainment revenue was higher for the second quarter of 2010 compared to the second quarter of 2009 which was offset by lower retail and miscellaneous income for the same quarters.   Operating Cost and Expense Information  The breakdown of the Propertys operating costs and expenses is as follows (dollars in thousands):  Three Months Ended June 30,2010
     
     2009
     
     Percent
ChangeCasino
     $     14,716
     
     $        15,769
     
     (6.7) %Rooms
     7,449
     
     7,146
     
     4.2 %Food and beverage
     11,036
     
     10,007
     
     10.3 %Other
     1,877
     
     2,222
     
     (15.5) %General and administrative
     13,129
     
     13,435
     
     (2.3) %Depreciation and amortization
     4,924
     
     5,252
     
     (6.2) %Total
     $     53,131
     
     $       53,831
     
     (1.3) %
  Operating Expenses Operating expenses were $53.1 million for the quarter ended June 30, 2010 compared to $53.8 million for the quarter ended June 30, 2009.  Lower casino operating expenses were offset by higher rooms and food and beverage expenses for the quarter ended June 30, 2010 compared to the quarter ended June 30, 2009. Depreciation and amortization decreased from $5.2 million for the quarter ended June 30, 2009 to $4.9 million for the quarter ended June 30, 2010.  The decrease was due to short-lived assets included in the original purchase becoming fully depreciated. Interest Expense For the three months ended June 30, 2010, interest expense totaled $4.3 million. For the three months ended June 30, 2009, interest expense totaled $2.2 million. The increase of $2.0 million is due to the required minimum LIBOR index floor of 1.5% for the quarter ended June 30, 2010 and a premium interest rate due as set forth in the Second Amendment to the Term Loan in the amount of $1.1 million from May 6, 2010 through June 30, 2010.  A minimum LIBOR index was not required for the quarter ended June 30, 2009. -14-


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Comparison of the Six Months Ended June 30, 2010 with the Six Months Ended June 30, 2009 Summary Financial Information  The following table summarizes the Hotels results of operations (dollars in thousands):  Six Months Ended June 30,2010
     
     
     
     2009Net revenues
     
     $
     101,494
     
     
     $
     105,917Operating loss
     
     
     (4,567
     )
     
     
     (3,053
     )Net loss
     
     
     (11,912
     )
     
     
     (7,526
     )
  Revenue Information  The breakdown of the Propertys net revenue is as follows (dollars in thousands):  Six Months Ended June 30,2010
     
     
     
     2009
     
     
     Percent
ChangeCasino
     $
     35,268
     
     
     $
     40,909
     
     
     (13.8)
     )%Rooms
     
     40,232
     
     
     
     40,038
     
     
     .5
     %Food and beverage
     
     31,791
     
     
     
     30,564
     
     
     4.0
     %Other revenue
     
     6,181
     
     
     
     6,683
     
     
     (7.5)
     )%113,472
     
     
     
     118,194
     
     
     (4.0)
     )%Less:  promotional allowance
     
     (11,978
     )
     
     
     (12,277
     )
     
     (2.4)
     )%Net revenues
     $
     101,494
     
     
     $
     105,917
     
     
     (4.2)
     )%
  Casino Casino revenue decreased $5.6 million, or 13.8%, to $35.3 million for the six months ended June 30, 2010, compared to $40.9 million for the six months ended June 30, 2009.  The decrease was primarily from reduced slot and race and sports book win.  Slot revenue decreased $3.1 million for the first six months of 2010 compared to the first six months of 2009.  Race and sports book revenue decreased $2.6 million for the first six months of 2010 compared to the first six months of 2009.  The decrease in slot win was primarily due to a decrease in drop.  The general economic downturn and a highly competitive environment have resulted in less volume in 2010.   The decrease in race and sports book revenue is primarily due to a lower hold percentage for the six months ended June 30, 2010.  The hold percentage for the six months ended June 30, 2009 was extraordinarily high due to the favorable outcome of Super Bowl betting. The Casino operating department margin was 15.7% for the six months ended June 30, 2010.  The Casino operating department margin was 21.3% for the six months ended June 30, 2009.  The lower operating margin was the result of higher promotional spending in relation to lower casino revenues for the six months ended June 30, 2010 compared to the six months ended June 30, 2009. Rooms For the first six months ended June 30, 2010, room revenue was $40.2 million, approximately the same as the room revenue of $40.0 million for the six months ended June 30, 2009.  Slightly higher occupancy was achieved for the six months ended June 30, 2010 compared to the six months ended June 30, 2009 which was offset by a slightly lower average daily rate between the six month periods.  The 2010 convention calendar was more favorable with more June conventions compared to 2009. The Room operating department margin was relatively unchanged between the two six month periods.  The Room operating margin for the first half of 2010 was 63.4%; the room operating margin for the first half of 2009 was 64.9%.  Costs associated with operating the Hotel held constant with the unchanged Hotel revenue. Food and Beverage Food and Beverage revenue for the six months ended June 30, 2010 was $31.8 million, an increase of $1.2 million from $30.6 million for the six months ended June 30, 2009.  The operating margin of 30.8% for the first six months of 2010 decreased from the operating margin of 32.5% for the six months of 2009.  The decrease was primarily due to slightly higher cost of goods for the six months ended June 30, 2010 compared to the six months ended June 30, 2009. -15-


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Other Other Revenue includes retail sales, entertainment sales and miscellaneous income. Other Revenue was approximately $6.2 million for the six months ended June 30, 2010 compared to $6.7 million for Other Revenue reported for the six months ended June 30, 2009.  Entertainment revenue was higher for the first half of 2009 compared to the first half of 2010 because more scheduled headliner performances in 2010 were engaged through four wall agreements, in which the producer pays the artists fees directly and retains the ticket sales.  Operating Cost and Expense Information  The breakdown of the Propertys operating costs and expenses is as follows (dollars in thousands):   Six Months Ended June 30,2010
     
     
     2009
     
     Percent
ChangeCasino
     $
     29,747
     
     $
     32,193
     
     (7.6)
     )%Rooms
     
     14,713
     
     
     14,053
     
     4.7
     %Food and beverage
     
     21,988
     
     
     20,634
     
     6.6
     %Other expense
     
     3,794
     
     
     4,680
     
     (18.9)
     )%General and administrative
     
     25,976
     
     
     26,920
     
     (3.5)
     )%Depreciation and amortization
     
     9,843
     
     
     10,490
     
     (6.2)
     )%Total
     $
     106,061
     
     $
     108,970
     
     (2.7)
     )%
 Operating Expenses Operating expenses decreased $2.9 million for the six months ended June 30, 2010 compared to the six months ended June 30, 2009.  The decrease was primarily due to volume related expenses especially in the casino division. Interest Expense For the six months ended June 30, 2010, interest expense totaled $7.3 million. For the six months ended June 30, 2009, interest expense totaled $4.5 million. The increase of $2.9 million is due to the loan modification which established a LIBOR rate floor of 1.5% for the six months ended June 30, 2010 and also due to an interest premium charged for the loan default from May 6, 2010 through June 30, 2010 in the amount of $1.3 million.  The previous loan terms which were in effect during the six months ended June 30, 2009 did not require a LIBOR rate floor. Liquidity and Capital Resources Cash flows of the Company for the six months ended June 30, 2010 compared to the six months ended June 30, 2009 consisted of the following: Cash Flow - Operating Activities Cash flow used in operations was $5.7 million for the six months ended June 30, 2010 compared to cash flow used in operations of $1.7 million for the six months ended June 30, 2009.  The decrease in operating cash flow was primarily the result of the increase in net loss.  A net loss of $11.9 million for the six months ended June 30, 2010 compares to a net loss of $7.5 million for the six months ended June 30, 2009. As of June 30, 2010, the Company had cash and equivalents of $8.4 million of which $3.3 million was cash in the casino used to fund daily operations.  The Company has renegotiated its Term Loan subsequent to June 30, 2010.  See Note 3 and 9 of these financial statements.   -16-


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Cash Flows - Investing Activities For the six months ended June 30, 2010, $0.4 million of cash was provided by investing activities of which $2.1 million was used for additions to property and equipment. Restricted Cash decreased $2.5 million with the reduction of certain escrow accounts required by the Term Loan.  For the six months ended June 30, 2009, $4.4 million was used to fund investing activities of which $3.7 million of cash was used for additions to property and equipment. Cash Flows - Financing Activities For the six months ended June 30, 2010, $137 thousand of debt issuance costs were expended.  During the six months ended June 30, 2009, $5 thousand of debt issuance costs were incurred.  At June 30, 2010 the Term Loan has a balance of $230 million. Interest on the Term Loan accrues at a rate of one month LIBOR plus 3.5%.  The LIBOR rate has a minimum of 1.5%.  The Term Loan provides for no amortization during the term. The Term Loan is collateralized by a first priority deed of trust on the Hotel. Pursuant to the terms of the Term Loan, the Company purchased an interest rate cap with LIBOR strike rate of 5.75% for the first two years of the Term Loan and an interest rate cap with LIBOR strike rate of 6.25% for any extension periods.  The value of the interest rate cap as of June 30, 2010 was zero. The Term Loan had an original expiration date of May 10, 2008.  Upon the satisfaction of certain conditions, the Term Loan provided for three, one year extensions.  The Company exercised the first extension option in 2008.  On August 14, 2009 the Company and Goldman Sachs Mortgage Company (the Lender) executed the First Amendment to Loan Agreement and Omnibus Loan Modification Agreement.  The agreement extended the Term Loan due date for two years.  Also as part of the loan modification, the Company was required to obtain a new extension rate cap agreement, pay an extension fee and out-of-pocket expenses incurred by the lender and meet certain debt yield benchmarks.  The Company paid $20 million in principal during 2009 as part of the negotiated extension as of June 30, 2009. Other Factors Affecting Liquidity  The Company's independent registered public accounting firm included an explanatory paragraph that expresses substantial doubt as to the Company's ability to continue as a going concern in their audit report contained in the Companys Annual Report on Form 10-K for the year ended December 31, 2009.  The Company cannot provide any assurance that it will in fact operate its business profitably, maintain existing financings, or obtain sufficient financing in the future to sustain its business in the event the Company is not successful in its efforts to generate sufficient revenue and operating cash flow. The Companys ability to continue as a going concern will be determined by the Companys ability to obtain additional funding and to generate sufficient revenue to cover its operating expenses. The accompanying condensed financial statements are prepared assuming that the Company will continue as a going concern. Subsequent to June 30, 2010, the Company executed the Second Amendment to the Term Loan. The Second Amendment extends the due date of the loan to December 31, 2012 and provides for a total of $22 million in additional borrowings. The Company can, if needed, defer making interest payments to a maximum of $10 million.  See Note 3. In addition, the Second Amendment to the Term Loan provides for additional liquidity to be provided by the Companys members above the loan advances made by the lender. Members of the Company are required to make capital contributions, if necessary, up to $20 million. The execution of the Loan Modification Agreement subsequent to June 30, 2010, improves the Companys ability to meet its debt requirements, fund operations, and make capital improvements. -17-


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Contractual Obligation and Other Commitments The following table summarizes the Companys contractual obligations and commitments (amount in thousands):  Payments Due by PeriodLess than 1 Year
     
     
     1-3 Years
     
     
     3-5 Years
     
     
     More than 5 Years
     
     
     Total(In Thousands)Long-Term Debt ObligationTerm Loan (a)
     
     $
     -
     
     $
     230,000
     
     $
     -
     
     $
     -
     
     $
     230,000Variable interest payments (b)
     
     
     12,810
     
     
     24,570
     
     
     -
     
     
     -
     
     
     37,380Contractual ObligationsEmployment agreements (c)
     
     
     1,589
     
     
     1,649
     
     
     -
     
     
     -
     
     
     3,238Licensing agreement (d)
     
     
     -
     
     
     -
     
     
     -
     
     
     -
     
     
     -Operating leases(e)
     
     
     353
     
     
     205
     
     
     -
     
     
     -
     
     
     558$
     14,752
     
     $
     256,424
     
     $
     -
     
     $
     -
     
     $
     271,176
  (a)
     The Term Loan, with an initial funding of $209,200,000 originated May 11, 2006.  The Company has drawn an additional $40.8 million under the Term Loan and had an outstanding balance of $250,000,000.  The loan had an original two-year term and three, one-year extensions.  The Term Loan was extended twice with the lender requiring the Company to make $20 million in principal payments, pay certain fees, purchase an interest rate cap and pay out-of-pocket expenses of the lender.  The Company defaulted on its June 1, 2010 interest payment.  The default was cured on July 30, 2010 when the Company entered into a loan modification agreement.  The agreement has the lender advancing the Company $22 million and provides for a due date of December 31, 2012.   Interest will accrue at LIBOR plus 4.0% with a LIBOR floor of 1.5%.  The spread will increase 0.5% every six months beginning July 2011 up to a maximum of 5.5%.(b)
     Based on the LIBOR floor of 1.5% plus 4% for one month then incrementing 0.5% each six months up to a maximum of 5.5%.(c)
     The Company is party to employment agreements with 13 of its senior executives, with terms of one to three years.(d)
     The Company signed a new agreement with Hilton commencing January 1, 2009.  The agreement expires December 31, 2015 and allows the Hotel to use the Hilton name, advertise on the Hilton Hotels website, and utilize the Hilton reservation system and other Hilton amenities.  In exchange, the Hotel is required to make certain capital improvements and will pay varying percentage fees of Food and Beverage Revenue (as defined in the agreement) and Hotel Revenue (as defined in the agreement) and also is obligated to participate in the HHonors Program TM reward program.  For the year ended December 31, 2010 the Company will expense 1% of defined Food and Beverage revenue and 4.25% of defined Hotel Revenue in accordance with this agreement. For the year ended December 31, 2009, $4.1 million was expensed in accordance with this agreement.(e)
     The Company is party to operating leases for office and telephone equipment with original terms of three to five years.
  Off-Balance Sheet Arrangements The Company is not currently subject to any off-balance sheet arrangements which it believes will have a material adverse impact on its financial condition.  Debt Instruments The following table provides information about the Companys long-term debt at June 30, 2009 (amounts in thousands):  Maturity Date
     
     
     Face Amount
     
     
     Carry Value
     
     
     Fair ValueTerm Loan
     
     June, 2011
     
     $
     230,000
     
     $
     230,000
     
     $
     195,500
 The Term Loan originated May 11, 2006 and had an initial principal amount of $209.2 million with interest accruing at a rate of one month LIBOR plus 2.9%.  The Company extended the loan effective August 2009.  As part of the extension agreement, the Company was required to make principal payments totaling $20 million, pay fees totaling $1.5 million, purchase an interest rate cap and pay out-of-pocket expenses to the Lender.  Interest on the extension currently accrues at LIBOR plus 4.0% through May 2011.  The LIBOR rate has a floor of 1.5%. On July 30, 2010, the Company executed a Loan Modification Agreement which extended the due date of the term loan to December 31, 2012, provided for $22 million in additional borrowings and cured defaultinterest that accrued from June 1, 2010.  See Note 3 for additional requirements of the Loan Modification Agreement.  -18-


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Litigation Contingencies and Available Resources In the normal course of business, the Company is subject to various litigation, claims and assessments. The Company is not currently a party to any material litigation and it is not aware of any material action, suit or proceedings against it that has been threatened by any person. Critical Accounting Policies Significant Accounting Policies and Estimates The Company prepares its financial statements in conformity with accounting principles generally accepted in the United States. Certain of its accounting policies, including the determination of slot club promotion liability, the estimated useful lives assigned to its assets, asset impairment, insurance reserves, and allowance for doubtful accounts require that it apply significant judgment in defining the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. The Companys judgments are based on its historical experience, terms of existing contracts, observance of trends in the gaming industry and information available from other outside sources. There can be no assurance that actual results will not differ from the Companys estimates. To provide an understanding of the methodology the Company applies, its significant accounting policies and basis of presentation are discussed below, as well as where appropriate in this discussion and analysis and in the notes to the Companys financial statements. Slot Club Promotions The Companys Slot Club allows customers to redeem points earned from their gaming activity for cash and complimentary food, beverage, rooms, entertainment and merchandise.  At the time redeemed, the retail value of complimentaries is recorded as revenue with a corresponding offsetting amount included in promotional allowances.  The cost associated with complimentary food, beverage, rooms, entertainment and merchandise redeemed is recorded in casino costs and expenses.  The Company also records a liability for the estimated cost of the outstanding points that it believes will ultimately be redeemed. Self-Insurance Reserve The Company is self insured up to certain stop loss amounts for workers compensation and guest liability claims. In estimating this accrual, the Company considers historical loss experience and makes judgments about the expected levels of costs per claim. The Company believes its estimates of future liability are reasonable based upon its methodology; however, changes in accident frequency and severity and other factors could materially affect the estimate for this liability. Derivative Investments and Hedging Activities The Companys Term Loan requires it to enter into interest rate caps in order to manage interest rate risks associated with this borrowing. The Company adopted the guidance under ASC Topic 815. The guidance provides users of financial statements with an enhanced understanding of (i) how and why an entity uses derivative instruments, (ii) how derivative instruments and related hedged items are accounted for under the previous guidance and its related interpretations and (iii) how derivative instruments and related hedged items affect an entitys financial position, results of operations and cash flows.   Derivative financial instruments are recognized as assets or liabilities, with changes in fair value affecting net income/(loss). Our derivative investment does not qualify for hedge accounting. Allowance for Doubtful Accounts The Companys receivables balances relate primarily to its hotel and casino operations. The Company reserves an estimated amount for receivables that may not be collected. The Company estimates the allowance for doubtful accounts by applying standard reserve percentages to aged account balances under a specific dollar amount and specifically analyzing the collectability of each account with a balance over the specified dollar amount, based on the age of the account, the customers financial condition, collection history and any other known information.  -19-


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Property and Equipment Property and equipment are stated at cost. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets, while costs of normal repairs and maintenance are charged to expense as incurred. Long-Lived Assets Long-lived assets, which are not to be disposed of, including intangibles and property and equipment, are periodically reviewed by management for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. For assets to be held and used, the Company reviews these assets for impairment whenever indicators of impairment exist. If an indicator of impairment exists, the Company compares the estimated future cash flows of the asset, on an undiscounted basis, to the carrying value of the asset. If the undiscounted cash flows exceed the carrying value, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying value, then impairment is measured as the difference between fair value and carrying value, with fair value typically based on a discounted cash flow model. If an asset is still under development, future cash flows include remaining construction costs.  Reclassification Certain reclassifications have been made to the 2010 and 2009 financial statements due to clarification on the presentation of certain gaming related expenses.  These reclassifications had no effect on net income or loss or on working capital or members equity. Recent Accounting Pronouncements In the third quarter of 2009, the Company adopted the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC).  The ASC is the single official source of authoritative, nongovernmental GAAP, other than guidance issued by the SEC.  The adoption of the ASC did not have a material impact on the financial statements included herein. In June 2009, the FASB issued amendments related to Topic 810. Among other items, the related sections of Topic 810 respond to concerns about the application of certain key provisions of FIN 46(R), including those regarding the transparency of the involvement with variable interest entities.  The related sections of Topic 810 are effective for calendar year companies beginning on January 1, 2010 and were adopted by the Company as of that date.  The adoption did not have a material impact on the financial position, results of operations, cash flows, or disclosures of the Company. In January 2010, the FASB issued Accounting Standards Update (ASU) No. 2010-06, Improving Disclosures about Fair Value Measurements an amendment to ASC Topic 820, Fair Value Measurements and Disclosures.  This amendment requires an entity to: (i) disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers and (ii) present separate information for Level 3 activity pertaining to gross purchases, sales, issuances, and settlements.  ASU No. 2010-06 is effective for the Company for interim and annual reporting beginning after December 15, 2009, with one new disclosure effective after December 15, 2010. The Company has adopted this ASU in full with respect to the interim period ended March 31, 2010, and the adoption did not have a significant impact on the Companys financial positions, results of operations, cash flows or disclosure.  A variety of proposed or otherwise potential accounting standards are currently under review and study by standard-setting organizations and certain regulatory agencies.  Because of the tentative and preliminary nature of such proposed standards, we have not yet determined the effect, if any, that the implementation of any such proposed or revised standards would have on our unaudited Condensed Financial Statements. -20-


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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Market risk is the risk of loss from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices.  The Companys primary exposure to market risk is interest rate risk associated with its variable rate long-term debt.   If LIBOR were to increase 100 basis points and there were no additional borrowings, based on our borrowings as of June 30, 2010 interest expense would increase approximately $2.3 million for the year ending June 30, 2011.  The Company attempts to manage its interest rate risk by entering into interest rate cap agreements.  The Company does not hold or issue financial instruments for trading purposes and does not enter into derivative transactions that would be considered speculative positions.  The derivative financial instruments consist exclusively of interest rate cap agreements.  Differentials resulting from these agreements are recorded on an accrual basis as an adjustment to interest expenses. To manage counterparty credit risk in interest rate cap agreements, the Company only enters into agreements with highly rated institutions that can be expected to perform under terms of such agreements.  -21-


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ITEM 4. CONTROLS AND PROCEDURES Our management, including our Executive Vice President of Finance and our Chief Executive Officer and General Manager, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13(a)  15(e) and 15(d)  15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on this evaluation, our principal executive and principal financial officers concluded our disclosure controls and procedures are effective in alerting them in a timely manner to material information required to be included in our SEC reports. There has been no change in our internal control over financial  reporting (as defined in Rules 13(a)  15(e) and 15(d)  15(e) under the Securities Exchange Act of 1934, as amended) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial  reporting.  -22-


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PART II. OTHER INFORMATION ITEM 6. EXHIBITS  EXHIBIT NUMBER2.1
     Purchase and Sale Agreement, dated as of December 24, 2003, by and among Colony Resorts LVH Acquisitions, LLC, LVH Corporation and Caesars Entertainment Corporation*3.1
     Articles of Organization, dated as of December 18, 2003, for Colony Resorts LVH Acquisitions, LLC*3.2
     Operating Agreement, dated as of December 22, 2003, for Colony Resorts LVH Acquisitions, LLC*3.3
     Amended and Restated Operating Agreement, dated June 18, 2004, for Colony Resorts LVH Acquisitions, LLC+3.4
     Amendment No. 1 to the Amended and Restated Operating Agreement, dated July 23, 2004, for Colony Resorts LVH Acquisitions, LLC****3.5
     Amendment to Articles of Organization, dated June 25, 2004, for Colony Resorts LVH Acquisitions, LLC******10.1
     Deposit Escrow Agreement, dated as of December 24, 2003, by and among LVH Corporation, Colony Resorts LVH Acquisitions, LLC and Nevada Title Company*10.2
     Coinvestment Transfer Restriction Agreement, dated June 18, 2004, by and among Mr. Barrack, Mr. Ribis, Co-Investment Partners and Coinvestment Voteco+10.3
     Transfer Restriction Agreement, dated June 18, 2004, by and among Mr. Barrack, Holdings and Voteco+10.4
     Employment Agreement, dated as of March 9, 2004, by and between Colony Resorts LVH Acquisitions, LLC and Rodolfo Prieto*10.5
     Employment Agreement, dated as of March 9, 2004, by and between Colony Resorts LVH Acquisitions, LLC and Robert Schaffhauser*10.6
     Employment Agreement, dated as of March 9, 2004, by and between Colony Resorts LVH Acquisitions, LLC and Kenneth Ciancimino*10.7
     Letter Agreement, dated as of March 10, 2004, by and between Colony Resorts LVH Acquisitions, LLC and Rodolfo Prieto*10.8
     Letter Agreement, dated as of March 10, 2004, by and between Colony Resorts LVH Acquisitions, LLC and Robert Schaffhauser*10.9
     Letter Agreement, dated as of March 10, 2004, by and between Colony Resorts LVH Acquisitions, LLC and Kenneth Ciancimino*10.10
     Employment Agreement, dated as of May 17, 2004, by and between Colony Resorts LVH Acquisitions, LLC and Gonzalo De Varona.***10.11
     Employment Agreement, dated as of April 12, 2004, by and between Colony Resorts LVH Acquisitions, LLC and Robert Stewart.***10.12
     Vice Chairman Agreement, dated June 18, 2004, between Colony Resorts LVH Acquisitions, LLC and Nicholas L. Ribis.****10.13
     Colony Resorts LVH Acquisitions, LLC 2004 Incentive Plan****10.14
     Loan Agreement, dated June 18, 2004, by and between Colony Resorts LVH Acquisition, LLC and Archon Financial, L.P.+10.15
     Sale Right Agreement, dated June 18, 2004, by and among Colony Resorts LVH Acquisitions, LLC, Colony Resorts LVH Holdings, LLC, Colony Resorts LVH Coinvestment Voteco, LLC, Colony Resorts LVH Voteco, LLC and Colony Resorts LVH Co-Investment Partners, L.P.****10.16
     Services Agreement, dated June 18, 2004, between Colony Resorts LVH Acquisitions, LLC and Resorts International Hotel and Casino, Inc.****10.17
     Joint Marketing Agreement, by and between Colony Resorts LVH Acquisitions, LLC and Resorts International Hotel, Inc.****10.18
     Joint Services Agreement, by and between Colony Resorts LVH Acquisitions, LLC and Resorts International Hotel, Inc.****10.19
     Employment Agreement, dated as of May 11, 2003, between LVH Corporation and Thomas Page.****-23-


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EXHIBIT NUMBER
     (continued)10.20
     Addendum to Employment Agreement, dated as of June 22, 2004, by and between Colony Resorts LVH Acquisitions, LLC and Thomas Page.****10.21
     Addendum to Employment Agreement, dated as of April 28, 2006, by and between Colony Resorts LVH Acquisitions, LLC and Robert Schaffhauser ++10.22
     Addendum to Employment Agreement, dated as of April 28, 2006, by and between Colony Resorts LVH Acquisitions, LLC and Ken Ciancimino ++10.23
     Loan Agreement dated as of May 11, 2006, between Colony Resorts LVH Acquisitions, LLC and Goldman Sachs Commercial Mortgage Capital, L.P. +++10.24
     First Amendment to the Colony Resorts LVH Acquisitions, LLC 2004 Incentive Plan ++++10.25
     Amended and Restated Joint Services Agreement, dated as of April 26, 2005 by and between Colony Resorts LVH Acquisitions, LLC and Resorts International Hotel, Inc. +++++10.26
     Amended and Restated Joint Marketing Agreement, dated as of April 26, 2006 by and between Colony Resorts LVH Acquisitions, LLC and Resorts International Hotel, Inc. +++++10.27
     Employment Agreement dated as of October 15, 2007 by and between Colony Resorts LVH  Acquisition, LLC and Joseph DeRosa ++++++10.28
     Amended and Restated License Agreement dated as of January 1, 2009 by and between Colony Resorts LVH Acquisitions, LLC and HLT Existing Franchise Holding, LLC +++++++10.29
     Second Addendum to Employment Agreement dated as of December 8, 2008 by and between Colony Resorts LVH Acquisitions, LLC and Robert E. Schaffhauser ++++++++10.30
     Second Addendum to Employment Agreement dated as of December 8, 2008 by and between Colony Resorts LVH Acquisitions, LLC and Kenneth M. Ciancimino ++++++++10.31
     Third Addendum to Employment Agreement dated as of March 2, 2010 by and between Colony Resosrts LVH Acquisitions, LLC and Kenneth M. Ciancimino #10.32
     Employment Agreement Dated September 8, 2009 by and between Colony Resorts LVH Acquisitions, LLC and David Monahan ##10.33
     Second Amendment to Loan Agreement and Omnibus Loan Modification Agreement, Dated July 30, 2010 by and between Colony Resorts LVH Acquisitions, LLC and Goldman Sachs Mortgage Company ###10.34
     Amendment to Vice Chairman Agreement dated March 17, 201014.1
     Code of Ethics*******31.1
     Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
     Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
     Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
     Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


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METHOD OF FILING*
     Incorporated by reference to the Registrants Form 10, filed March 15, 2004 (File Number 0-50635).**
     Incorporated by reference to the Registrants Amendment No. 1 to Form 10, filed April 26, 2004 (File Number 0-50635).***
     Incorporated by reference to the Registrants Post-Effective Amendment No. 1 to Form 10, filed June 17, 2004 (File Number 0-50635).+
     Incorporated by reference to the Registrants Quarterly Report on Form 10-Q, filed June 28, 2004 (File Number 0-50635).****
     Incorporated by reference to Registrants Post-Effective Amendment No. 2 to Form 10 filed August 13, 2004 (File Number 0-50635).*****
     Incorporated by reference to Registrants Quarterly Report on Form 10-Q filed August 23, 2004 (File Number 0-50635).******
     Incorporated by reference to Registrants Quarterly Report on Form 10-Q/A filed September 9, 2004 (File Number 0-50635).******
     Incorporated by reference to Registrants Quarterly Report on Form 10-Q filed November 15, 2004 (File Number 0-50635).*******
     Incorporated by reference to Registrants Annual Report on Form 10-K filed March 31, 2004 (File Number 000-50635)++
     Incorporated by reference to Registrants Quarterly Report on Form 10-Q filed August 14, 2006.+++
     Incorporated by reference to Registrants Current Report on Form 8-K, filed May 19, 2006.++++
     Incorporated by reference to Registrants Quarterly Report on Form 10-Q filed November 14, 2006+++++
     Incorporated by reference to Registrants Annual Report on Form 10-K filed March 30, 2007 (File Number 000-50635)+++++++
     Incorporate by reference to Registrants Current Report on Form 8-K filed January 5, 2009++++++++
     Incorporated by reference to Registrants Annual Report on Form 10-K filed March 26, 2009 (File Number 000-50635)##
     Incorporated by reference to Registrants Report Form 8-K filed September 14, 2009 (File Number 000-50635)#
     Incorporated by reference to Registrants Quarterly Report on Form 10-Q filed May 14, 2010 (File Number 000-50635)###
     Incorporated by reference to Registrants Report Form 8-K filed August 5, 2010 (File Number 000-50635)
   -25-


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SIGNATURES Pursuant to the requirements 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.   COLONY RESORTS LVH ACQUISITIONS, LLCDate:  August 13, 2010
     
     By:
     
     /s/David MonahanDavid MonahanChief Executive Officer and General ManagerDate:  August 13, 2010
     
     By:
     
     /s/Robert SchaffhauserRobert SchaffhauserExecutive Vice President of Finance
  -26-


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