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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

For the fiscal year ended December 31, 2004

or

For the transition period from              to             

Commission file number 000-32987

COLONY RIH HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

RESORTS INTERNATIONAL HOTEL AND CASINO, INC.

(Exact name of registrant as specified in its charter)

Registrants’ telephone number, including area code:

(609) 344-6000

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

None

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

COLONY RIH HOLDINGS, INC.

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

(Title of Class)

RESORTS INTERNATIONAL HOTEL AND CASINO, INC.

COMMON STOCK, PAR VALUE $.01 PER SHARE

(Title of Class)

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

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

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

The aggregate market value of the voting and non-voting common stock held by non-affiliates of Colony RIH Holdings, Inc. and Resorts International Hotel and Casino, Inc. as of March 30, 2005, was $0.

As of March 30, 2005, 38,295 shares of class A common stock and 774,982 shares of class B common stock of Colony RIH Holdings, Inc. were outstanding.

As of March 30, 2005, 100 shares of common stock of Resorts International Hotel and Casino, Inc. were outstanding.

Information required by Part III of this Form 10-K, to the extent not set forth herein, is incorporated by reference from the registrant’s definitive proxy statement for its 2005 annual meeting of stockholders, which will be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, within 120 days after the end of the registrants’ fiscal year ended December 31, 2004.

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COLONY RIH HOLDINGS, INC.

AND

RESORTS INTERNATIONAL HOTEL AND CASINO, INC.

Annual Report on Form 10-K

TABLE OF CONTENTS

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

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

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PART I

Item 1. Business.

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

RIHC, Kerzner International North America, Inc. (“KINA”), formerly Sun International North America, Inc., a Delaware corporation, and GGRI, Inc. (“GGRI”), a Delaware corporation, entered into a purchase agreement, dated as of October 30, 2000, as amended, (the “Purchase Agreement”). Pursuant to the Purchase Agreement, RIHC acquired all of the capital stock of RIH, the Warehouse Assets (as defined in the Purchase Agreement) and all of the capital stock of New Pier Operating Company, Inc. (“New Pier”), a New Jersey corporation, (collectively, the “Acquisition”), on April 25, 2001 for approximately $144.8 million. In conjunction with the Acquisition, RIHC borrowed $82.0 million under an Amended and Restated Credit Agreement, dated April 25, 2001, from the lenders named therein (the “Credit Facility”) and CRH issued a $17.5 million note to KINA (the “Seller Note”). These debts were retired in March 2002 in conjunction with the issuance of $180 million of first mortgage notes (see “The Expansion”).

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

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

Overview

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

In May 1978, Resorts commenced operations as the first casino hotel in Atlantic City. This was accomplished by the conversion of the former Haddon Hall Hotel, a classic hotel structure originally built in the early 1900’s, into a luxury casino hotel. Situated on 11.0 acres of land with approximately 310 feet of Boardwalk frontage, Resorts overlooks the Atlantic Ocean. On September 4, 2002, RIHC decommissioned the 166-room Atlantic City Tower to begin construction in November 2002 of a 27-story hotel tower on the same site. The expansion was substantially completed on June 16, 2004. The expansion added 399 hotel rooms and suites in the Rendezvous Tower, the Grand Lobby (which replaced the former hotel lobby), 25,000 square feet of additional gaming space (collectively, the “New Tower”), and increased the number of slot machines and table games by 840 machines and 11 tables, as compared to December 31, 2003 levels. RIHC opened the expanded gaming space on May 28, 2004, and began opening hotel rooms in the New Tower to the public on June 16, 2004. The grand opening ceremony for the New Tower was held over the July 4, 2004 weekend.

Additional amenities of the casino facility during 2004 included a 1,400-seat theater, two smaller entertainment venues, six restaurants, a VIP slot and table player lounge, an indoor swimming pool, a lounge, a health club and leased retail shops. The complex also has approximately 39,100 square feet of convention facilities, including six large meeting rooms and a 12,000 square foot ballroom.

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Resorts is situated on the Boardwalk of Atlantic City, along with eight of Atlantic City’s twelve casinos. Resorts sits at the northern end of the Boardwalk adjacent to the Trump Taj Mahal Casino Resort (the “Taj Mahal”), which is also adjoined by the Showboat Hotel and Casino (“Showboat”). These three properties have a total of approximately 3,400 hotel rooms and approximately 360,000 square feet of gaming space in close proximity to each other. An enclosed pedestrian bridge between Resorts and the Taj Mahal allows patrons of both hotels to move between both casinos without exposure to the weather and readily partake in events at both casino hotels. A similar enclosed pedestrian bridge connects the Showboat Atlantic City to the Taj Mahal, allowing patrons to walk under cover among all three casino hotels. The remaining nine Atlantic City casino hotels are located approximately one-half mile to one and one-half miles to the south on the Boardwalk or, to the west, in the Marina District of Atlantic City.

Facilities Overview

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

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

Meeting Rooms, Restaurants and Other Amenities. Resorts’ meeting room facilities consist of a large banquet room with five breakout rooms. In the aggregate, these rooms have the ability to accommodate approximately 2,600 people in 39,100 square feet of space. Meeting rooms range in size from 450 to 12,028 square feet.

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

With a capacity to seat 1,400 patrons in approximately 18,000 square feet of space, the primary purpose of Resorts’ Superstar Theater is to attract patrons to the casino. The theater is used to enhance the casino’s image as an entertainment facility offering some of the best entertainment in Atlantic City. Recent acts which we believe target our core customer base include: Tom Jones, Smokey Robinson, Don Rickles, Jerry Seinfield and Chaka Khan. During 2004, Resorts also operated two additional entertainment venues, the 300-seat Screening Room, used for off-Broadway-style shows, and a 200-seat room which was used to present a comedy club.

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

Parking. A multi-level parking garage that is connected to Resorts is used for patrons’ self-parking and accommodates approximately 700 vehicles. Additional adjacent properties, consisting of approximately 7.9 acres, which are owned by CRH, provide parking for approximately 700 vehicles and valet parking for approximately 450 vehicles. See “Option Land” and “Item 2. Properties.”

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The Expansion

On March 22, 2002, RIHC sold $180.0 million aggregate principal amount of 11 ¹/2% first mortgage notes (the “First Mortgage Notes”) at a price of 97.686% yielding $175.8 million. Concurrent with the sale of the First Mortgage Notes, CRH issued 17,295 shares of class A common stock at a cash price of $0.0475 and 349,992 shares of class B common stock at a price of $100 to its existing shareholders for a total price of approximately $35.0 million. The proceeds from the sale of the First Mortgage Notes and issuance of stock were used to retire existing debt and to finance a portion of the cost to develop, construct, and equip the New Tower.

On September 4, 2002, CRH decommissioned the 166-room Atlantic City Tower to begin construction in November 2002 of the New Tower. From the proceeds of the sale of the First Mortgage Notes, $89.4 million was deposited in a construction disbursement account for use in construction of the New Tower. Additionally, the New Jersey Casino Reinvestment Development Authority (“CRDA”) agreed to reimburse RIHC for certain costs for the construction of the New Tower totaling approximately $13.1 million through 2008, of which $9.2 million was received in 2003, $0.8 million was received in 2004, and approximately $3.1 million is expected to be received in the aggregate from 2005 through 2008. The CRDA will also make an additional $1.5 million available for expenses incurred in connection with public improvements relating to the construction of the New Tower. In June 2002, RIH entered into a $20.0 million credit facility, the proceeds of which were used for the acquisition of furniture, fixtures and equipment. RIHC has guaranteed the obligations of RIH under this equipment credit facility. As of December 31, 2004, the Companies had used $14.7 million of the equipment credit facility to purchase furniture, fixtures and equipment for the New Tower and $3.1 million to purchase additional slot machines. In November 2002, RIHC also entered into a $10.0 million revolving credit facility (the “Commerce Facility”). There was no outstanding balance on the Commerce Facility at December 31, 2004. However, $4.4 million of standby letters of credit have been issued against the Commerce Facility related to insurance obligations of the Company, leaving an availability of $5.6 million as of December 31, 2004.

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

Hotel rooms and suites in the new Rendezvous Tower are among the largest in Atlantic City. Rooms in the Ocean Tower, a classic hotel structure constructed in the 1920’s and completely renovated in 1999, are competitive with the hotel rooms offered by other facilities in the Atlantic City market.

Option Land

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

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

In March 2004, the Option Land was acquired by RREH in exchange for the issuance of a $40 million note by RREH to KINA. This $40 million note will mature immediately following the maturity, acceleration or refinancing (other than permitted refinancing) of the First Mortgage Notes which are due March 22, 2009. No principal payments are required on the $40 million note until it reaches maturity. Interest on the $40 million note is payable semi-annually, and calculated at the following annual rates: 0% through September 2004, 4% from October 2004 through March 2006, 6% from April 2006 through March 2008, and 9% from April 2008 through March 2009. The note payable to KINA is guaranteed by CRH, RIHC and RIH,

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provided, however that the guarantee of RIHC and RIH does not become effective until either the First Mortgage Notes have been paid in full or the fixed charge coverage ratio of RIHC is at least 2.0 to 1.0. In addition, the amount guaranteed is initially limited to $20 million increasing by $5 million each year.

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

Business Strategy and Marketing Overview

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

Resorts classifies its customers according to their gaming budget. A low-level slot player is defined as a customer who is willing to gamble less than $400 per sitting, a mid-level slot player as a customer who is willing to gamble $400 to $1,000 per sitting and a high-level slot player as a customer who is willing to gamble more than $1,000 per sitting. A low-level table game player is defined as a customer who is willing to gamble less than $5,000 per visit, a mid-level table game player as a customer who is willing to gamble $5,000 to $25,000 per visit, a high-level table game player as a customer who is willing to gamble $25,000 to $100,000 per visit and a premium table game player as a customer who is willing to gamble more than $100,000 per visit.

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

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

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

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

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

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Atlantic City Market

Atlantic City’s strategic location, combined with its core demographics and steady market growth, makes it a viable gaming market. Atlantic City is located along the most densely populated area of the United States, the New York-Philadelphia-Baltimore-Washington D.C. corridor. In addition, its beaches remain an attractive draw to many tourists and Resorts will continue to capitalize on and attract this customer base.

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

The Atlantic City market has a strong “locals” component, which includes gaming patrons that generally live within 200 miles of Atlantic City. As a result, management believes the Atlantic City customers tend to frequent the casinos in the market more often than customers in destination-based markets such as Las Vegas. Management believes the Atlantic City customer tends to be more sophisticated and sensitive to changes in slot hold percentage than customers in other gaming jurisdictions. Additionally, it is believed that the “locals” component of the Atlantic City market results in a more stable stream of cash flow that is less susceptible to economic downturns than that of destination-based markets.

Slot play has become increasingly popular with Atlantic City gaming patrons. This popularity is partially due to technological improvements such as “cashless” slot machines, bill and coupon acceptors, video poker, and themed slot machines that have increased convenience and entertainment value. Additionally, slot machines tend to generate higher margins than table games, and Atlantic City gaming operators have correspondingly, over the years, increased the number of slot machines. However, with the increased popularity of poker, table games play has begun to make a comeback. This trend is evidenced by a 25-unit (2.1%) increase in table game units in the Atlantic City market from 1,198 units in 2003 to 1,223 units in 2004. The number of slot machines actually declined from 2003 levels by approximately 800 units (1.8%), to 41,605 units in 2004.

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

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

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

Competition

Competition in the Atlantic City market remains intense. At the present time, there are 12 casino hotels located in Atlantic City, including Resorts, all of which compete for gaming patrons. Competition in the Atlantic City market centers on hotel and casino facilities and related amenities; ease of access and parking facilities; services and promotions provided to patrons; and entertainment. Substantial new expansion and development activity in Atlantic City, as discussed above, continues to intensify the competitive pressure in the Atlantic City market.

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

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

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

In addition to Native American casinos, a major competitive threat to the Atlantic City gaming market has been expansion of gaming in the states surrounding New Jersey, including the “racinos” (slot machine facilities located at existing racetracks) in Delaware and New York, and the development of gaming facilities in Pennsylvania and potentially Maryland. In 2004, the Pennsylvania legislature passed a bill legalizing slots at a number of facilities around the state, including at least four in the Philadelphia region, which are scheduled to begin operations in 2007. In addition, there are recent indications that the New Jersey legislature is pursuing the approval of the installation of video lottery terminals (“VLT’s”) at the Meadowlands race track in northern New Jersey.

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

Gaming Credit Policy

Resorts extends credit to selected gaming customers, primarily in order to compete with other casino hotels in Atlantic City that also extend credit to customers. Credit play represented approximately 21% of table game volume at Resorts in 2004, 22% in 2003 and 21% in 2002. RIH’s gaming receivables, net of allowance for uncollectible amounts, were $3.9 million as of December 31, 2004, $3.7 million as of December 31, 2003, $4.0 million as of December 31, 2002. The collectibility of gaming receivables has an effect on results of operations and management believes that overall collections have been satisfactory. Atlantic City gaming debts are enforceable under the laws of New Jersey and certain other states, although it is not clear whether other states will honor this policy or enforce judgments rendered by the courts of New Jersey with respect to such debts.

Security Controls

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

Seasonal Factors

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

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Employees

As of December 31, 2004, Resorts had approximately 2,800 employees, including approximately 700 casino employees, 700 food and beverage employees, 170 security employees, 350 administrative support employees, 400 hotel employees, 350 marketing and entertainment employees, 100 facilities employees, 50 parking employees and a senior management team of approximately 12 members. All employees have completed the Company’s customer service program which reinforces high level of service and professionalism within their respective areas.

Management believes that its employee relations are now satisfactory. Approximately 1,200 of the employees are represented by unions. Of these employees, approximately 900 are represented by the Hotel Employees and Restaurant Employees International Union Local 54, whose contract was renewed in November 2004, after a month-long strike, for a term of five years. There are several union contracts covering other union employees.

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

Regulation and Gaming Taxes and Fees

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

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

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

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

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

Restrictions on Ownership of Equity and Debt Securities. The NJCCA imposes certain restrictions upon the ownership of securities issued by a corporation that holds a casino license or is a holding, intermediary or subsidiary company of a corporate

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

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

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

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

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

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

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

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On June 30, 2003 the NJCCA was amended, effective July 1, 2003, to impose or increase certain taxes and fees on the Atlantic City casino industry. These taxes and fees, which were imposed in an effort to reduce the state’s budget deficit, included:

(1) a 7.5% tax on casino net profits subject to a minimum tax of $350,000 per licensee per year through June 30, 2006; (2) a 4.25% tax on rooms, food, drinks and entertainment admissions provided to customers at no cost or reduced cost; (3) a $3.00 occupied room fee; (4) an increase in the parking fee from $1.50 per car per day to $3.00 per car per day; and (5) a revision in the calculation of the 8% tax on gross gaming revenues, to eliminate the deduction for uncollectible debts.

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

The amended NJCCA requires a licensee to satisfy its investment obligation by purchasing bonds to be issued by the CRDA or by making other investments authorized by the CRDA, in an amount equal to 1.25% of a licensee’s gross revenue. If the investment obligation is not satisfied, then the licensee will be subject to an investment alternative tax of 2.5% of gross revenue. Licensees are required to make quarterly deposits with the CRDA against their current year investment obligations. RIH’s investment obligations amounted to $3.2 million for 2004, $3.0 million for 2003, and $3.3 million for 2002 and have been satisfied by deposits made with the CRDA. At December 31, 2004, RIH held $7.0 million face amount of bonds issued by the CRDA and had $7.2 million on deposit with the CRDA, the majority of which has been pledged for specific projects. The CRDA bonds issued through 2004 have interest rates ranging from 3.5% to 7.0% and have repayment terms between 20 and 50 years.

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

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

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

Item 2. Properties.

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

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

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

In conjunction with the purchase of RIH from KINA in April 2001 by CRH and RIHC, CRH obtained an option to purchase approximately 10.0 acres of real property immediately adjacent to the Resorts site and approximately 2.0 acres of real property located in the Atlantic City metropolitan area, pursuant to the Option Agreement for a total purchase price of $40.0 million. Portions of the Option Land are zoned for casino hotel use and are available for future expansion. Some of the property was leased from KINA by RIH for use as a surface parking lot under a lease agreement with terms running contemporaneous with the terms of the Option Agreement. In March 2004, the Option Land was acquired by RREH in exchange for the issuance of a $40 million note by RREH to KINA. See “Item 1-Business: Option Land”.

Other Properties. RIHC also owns land in Egg Harbor Township, New Jersey which is utilized for a warehouse operation servicing Resorts.

Mortgaged Properties. All property currently held or leased by RIHC is mortgaged for the benefit of Deutsche Bank Trust Company (formerly known as Bankers Trust Company) as collateral for RIHC’s $180.0 million aggregate principal amount of 11 1/2% First Mortgage Notes due 2009.

Item 3. Legal Proceedings.

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

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

No matters were submitted to a vote of security holders during the quarter ended December 31, 2004.

PART II

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

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

As of March 30, 2005, CRH has two holders of record of each of its class A common stock, par value $.01 per share, and class B common stock, par value $.01 per share. RIHC is a wholly owned subsidiary of CRH.

Neither CRH nor RIHC has ever paid a dividend on its common stock, nor do they anticipate paying any dividends in the foreseeable future. Certain funds received upon issuance of the First Mortgage Notes were deposited into a construction disbursement account for use in connection with construction of the New Tower. Under the terms of the Disbursement Agreement, dated March 22, 2002, funds remaining in the liquidity disbursement account after the final Test Period (as defined in the Indenture, the four fiscal quarter period ending December 31, 2004) , and upon certification by RIHC of certain conditions, would be returned to RIHC and could be distributed as a dividend to CRH. This certification was delivered by RIHC, and accordingly on January 20, 2005 the $9.7 million remaining in the liquidity disbursement account was delivered to RIHC; as of March 30, 2005, the funds have not been distributed as a dividend to CRH. The Indenture contains restrictions on the payment of dividends or other distributions by RIHC and its restricted subsidiaries. In addition, Section 1.05 of the NJCCA prohibits CRH from paying dividends to any person who is disqualified by the NJCCC.

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Item 6. Selected Financial Data.

The following table sets forth the selected financial data of CRH and its Predecessor, RIH, as of and for each of the periods indicated. The selected financial data of RIH as of December 31, 2000 and for the year then ended is derived from RIH’s financial statements, which have been audited by Arthur Andersen LLP. The selected financial data of RIH for the period from January 1, 2001 to April 24, 2001 (pre-acquisition period) are derived from RIH’s financial statements, which have been audited by Ernst & Young LLP. The selected financial data of CRH as of December 31, 2004, 2003, 2002, and 2001 and for the years ended December 31, 2004, 2003, and 2002 and for the period from April 25, 2001 to December 31, 2001 (post-acquisition period) are derived from CRH’s financial statements, which have been audited by Ernst & Young LLP.

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

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

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

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

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

Assets

Liabilities

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Equity

Net Income (loss)

Executive Overview

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

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

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

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

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Although significant improvement was reflected in the Company’s operating results beginning in the third quarter of 2000 and continuing through the end of 2002, operating results for 2003 were unfavorably impacted by many factors, most notably the disruption resulting from construction of the New Tower and the resulting loss of hotel rooms and gaming capacity during the construction. However, with the opening of the New Tower, operating results for 2004 were positively impacted. As such, management is focused on current efforts to position the Company to capitalize on that impact going forward.

Key Performance Indicators

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

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

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

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Operating Results

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

Revenues

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

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

The decrease in slot revenues in 2003 was due to a $295 million (12%) decrease in slot handle to $2.2 billion from $2.5 billion in 2002, while the 2003 net slot hold increased to 7.8% from the 2002 net slot hold of 7.5%. The decrease in slot handle was a direct result of the loss of hotel rooms, on-going construction related to the New Tower, and the impact of the openings of the Showboat’s hotel expansion in May 2003 and the Borgata in July 2003.

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

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

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

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

The decrease in food and beverage revenues in 2003 was due to a 10% decrease in restaurant covers to 1.31 million covers from 1.46 million covers in 2002 as a result of reduced volumes throughout the property, related to the construction of the New Tower.

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

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

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

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

Operating Results

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

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

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

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

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

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

Non-Operating Results

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

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

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

The increase in interest expense in 2004 is due to increased borrowings throughout the year under the equipment credit facility. The increase in interest expense in 2003 is due to a full year of interest expense following the sale of the First Mortgage Notes on March 22, 2002, offset by higher capitalized interest.

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

Income Taxes

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

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

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

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

At December 31, 2004, RIHC has a state net operating loss carryforward of approximately $144.9 million. The carryforward will expire as follows: 2005, $32.8 million; 2006, $2.4 million; 2007, $40.2 million; 2008, $20.7 million; and 2009, $48.8 million. RIHC has reported a full valuation allowance against the carryforward because it does not expect to realize the tax benefit, primarily due to the limited expiration period. However, RIHC has approximately $1.8 million of state tax credits resulting from the NJAMA which may be applied to offset future taxable income without expiration; these credits have been recorded as an asset on RIHC’s balance sheet at December 31, 2004.

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Liquidity and Capital Resources

RIHC’s cash flows consisted of the following:

Cash flows from Operating Activities

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

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

Cash Flows from Investing Activities

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

During the year ended December 31, 2003, the Company expended $53.5 million for the purchase of property and equipment, which included $41.1 million for the construction of the new hotel tower, $3.6 million of capitalized interest related to the construction of the new hotel tower, and $8.8 million for other expenditures, such as the purchase of new slot machines and related equipment, computer upgrades, the relocation of Resorts’ Asian restaurant, and other facility improvements.

During the year ended December 31, 2002, the Company expended $21.6 million for the hotel expansion and other capital improvements and replacements, including purchases of slot machines and related equipment, computer upgrades and facility improvements. Of the total, $12.5 million was expended for the construction of the new hotel tower, which includes $0.4 million of capitalized interest.

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

The CRDA agreed to reimburse certain costs associated with the hotel tower construction, totaling approximately $13.1 million through 2008. Approximately $0.8 million of these reimbursements was received by RIHC in 2004, and $9.2 million was received in 2003.

Cash Flows from Financing Activities

On March 22, 2002, RIHC sold $180.0 million aggregate principal amount of 11 ¹/2% First Mortgage Notes at a price of 97.686% yielding $175.8 million. Concurrent with the sale of the notes, CRH issued 17,295 shares of class A common stock at a cash price of $0.0475 per share and 349,992 shares of class B common stock at a price of $100 per share to its existing shareholders resulting in aggregate proceeds of approximately $35.0 million. The proceeds from the sale of the First Mortgage Notes and issuance of stock were used to retire existing debt and to finance the costs associated with the construction of the New Tower.

Other Factors Affecting Liquidity

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

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

In June 2002, RIHC entered into a Thermal Energy Services Agreement (the “Agreement”) with an energy supplier. The initial term of the Agreement is 20 years, renewable at the Companies’ option for two additional five year terms. The Agreement has three components: a monthly charge for operation and maintenance of the thermal energy facilities; a capital lease component for capital improvements whose value is estimated at $6.2 million, for which payments during 2004 were $124,900, including interest, with the total payments over the 20 year initial term estimated at $9.6 million including interest, and; a usage fee for steam and chilled water, whose usage and rate will vary by month of the year.

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

In conjunction with the option land purchase transaction, the Option Agreement between RIHC and KINA was terminated. With the termination of the Option Agreement, the lease agreement between KINA and RIH converted to a month-

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

Commitments and Contractual Obligations

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

Construction commitments represent the balance due on the contract for the construction of the New Tower. Purchase obligations represent agreements to purchase goods or services that are enforceable and legally binding on the Company.

Resorts plans to fund contractual obligations and other estimated spending through operating cash flows and available borrowings under the revolving credit facility.

Off Balance Sheet Arrangements

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

Application of Critical Accounting Policies

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

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

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Management believes that following are critical accounting estimates:

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

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

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

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

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

Adoption of Recent Accounting Pronouncements

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

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Quarterly Results of Operations

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