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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-K

          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.

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          Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (ss. 229.405 of this chapter) 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). 

          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 June 30, 2002, based upon the last sale price of such voting and non-voting common stock on that date was $0.

          The number of shares outstanding of Colony RIH Holdings, Inc.’s class A common stock, $0.01 par value, was 38,295 and the number of shares outstanding of Colony RIH Holdings, Inc.’s class B common stock, $0.01 par value, was 774,982, as of March 27, 2003.

          The number of shares outstanding of Resorts International Hotel and Casino, Inc.’s common stock, $0.01 par value, was 100 as of March 27, 2003.

          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 2003 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 fiscal year to which this Form 10-K relates.

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COLONY RIH HOLDINGS, INC.
AND
RESORTS INTERNATIONAL HOTEL AND CASINO, INC.

Annual Report on Form 10-K

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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 CRH’s (as defined in this Form 10-K) expectations or beliefs concerning future events. Statements containing expressions such as “believes,” “anticipates,” “expects,” “seeks,” “estimates,” “plans,” “intends” and similar expressions used in CRH’s press releases and periodic reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission are intended to identify forward-looking statements. All forward-looking statements involve risks and uncertainties. Although CRH believes its expectations are based upon reasonable assumptions within the bounds of its knowledge of its business and operations, there can be no assurances that actual results will not materially differ from expected results.  CRH cautions 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 CRH’s gaming licenses, increases in or new taxes imposed on gaming revenues or gaming devices, a finding of unsuitability by regulatory authorities with respect to CRH’s officers, directors or key employees, loss or retirement of key executives, adverse economic conditions in CRH’s key markets, severe and unusual weather in CRH’s key markets, 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. CRH undertakes 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. (“CRH”, or the “Company”), incorporated on March 7, 2001 as a Delaware corporation, owns 100% of the outstanding common stock of Resorts International Hotel and Casino, Inc. (“RIHC”), incorporated on October 24, 2000 as a Delaware corporation. RIHC, through its wholly-owned subsidiary, Resorts International Hotel, Inc. (“RIH”, or the “Predecessor”) a New Jersey corporation, owns and operates Resorts Atlantic City (“Resorts”), a casino hotel located in Atlantic City, New Jersey.

          RIHC, Sun International North America, Inc. (“SINA”), 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 SINA (the “Seller Note”).

          Prior to the completion of the Acquisition on April 25, 2001, neither CRH nor RIHC had conducted business other than in connection with the Purchase Agreement and the new Credit Facility.

Overview

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

          Resorts commenced operations in May 1978 as the first casino hotel opened 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 casino hotel.  Resorts is currently situated on 11.0 acres of land with approximately 310 feet of Boardwalk frontage overlooking the Atlantic Ocean.  Prior to September 2002, Resorts consisted of two hotel towers, the 15-story Ocean Tower and the nine-story Atlantic City Tower.  In September 2002, CRH decommissioned the 166-room Atlantic City Tower in anticipation of beginning construction of a 27-story hotel tower on the same site (see “The Expansion”).  In addition to the casino facilities described below, the casino hotel complex currently has 480 hotel rooms and suites, a 1,400-seat theater, 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 38,200 square feet of convention facilities, including six large meeting rooms and a 12,000 square foot ballroom.

          Resorts is situated on the Boardwalk of Atlantic City, along with eight of Atlantic City’s eleven casinos. Resorts sits at the northern end of the Boardwalk adjacent to the Trump Taj Mahal Casino Resort, which is also adjoined by the Showboat Hotel and Casino. These three properties have a total of approximately 2,500 hotel rooms and approximately 339,000 square feet of gaming space in close proximity to each other. An enclosed pedestrian bridge between Resorts and the Trump Taj Mahal Casino Resort 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 to the Taj Mahal, allowing patrons to walk under cover among all three casino hotels. The remaining eight Atlantic City casino hotels are located approximately one-half mile to one and one-half miles to the south on the Boardwalk or in the Marina District of Atlantic City.

Facilities Overview

          Gaming Floor.  Resorts has a casino of approximately 78,000 square feet, including a simulcast and pari-mutuel betting facility of approximately 13,000 square feet. As of December 31, 2002, the casino contained approximately 2,475 slot machines, and 64 table games, which included thirty-two blackjack tables, eight roulette tables, five craps tables, and other specialty games such as Caribbean Stud, Baccarat, Mini-Baccarat, Let It Ride, Three-Card Poker, Pai Gow Poker and Spanish Twenty-One.

          The configuration of the casino floor is continually monitored and the games are offered to patrons with a view towards enhancing customer service and offering the latest gaming products and technology as they are approved by the New Jersey Casino Control Commission (the “NJCCC”).  Customer trends and preferences toward newer, themed slot machines are also actively monitored; management is committed to meeting these demands with the mix of slot machines offered. Additionally, the amount and type of table games on the gaming floor will be adjusted in anticipation of seasonal changes or special events.

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          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 38,200 square feet of space. Meeting rooms range in size from 450 to 12,028 square feet. Although management believes the meeting room facilities are competitive with those offered by other operators in the market, the ability to attract convention and other large meeting traffic is constrained by the limited number and quality of hotel rooms and suites. Management believes the increase in number and improved quality of hotel rooms and suites resulting from the current hotel expansion (see “The Expansion”) will allow the Company to significantly improve its marketability to conventions, which tend to draw higher margin customers.

          Management believes the quality of its restaurants gives Resorts a significant 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 breakfast, lunch and dinner buffet.

          With a capacity to seat 1,400 patrons in approximately 18,000 square feet of space, the primary purpose of the 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 target the core customer base include Tom Jones, Aretha Franklin, Regis Philbin, Martin Short, Steve and Eydie, and The Temptations.

          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, which is connected to Resorts by an enclosed walkway, is used for patrons’ self-parking and accommodates approximately 700 vehicles. Additional adjacent properties, consisting of approximately 3.5 acres, which are owned by CRH, provide parking for approximately 300 vehicles.  In addition, the Company leases approximately 4.4 acres adjoining Resorts from SINA, which is currently used to provide additional uncovered self-parking for approximately 400 vehicles and valet parking for approximately 450 vehicles. See “Item 2. Properties.”

The Expansion

          On March 22, 2002, RIHC sold $180.0 million aggregate principal amount of 11½% First Mortgage Notes (the “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 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 will be used to finance the cost to develop, construct, and equip a new hotel tower.

          On September 4, 2002, CRH decommissioned the 166-room Atlantic City Tower in anticipation of beginning construction in November 2002 of a 27-story hotel tower on the same site, at a cost of approximately $115.5 million. The expansion will add approximately 400 hotel rooms and suites. Subject to the approval of the NJCCC, the project will also add approximately 14,000 square feet of additional gaming space and 570 slot machines. From the proceeds of the sale of the First Mortgage Notes, $89.4 million was deposited in a construction disbursement account for use in construction of the hotel tower. Additionally, the New Jersey Casino Reinvestment Development Authority (“CRDA”) will reimburse certain construction costs, in the amount of $9.8 million through 2003 and an additional $2.7 million in the aggregate from 2004 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 hotel tower.  In June 2002, RIH entered into a $20.0 million credit facility, the proceeds of which are to be used for the acquisition of furniture, fixtures and equipment.  RIHC has guaranteed the obligations of RIH under this equipment credit facility.  The Companies intend to use $15.0 million of the equipment credit facility to purchase furniture, fixtures and equipment for the new hotel tower and expanded gaming facility.  In November 2002, the Companies also entered into a $10.0 million revolving credit facility.  The hotel tower project is subject to many variables, including financing, regulatory and governmental approvals and typical delays associated with construction. No assurances can be given as to when this expansion project will be completed.

          The expansion is a key component in continuing the Company’s strategy of growing its core customer base.  Management believes that there existed a significant disparity in the quality of amenities offered by the two hotel towers, which constrained its ability to attract and retain higher-margin, mid-level slot players and mid-level table game players.  Resorts’ customers are classified 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

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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.

          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.  In contrast, the Atlantic City Tower was built in the 1960’s as a motel and consequently had smaller corridors, thinner walls and smaller bathrooms than the hotel rooms offered by the other casino hotels in the Atlantic City market.  Based on an analysis of the players which are tracked, management believes the Ocean Tower has historically generated a win per occupied room greater than twice that generated by the Atlantic City Tower.

          Management believes the completion of the opening of the new hotel tower will increase both the top-line revenues and significantly expand the operating margins for the following reasons:

          Management has assembled what it believes to be a highly qualified team to design and construct the new hotel tower, including Perini Building Company, Inc. as construction manager and contractor and the partnership of Bergman, Walls & Associates, Ltd. as the architects.

          Construction of the tower expansion is currently underway and is expected to be completed and the tower opened by the end of the second quarter of 2004.  The potential for disruption from construction as well as loss of hotel rooms and gaming floor space may have an impact on revenues during the construction period.

Business Strategy

          Resorts business strategy is to:

          Capitalize on Recent Successful Initiatives.  The current senior management team joined Resorts early in 2000 and has since significantly improved the operating performance of Resorts, primarily by marketing value driven programs to its core customer base, implementing several cost-cutting initiatives and expanding the casino floor where possible. The benefits resulting from these initiatives have begun to be realized, and are expected to continue in 2003.

          Increase Operating Leverage and Efficiencies.  The expansion is expected to improve operating efficiencies by substantially increasing the number of high quality hotel rooms and suites offered while only marginally increasing operating expenses.  Management believes the expansion will allow it to increase the average length of stay of customers and attract higher-margin, higher-level customers.

          Invest in State-of-the-Art Slot Machines.  Management is committed to offering customers the latest themed slot machines and gaming technology, believing this focus is critical to retaining mid-level slot players, who are believed to be more knowledgeable and sophisticated than players in other gaming segments.

          Develop and Expand the Core Customer Base.  Management primarily focuses on developing and expanding the mid- to high-level slot customer base, with a secondary focus on the mid- to high-level table game customer base.  Bus promotion strategy is continually refined to target only the most profitable bus markets.  Management believes that its recent success is the result of marketing initiatives focused on building player loyalty through more efficient use of player information, and further believes the primary means of attracting new players will be its ability to offer high quality hotel rooms and suites.

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          Focus on Customer Service.  The importance of creating a culture focused on customer service is continually emphasized.  Each employee is extensively trained in their respective functional area to respond immediately to customer needs.  Employee compensation at all levels is performance-based, with customer satisfaction being a key basis of evaluation.  Management believes this promotes an environment in which all employees feel a sense of commitment to customer service.

Marketing Overview

          Resorts’ marketing programs target middle- and higher-income customers who have the propensity to gamble. The customer database identifies and targets 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 is promoted through radio, outdoor and print advertising and direct mailings. The vast majority of future marketing efforts will seek to increase Resorts’ market share of drive-in slot players. Management believes drive-in players tend to be higher-income slot customers than customers who travel by bus and tend to spend more of their time in the casino where they are staying.

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

Atlantic City Market

          Atlantic City’s strategic location, combined with its core demographics and steady market growth, makes it a compelling 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.

          The Atlantic City market has demonstrated continued and steady growth, despite several recessions and the recent proliferation of new gaming jurisdictions, including Delaware and Connecticut. Compound annual growth in total gaming revenue has averaged 3.2% since 1990. Resorts competes directly with 10 casino hotels in Atlantic City. The Atlantic City market, as of December 31, 2002, contained approximately 11,800 hotel rooms and suites and 1.26 million square feet of gaming area, including simulcast betting and poker rooms.

          According to the South Jersey Transportation Authority, Atlantic City hosted approximately 33.2 million visitors in 2002, an increase of 2.5% over 2001, which tallied approximately 32.4 million visitors. In addition, these visitors spent over $4.3 billion in the local economy and kept the approximately 11,800 rooms in the Atlantic City market 93.4% occupied.

          The Atlantic City market has a strong “locals” component, which includes gaming patrons that generally live within 150 miles of Atlantic City.  As a result of this close vicinity, management believes the Atlantic City customer tends to frequent the casinos in the market more 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, management believes that the locals component of the Atlantic City market results in a more stable stream of cash flows 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 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 increased the number of slot machines in favor of table games on their gaming floors.  This trend is evidenced by the 16.3% increase in the number of slot machines in the Atlantic City market since 1996 as compared to the 14.7% decrease in the number of table games.  Slot revenues increased from 68.7% of total casino revenues in the Atlantic City market in 1996 to 74.3% of total casino revenues in 2002.

          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.

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          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:

          Additionally, the CRDA has undertaken an enhancement project of North Carolina Avenue, which will allow for improved traffic flow in Atlantic City. Upon completion, North Carolina Avenue will serve as the primary thoroughfare from the Marina District to the Boardwalk, thereby promoting traffic flow to Resorts’ entrance, which is located on North Carolina Avenue. The Cordish Co. commenced construction in May 2002 of an approximate 300,000 square foot retail and entertainment complex located adjacent to the Atlantic City Convention Center. The project, which is owned and being funded by the CRDA, is estimated will cost $76.0 million, and is scheduled to be completed in Summer 2003.

          Several gaming operators have announced new development or expansion projects which management believes will attract new, higher-margin customers and alleviate hotel room and suite inventory constraints.  The most significant addition to the Atlantic City market will be the completion by Boyd Gaming Corporation and MGM Grand, Inc. of a resort complex located in the Marina District, named the “Borgata,” which is expected to open in the Summer of 2003.  It is expected that the Borgata will attract a younger gaming customer and will increase the size and profitability of the overall market in the long term. In addition, management believes the Borgata will be Atlantic City’s first destination-based resort and will drive additional traffic to the Boardwalk due to the longer estimated length of stay of the Borgata’s target customers.  However, for the short term, the opening of the Borgata may impact the results of the existing Atlantic City casinos, including Resorts, as casino patrons visit the city’s newest attraction.  In addition to the construction of the Borgata, several Atlantic City properties have announced or are currently undergoing renovations, including:

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Competition

          General.  Competition in the Atlantic City market remains intense.  At the present time, there are 11 casino hotels located in Atlantic City, including Resorts, all of which compete for 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 has recently been completed or has been announced in Atlantic City, which intensifies the pressure in the Atlantic City market as discussed above.

          Competing Jurisdictions.  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.  To a minimal extent, 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.

          There are currently two Native American-owned gaming properties in Connecticut that compete directly with Atlantic City for gaming patrons, 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 the slot machine facilities located at Delaware racetracks.  As of December 31, 2002, the three facilities located in Delaware offered a total of approximately 5,430 slot machines, and reportedly generated approximately $566 million in revenues for the year 2002, an increase of 7.5% over 2001.  Delaware Governor Minner has recently proposed allowing 500 more slot machines at each of the state’s racetracks and to extend the hours that gaming is permitted.

          Legislation permitting other forms of casino gaming has been proposed, from time to time, in various states, including those bordering the state of New Jersey.  In November 2002, pro-gambling governors were elected in Pennsylvania and Maryland, where it is expected that slot machines will be proposed for those state’s race tracks.  Other nearby states, including New York and Massachusetts, are also considering various forms of gambling.  In addition, New Jersey Governor McGreevey has established a commission to study the feasibility of installing video lottery terminals (“VLT’s”), a form of slot machine, at race tracks in New Jersey.  To the extent that legalized gaming becomes more prevalent in New Jersey or other jurisdictions near Atlantic City, competition will intensify. 

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 21% of table game volume at Resorts in 2002, 25% in 2001 and 25% in 2000.  The credit play percentage of table game volume for the Atlantic City industry was 19% in 2002, 21% in 2001, and 23% in 2000.  RIH’s gaming receivables, net of allowance for uncollectible amounts, were $4.0 million as of December 31, 2002, $5.2 million as of December 31, 2001 and $6.9 million as of December 31, 2000.  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 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.

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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.

Employees

          As of December 31, 2002, Resorts had approximately 3,000 employees, including approximately 800 casino employees, 800 food and beverage employees, 200 security employees, 150 administrative support employees, 315 hotel employees, 425 marketing and entertainment employees, 100 facilities employees, 55 parking employees and a senior management team of approximately 12 members.  All of its employees have completed the Company’s customer service program during which they were taught to function on the highest level of service and professionalism within their specific segment.

          Management believes that its employee relations are satisfactory.  Approximately 1,300 of the employees are represented by unions. Of these employees, approximately 1,000 are represented by the Hotel Employees and Restaurant Employees International Union Local 54, whose contract was renewed in September 1999 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 New Jersey Casino Control Act, or 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 New Jersey Casino Control Act, (“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. Previous law only allowed for casino expansion if a casino built new hotel rooms first. In addition, the maximum casino square footage has been 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 permitted to allow 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 coextensive with that of a casino license.

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          In January 2000, the casino license of RIH was renewed for the four-year period ending January 31, 2004.

          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 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 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.

          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 has been amended 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 shall be contributed to the AC Fund. Each licensee’s share of the amount to be contributed to the AC Fund is 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.

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          The following table summarizes, for the periods shown, the fees, taxes and contributions assessed upon Resorts 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 $3.3 million for 2002, $3.0 million for 2001, and $2.6 million for 2000, and have been satisfied by deposits made with the CRDA.  At December 31, 2002, RIH held $7.4 million face amount of bonds issued by the CRDA and had $18.7 million on deposit with the CRDA, the majority of which has been pledged for specific projects. The CRDA bonds issued through 2002 have interest rates ranging from 3.5% to 7.0% and have repayment terms of 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 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 $12.4 million in reimbursement payments for approved invoices connected to 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, Resorts has received a lump sum payment of $1.5 million representing Resorts’ share of donations made to the Atlantic City Housing Fund. Resorts will utilize these funds for the 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 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 expansion project.

          Recent Proposals.  In January 2003, New Jersey Governor James McGreevey, in an effort to close a $5 billion state budget gap, proposed increasing the state’s casino revenue tax to 10% (from the current 8%), as well as imposing a 6% sales tax on complimentary rooms, food and other incentives, and a 7% occupancy tax on hotel rooms statewide.  The New Jersey casino industry has opposed these proposed tax increases, which, if approved, would have a significant detrimental effect on the operating results of Atlantic City casinos.

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, leases and/or has an option to purchase.

          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 includes 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.

          RIHC also own 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.

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          RIHC has 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”), dated April 25, 2001, for a total purchase price of $40.0 million.

          The Option Agreement has a two-year term, which term may 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 expires in April 2003.  Portions of the option property are zoned for casino hotel use and are available for future expansion. Some of the leased option property is currently utilized as a surface parking lot.  Pursuant to the terms of the lease agreement, portions of the option property are leased for a term of two years contemporaneous with the terms of the Option Agreement. The lease agreement is automatically extended for a concurrent term upon the extension of the Option Agreement.

          Other Properties.  RIHC also own land adjacent to Delaware Avenue in Atlantic City, a portion of which is utilized for a warehouse operation servicing Resorts.

          Mortgage Properties.  All property currently held or leased by RIHC, other than property which is subject to the Option Agreement, is mortgaged for the benefit of 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 for the quarter ended December 31, 2002.

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.

          Presently, 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 has one holder of record of its common stock, par value $.01 per share.

          Neither CRH nor RIHC pays or anticipates paying in the foreseeable future any dividends on their common equity.  Under the terms of the Disbursement Agreement, dated March 22, 2002, funds remaining in the liquidity disbursement account, after the financial statements for the four fiscal quarter period ending December 31, 2004 have been delivered and the required disbursements under the agreement have been made, may be distributed as a dividend to CRH.  The Indenture, dated March 22, 2002, 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.

          Since March 7, 2001, CRH’s date of incorporation, CRH has issued the following securities without registration pursuant to Section 4(2) of the Securities Act:

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          Since October 24, 2000, RIHC’s date of incorporation, RIHC has issued the following securities without registration pursuant to Section 4(2) of the Securities Act:

Item 6.   Selected Financial Data.

          The following table sets forth the selected financial data of Colony RIH Holdings, Inc. (“CRH”) and its Predecessor, Resorts International Hotel, Inc. (“RIH”) as of and for each of the periods indicated.  The selected financial data of RIH as of December 31,  2000, 1999, and 1998 and for each of the years then ended are derived from RIH’s financial statements, which have been audited by Arthur Andersen LLP.  The summary 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, 2002 and 2001 and for the year ended December 31, 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.  Certain amounts in the prior period financial statements have been reclassified to conform to their current period presentation.

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

          The financial information contained in “Results of Operations” and “Liquidity” provides a comparison of the combination of CRH and RIH in 2002 and 2001 to that of RIH in 2000.  CRH is a successor company to RIH and accordingly is on a different basis of accounting than RIH; however, management believes amounts included in revenue and certain costs and expenses are comparable.

          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.

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

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Voteco, LLC (“Voteco”), another affiliate of Colony Capital, and Nicholas L. Ribis, a Director and Vice President 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.

RIH Acquisition

          RIHC entered into a Purchase Agreement with SINA and GGRI, dated as of October 30, 2000.  Pursuant to the Purchase Agreement, RIHC acquired all of the capital stock of RIH, all of the capital stock of New Pier and certain related assets, on April 25, 2001.  The acquisition of the capital stock of RIH, the capital stock of New Pier and the assets is referred to herein as the “Acquisition.” Prior to the completion of the Acquisition on April 25, 2001, CRH and RIHC had conducted no business other than in connection with the Purchase Agreement, and the related Credit Facility.

Renovation of Resorts

          Several significant events have affected the operating results of Resorts since 1999.  Prior to RIHC’s purchase of Resorts, SINA 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.  SINA was only partially successful in regaining the customers lost during this period.  SINA 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.

Management Initiatives

          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 through the end of 2002.

The Expansion

          On September 4, 2002, CRH decommissioned the 166-room Atlantic City Tower in anticipation of beginning construction in November 2002 of a 27-story hotel tower on the same site. The expansion will add approximately 400 hotel rooms and suites. Subject to the approval of the New Jersey Casino Control Commission, the project will also add approximately 14,000 square feet of additional gaming space and 570 slot machines. In addition, the expansion plans include the relocation and expansion of the hotel lobby and porte cochere.  The expansion is budgeted to cost approximately $115.5 million and is expected to be completed by the end of the second quarter of 2004.

Results of Operations

Comparison of Years Ended December 31, 2002 and 2001

          Revenues.  Gaming revenues were $259.2 million for the year ended December 31, 2002, an increase of $18.1 million, or 7.5%, over gaming revenues for the comparable 2001 period of $241.1 million.

          Slot revenues were $186.6 million for the year ended December 31, 2002, an increase of $15.9 million, or 9.3%, over the comparable 2001 period of $170.7 million.  Slot handle (the dollar amounts wagered) for 2002 increased $318.1 million, or 14.6%, while the 2002 net slot hold declined to 7.5% from the 2001 net slot hold of 7.9%.  In 2002, Resorts benefited from the continuation of its effective marketing programs commenced in 2001 and from new marketing initiatives started in 2002.  The decline in the net slot hold results from Resorts maintaining its competitive position within the Atlantic City market.

          Table games revenues were $69.9 million for the year ended December 31, 2002, an increase of $2.5 million, or 3.7%, over the $67.4 million of revenues for the comparable 2001 period.  This resulted from an increase in the table

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games hold to 16.2% for the year ended December 31, 2002, from 15.0% for the comparable 2001 period, partially offset by a decrease in table games drop (the dollar amount of chips purchased) of $17.9 million, or 4.0%, to $431.9 million for the year ended December 31, 2002 from the comparable 2001 period of $449.8 million.

          Simulcast revenues were $2.7 million for the year ended December 31, 2002, a decrease of $369,000, or 12.1%, from the comparable 2001 period mainly due to the relocation and subsequent decrease in the size of Resorts’ simulcast room in August 2002 in preparation for the commencement of the hotel expansion construction.

          Lodging revenues were $13.0 million for the year ended December 31, 2002, a decrease of $1.1 million, or 7.8%, from the comparable 2001 period.  Lodging revenues decreased due to the loss of 166 rooms from the demolition of the Atlantic City Tower in September 2002 as part of CRH’s project to develop a new, 27-story hotel tower in its place.  Overall room occupancy for 2002 increased to 91.8% compared to the 2001 occupancy of 89.0%.

          Other revenues including entertainment and miscellaneous items were $6.5 million for the year ended December 31, 2002, an increase of $796,000, or 14.0%, over the comparable 2001 period.  The increase is attributable to higher entertainment revenues due to the offering of more headliner acts targeted to our gaming patron and increased retail revenues due to Resorts moving the gift shop operations in-house in February 2002.

          Promotional allowances were $66.7 million for the year ended December 31, 2002, an increase of $6.1 million, or 10.1%, over $60.6 million for the comparable 2001 period.  The increase is due to a $6.5 million increase in cash incentives to casino customers.

          Costs and Expenses.  Casino costs and expenses were $123.6 million for the year ended December 31, 2002, an increase of $3.0 million, or 2.5%, from the comparable 2001 period.  This increase is principally attributable to an increase in promotional marketing costs.

          Lodging costs and expenses were $1.7 million for the year ended December 31, 2002, a decrease of $1.2 million, or 41.4%, from the comparable 2001 period.  The Company allocates the departmental costs of providing complimentary services to casino patrons to casino costs and expenses. For the year ended December 31, 2002, the complimentary occupancy percentage was 84.2% compared to 72.3% in 2001 resulting in a higher allocation of costs, and, therefore, lowered lodging expenses.  This decrease is also attributable to a decrease in the number of room nights sold due to the demolition of the Atlantic City Tower.

          Selling, general and administrative expenses were $36.8 million for the year ended December 31, 2002, an increase of $4.8 million, or 15.0%, from the comparable 2001 period.  This increase is a result of increased insurance, property taxes, land and other rentals, and miscellaneous expenses.

          Depreciation and amortization expenses were $10.2 million for the year ended December 31, 2002, a decrease of $577,000, or 5.4%, from the comparable 2001 period.  This decrease is due to the elimination of goodwill amortization for 2002.

          Interest expense, net of interest income, was $17.1 million for the year ended December 31, 2002, an increase of $4.3 million, or 33.6%, from the comparable 2001 period.  This increase is the result of the issuance of the First Mortgage Notes in March 2002.  At December 31, 2002, the Companies’ long-term debt was $183.0 million, compared to $88.5 million at December 31, 2001.

          The loss on extinguishment of debt 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 Credit Facility.

          Provision for income taxes was $3.2 million on income before taxes of $6.1 million for the year ended December 31, 2002, compared to $5.0 million on income before taxes of $12.8 million for the post-acquisition period of April 25, 2001 through December 31, 2001 and $0 on a loss of $4.9 million for the pre-acquisition period of January 1, 2001 through April 24, 2001.  Included in the tax expense for 2002 is a $947,000 provision for state tax for which there was no corresponding amount in the previous period.  In July 2002, the State of New Jersey passed the Business Tax Reform Act which, among other things, suspended the use of the New Jersey net operating loss carryforwards for two years as of January 1, 2002.  See the Notes to Financial Statements.

Comparison of Years Ended December 31, 2001 and 2000

          Revenues.  Gaming revenues were $241.1 million, an increase of $5.3 million, or 2.2%, over gaming revenues for the comparable 2000 period of $235.8 million.

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          Slot revenues were $170.7 million for the year ended December 31, 2001, an increase of $10.1 million, or 6.3% over the comparable 2000 period.  Slot handle for 2001 increased $246.7 million, or 12.8%, while the 2001 net slot hold declined to 7.9% from the 2000 net slot hold of 8.3%.  In 2001, RIH benefited from the continuation of its effective marketing programs commenced in 2001 and from new marketing initiatives started in 2000. The decrease in the net slot hold results from RIH maintaining its competitive position within the Atlantic City market.

          Table games revenues were $67.4 million for the year ended December 31, 2001, a decrease of $5.2 million, or 7.2%, from $72.6 million from the comparable 2000 period.  This declined resulted from a decrease in the table game hold to 15.0% for the year ended December 31, 2001, from 15.5% for the comparable 2000 period, combined with a decrease in table games drop of $17.2 million, or 3.7%, to $449.8 million for the year ended December 31, 2001 from the comparable 2000 period of $467.0 million.

          Simulcast revenues were $3.1 million for the year ended December 31, 2001, a decrease of $367,000 or 13.6%, from the comparable 2000 period.

          Lodging revenues were $14.1 million for the year ended December 31, 2001, a decrease of $2.3 million, or 14.2%, from the comparable 2000 period.  Lodging revenues declined as the average room rate decreased $11.76, or 14.6%, from the comparable 2000 period. This is attributable to management’s decision to decrease the complimentary room rate to be more competitive within the Atlantic City marketplace for preferred gaming guests. Overall room occupancy for 2001 remained flat at 89.0% compared to the 2000 period.

          Food and beverage revenues declined $1.2 million, or 4.5%, for the year ended December 31, 2001, from the comparable 2000 period.  The average guest check remained relatively constant between the periods, and the number of covers declined in the 2001 period by 74,000, or 4.8%, from the comparable 2000 period.  This decline resulted from management’s decisions to both limit days and hours of operations of certain restaurants.

          Other revenues including entertainment and miscellaneous items were $5.7 million for the year ended December 31, 2001, an increase of $700,000, or 14.4% over the comparable 2000 period.  The increase is attributable to higher entertainment revenues due to the offering of more headliner acts.

          Promotional allowances were $60.6 million for the year ended December 31, 2001, a decrease of $2.4 million, or 3.8%, from $63.0 million for the comparable 2000 period.  The decrease is due to a $5.7 million decrease in cash incentives to bus passengers partially offset by a $2.4 million increase in cash incentives to casino customers.

          Costs and Expenses.  Lodging costs and expenses were $2.9 million for the year ended December 31, 2001, a decrease of $1.3 million, or 31.0%, from the comparable 2000 period.  The Company allocates the departmental costs of providing complimentary services to casino patrons to casino costs and expenses. For the year ended December 31, 2001, the complimentary occupancy percentage was 72.3% compared to 61.1% in 2000 resulting in a higher allocation of costs, and, therefore, lowered lodging expenses.  This decrease is also attributable to a decrease in the number of room nights sold due to the demolition of the Atlantic City Tower.

          Food and beverage costs were $12.9 million for the year ended December 31, 2001, a decline of $1.8 million, or 12.2%, from the comparable 2000 period.  This decrease is caused by lower food and beverage product cost associated with reduced revenues, and operating efficiencies.

          Selling, general and administrative expenses were $32.0 million for the year ended December 31, 2001, an increase of $5.5 million, or 14.7%, from the comparable 2000 period. This increase is due to higher property rental and advertising costs.

          Depreciation and amortization expenses were $10.7 million for the year ended December 31, 2001, a decrease of $6.3 million, or 37.1%, from the comparable 2000 period.  This decrease is due to the reduction in the basis of the assets as a result of the Acquisition.

          Interest expense, net of amortization and interest income, was $12.8 million for the year ended December 31, 2001, a decrease of $10.3 million, or 44.6%, from the comparable 2000 period. This reduction is attributable to a lower level of debt as a result of the Acquisition and a reduced effective interest rate on borrowings.

Liquidity

          The Companies’ principal source of liquidity is cash flow from operations. For the year ended December 31, 2002, cash flow provided by operations approximated $27.0 million, compared to $14.7 million for the comparable 2001 period.

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          For the year ended December 31, 2002, the Companies have expended $21.6 million for the hotel expansion project and other capital improvements and replacements, such other expenditures including the purchases of slot machines and related equipment, computer upgrades, and facility improvements.   Of the total expenditures, $12.5 million was expended for construction of the new hotel tower.

          For the year ended December 31, 2001, the Company expended $12.8 million in capital expenditures, which included $5.6 million for the conversion of a closed nightclub into a slot parlor with 257 slot machines, additional slot machines to maintain a current product offering, normal property maintenance, and pre-development costs for the new hotel tower.

          For the year ended December 31, 2000, the Company invested $11.7 million in capital expenditures, which included $3.5 million for the construction of a nine-bay bus transportation center, as well as the purchase of approximately 280 slot machines, computer equipment, and upgrades to key systems.

          On March 22, 2002, RIHC sold $180.0 million aggregate principal amount of 11½% 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 and 349,992 shares of class B common stock at a price of $100 to its existing shareholders for a 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 will be used to finance the cost to develop, construct, and equip a new hotel tower.  As of December 31, 2002, $80.0 million of the proceeds is deposited in a construction disbursement account for this purpose.  Additionally, $10.0 million of the proceeds from the issuance of stock has been deposited in a liquidity disbursement account to be used for working capital in the event RIHC’s Adjusted Consolidated EBITDA, as defined in the First Mortgage Notes Indenture, for any four fiscal quarters ending on or prior to December 31, 2004, is less than $28.0 million.  At the end of the measurement period referred to in the previous sentence, RIHC will be permitted to secure a release of any unutilized amount in the liquidity disbursement account for use in its business or to fund a dividend to CRH to return such unutilized amount to CRH’s stockholders.  Due to the change in debt following the sale of First Mortgage Notes, CRH’s long-term debt increased from $88.5 million at December 31, 2001 to $183.0 million at December 31, 2002.  As a result of this change, annual interest expense was approximately $19.1 million in 2002, compared to the $13.9 million in 2001.

          CRH’s cash and cash equivalents at December 31, 2002, were $33.0 million as compared to $15.4 million at December 31, 2001.   Additionally, at December 31, 2002, CRH had a restricted cash balance of $90 million, which includes $10.0 million in the liquidity disbursement account, and is included in other assets on the Company’s Consolidated Balance Sheet.  A portion of the unrestricted cash and cash equivalents is required for the day-to-day operations of Resorts Atlantic City, which, as of December 31, 2002, included approximately $16.5 million of currency and coin on-hand for casino and hotel operations.  This amount varies by days of the week, holidays and seasons. 

          In June 2002, RIH entered into a $20.0 million credit facility, the proceeds of which are to be used for the acquisition of furniture, fixtures, and equipment.  RIHC has guaranteed the obligations of RIH under this equipment credit facility.  The Companies intend to use $15.0 million of the equipment credit facility to purchase furniture, fixtures, and equipment for the new hotel tower and the expanded gaming facility.  In November 2002, the Companies also entered into a $10.0 million revolving credit facility.  Neither the $20.0 million credit facility nor the $10.0 million revolving credit facility had been used as of December 31, 2002.

          The CRDA will reimburse certain construction expenses for the construction of the new hotel tower in the amount of $9.8 million through 2003. Additionally, Resorts will receive an additional $2.7 million payable at the rate of approximately $500,000 per year for the years 2004 through 2008 for reimbursements of expenses relating to the construction of the hotel tower. The CRDA will make an additional $1.5 million available for expenses incurred in connection with public improvements relating to the construction of the new hotel tower. In March 2002, Resorts received a lump sum payment of $1.5 million representing Resorts’ share of donations made to the Atlantic City Housing Fund. Resorts will utilize these funds for the expansion project as they are not restricted to housing use. See “Business--Regulation and Gaming Taxes and Fees--CRDA Funds.”

          In June 2002, the Companies entered into a Thermal Energy Services Agreement (the “Agreement”).  The initial term of the Agreement is 20 years, renewable at the Companies’ option for two additional five year terms.  The Agreement has three components: a monthly charge for operation and maintenance of the thermal energy facilities; a capital lease component for capital improvements whose value is estimated at $6.5 million, for which payments during 2002 were $126,000, including interest, with the total payments over the 20 year initial term estimated at $9.6 million including interest, and; a usage fee for steam and chilled water, whose usage and rate will vary by month of the year.

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          Management believes that its existing cash and projected operating cash flows will be sufficient to meet the cash requirements of its existing operations, including maintenance, capital improvements and debt service requirements, for the next twelve months and the foreseeable future thereafter. Management currently believes that cash requirements of its existing operations beyond the next twelve months and the foreseeable future thereafter will consist of costs relating to construction of the hotel tower, debt service requirements and capital improvements and replacements in the ordinary course of business, which management expects to be met by the proceeds of the First Mortgage Notes, existing cash, cash flows from operations, the furniture, fixtures and equipment facility and its new revolving credit facility.

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

          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 Company’s collection policy, and the judgment and expertise of management. 

          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.

          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.

          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 Company’s 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

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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 Company’s assets periodically.

Quarterly Results of Operations

          The following table sets forth certain unaudited financial information on a quarterly basis:

          During the 3rd quarter of 2002, the Company reclassified certain costs (primarily coin incentives to gaming patrons) from costs and expenses to promotional allowances to be consistent with prevailing industry practice.  Such amounts totaled $4.9 million and $4.3 million for the three months ended June 30, 2002 and March 31, 2002, and $3.8 million, $4.4 million, $3.8 million, $1.5 million, and $4.8 million for the three months ended December 31, 2001, September 30, 2001, the period from April 25, 2001 to June 30, 2001, the period from April 1, 2001 to April 24, 2001, and the three months ended March 31, 2001, respectively.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk.

          The Company has exposure to interest rate risk from its short-term and long-term debt. In general, the company’s long-term debt is fixed rate.  See Note 8 of the Notes to the Consolidated Financial Statements of CRH for components of the Company’s long-term debt. The Company believes that the market risk from changes in interest rates would not be material to the fair value of these financial instruments, or the related cash flows, or future results of operations.

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Item 8.   Financial Statements and Supplementary Data.

INDEX TO FINANCIAL STATEMENTS

          All other schedules called for under Regulation S-X are not submitted because they are not applicable, not required, or because the required information is not material, or is included in the financial statements or notes thereto.

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Report of Independent Auditors

Board of Directors
Colony RIH Holdings, Inc.

We have audited the accompanying consolidated balance sheets of Colony RIH Holdings, Inc. (“the Company”) as of December 31, 2002 and 2001, and the related consolidated statements of operations, shareholders’ equity, and cash flows for the year ended December 31, 2002 and for the period from April 25, 2001 to December 31, 2001 (post-acquisition period) and the consolidated statements of operations, shareholders’ equity, and cash flows of Resorts International Hotel, Inc. (Predecessor) for the period from January 1, 2001 to April 24, 2001 (pre-acquisition period). Our audits also included the financial statement schedule listed in the Index to Financial Statements. These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. The financial statements and schedule of Resorts International Hotel, Inc. (Predecessor) for the year ended December 31, 2000 were audited by other auditors who have ceased operations. Those auditors expressed an unqualified opinion on those financial statements and schedule in their report dated January 19, 2001.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Colony RIH Holdings, Inc. at December 31, 2002 and 2001, and the consolidated results of its operations and its cash flows for the year ended December 31, 2002 and for the post-acquisition period from April 25, 2001 to December 31, 2001 in conformity with accounting principles generally accepted in the United States. Further, in our opinion, the aforementioned Predecessor consolidated financial statements present fairly, in all material respects, the consolidated results of operations and cash flows of Resorts International Hotel, Inc. for the pre-acquisition period from January 1, 2001 to April 24, 2001 in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related 2002 and 2001 financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

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THE FOLLOWING REPORT OF ARTHUR ANDERSEN LLP IS A COPY OF A PREVIOUSLY ISSUED REPORT THAT HAS NOT BEEN REISSUED BY ARTHUR ANDERSEN LLP.  THE REPORT OF ERNST & YOUNG LLP RELATES TO THE YEAR ENDED DECEMBER 31, 2002 and 2001.  CONSEQUENTLY, THE FOLLOWING REPORT OF ARTHUR ANDERSEN LLP, WHICH IS THE MOST RECENTLY ISSUED REPORT, RELATES TO THE YEAR ENDED DECEMBER 31, 2000.

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of
Resorts International Hotel, Inc.

          We have audited the accompanying balance sheet of Resorts International Hotel, Inc. (a New Jersey corporation) as of December 31, 2000 and the related statements of operations, shareholder’s equity and cash flows for each of the two years in the period ended December 31, 2000.  These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

          We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

          In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Resorts International Hotel, Inc. as of December 31, 2000 and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2000 in conformity with accounting principles generally accepted in the United States.

          Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule listed in the index to the financial statements is presented for the purpose of complying with the Securities and Exchange Commission’s rules and is not part of the basic financial statements, and in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.

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COLONY RIH HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)

See accompanying notes

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COLONY RIH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)

See accompanying notes.

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COLONY RIH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)