10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2006

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File Number 000-50635

COLONY RESORTS LVH ACQUISITIONS, LLC

(Exact Name of Registrant as Specified in its Charter)

NEVADA	41-2120123
(State or Other Jurisdiction of Incorporation)	(I.R.S. Employer Identification Number)
3000 PARADISE ROAD LAS VEGAS, NEVADA	89109
(Address of Principal Executive Offices)	(Zip Code)

702-732-5111

(Registrant’s Telephone Number, Including Area Code)

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

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer  ¨    Accelerated Filer  ¨    Non-accelerated filer  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)    Yes  ¨    No  x

As of April 30, 2006, there were 0.90 Class A Membership Units held by Colony Resorts LVH Coinvestment Voteco, LLC and 0.60 Class A Membership Units held by Colony Resorts LVH Voteco, LLC.

COLONY RESORTS LVH ACQUISITIONS, LLC

FORM 10-Q

TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS
COLONY RESORTS LVH ACQUISITIONS, LLC
	UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS:
	UNAUDITED CONDENSED BALANCE SHEETS	1
	UNAUDITED CONDENSED STATEMENTS OF OPERATIONS	2
	UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS	3
	NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS	4
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	12
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK	18
ITEM 4.	CONTROLS AND PROCEDURES	18
PART II.	OTHER INFORMATION	20
ITEM 6.	EXHIBITS	20
SIGNATURES		22

COLONY RESORTS LVH ACQUISITIONS, LLC

UNAUDITED CONDENSED BALANCE SHEETS

(in thousands)

	March 31, 2006		December 31, 2005
Assets
CURRENT ASSETS:
Cash and equivalents	$	20,002	$	17,218
Restricted cash		1,669		2,278
Accounts receivable, net		17,749		18,415
Due from affiliates		867		2,370
Inventories		2,906		3,099
Prepaid expenses and other current assets		6,055		5,285
Total current assets		49,248		48,665
PROPERTY AND EQUIPMENT, NET		315,746		312,967
RESTRICTED CASH		1,437		5,471
OTHER ASSETS, NET		1,167		2,596
Total assets	$	367,598	$	369,699
Liabilities and Members’ Equity
CURRENT LIABILITIES:
Accounts payable	$	6,629	$	12,849
Accrued expenses		33,570		36,204
Total current liabilities		40,199		49,053
TERM LOAN		200,000		200,000
Total liabilities		240,199		249,053
COMMITMENTS AND CONTINGENCIES
REDEEMABLE MEMBERS’ EQUITY		60,000		60,000
MEMBERS’ EQUITY		67,399		60,646
Total liabilities and members’ equity	$	367,598	$	369,699

See notes to the unaudited condensed financial statements.

- 1 -

COLONY RESORTS LVH ACQUISITIONS, LLC

UNAUDITED CONDENSED STATEMENTS OF OPERATIONS

(in thousands, except unit data)

	For the three months ended March 31, 2006			For the three months ended March 31, 2005
Revenues:
Casino	$	27,589		$	26,162
Rooms		29,542			28,048
Food and beverage		18,732			17,435
Other revenue		7,611			6,714
Total revenue		83,474			78,359
Less: promotional allowances		(6,689	)		(5,702	)
Net revenues		76,785			72,657
Expenses:
Casino		18,723			18,444
Rooms		7,832			7,291
Food and beverage		13,863			13,582
Other expense		3,770			3,380
General & administrative		17,103			16,997
Depreciation		3,054			2,373
Total Expense		64,345			62,067
Operating income		12,440			10,590
Interest expense		5,824			4,933
Net income	$	6,616		$	5,657
Net income allocation
Allocable to Class A	$	—		$	—
Allocable to Class B	$	6,616		$	5,657
Basic weighted average Class A membership units outstanding		1.50			1.50
Basic weighted average Class B membership units outstanding		1,500,000.00			1,500,000.00
Diluted weighted average membership units outstanding		1,500,001.50			1,500,001.50
Net income per Class A membership unit-basic	$	4.41		$	3.77
Net income per Class B membership unit-basic	$	4.41		$	3.77
Per membership unit-diluted	$	4.41		$	3.77

See notes to the unaudited condensed financial statements.

- 2 -

COLONY RESORTS LVH ACQUISITIONS, LLC

UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS

(in thousands)

	For the three months ended March 31, 2006			For the three months ended March 31, 2005
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	6,616		$	5,657
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation		3,054			2,373
Provision for bad debts		322			383
Interest rate cap		(13	)		(24	)
Amortization of deferred financing costs		560			557
Change in Working Capital Components:
Accounts receivable		344			(2,770	)
Inventories, prepaid expenses and other assets		306			295
Accounts payable and accrued expenses		(8,854	)		1,674
Due from affiliates		1,503			2,038
Stock – based employee compensation		137			—
Net cash provided by (used in) operating activities		3,975			10,183
CASH FLOWS USED IN INVESTING ACTIVITIES:
Additions to property and equipment		(5,834	)		(2,944	)
Net cash used in investing activities		(5,834	)		(2,944	)
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Restricted cash		4,643			(483	)
Net cash provided by (used in) financing activities		4,643			(483	)
Increase in cash and equivalents		2,784			6,756
Cash and equivalents at beginning of period		17,218			12,888
Cash and equivalents at end of period	$	20,002		$	19,644
Supplemental Cash Flow Information:
Cash paid for interest, net of capitalized interest	$	5,309		$	4,414

See notes to the unaudited condensed financial statements.

- 3 -

COLONY RESORTS LVH ACQUISITIONS, LLC

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

1. ORGANIZATION AND BASIS OF PRESENTATION

Colony Resorts LVH Acquisitions, LLC, a Nevada limited liability company (the “Company”), was formed at the direction of Colony Investors VI, L.P., a Delaware limited partnership (“Colony VI”) and an affiliate of Colony Capital, LLC (“Colony Capital”), under the laws of the State of Nevada on December 18, 2003. Pursuant to the Company’s Amended and Restated Operating Agreement, dated June 18, 2004 (the “Operating Agreement”), the Company will continue in existence perpetually. Members of the Company, however, may terminate the Operating Agreement and dissolve the Company at any time.

The Company’s members consist of Colony Resorts LVH Holdings, LLC (“Holdings”), which is a wholly owned subsidiary of Colony VI, a discrete investment fund managed by an affiliate of Colony Capital, Colony Resorts LVH Co-Investment Partners, L.P. (“Co-Investment Partners”), Colony Resorts LVH Coinvestment Voteco, LLC (“Coinvestment Voteco”) and Colony Resorts LVH Voteco, LLC (“Voteco”), each of which purchased Class A or Class B Membership Units on June 18, 2004 in connection with the equity financing described in Note 8.

Prior to June 18, 2004, the Company had conducted no business other than in connection with the execution of the Purchase and Sale Agreement (as defined below), relating to the acquisition of substantially all of the assets and certain liabilities of LVH Corporation, a Nevada corporation (“LVH”) (the “Acquisition”). LVH is a wholly-owned subsidiary of Harrah’s Entertainment, Inc., formerly Caesars Entertainment, Inc., that prior to the Acquisition operated the Las Vegas Hilton, a casino resort located in Las Vegas, Nevada (the “Hotel” or the “Property”). Commencing June 18, 2004, the revenues and expenses of the Property are included in the Company’s statement of operations.

Interim Financial Statements

The accompanying condensed financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. The Company believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary for the fair presentation of the financial position, results of operation and cash flows for the interim periods have been made. The results for the three-month period ended March 31, 2006, are not necessarily indicative of results to be expected for the full fiscal year.

These financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2005, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2005 (filed March 31, 2006 (File Number 0-50635)) (the “Form 10K”).

Use of Estimates

The preparation of the unaudited condensed financial statements in accordance with accounting principles generally accepted in the United States of America requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, including related disclosure of contingent assets and liabilities. On an on-going basis, management evaluates those estimates, including those related to asset impairments, accruals for slot marketing points, compensation and related benefits, revenue recognition, allowance for doubtful accounts, contingencies and litigation. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents

Cash and cash equivalents consist of cash and short-term investments with original maturities not in excess of 90 days.

- 4 -

COLONY RESORTS LVH ACQUISITIONS, LLC

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS—(Continued)

Restricted Cash

The Company has on deposit $3.1 million in various escrow accounts as of March 31, 2006, which are held for insurance and property taxes.

Accounts Receivable

Accounts Receivable are due within one year and are recorded net of amounts estimated to be uncollectible. The Company allows for an estimated amount of receivables that may not be collected. The Company estimates an allowance for doubtful accounts using a specific formula applied to aged receivables as well as a specific review of large balances. Historical experience is considered, as are customer relationships, in determining specific reserves.

Concentrations of Credit Risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of short-term investments and receivables. The short-term investments (including restricted cash equivalents) are placed with high credit quality financial institutions, which invest such cash primarily in money market funds.

Inventories

Inventories are stated at the lower of cost or market. Cost is determined by the first-in, first-out and specific identification methods. Inventories consist primarily of food, beverage and retail products.

Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization are provided on a straight-line basis over the estimated useful lives of the assets as follows:

Building and improvements	15 to 40 Years
Furniture, fixtures and equipment	3 to 15 Years

Maintenance, repairs and renewals that neither materially add to the value of the property nor appreciably prolong its life are charged to expense as incurred. Gains or losses on disposition of property and equipment are included in the statements of operations.

Management evaluates property and equipment and other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets exceeds their fair value in accordance with Financial Accounting Standards Board’s Statement of Financial Accounting Standards No. 144 “Accounting for the Impairment or Disposal of Long Lived Assets.” Impairment losses are recognized when estimated future undiscounted cash flows expected to result from the use of the assets and their eventual disposition are less than their carrying amounts.

Capitalized Interest

The interest cost associated with major construction projects is capitalized and is included in the cost of the project. When no debt is incurred specifically for a project, interest is capitalized on amounts expended on the project using the weighted-average cost of the Company’s outstanding borrowings. Capitalization of interest ceases when the project is substantially complete or development activity is suspended for more than a brief period. During the three months ended March 31, 2006, the Company capitalized approximately $42,000 of interest. During the three months ended March 31, 2005 there were no significant construction projects and thus no interest was capitalized during the period.

Deferred Financing Costs

Deferred financing costs of $5.2 million relate to the Company’s financing of the Acquisition. The

- 5 -

COLONY RESORTS LVH ACQUISITIONS, LLC

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS—(Continued)

Company has commenced amortization of these costs since the closing of the Acquisition using the effective interest rate method. Amortization expense was $560,000 and was $557,000 for the three months ended March 31, 2006 and 2005, respectively.

Casino Revenue and Promotional Allowances

Casino revenue is the aggregate of gaming wins and losses. In accordance with industry practice, the retail value of accommodations, food and beverage, and other services furnished to hotel/casino guests without charge is included in gross revenue and then deducted as promotional allowances.

Hotel, Food and Beverage Revenues

Hotel revenue recognition criteria are generally met at the time of occupancy. Food and beverage revenue recognition criteria are generally met at the time of service. Deposits for future hotel occupancy or food and beverage services contracts are recorded as deferred income until revenue recognition criteria are met. Cancellation fees for hotel and food and beverage services are recognized upon cancellation by the customer as defined by a written contract entered into with the customer.

Patron Club Promotion and Progressive Jackpot Payouts

The Company has established a promotional club to encourage repeat business from frequent and active slot machine customers and table games patrons. Members earn points based on gaming activity and such points can be redeemed for cash. The Company accrues for club points as a reduction to revenue based upon the estimates for expected redemptions.

The Company maintains a number of progressive slot machines and table games. As wagers are made on the respective progressive games, the amount available to win (to be paid out when the appropriate jackpots are hit) increases. The Company has recorded the progressive jackpots as a liability with a corresponding charge against casino revenue.

Advertising Costs

Costs for advertising are expensed as incurred, except costs for direct-response advertising, which are capitalized and amortized over the period of the related program. Direct-response advertising consists primarily of mailing costs associated with the direct-mail programs. Advertising costs that were expensed during the three months ended March 31, 2006 were $1.8 million and were $647,000 for the three months ended March 31, 2005.

Accounting for Derivative Instruments and Hedging Activities

The Company uses an interest rate cap to assist in managing interest incurred on its Term Loan. The difference between amounts received and amounts paid under such agreement, as well as any costs or fees, is recorded as a reduction of, or addition to, interest expense as incurred over the life of the interest rate cap.

The Company has a policy aimed at managing interest rate risk associated with its current and anticipated future borrowings. This policy enables the Company to use any combination of interest rate swaps, futures, options, cap and similar instruments. To the extent the Company employs such financial instruments pursuant to this policy, and the instruments qualify for hedge accounting, they are accounted for as hedging instruments.

In order to qualify for hedge accounting, the underlying hedged item must expose the Company to risks associated with market fluctuations and the financial instrument used must be designated as a hedge and must reduce the Company’s exposure to market fluctuation throughout the hedge period. If these criteria are not met, a change in the market value of the financial instrument is recognized as a gain or loss in the period of change. Otherwise, gains and losses are not recognized except to the extent that the financial instrument is disposed of prior to maturity. Net interest paid or received pursuant to the financial instrument is included as interest expense in the period. The Company has not designated its interest rate cap as a hedge; therefore, changes in the market value of the interest rate cap are recognized as gains or losses in the period of the change. During the quarters ended March 31, 2006 and 2005, the Company recognized gains of approximately $13,000 and $24,000, respectively.

- 6 -

COLONY RESORTS LVH ACQUISITIONS, LLC

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS—(Continued)

Income Taxes

The Company is a limited liability company and will be treated as a partnership for federal income tax purposes. Accordingly, no provision for federal income taxes was recorded because the taxable income or loss is included in the income tax return of the members.

Income (loss) Per Membership Unit

The Company’s income (loss) per membership unit was calculated using the two-class method. Under the two-class method, income (loss) is allocated to each class of membership unit based on the respective members’ participation rights in undistributed income.

The diluted income per membership unit includes the effect of the assumed conversion of the Class B Membership Units into Class A Membership Units at a 1:1 ratio. At March 31, 2006 and 2005, the 0.167 options to purchase Class A Membership Units and 166,667 options to purchase Class B Membership Units have been excluded in the diluted income per membership unit calculation, because the assumed conversion of these options would be anti-dilutive.

Recent Accounting Pronouncements

On December 16, 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (SFAS No. 123(R)”), which is a revision to SFAS No. 123, “Accounting for Stock-Based Compensation”. SFAS No. 123(R) supersedes Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB No. 25”) and amends SFAS No. 95, “Statement of Cash Flows”. Among other items, SFAS No. 123(R) requires the recognition of compensation expense in an amount equal to the fair value of share-based payments, including employee stock options and restricted stock, granted to employees.

The Company adopted SFAS No. 123(R) on January 1, 2006 using the “modified prospective” method, in which compensation cost is recognized beginning with the effective date (a) based on the requirements of SFAS No. 123(R) for all share-based payments granted after the effective date and (b) based on the requirements of SFAS No. 123 for all awards granted to employees prior to the effective date of SFAS No. 123(R) that remain unvested on the effective date. The impact of adopting SFAS No. 123(R) is discussed in Footnote 9 “Accounting for Stock-Based Compensation”.

SFAS No. 123(R) also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow. This requirement does not affect the Company since the entity is a limited liability company and the provision or benefit of federal income taxes is included in the income tax return of the members.

In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections-a replacement of APB Opinion No. 20 and FASB Statement No. 3”, which changes the requirements for the accounting for and reporting of a change in accounting principle. SFAS No. 154 applies to all voluntary changes in accounting principle, as well as to changes required by an accounting pronouncement if the pronouncement does not include specific transition provisions. This statement requires retrospective application to prior periods’ financial statements of changes in accounting principle. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The adoption on January 1, 2006 of SFAS No. 154 did not have a material effect on the Company’s financial position, results of operations or cash flows.

3. ACCOUNTS RECEIVABLE

Components of accounts receivable were as follows (in thousands):

	March 31, 2006			December 31, 2005
Casino	$	12,185		$	11,294
Hotel		7,218			8,920
Other		976			577
		20,379			20,791
Less: Allowance for doubtful accounts and discounts		(2,630	)		(2,376	)
	$	17,749		$	18,415

- 7 -

COLONY RESORTS LVH ACQUISITIONS, LLC

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS—(Continued)

The Company extends credit to approved casino customers following background checks and investigations of creditworthiness.

An estimated allowance for doubtful accounts and discounts is maintained to reduce the Company’s receivables to their estimated net realizable value. Although management believes the allowance is adequate, it is possible that the estimated amount of cash collections with respect to the casino accounts receivable could change.

4. PROPERTY AND EQUIPMENT, NET

Components of property and equipment were as follows (in thousands):

	March 31, 2006			December 31, 2005
Land and land improvements	$	153,982		$	153,982
Building and improvements		124,549			109,425
Furniture, fixtures and equipment		52,792			50,660
Construction in progress		1,708			13,130
		333,031			327,197
Less: accumulated depreciation		(17,285	)		(14,230	)
	$	315,746		$	312,967

5. ACCRUED EXPENSES

Accrued expenses consist of the following (in thousands):

	March 31, 2006		December 31, 2005
Customer deposits	$	5,411	$	5,255
Payroll and related		11,017		11,869
Taxes and licenses		3,100		2,274
Casino		8,353		11,174
License fees		261		186
Interest		969		934
Other		4,459		4,512
	$	33,570	$	36,204

- 8 -

COLONY RESORTS LVH ACQUISITIONS, LLC

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS—(Continued)

6. TERM LOAN

On June 18, 2004 in connection with the consummation of the Acquisition, the Company entered into the Goldman Term Loan (the “Term Loan”). The Term Loan is for a principal amount of $200 million and is for an initial term of two (2) years with two one-year extensions. The initial maturity date of the Term Loan is July 11, 2006. The Company intends to extend or refinance the Term Loan upon maturity. Interest on the Term Loan accrues at a rate of 6.50% plus the greater of (i) one-month LIBOR or (ii) 1.5%. The Term Loan provides for no amortization during the term. The Term Loan is secured by a first priority deed of trust on the Property.

Pursuant to the terms of the Term Loan, the Company purchased an interest rate cap at the funding of the Term Loan for $769,000 with LIBOR strike rate of 5% for the first two years of the Term Loan and an interest rate cap with a LIBOR strike rate of 6% for any extension periods. The interest rate cap was valued at $34,000 and $21,000 at March 31, 2006 and December 31, 2005, respectively. The interest rate cap is included within other assets on the balance sheet. As a result of the change in value of the interest rate cap, the Company recorded a corresponding mark to market adjustment of $13,000 which reduced interest expense in the accompanying unaudited condensed statement of operations.

7. REDEEMABLE MEMBERS’ EQUITY

In connection with the closing of the Acquisition, the Company, Voteco, Coinvestment Voteco, Co-Investment Partners and Holdings entered into a Sale Right Agreement, dated June 18, 2004 (the “Sale Right Agreement”). Pursuant to the terms of Co-Investment Partners’ partnership agreement, at any time after May 23, 2008, Whitehall (a limited partner in Co-Investment Partners and an affiliate of Goldman Sachs & Co. and Archon Financial, L.P., the lender under the Goldman Term Loan) has the right to request that Co-Investment Partners purchase all of Whitehall’s interest in Co-Investment Partners at a purchase price determined by Whitehall. Pursuant to the Sale Right Agreement, upon receiving notice from Whitehall that it has exercised the sale right above, the Company must, within forty-five days elect to either (i) purchase Whitehall’s interest in Co-investment Partners or (ii) sell the Company in its entirety. If the Company elects not to purchase Whitehall’s interest, it must appoint Goldman Sachs & Co. as its sole and exclusive agent for a period of one year to seek to sell the Company at a price extrapolated from the price Whitehall established for its interest in Co-Investment Partners. In addition, on June 18, 2010, if the Company has not been sold pursuant to sale right above or otherwise, the Company shall appoint Goldman Sachs & Co. as its sole agent to seek to sell the Company at the best price obtainable. For purposes of the statement presentation and the diluted membership unit calculation, it is assumed that the redemption of Whitehall’s interest or sale of the property will be consummated at fair value.

8. RELATED PARTY TRANSACTIONS

In 2004, the Company advanced $2.1 million to Resorts International Holdings, Inc. (“RIH”), a company affiliated through common ownership, in connection with the acquisition by RIH of four gaming properties. The advance was fully repaid in February 2005.

The Company has billed RIH for certain costs and expenses incurred on its behalf. All amounts billed have been paid by RIH as of March 31, 2006 except for $515,000 which is recorded in due from affiliates as of March 31, 2006.

The Company entered into a Services Agreement with Resorts International Hotel, Inc. (“Resorts”) an affiliate of the Company (through common ownership) on June 18, 2004 (the “Services Agreement”). The Company entered into an Amended and Restated Joint Services Agreement (the “Joint Services Agreement”) and Amended and Restated Joint Marketing Agreement (the “Marketing Agreement”) with Resorts and Resorts International Holdings, LLC, an affiliate of the Company (through common ownership) on April 26, 2005. The Services Agreement and Joint Services Agreement provide for an initial term of three years with automatic one year renewal periods. The Marketing Agreement provides for an initial term of ten years with automatic one year renewal periods. The agreements provide that the Company and Resorts will cooperatively develop and implement joint services and marketing programs.

During the three month period ended March 31, 2006, the Company provided and/or received services from these affiliated companies. The total net value of services received from the affiliated companies was approximately $1.0 million for the quarter ended March 31, 2006. No services were received from affiliated companies for the quarter ended March 31, 2005.

- 9 -

COLONY RESORTS LVH ACQUISITIONS, LLC

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS—(Continued)

9. 2004 INCENTIVE PLAN

In connection with the closing of the Acquisition, the Company’s board and members approved the Company’s 2004 Incentive Plan (the “Plan”). As of June 18, 2004, the Company had a total of 0.167 Class A Units and 166,667 Class B units reserved for issuance under the Plan.

Subsequent to the closing of the Acquisition, the Company granted 0.167 options of Class A Units and 166,667 options of Class B Units to certain executives, in accordance with the Plan. The options have a 10 year life, vest over three to five years and have an exercise price of $100 per unit for both classes which was equal to, or greater than, the fair market value of the membership units at the date of grant.

Effective January 1, 2006, the Company adopted the provisions of Statement of Financial Accounting Standards No. 123 (revised 2004), “Shared-Based Payment” (SFAS No. 123(R)”) requiring that compensation cost relating to share-based payment transactions be recognized in the financial statements. The cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the equity award). Prior to January 1, 2006, the Company accounted for share-based compensation to employees in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB No. 25”), and related interpretations. The Company adopted SFAS No. 123(R) using the modified prospective method and accordingly, financial statement amounts for prior periods presented in the Form 10-Q have not been restated to reflect the fair value method of recognizing compensation cost relating to these options.

There was approximately $137,000 of compensation cost related to these options recognized in general and administrative expenses in the three months ended March 31, 2006 based on the implementation of FAS 123(R).

The fair value of the option awards is estimated on the date of grant using an appraisal of the value of the Company and its membership units. No additional grants have been awarded subsequent to the Acquisition date.

As a result of the difference in the option agreements, differing valuing models were used to value the options as of the grant date. The estimated fair value of 15,000 options granted was $17.08 per membership unit and was computed using the binominal lattice value method with the following weighted average assumptions: risk free interest rate of 2.9%, no expected dividend yields and expected lives of 24 months. The estimated fair value of the 41,668 options at the date of grant was $27.73 per membership unit and was computed using the Black-Scholes-Merton option pricing model with the following weighted average assumptions: risk free interest rate of 3.24%; no expected dividend yields; and expected lives of 36 months. The following table sets forth the assumptions used to determine compensation cost for these options consistent with the requirements of SFAS No. 123(R).

	Three Months Ended March 31, 2006
Weighted-average assumptions:
Model	Binomial Lattice		Black-Scholes
Number of options	15,000 options		41,668 options
Membership unit price	$100		$100
Exercise unit price	N/A		$100
Dividend yield	N/A		0	%
Volatility	40	%	40	%
Risk-free rate	2.9	%	3.24	%
Valuation Date	June 19, 2004		June 19, 2004
Expiration Date	June 19, 2006		June 19, 2007
Term	24 months		36 months
Up movement	1.20		N/A
Down movement	0.89		N/A
Risk Neutral Probability	48.1	%	N/A

Under APB No. 25 there was no compensation cost recognized for these options and thus the financials for the three months ended March 31, 2005 include no such costs. The following table sets forth pro forma information as if compensation cost had been determined consistent with the requirements of SFAS No. 123.

- 10 -

COLONY RESORTS LVH ACQUISITIONS, LLC

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS—(Continued)

	Three Months Ended March 31, 2005
	(Amounts in thousands, except per share data)
	Class A Membership Units			Class B Membership Units
Net Income
As reported	$	5,657		$	5,657
Deduct: compensation expense under fair value-based method		(118	)		(118	)
Pro forma	$	5,539		$	5,539
Basic income per membership unit as reported	$	3.77		$	3.77
Stock-based compensation cost		(.07	)		(.07	)
	$	3.70		$	3.70
Diluted income per membership unit as reported	$	3.77			—
Stock-based compensation cost		(.07	)		—
	$	3.70			—

10. COMMITMENTS AND CONTINGENCIES

Letter of Credit

In 2005, the Company was required to deliver an irrevocable standby letter of credit in the amount of $1,437,000 to Zurich American Insurance Company in connection with an insurance policy issued by Zurich to the Company. The letter of credit is secured by a certificate of deposit for $1,437,000 which is included in restricted cash on the balance sheet as of March 31, 2006. The expiration date of the letter of credit is October 2006 and is automatically extended for one year from the expiration date unless the issuing bank notifies the Company sixty days prior to such expiration date that the letter of credit will not be renewed. As of March 31, 2006, there are no amounts outstanding on the letter of credit.

Litigation

The Company is not a party to any material litigation, and it is not aware of any action, suit or proceeding against it that has been threatened by any person.

11. SUBSEQUENT EVENT

On May 11, 2006, the Company entered into a new Goldman Term Loan (the “new Term Loan”). The new Term Loan is for an initial principal amount of $209 million and is for an initial term of two (2) years with three one-year extensions. The new Term Loan is subject to a $5.8 million holdback amount for deferred maintenance projects and is subject to future funding to a maximum of $250 million. Interest on the new Term Loan accrues at a rate of one month LIBOR plus 2.9%. The new Term Loan provides for no amortization during the term. The new Term Loan is secured by a first priority deed of trust on the Property.

Pursuant to the terms of the Term Loan, the Company purchased an interest rate cap with LIBOR strike rate of 5.75% for the first two years of the Term Loan and an interest cap with LIBOR strike rate of 6.25% for any extension periods.

Proceeds of the new Term Loan were used to extinguish the June 18, 2004 Goldman Term Loan and to pay a $1.0 million exit fee.

- 11 -

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements, the related notes to financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Annual Report on Form 10-K and the unaudited interim condensed financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Overview

Prior to June 18, 2004, Colony Resorts LVH Acquisitions, LLC (the “Company”) conducted no business other than in connection with the completion of the acquisition of substantially all of the assets and certain liabilities of LVH Corporation, a Nevada corporation (“LVH”) (the “Acquisition”). LVH is a wholly-owned subsidiary of Harrah’s Entertainment, Inc., formerly Caesars Entertainment, Inc., that prior to the Acquisition, operated the Las Vegas Hilton, a casino resort located in Las Vegas, Nevada (the “Hotel” or “Property”). The Acquisition closed on June 18, 2004. Since June 18, 2004, the Company has owned and operated the Property and accordingly has a limited operating history. The following discussion of the Company’s results of operations compares the three months ended March 31, 2006 to the three months ended March 31, 2005.

Casino revenue is derived primarily from patrons wagering on slot machines, table games and other gaming activities. Table games generally include Blackjack or Twenty One, Craps, Baccarat and Roulette. Other gaming activities include the Race and Sports Book and Poker. Casino revenue is defined as the win from gaming activities, computed as the difference between gaming wins and losses, not the total amounts wagered. “Table game volume,” “table game drop” (terms which are used interchangeably), and “slot handle” are casino industry specific terms that are used to identify the amount wagered by patrons for a casino table game or slot machine, respectively. “Table game hold” and “slot hold” represent the percentage of the total amount wagered by patrons that the casino has won. Hold is derived by dividing the amount won by the casino by the amount wagered by patrons. Casino revenue is recognized at the end of each gaming day.

Casino revenues vary from time to time due to general economic conditions, popularity of entertainment offerings, table game hold, slot hold, and occupancy percentages in the hotels. Casino revenues also vary depending upon the amount of gaming activity as well as variations in the odds for different games of chance. The Property also uses technology, such as cashless wagering on slot machines, to increase revenues and/or decrease expenses. Casino revenues, room revenues, food and beverage revenues and other revenues vary due to general economic conditions and competition.

Room revenue is derived from rooms and suites rented to guests. “Average daily rate” is an industry specific term used to define the average amount of revenue per rented room per day. “Occupancy percentage” defines the total percentage of rooms occupied, and is computed by dividing the number of rooms occupied by the total number of rooms available. Room revenue is recognized at the time the room is provided to the guest.

Food and beverage revenues are derived from food and beverage sales in the food outlets of the Property, including restaurants, room service and banquets. Food and beverage revenue is recognized at the time the food and/or beverage are provided to the guest.

Other revenue includes retail sales, entertainment sales, telephone and other miscellaneous income at the casino/hotel. Such revenue is recognized at the time the goods or services are provided to the guest.

Results of Operations

Comparison of three months ended March 31, 2006 with March 31, 2005

Net revenues:

For the Three Months Ended March 31

(dollars in thousands)

	2006			2005			% CHANGE
Casino	$	27,589		$	26,162		5	%
Rooms		29,542			28,048		5	%
Food and beverage		18,732			17,435		7	%
Other		7,611			6,714		13	%
		83,474			78,359		7	%
Less - promotional allowance		(6,689	)		(5,702	)	17.3	%
Total net revenues	$	76,785		$	72,657		6	%

- 12 -

Casino

Casino revenue increased $1.4 million, or 5%, to $27.6 million for the quarter ended March 31, 2006, compared to $26.2 million for the quarter ended March 31, 2005. The increase in casino revenue was due to increased drop of $2.3 million for table games along with an increase in hold percentage to 13.3% for the three months ended March 31, 2006 from 12.9% for the three months ended March 31, 2005. Slot win increased by approximately $0.6 million from the quarter ended March 31, 2006 compared to 2005. The slot win was a result of an increase in hold percentage to 6.4% for the quarter ended March 31, 2006 compared to a hold percentage of 5.9% for the quarter ended March 31, 2005. Other Gaming increased approximately $0.9 million from the quarter ended March 31, 2006 over the quarter ended March 31, 2005. The increase is primarily due to an increased sports handle of approximately $7.5 million between the two periods.

The Casino operating department margin was 11.6% for the quarter ended March 31, 2006 compared to an operating department margin of 9.9% for the quarter ended March 31, 2005. The increase in operating efficiency was a result of higher revenues and static total expenses from quarter to quarter.

Rooms

For the quarter ended March 31, 2006, room revenue was $29.5 million, an increase of $1.5 million from the quarter ended March 31, 2005. Average daily room rate increased to $122.47 for the quarter ended March 31, 2006 from $115.18 for the quarter ended March 31, 2005, a 6.3% increase. Total occupied room nights decreased by approximately 5,500 room nights primarily due to the city-wide cancellation of a major convention. Convention rooms continue to comprise the majority of our room nights and, even with the cancellation of the major convention, the convention segment increased approximately 3,000 room nights from the quarter ended March 31, 2005.

The Room operating department margin declined slightly from 74.0% for the three months ended March 31, 2005 to 73.5% for the three months ended March 31, 2006.

Food and Beverage

Food and Beverage revenues for the quarter ended March 31, 2006 were $18.7 million compared to $17.4 million for the quarter ended March 31, 2005 for a favorable increase of $1.3 million (7.4%). Increased revenue was due to increases in banquet food prices and increased volume due to the remodeling of our coffee bar. For the quarter ended March 31, 2006, operating margins for Food and Beverage were 26.0%. For the quarter ended March 31, 2005 operating margins for Food and Beverage were 22.1%. The increased efficiency is primarily due to static costs on increased volume and pricing.

Other

Other revenues include retail sales, entertainment sales, telephone and miscellaneous income. Other Revenue was approximately $7.6 million for the quarter ended March 31, 2006 which was a $0.9 million increase over $6.7 million for the quarter ended March 31, 2005. The increase is primarily due to a withdrawal fee paid by the city-wide convention discussed above that cancelled in January. Lounge revenue also increased from quarter to quarter because of Menopause, an off-Broadway production show which currently has 10 scheduled performances per week.

- 13 -

Operating expenses

For the Three Months Ended March 31

(dollars in thousands)

	2006		2005		% CHANGE
Casino	$	18,723	$	18,444	2	%
Rooms		7,832		7,291	7	%
Food and beverage		13,863		13,582	2	%
Other		3,770		3,380	12	%
General and administrative		17,103		16,997	1	%
Depreciation & amortization		3,054		2,373	29	%
Total	$	64,345	$	62,067	4	%

Operating Expenses

Operating expenses excluding depreciation and amortization increased $1.6 million for the quarter ended March 31, 2006 compared to the quarter ended March 31, 2005. The increase was mainly due to volume with only advertising cost showing a significant change from the prior year. Advertising costs increased by approximately $0.9 million primarily due to additional media buying. Casino expense increased due predominately to increased bad debt provisions associated with increased casino revenues. Food and Beverage operating expenses were virtually unchanged even though revenues increased.

Depreciation and amortization increased from $2.4 million for the quarter ended March 31, 2005 to $3.1 million for the quarter ended March 31, 2006. The increase is primarily due to the additional expense associated with renovations completed in the last quarter of 2005.

Interest Expense

For the quarter ended March 31, 2006, interest expense totaled $5.8 million. For the quarter ended March 31, 2005, interest expense totaled $4.9 million. The increase of $0.9 million is due to rising interest rates for the period March 31, 2006 compared to the period ended March 31, 2005, offset partially by capitalized interest associated with final expenditures made on completed 2005 renovation projects.

Financial Condition

Liquidity and Capital Resources

Cash flows of the Company for the three months ended March 31, 2006 compared to the three months ended March 31, 2005 consisted of the following:

Cash Flow - Operating Activities

Cash flow provided by operations was $4.0 million for the three months ended March 31, 2006 compared to $10.1 million provided by operations for the three months ended March 31, 2005. The Company reduced accounts payable and accrued expenses for the three months ended March 31, 2006 by $8.9 million. For the quarter ended March 31, 2005 accounts payable and accrued expenses increased by $1.7 million.

As of March 31, 2006, the Company had cash and equivalents of $20 million of which $10.3 million was cash in the casino used to fund daily operations. For the remainder of 2006, the Company expects to fund property operations, capital expenditures, and debt service requirements from existing cash balances, operating cash flow and new borrowings.

- 14 -

Cash Flows - Investing Activities

For the quarter ended March 31, 2006, $5.8 million of cash was used to fund investing activities, all of which related to additions for property and equipment. For the quarter ended March 31, 2005, $2.9 million of cash was used for additions to property and equipment.

Cash Flows - - Financing Activities

For the quarter ended March 31, 2006, $4.6 million of restricted cash was used for the purchase of property and equipment. For the quarter ended March 31, 2005, $0.5 million of cash was transferred to restricted cash.

The Company expects to fund 2006 capital expenditure projects from existing cash balances and operating cash flow.

Other Factors Affecting Liquidity

While the Company believes that the cash provided by its cash flows from operations together with cash on hand will be adequate to fund its activities, including the capital expenditures that the Company plans to make, no assurances can be made that such sources will be sufficient to meet such requirements. Covenants under the Term Loan restrict the Company’s future borrowing capacity. However, subject to certain conditions, the Term Loan does permit the Company to incur additional debt to fund working capital. If circumstances warrant, the Company may seek to obtain a working capital line of credit.

A downturn in the economy, increase in revenue or wagering taxes, acts of terrorism, war or military actions would impact the Company’s casino operations and negatively impact its cash flows from operations. If this were to occur, the Company would be required to adjust its capital spending plans.

On May 11, 2006, the Company entered into a new Goldman Term Loan (the “new Term Loan”). The new Term Loan is for an initial principal amount of $209 million and is for an initial term of two (2) years with three one-year extensions. The new Term Loan is subject to a $5.8 million holdback amount for deferred maintenance projects and is subject to future funding to a maximum of $250 million. Interest on the New Term Loan accrues at a rate of one month LIBOR plus 2.9%. The New Term Loan provides for no amortization during the term. The New Term Loan is secured by a first priority deed of trust on the Property.

Pursuant to the terms of the Term Loan, the Company purchased an interest rate cap with LIBOR strike rate of 5.75% for the first two years of the Term Loan and an interest cap with LIBOR strike rate of 6.25% for any extension periods.

Proceeds of the new Term Loan were used to extinguish the June 18, 2004 Goldman Term Loan.

Contractual Obligation and Other Commitments

The following table summarizes the Company’s contractual obligations and commitments (amount in thousands):

	Payments Due by Period
	Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years		Total
	(In thousands)
Long-Term Debt Obligations
Term Loan (a)	$	—	$	200,000	$	—	$	—	$	200,000
Variable interest payments (b)		4,844		—		—		—		4,844
Contractual Obligations
Employment agreements (c)		2,371		1,820		—		—		4,191
Licensing agreement (d)		2,000		4,000		—		—		6,000
Entertainment contracts (e)		9,450		—		—		—		9,450
	$	18,665	$	205,820	$	—	$	—	$	224,485

(a) The Term Loan was consummated in connection with the Acquisition. The Term Loan is for a principal amount of $200 million and is for an initial term of two years with two one-year extensions. The Loan accrues interest at a rate of 6.5% plus the greater of (i) one-month LIBOR (which was 5.125% at March 31, 2006) or (ii) 1.5%. The Loan is secured by a first priority deed of trust on the property and has no amortization.

- 15 -

(b) Based on March 31, 2006 LIBOR rates of 5.125% plus the applicable interest rate.

(c) The Company is party to employment agreements with five of its senior executives, with original terms of three to five years.

(d) The Company licenses from Hilton the right to use the mark “Hilton” and is part of Hilton’s reservation system and Hilton’s “HHonors Program ^TM”. The license expires on December 31, 2008 and during the term of the license, the Company is required to pay Hilton an annual fee of $2 million plus 1% of the Hotel’s gross room revenue.

(e) The Company is party to certain contracts to retain specific entertainers for recurring performances. These agreements expire during 2006.

Off-Balance Sheet Arrangements

The Company is not currently subject to any off-balance sheet arrangements which it believes will have a material adverse impact on its financial condition.

Debt Instruments

The following table provides information about the Company’s long-term debt at March 31, 2006 (amounts in thousands):

	Maturity Date	Face amount		Carrying value		Estimated fair value
Term Loan	June 2006	$	200,000	$	200,000	$	200,000

The Term Loan is for a principal amount of $200 million and interest accrues at a rate of 6.5% plus the greater of (i) one-month LIBOR or (ii) 1.5%. The initial term is two years with two one-year extension options. The Term Loan contains certain restrictions that, among other things, limit the ability of the Company to create certain liens, enter into certain transactions with affiliates, enter into certain mergers or consolidations or sell assets of the Company without prior approval of the lenders or noteholders. Financial covenants included in the Term Loan include total debt to EBITDA (Earning Before Interest, Taxes, Depreciation and Amortization) ratio. The financial covenants in the Term Loan involving EBITDA are applied on a trailing 12 months basis. For purposes of debt compliance, EBITDA is defined as net income plus interest expense, income taxes and depreciation and amortization expenses. The Company was in compliance with all required covenants and ratios under its debt instruments.

Litigation Contingencies and Available Resources

In the normal course of business, the Company is subject to various litigation, claims and assessments. The Company is not currently a party to any material litigation and it is not aware of any material action, suit or proceedings against it that has been threatened by any person.

Critical Accounting Policies

Significant Accounting Policies and Estimates

The Company prepares its financial statements in conformity with accounting principles generally accepted in the United States. Certain of its accounting policies, including the determination of slot club promotion liability, the estimated useful lives assigned to its assets, asset impairment, insurance reserves, purchase price allocations made in connection with its acquisitions and the calculation of its income tax liabilities, require that it apply significant judgment in defining the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. The Company’s judgments are based on its historical experience, terms of existing contracts, observance of trends in the gaming industry and information available from other outside sources. There can be no assurance that actual results will not differ from the Company’s estimates. To provide an understanding of the methodology the Company applies, its significant accounting policies and basis of presentation are discussed below, as well as where appropriate in this discussion and analysis and in the notes to the Company’s financial statements.

Patron Club Promotions

The Company’s Slot Club allows customers to redeem points earned from their gaming activity for cash and complimentary food, beverage, rooms, entertainment and merchandise. At the time redeemed, the retail value of complimentaries are recorded as revenue with a corresponding offsetting amount

- 16 -

included in promotional allowances. The cost associated with complimentary food, beverage, rooms, entertainment and merchandise redeemed is recorded in casino costs and expenses. The Company also records a liability for the estimated cost of the outstanding points that it believes will ultimately be redeemed.

Self-Insurance Reserve

The Company is self insured up to certain stop loss amounts for workers’ compensation. In estimating this accrual, the Company considers historical loss experience and makes judgments about the expected levels of costs per claim. The Company believes its estimates of future liability are reasonable based upon its methodology; however, changes in accident frequency and severity and other factors could materially affect the estimate for this liability.

Derivative Investments and Hedging Activities

The Company’s Term Loan requires it to enter into interest rate caps in order to manage interest rate risks associated with this borrowing. The Company has adopted SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (as amended by SFAS No. 138 and 149) to account for its interest rate cap arrangement.

Allowance for Doubtful Accounting Reserves

The Company’s receivables balances relate primarily to its hotel and casino operations. The Company reserves an estimated amount for receivables that may not be collected. The Company estimates the allowance for doubtful accounts by applying standard reserve percentages to aged account balances under a specific dollar amount and specifically analyzing the collectibility of each account with a balance over the specified dollar amount, based on the age of the account, the customer’s financial condition, collection history and any other known information.

The allowance for doubtful accounts as a percentage of receivables at March 31, 2006 increased slightly when compared to March 31, 2005 primarily as a result of the increase in casino receivables. The Company maintains strict controls over the issuance of markers and aggressively pursues collection from those customers who fail to pay after issuance of the marker.

Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets or the terms of the capitalized lease, while costs of normal repairs and maintenance are charged to expense as incurred.

The Company evaluates its property and equipment and other long-lived assets for impairment in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”. For assets to be disposed of, the Company recognizes the asset to be sold at the lower of carrying value or fair market value less costs of disposal. Fair market value for assets to be disposed of is generally estimated based on comparable asset sales, solicited offers or a discounted cash flow model. For assets to be held and used, the Company reviews fixed assets for impairment whenever indicators of impairment exist. If an indicator of impairment exists, the Company compares the estimated future cash flows of the asset, on an undiscounted basis, to the carrying value of the asset. If the undiscounted cash flows exceed the carrying value, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying value, then impairment is measured based on fair value compared to carrying value, with fair value typically based on a discounted cash flow model.

Recent Accounting Pronouncements

On December 16, 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (“SFAS No. 123(R)”), which is a revision to SFAS No. 123, “Accounting for Stock-Based Compensation”. SFAS No. 123(R) supersedes Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB No. 25”) and amends SFAS No. 95, “Statement of Cash Flows”. Among other items, SFAS No. 123(R) requires the recognition of compensation expense in an amount equal to the fair value of share-based payments, including employee stock options and restricted stock, granted to employees.

The Company adopted SFAS No, 123(R) on January 1, 2006 using the “modified prospective” method, in which compensation cost is recognized beginning with the effective date (a) based on the requirement of SFAS No. 123(R) for all share-based payments granted after the effective date and (b) based on

- 17 -

the requirements of SFAS No. 123 for all awards granted to employees prior to the effective date of SFAS No. 123(R) that remain unvested on the effective date. The impact of adopting SFAS No, 123(R) is discussed in Footnote 9 “Accounting for Stock-Based Compensation”.

SFAS No. 123(R) also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow. This requirement does not affect the Company since the entity is a limited liability company and the provision or benefit of federal income taxes is included in the income tax return of the members.

In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections-a replacement of APB Opinion No. 20 and FASB Statement No. 3”, which changes the requirements for the accounting for and reporting of a change in accounting principle. SFAS No. 154 applies to all voluntary changes in accounting principle, as well as to changes required by an accounting pronouncement if the pronouncement does not include specific transition provisions. This statement requires retrospective application to prior periods’ financial statements of changes in accounting principle. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The adoption on January 1, 2006 of SFAS No. 154 did not have a material effect on the Company’s financial position, results of operations or cash flows.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The following discusses the Company’s exposure to market risk related to changes in interest rates, equity prices and foreign currency exchange rates. The Company does not believe that its exposure to market risk is material.

Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. The Company’s primary exposure to market risk is interest rate risk associated with its long-term debt. The Company attempts to manage its interest rate risk by the use of an interest rate cap on its Term Loan. The ability to enter into an interest rate cap allows the Company to manage its interest rate risk associated with its variable rate debt.

The Company does not hold or issue financial instruments for trading purposes and does not enter into derivative transactions that would be considered speculative positions. The Company’s derivative financial instruments consist exclusively of the interest rate cap which does not qualify for hedge accounting. Interest differentials resulting from these agreements are recorded on an accrual basis as an adjustment to interest expense.

As of March 31, 2006 the Term Loan has a floating interest rate based on 6.50% plus the greater of (i) one-month LIBOR or (ii) 1.5%. The initial term of the Term Loan is two years with two one-year extension options. The Term Loan is subject to interest rate risk and the interest payments associated with the Term Loan will increase if LIBOR increases.

Pursuant to the terms of the Term Loan, the Company purchased an interest rate cap with a LIBOR strike rate of 5% for the first two years of the Term Loan and an interest rate cap with a LIBOR strike rate of 6% for any extension periods; therefore, a hypothetical increase in LIBOR of 100 basis points from the rates in effect on the date of this Form 10-Q would not cause the interest payments on the Term Loan to increase significantly. The LIBOR strike rate of the interest rate cap on the date of this Form 10-Q provides protection for the Company against significant increases in LIBOR. Interest paid in excess of the LIBOR strike rate would be refunded to the Company to offset interest paid.

The Company has not had any material changes in its exposure to market risk since December 31, 2005.

The Company does not have any significant foreign currency exchange rate risk or commodity price risk and it does not currently trade any market sensitive instruments.

ITEM 4. CONTROLS AND PROCEDURES

As required by in Rules 13a-15d of the Securities Exchange Act of 1934, as amended, the Company’s management, including our Executive Vice President of Finance and our Chief Executive Officer and General Manager, performed an evaluation of the effectiveness of the design and operation of Company’s disclosure controls and procedures to determine whether any changes occurred during the first quarter of 2006 that have materially affected, or are reasonably likely to materially affect our internal control of financial reporting. Based upon that evaluation there have been no such changes during the first quarter 2006.

- 18 -

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements relating to future events and future performance of the Company within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including, without limitation, statements regarding the Company’s expectations, beliefs, intentions or future strategies that are signified by the words “expects,” “anticipates,” “intends,” “believes” or similar language. Actual results could differ materially from those anticipated in such forward-looking statements.

All forward-looking statements included in this document are based on information available to the Company on the date hereof, and the Company assumes no obligation to update any forward-looking statements. The Company cautions investors that its business and financial performance are subject to substantial risks and uncertainties.

- 19 -

PART II. OTHER INFORMATION

ITEM 6. EXHIBITS

EXHIBIT NUMBER	Description of Exhibits
2.1	Purchase and Sale Agreement, dated as of December 24, 2003, by and among Colony Resorts LVH Acquisitions, LLC, LVH Corporation and Caesars Entertainment Corporation*
3.1	Articles of Organization, dated as of December 18, 2003, for Colony Resorts LVH Acquisitions, LLC*
3.2	Operating Agreement, dated as of December 22, 2003, for Colony Resorts LVH Acquisitions, LLC*
3.3	Amended and Restated Operating Agreement, dated June 18, 2004, for Colony Resorts LVH Acquisitions, LLC+
3.4	Amendment No. 1 to the Amended and Restated Operating Agreement, dated July 23, 2004, for Colony Resorts LVH Acquisitions, LLC****
3.5	Amendment to Articles of Organization, dated June 25, 2004, for Colony Resorts LVH Acquisitions, LLC*****
10.1	Deposit Escrow Agreement, dated as of December 24, 2003, by and among LVH Corporation, Colony Resorts LVH Acquisitions, LLC and Nevada Title Company*
10.2	Coinvestment Transfer Restriction Agreement, dated June 18, 2004, by and among Mr. Barrack, Mr. Ribis, Co-Investment Partners and Coinvestment Voteco+
10.3	Transfer Restriction Agreement, dated June 18, 2004, by and among Mr. Barrack, Holdings and Voteco+
10.4	Employment Agreement, dated as of March 9, 2004, by and between Colony Resorts LVH Acquisitions, LLC and Rodolfo Prieto*
10.5	Employment Agreement, dated as of March 9, 2004, by and between Colony Resorts LVH Acquisitions, LLC and Robert Schaffhauser*
10.6	Employment Agreement, dated as of March 9, 2004, by and between Colony Resorts LVH Acquisitions, LLC and Kenneth Ciancimino*
10.7	Letter Agreement, dated as of March 10, 2004, by and between Colony Resorts LVH Acquisitions, LLC and Rodolfo Prieto*
10.8	Letter Agreement, dated as of March 10, 2004, by and between Colony Resorts LVH Acquisitions, LLC and Robert Schaffhauser*
10.9	Letter Agreement, dated as of March 10, 2004, by and between Colony Resorts LVH Acquisitions, LLC and Kenneth Ciancimino*
10.10	Employment Agreement, dated as of May 17, 2004, by and between Colony Resorts LVH Acquisitions, LLC and Gonzalo De Varona.***
10.11	Employment Agreement, dated as of April 12, 2004, by and between Colony Resorts LVH Acquisitions, LLC and Robert Stewart.***
10.12	Vice Chairman Agreement, dated June 18, 2004, between Colony Resorts LVH Acquisitions, LLC and Nicholas L. Ribis.****
10.13	Colony Resorts LVH Acquisitions, LLC 2004 Incentive Plan****
10.14	Loan Agreement, dated June 18, 2004, by and between Colony Resorts LVH Acquisition, LLC and Archon Financial, L.P.+
10.15	Sale Right Agreement, dated June 18, 2004, by and among Colony Resorts LVH Acquisitions, LLC, Colony Resorts LVH Holdings, LLC, Colony Resorts LVH Coinvestment Voteco, LLC, Colony Resorts LVH Voteco, LLC and Colony Resorts LVH Co-Investment Partners, L.P.****
10.16	Services Agreement, dated June 18, 2004, between Colony Resorts LVH Acquisitions, LLC and Resorts International Hotel and Casino, Inc.****
10.17	Amended and Restated Joint Marketing Agreement, dated April 26, 2005, by and among Colony Resorts LVH Acquisitions, LLC, Resorts International Hotel, Inc. and Resorts International Holdings, LLC+++
10.18	Amended and Restated Joint Services Agreement, dated April 26, 2005, by and among Colony Resorts LVH Acquisitions, LLC, Resorts International Hotel, Inc. and Resorts International Holdings, LLC+++
10.19	Employment Agreement, dated as of May 11, 2003, between LVH Corporation and Thomas Page.****
10.20	Addendum to Employment Agreement, dated as of June 22, 2004, by and between Colony Resorts LVH Acquisitions, LLC and Thomas Page.****

- 20 -

14.1	Code of Ethics++
31.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

METHOD OF FILING

* Incorporated by reference to the Registrant’s Form 10, filed March 15, 2004 (File Number 0-50635).

** Incorporated by reference to the Registrant’s Amendment No. 1 to Form 10, filed April 26, 2004 (File Number 0-50635).

*** Incorporated by reference to the Registrant’s Post-Effective Amendment No. 1 to Form 10, filed June 17, 2004 (File Number 0-50635).

+ Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q, filed June 28, 2004 (File Number 0-50635).

**** Incorporated by reference to Registrant’s Post-Effective Amendment No. 2 to Form 10 filed August 13, 2004 (File Number 0-50635).

***** Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q filed August 23, 2004 (File Number 0-50635).

++ Incorporated by reference to Registrant’s Annual Report on Form 10-K filed March 31, 2005 (File Number 0-50635)

+++ Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q filed May 16, 2005 (File Number 0-50635).

(b) Reports on Form 8-K

- 21 -

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	COLONY RESORTS LVH ACQUISITIONS, LLC
Date:  May 15, 2006	By:	/s/ Rodolfo Prieto
		Rodolfo Prieto
		Chief Executive Officer and General Manager
Date:  May 15, 2006	By:	/s/ Robert Schaffhauser
		Robert Schaffhauser
		Executive Vice President of Finance

- 22 -

EX-31.1

Exhibit 31.1

Section 302 CEO Certification

CERTIFICATIONS

I, Rodolfo Prieto, certify that:

1. I have reviewed this Form 10-Q of Colony Resorts LVH Acquisitions, LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial statements for external purposes in accordance with generally accepted accounting principles.

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  May 15, 2006

/s/ Rodolfo Prieto

Rodolfo Prieto

Chief Executive Officer

- 23 -

EX-31.2

Exhibit 31.2

Section 302 CFO Certification

CERTIFICATIONS

I, Robert Schaffhauser, certify that:

1. I have reviewed this Form 10-Q of Colony Resorts LVH Acquisitions, LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial statements for external purposes in accordance with generally accepted accounting principles.

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  May 15, 2006

/s/ Robert Schaffhauser

Robert Schaffhauser

Executive Vice President of Finance

- 24 -

EX-32.1

Exhibit 32.1

Section 906 CEO Certification

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Colony Resorts LVH Acquisitions, LLC (the “Company”) on Form 10-Q for the quarter ended March 31, 2006, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Rodolfo Prieto, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Rodolfo Prieto

Rodolfo Prieto

Chief Executive Officer

May 15, 2006

- 25 -

EX-32.2

Exhibit 32.2

Section 906 CFO Certification

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Colony Resorts LVH Acquisitions, LLC (the “Company”) on Form 10-Q for the quarter ended March 31, 2006, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert Schaffhauser, Executive Vice President of Finance, respectively, of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Robert Schaffhauser

Robert Schaffhauser

Executive Vice President of Finance

May 15, 2006

- 26 -