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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

                                  ANNUAL REPORT

    (Mark One)

       [X]        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                          SECURITIES EXCHANGE ACT OF 1934

                       For the fiscal year ended  December 31, 2000
                                                  -----------------

       [ ]        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 0-11287

                    THE CLARIDGE HOTEL AND CASINO CORPORATION
             (Exact name of registrant as specified in its charter)


              New York                                          22-2469172
  (State or other jurisdiction of                            (I.R.S. Employer
   incorporation or organization)                         Identification Number)

   Indiana Avenue and the Boardwalk
       Atlantic City, New Jersey                                   08401
(Address of principal executive offices)                        (Zip Code)

       Registrant's telephone number, including area code: (609) 340-3400

                               ------------------

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

                                                       Name of each exchange
         Title of each class                            on which registered
         -------------------                           ---------------------
  First Mortgage Notes, due 2002                       New York Stock Exchange

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

                         Class A Stock, $.001 par value
                                (Title of Class)

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

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

All issued and outstanding shares of the Corporation have been offered and sold
in reliance on exemptions from the registration requirements of the Securities
Act of 1933, as amended. Therefore, there is no established trading market for
any class of shares of the Corporation. The Corporation did, in 1989, jointly
with Atlantic City Boardwalk Associates, L.P. ("Partnership") and Del Webb
Corporation ("Webb"), register certain Contingent Payment Rights. As stated in
the Prospectus dated May 5, 1989, Contingent Payment Rights may or may not be
securities. None of the Corporation, the Partnership, or Webb has admitted that
the Contingent Payment Rights are securities or that any of them is the issuer
of any such securities.

Indicate the number of shares outstanding of each class of the Registrant's
Stock, as of the latest practicable date:

                                          Number of Shares Outstanding
                                                  March 30, 2001
                                          ----------------------------
Class A Stock                                      5,062,500


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                                     PART I

Item 1. BUSINESS

General

      The Claridge Hotel and Casino Corporation (the "Corporation"), through its
wholly-owned subsidiary, The Claridge at Park Place, Incorporated ("New
Claridge"), operates The Claridge Hotel and Casino ("Claridge") in Atlantic
City, New Jersey. The Corporation was formed as a New York corporation on August
26, 1983, and qualified to engage in business in New Jersey as a foreign
corporation in September 1983. New Claridge was formed as a New Jersey
corporation on August 29, 1983.

      The Corporation maintains its executive and administrative offices at
Indiana Avenue and the Boardwalk, Atlantic City, New Jersey 08401, telephone
number (609) 340-3400.

Corporate Structure

      On October 31, 1983, New Claridge acquired certain assets of the Claridge
including gaming equipment ("Casino Assets"), from Del E. Webb New Jersey, Inc.
("DEWNJ"), a wholly-owned subsidiary of Del Webb Corporation ("Webb"); leased
certain other of the Claridge's assets, including the buildings, parking
facility and non-gaming, depreciable, tangible property of the Claridge ("Hotel
Assets"), from Atlantic City Boardwalk Associates, L.P., a New Jersey limited
partnership ("Partnership"); subleased the land on which the Claridge is located
from the Partnership; assumed certain liabilities related to the acquired
assets; and undertook to carry on the business of the Claridge. In connection
with these transactions, the Partnership granted the Expandable Wraparound
Mortgage (described below) to New Claridge. These transactions were entered into
in connection with the private placement of equity interests in the Corporation
and the Partnership. The offering was structured to furnish the investors with
certain tax benefits available under the federal tax law then in effect. The
common stock of the Corporation and the limited partnership interests of the
Partnership were sold together in the private placement as units, and because
there has been relatively little trading in the stock or Partnership interests,
there is a substantial similarity between the equity ownership of the
Corporation and the Partnership. Although the Corporation and the Partnership
are independent entities, approximately 92% of the Corporation's common stock is
owned by persons who also own limited partnership interests in the Partnership.
The Partnership does not currently engage in any significant business activities
other than those relating to the Claridge.

       In October 1988, the Corporation and New Claridge entered into an
agreement to restructure the financial obligations of the Corporation and New
Claridge (the "Restructuring Agreement"). The restructuring, which was
consummated in June 1989, resulted in (i) a reorganization of the ownership
interests in the Claridge; (ii) modifications of the rights and obligations of
certain lenders; (iii) satisfaction and termination of the obligations and
commitments of Webb and DEWNJ under the original structure; (iv) modifications
of the lease agreements between New Claridge and the Partnership; and (v) the
forgiveness by Webb of substantial indebtedness.

       On January 31, 1994, the Corporation completed an offering of $85 million
of First Mortgage Notes (the "Notes") due 2002, bearing interest at 11 3/4%.
The Notes are secured by (i) a non-recourse mortgage granted by the Partnership
representing a first lien on the Hotel Assets; (ii) a pledge granted by the
Corporation of all outstanding shares of capital stock of New Claridge; and
(iii) a guarantee by New Claridge. New Claridge's guarantee of the Notes is
secured by a collateral assignment of the second lien Expandable Wraparound
Mortgage, and by a lien on the Claridge's gaming and other assets, which lien
would be subordinated to liens that might be placed on those gaming and other
assets to secure any future

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revolving credit line arrangement. On January 28, 1997, New Claridge entered
into an agreement to subject its new self-parking garage to the lien of the
mortgage; such lien will not be subordinated to any liens which may be placed on
New Claridge's gaming and other assets to secure any future revolving credit
line arrangements. Interest on the Notes is payable semiannually on February 1
and August 1 of each year.

      The net proceeds of the Notes, totalling $82.2 million net of fees and
expenses, were used as follows: (i) to repay in full on January 31, 1994 the
then outstanding debt of the Corporation under its Revolving Credit and Term
Loan Agreement (the "Loan Agreement"), including the outstanding balance of the
Corporation's revolving credit line, which was secured by a first mortgage; (ii)
to expand the casino capacity of the Claridge by 12,000 square feet in 1994,
including the addition of approximately 500 slot machines and the relocation of
two restaurants and their related kitchens; (iii) to purchase property in 1995
and construct on that property a self-parking garage, which opened in mid-1996;
and (iv) to acquire the Contingent Payment Option (see Item 1. "Business -
Contingent Payment"). With the completion of the construction of the
self-parking garage, the proceeds of the offering of the Notes had largely been
expended.

Current Developments

      The Corporation has experienced recurring losses and deterioration in its
cash flow since 1996, which has affected the Corporation's ability to continue
to meet its obligation to pay interest on the Notes. The Corporation did not pay
the interest due on August 2, 1999 on the Notes, and, on August 16, 1999, the
Corporation and New Claridge filed voluntary petitions under Chapter 11 of the
United States Bankruptcy Code (the "Bankruptcy Code") in the United States
Bankruptcy Court for the District of New Jersey (the "Bankruptcy Court"). The
Partnership filed a voluntary petition under Chapter 11 of the Bankruptcy Code
on October 5, 1999.

      Management of the Corporation believes that this filing permitted the
Corporation to conserve its cash pending a restructuring of its financial
obligations in the Chapter 11 proceeding. As of December 31, 2000, the
Corporation had approximately $19.5 million of cash and cash equivalents.
General and administrative expenses, primarily for professional fees, have
increased as a result of the bankruptcy proceeding. From August 16, 1999 through
December 31, 2000, such expenses have totaled approximately $5.8 million, of
which approximately $3 million has been paid as of December 31, 2000.

      The Corporation continues to operate the business, as set forth in the
Bankruptcy Code, under the supervision of the Bankruptcy Court, as a
debtor-in-possession. As debtor-in-possession, the Corporation is authorized to
operate its business, but may not engage in transactions outside of the normal
course of business without the approval of the Bankruptcy Court. Further, the
Corporation is subject to operating within certain weekly cash budgets which
have been approved by the Bankruptcy Court pursuant to certain orders
authorizing the use of its cash. As of the petition date, actions to collect
prepetition indebtedness are stayed, and other contractual obligations may not
be enforced against the Corporation. In addition, the Corporation may reject
executory contracts and lease obligations, and parties affected by these
rejections may file claims with the Bankruptcy Court in accordance with the
reorganization process. As part of the "first day orders," the Bankruptcy Court
approved the Corporation's payment of prepetition employee compensation,
benefits and reimbursable employee expenses, as well as to continue to honor all
existing employee benefit plans and policies. In addition, the Bankruptcy Court
approved the payment of certain prepetition vendor claims, certain prepetition
guest-related claims (such as outstanding direct mail coupons, progressive
jackpots, and safekeeping deposits), and prepetition payroll, gaming and other
taxes and fees.

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      While the Corporation and its subsidiaries have sustainable operations,
the cash generated by those operations are not sufficient to (i) permit the
Corporation to meet the debt service on the currently outstanding Notes; (ii) to
make significant capital improvements that management believes are necessary to
improve the Claridge's competitive position in the Atlantic City casino market;
and (iii) regularly make capital improvements in the future to maintain that
competitive position. Accordingly, management of the Corporation intended to
seek, in the Chapter 11 proceeding, to reduce the Corporation's debt obligations
to a level that it believes would be consistent with the sustainable level of
cash to be generated by the Claridge. At the same time, management intended to
seek to simplify the ownership structure of the Claridge as between the
Corporation, New Claridge and the Partnership. On January 27, 2000, the
Corporation, New Claridge, and the Partnership filed a joint plan of
reorganization and disclosure statement with the Bankruptcy Court, which plan
provided for the above discussed financial restructuring. On April 5, 2000, in
response to objections raised by the trustee for the noteholders, the United
States Trustee, and others, the Corporation, New Claridge, and the Partnership
filed an amended plan of reorganization and disclosure statement. The adequacy
of the amended plan was approved by the Bankruptcy Court on May 9, 2000, which
allowed for the amended plan to be submitted to the Corporation's creditors for
a vote. On July 18, 2000, the Corporation announced the results of that vote:
the holders of the Corporation's Notes voted to reject the amended plan;
management of the Corporation believes that the unsecured creditors voted to
accept the amended plan. The Corporation had intended to pursue confirmation of
the amended plan under Section 1129B of the Bankruptcy Code, which allows for
the Bankruptcy Court judge to confirm the amended plan through the "cramdown"
procedure, at the confirmation hearing, which was scheduled to begin September
6, 2000.

      However, on August 11, 2000, the Bankruptcy Court judge granted permission
to the Official Secured Noteholders Committee (the "Committee") to hire an
investment banker to attempt to locate potential investors to submit competing
reorganization plans. The two primary offers which were considered by the
Corporation's Board of Directors (the "Board") were submitted by Park Place
Entertainment Corporation ("PPE")(owner and operator of Bally's Park Place,
Incorporated, the Atlantic City Hilton Casino Resort, and Caesars Atlantic City
casinos in Atlantic City) and GB Holdings, Incorporated ("GBHI") (owner and
operator of the Sands Hotel and Casino in Atlantic City). After evaluation by
the Board and its financial and legal advisors, the Corporation informed the
Bankruptcy Court judge that it intended to pursue the bid submitted by PPE. The
GBHI offer expired by its own terms on October 13, 2000.

      On November 28, 2000, the Corporation filed a second amended joint plan of
reorganization and a second amended disclosure statement, which included an
executed copy of the purchase and sale agreement between the Corporation and
PPE. The second amended joint plan of reorganization provides for a sale of
substantially all of the assets of New Claridge and the Partnership to PPE.
Certain amendments were subsequently made to this plan, and on March 27, 2001,
the fourth amended joint plan of reorganization and fourth amended disclosure
statement (the "Plan") were approved by the Bankruptcy Court to be submitted to
the creditors for a vote. Pursuant to the terms of the Plan, the secured
noteholders would receive approximately an 83% recovery on their claim of $90.5
million, and the unsecured creditors would receive approximately 61.5% of their
claim. If the creditors vote to accept the Plan, the Bankruptcy Court has
scheduled May 16, 2001 as the date for the confirmation hearing for the Plan.

Certain Agreements between the Corporation, New Claridge and the Partnership

      The current relationships and agreements between the Corporation, New
Claridge and the Partnership, are described below:

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      Operating Lease/Expansion Operating Lease. The Casino Assets are
      owned by New Claridge. In addition, the self-parking garage and the land
      on which it is located are owned by New Claridge. The Hotel Assets and
      underlying land are owned by the Partnership and leased by the Partnership
      to New Claridge under the terms of an operating lease (the "Operating
      Lease") originally entered into on October 31, 1983, and an expansion
      operating lease (the "Expansion Operating Lease"), which covered certain
      expansion improvements made to the Claridge in 1986 (the "Expansion
      Improvements"). The initial terms of both leases expired on September 30,
      1998, and each lease provided for three ten-year renewal options at the
      election of New Claridge. New Claridge exercised the first of the ten-year
      renewal options, extending the term of the Operating Lease and Expansion
      Operating Lease through September 30, 2008.

      Basic rent during the renewal term of each lease is calculated
      pursuant to a defined formula, with such rent for the lease year
      commencing October 1, 1998 through September 30, 1999 not to be more than
      $29.5 million nor less than $24 million for the Operating Lease, and not
      to be more than $3 million nor less than $2.5 million for the Expansion
      Operating Lease. In addition, in each subsequent year, rent will be
      calculated pursuant to a defined formula, but may not exceed 10% more than
      the basic rent for the immediately preceding lease year. Basic rent, as
      calculated pursuant to the defined formula, for the lease years commencing
      October 1, 1998, 1999 and 2000 was $24 million for the Operating Lease and
      $2.5 million for the Expansion Operating Lease.

      New Claridge is also required to pay as additional rent amounts
      including certain taxes, insurance and other charges relating to the
      occupancy of the land and Hotel Assets, certain expenses and debt service
      relating to furniture, fixture and equipment replacements and building
      improvements (collectively, "FF&E Replacements") and the general and
      administrative costs of the Partnership.

      The terms of the Operating Lease and Expansion Operating Lease have
      been amended from time to time. The most recent amendment (the "Sixth
      Amendment"), which was effective September 30, 1998, allowed for the
      deferral of $1.1 million of rent in either February 1999 or March 1999,
      dependent upon certain conditions being met. These conditions, which must
      have occurred prior to March 2, 1999, include (i) New Claridge having
      received the proceeds in connection with its settlement of the parking
      garage litigation; and (ii) the Corporation or New Claridge having paid
      the interest due on the Notes on February 1, 1999. New Claridge received
      the proceeds from the settlement of the parking garage litigation in
      February 1999, and paid the interest that was due on the Notes on March 2,
      1999, within the 30-day grace period allowed in accordance with the terms
      of the Indenture. The $1.1 million of basic rent deferred in 1999 is to be
      paid to the Partnership in monthly installments of $25,000 commencing
      January 1, 2000 until paid in full (subject to acceleration under certain
      circumstances). This amendment also provides for additional abatements of
      rent, through December 31, 2004, as necessary to reduce the Partnership's
      cash flow to an amount necessary only to meet the Partnership's cash
      requirements; these abatements, however, are to be reduced by specified
      amounts for each period commencing January 1, 2000 and ending December 31,
      2004 ($83,333 per month in 2000, $130,000 per month in 2001, $180,000 per
      month in 2002 and 2003, and $130,000 per month in 2004).

      In addition to the deferral and abatements of rent provided for in
      the Sixth Amendment, the amendment provides for the payment of $3.5
      million of additional basic rent on the earlier of (i) the maturity date
      of the Expandable Wraparound Mortgage Note (see below); (ii) such earlier
      date, if any, as the entire principal amount of the Expandable Wraparound
      Mortgage becomes due and payable; or (iii) the date on which any merger,
      consolidation, or similar transaction to which the Corporation or New
      Claridge is a party, or any sale of all or substantially all of the assets
      of the Corporation or New Claridge is consummated, or any change in
      control of the Corporation or New Claridge occurs.

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      If the Partnership should fail to make any payment due under the
      Expandable Wraparound Mortgage, New Claridge may exercise a right of
      offset against rent or other payments due under the Operating Lease and
      Expansion Operating Lease to the extent of any such deficiency. As a
      result of the Corporation's and New Claridge's Chapter 11 filing on August
      16, 1999, under the terms of the Indenture, an "Event of Default" has
      occurred (as defined in the Indenture). As a result of this Event of
      Default, the Corporation and New Claridge are precluded from receiving any
      further payments of principal or interest on the Expandable Wraparound
      Mortgage. As a result, New Claridge has exercised this right of offset
      against rental payments required to be made subsequent to August 16, 1999.
      Operating Lease payments are being made monthly by New Claridge to an
      escrow account for the benefit of the secured Noteholders, which can only
      be accessed with the approval of the Bankruptcy Court.

      Prior to August 16, 1999, the Partnership was required, under the
      Operating Lease, to provide FF&E Replacements to New Claridge, and to
      provide facility maintenance and engineering services to New Claridge. New
      Claridge was obligated under the Operating Lease, prior to August 16,
      1999, to lend the Partnership, at an annual interest rate of 14%, any
      amounts necessary to fund the cost of these FF&E Replacements. Such
      advances by New Claridge ("FF&E Loans") were secured under the Expandable
      Wraparound Mortgage, up to $25 million. One half of the principal amount
      of each FF&E Loan is payable in the 48th month following the advance, with
      the remaining balance due in the 60th month following the date of
      issuance. New Claridge is required to pay, as additional rent to the
      Partnership, the debt service on the FF&E Loans. As a result of the
      Corporation and New Claridge's Chapter 11 filing on August 16, 1999, and
      the Partnership's Chapter 11 filing on October 5, 1999, the Partnership no
      longer provides furniture, fixture, and equipment replacements to the
      Claridge; rather, New Claridge purchases these replacements directly.

      Expandable Wraparound Mortgage. On October 31, 1983, the Partnership
      executed and delivered to New Claridge the Expandable Wraparound Mortgage,
      which was subordinate to an $80 million first mortgage granted by the
      Partnership to a group of banks, and a $47 million purchase money second
      mortgage ("Purchase Money Second Mortgage"), granted by the Partnership to
      DEWNJ. The Purchase Money Second Mortgage, which was due on September 30,
      2000, was cancelled upon satisfaction of certain conditions set forth in
      an agreement entered into at the time of the 1989 restructuring. In
      conjunction with the offering of $85 million of Notes on January 31, 1994,
      the outstanding debt under the Loan Agreement, which included a first
      mortgage and the revolving credit line, was satisfied in full. By its
      terms, the Expandable Wraparound Mortgage may secure up to $25 million of
      additional loans to the Partnership from New Claridge to finance FF&E
      Replacements and facility maintenance and engineering shortfalls. The
      Expandable Wraparound Mortgage provides that, so long as the Partnership
      is not in default on its obligations under the Expandable Wraparound
      Mortgage, New Claridge is obligated to make payments required under any
      senior mortgage indebtedness. The indebtedness secured by the Expandable
      Wraparound Mortgage bears interest at an annual rate equal to 14%, with
      certain interest installments that accrued in 1983 through 1988 totalling
      $20 million being deferred until maturity. In addition, the Partnership is
      required under the Expandable Wraparound Mortgage to make payments of
      principal and interest in respect of any FF&E Loans made to finance FF&E
      Replacements or facility maintenance or engineering costs as described
      above. To the extent these FF&E Loans exceeded $25 million in the
      aggregate outstanding at any time, they would have been secured under
      separate security agreements and not by the lien of the Expandable
      Wraparound Mortgage.

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      The Expandable Wraparound Mortgage required monthly principal
      payments to be made by the Partnership to New Claridge, commencing in 1988
      and continuing through 1998, in escalating amounts totalling $80 million.
      In addition, in 1986 the principal amount secured by the Expandable
      Wraparound Mortgage was increased to provide the Partnership with funding
      for the construction of an expansion improvement, which resulted in
      approximately 10,000 square feet of additional casino space and a 3,600
      square foot lounge. Effective August 28, 1986, the Partnership commenced
      making level monthly payments of principal and interest calculated to
      provide for the repayment in full of the principal balance of this
      increase in the Expandable Wraparound Mortgage by September 30, 1998.

      In connection with the offering of the $85 million of the Notes on
      January 31, 1994, the Corporation agreed to use not less than $8 million
      from the net proceeds of the offering to finance internal improvements to
      the Claridge, which were funded through additional FF&E Loans. In
      connection therewith, the Expandable Wraparound Mortgage Agreement, as
      well as the Operating Lease and Expansion Operating Lease, were amended to
      provide that the principal amount on these additional FF&E Loans will be
      payable at final maturity of the Expandable Wraparound Mortgage.

      Under the terms of the Expandable Wraparound Mortgage, New Claridge
      is not permitted to foreclose on the Expandable Wraparound Mortgage and
      take ownership of the Hotel Assets so long as a senior mortgage is
      outstanding.

      The Expandable Wraparound Mortgage has been amended from time to
      time. In the most recent amendment, which was effective September 30,
      1998, the Corporation, New Claridge, and the Partnership agreed to amend
      the March 1997 restructuring agreement to provide for an extension of the
      maturity date of the Expandable Wraparound Mortgage to January 1, 2005. In
      addition, the Expandable Wraparound Mortgage Agreement and Note were
      amended to defer the principal payments which were payable during the
      fourth quarter of 1998 (totalling $3.5 million) to the earlier of (i) the
      maturity date of the Expandable Wraparound Mortgage Agreement and Note;
      (ii) such earlier date, if any, as the entire principal amount of the
      Expandable Wraparound Mortgage becomes due and payable; or (iii) the date
      on which any merger, consolidation, or similar transaction to which the
      Corporation or New Claridge is a party, or any sale of all or
      substantially all of the assets of the Corporation or New Claridge is
      consummated, or any change of control of the Corporation or New Claridge,
      occurs.

      As a result of the Corporation's and the Partnership's filing for
      reorganization under Chapter 11, the realizable value of the Expandable
      Wraparound Mortgage has become impaired. Therefore, during the fourth
      quarter of 1999 the Corporation recorded an adjustment to write-down the
      balance of the Expandable Wraparound Mortgage receivable, to an amount
      estimated to be the realizable value of the Hotel Assets.

Contingent Payment

      Following the 1983 transactions, Webb and its affiliates retained
significant interests in the Claridge. Effective with the closing of the
restructuring in June 1989, all or substantially all of the financial,
contractual, ownership, guarantee and other relationships of the Corporation and
New Claridge with Webb were terminated. The Restructuring Agreement provided
that Webb would retain an interest equal to $20 million plus interest from
December 1, 1988 at the rate of 15% per annum compounded quarterly (the
"Contingent Payment") in any proceeds ultimately recovered from the operations
and/or the sale or refinancing of the Claridge facility in excess of the first
mortgage loan and other liabilities. To give effect to this Contingent Payment,
the Corporation and the Partnership agreed not to make any distributions to

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their shareholders or partners, respectively, whether derived from operations or
from sale or refinancing proceeds, until Webb had received the Contingent
Payment. It is estimated that at December 31, 2000, the aggregate amount payable
in respect of the Contingent Payment was $118.5 million.

      In connection with the 1989 restructuring, Webb agreed to grant those
investors in the Corporation and the Partnership ("Releasing Investors"), from
whom Webb had received written releases from all liabilities, rights
("Contingent Payment Rights") to receive certain amounts to the extent available
for application to the Contingent Payment. Approximately 84% in interest of the
investors provided releases and became Releasing Investors. Payments to
Releasing Investors are to be made in accordance with a schedule of priorities,
as defined in the Restructuring Agreement.

      On April 2, 1990, Webb transferred its interest in the Contingent Payment
to an irrevocable trust for the benefit of the Valley of the Sun United Way, and
upon such transfer Webb was no longer required to be qualified or licensed by
the New Jersey Casino Control Commission (the "Commission").

      On February 23, 1996, the Corporation acquired an option to purchase, at a
discount from the carrying value, the Contingent Payment. The purchase price of
the option was $1 million, and the option could have been exercised any time
prior to December 31, 1997. Given its operating results (see Item 1. "Business -
Current Developments"), the Corporation was not able to exercise this Contingent
Payment option, and it expired in accordance with its terms on December 31,
1997.

      Under the terms of the proposed Plan, the Contingent Payment and the
Contingent Payment Rights would be extinguished, and the holders of the
Contingent Payment and Contingent Payment Rights would not receive any
distributions in respect of these items.

The Claridge

      The Claridge, located in the Boardwalk casino section of Atlantic City,
New Jersey, is a 26-story building that contains the Corporation's casino and
hotel facilities. Built in 1929 as a hotel, the Claridge was remodeled at a cost
of approximately $138 million prior to its reopening as a casino hotel in 1981.
The Expansion Improvements, which were completed in 1986 at a cost of
approximately $20 million, provided approximately 10,000 additional square feet
of casino space, together with a 3,600 square foot lounge. In 1994,
approximately $12.7 million was expended to expand the Claridge's casino square
footage by approximately 12,000 feet, and to move and enlarge two restaurants.
In 1996, New Claridge constructed a self-parking garage facility connected to
its existing valet-parking garage, at a cost of approximately $28 million. The
combined garage facility provides parking for approximately 1,200 vehicles.

      The Claridge's casino consists of approximately 59,000 square feet of
casino space on three main levels with various adjacent mezzanine levels. The
casino currently contains approximately 1,777 slot machines and sixty-three
table games, including twenty-six blackjack tables, six craps tables, four
roulette tables, one baccarat and five mini-baccarat tables, and twenty-one
other specialty games. The hotel with related amenities consists of 502 guest
rooms (including 28 corner suites, 26 specialty suites and five tower penthouse
suites), five restaurants, three lounges, a private players club, a 600-seat
theater, limited meeting rooms, a gift shop, a beauty salon, and a health club
with an indoor swimming pool.

      New Claridge experiences a seasonal fluctuation in demand, which is
typical of casino-hotel operations in Atlantic City. Historically, peak demand
has occurred during the summer season. New Claridge's principal market is the
mid-Atlantic area of the United States. The casino gaming business in

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Atlantic City is highly competitive and is strictly regulated under the New
Jersey Casino Control Act (the "Act") and regulations thereunder which affect
virtually all aspects of casino operations. (See Item 1. Business -
"Competition" and "Gaming Regulation and Licensing").

Competition

      Competition in the Atlantic City casino-hotel market is intense. As of
December 31, 2000, the twelve existing casino facilities offered approximately
1,198,000 square feet of gaming space, a 2.3% increase over the casino square
footage as of December 31, 1999 of approximately 1,171,000 square feet, due to
minor expansions of existing facilities throughout the year. The total casino
square footage as of December 31, 1999 decreased 3.4% from the prior year,
primarily due to the closing of the Trump World's Fair Casino in the fourth
quarter of 1999. For the years ended December 31, 2000 and 1999, citywide gaming
revenues, as reported, increased 3.3% and 3.1%, respectively, over prior year
levels.

      Consolidation of ownership in the casino industry has been evident in
recent years in Las Vegas and Atlantic City. The most recent example in Atlantic
City was the purchase of the Caesars World Incorporated by Park Place
Entertainment Corporation, which also owns and operates Bally's Park Place
Casino in Atlantic City and the Atlantic City Hilton. Currently, the twelve
Atlantic City casinos are owned and operated by seven companies, with Park Place
Entertainment Corporation owning three, Trump Hotels and Casinos owning three,
and Harrahs Entertainment, Incorporated owning two. These ownership structures
allow for the casinos under common ownership to reduce overhead costs by
consolidating certain administrative functions, thus increasing their
profitability even during periods of minimal revenue growth.

      As a result of current high room occupancy rates, a more favorable
regulatory climate, the reduced threat of competition from potential new gaming
jurisdictions, and significant infrastructure developments making Atlantic City
more accessible, a significant amount of new investment has been announced or
recently completed in the Atlantic City gaming market. Although in recent years
several Las Vegas casino operators had announced plans to construct new casinos
in Atlantic City, the next new casino is not expected to be opened until
mid-2003, when the MGM-Mirage opens its "Borgata" casino in the marina district
of Atlantic City.

      Major infrastructure improvements throughout Atlantic City were completed
within the last several years. A new $268 million convention center, which was
completed in May 1997, contains approximately 500,000 square feet of exhibition
space, 45 meeting rooms, food service facilities, and a 1,600-car underground
parking garage. The new convention center is the largest exhibition space
between Boston and Atlanta. A 500-room non-casino hotel, which is linked to the
new convention center by an elevated walkway, opened in November 1997. The
development of the corridor which links the convention center to the boardwalk
area is complete, and features a wide, landscaped boulevard with a reflecting
pool, an expanded park area, and a 60-foot lighthouse which is illuminated each
night by a light show. In February 1997, construction of the new $7.5 million
bus terminal, which is a major component of this corridor, was completed. The
State of New Jersey is also implementing a capital plan of approximately $125
million to upgrade and expand the Atlantic City International Airport.
Construction of a $300 million roadway, which will provide access from the
Atlantic City Expressway to the marina casino district, began in late 1998 and
is expected to be completed in the summer of 2001.

      All casinos in Atlantic City are part of hotels which offer dining,
entertainment, and other guest facilities. As the size of the gaming facilities
continue to grow, the need for additional hotel rooms has become evident. The
number of guest rooms available citywide increased significantly in 1996, 1997
and

                                       8
<PAGE>

1998, from approximately 9,300 rooms in the beginning of 1996, to approximately
11,900 as of December 31, 1998. The number of rooms available in 1999 decreased
slightly to approximately 11,300 rooms as of year end, due to the closing of the
Trump World's Fair, and remained constant through 2000. Planned future guestroom
additions have been announced at Harrah's and the Tropicana. Competition among
the existing casino-hotels is based on factors such as promotional allowances
and incentives; the attractiveness of the casino area; advertising; customer
service; the availability, quality, and price of rooms, food, and beverage; ease
and availability of parking and accessing the facility; and entertainment.

       The Atlantic City business is seasonal, with the highest level of
activity occurring during the summer months, and the lowest level of activity
during the winter months. The primary markets for Atlantic City casino patrons
are Philadelphia, New Jersey and New York City, together with the secondary
markets of central Pennsylvania, Delaware, Baltimore and Washington, D.C.
Casinos offer incentives, in the form of cash and complimentaries for rooms,
food and beverages, to their customers based on their casino play. In recent
years, competition for, and as a result, incentives offered to, customers has
increased significantly. Many Atlantic City casino patrons arrive by bus and
stay for approximately six hours. Competitive factors in Atlantic City require
the payment of cash incentives and coupons for use towards the price of meals to
patrons arriving under bus programs sponsored by the casino operators.
Competition for bus patrons intensified in 1996, in the form of higher coin
incentives; New Claridge was forced to match the citywide increases, thus
increasing its per patron average coin cost to approximately $19 in 1996 from
approximately $13 in 1995. New Claridge relied heavily on attracting patrons who
travel to Atlantic City by bus because the Claridge previously lacked a
self-parking facility, and therefore had to remain competitive with other casino
operators in regards to the incentives offered. Even with its 1,200-space
parking facility, New Claridge continues to rely on its bus customers as a
significant source of business. In 1997 and continuing into early 1998, citywide
bus package pricing competition eased somewhat, with the average coin cost per
patron arriving by bus to the Claridge decreasing to $16 for 1997 and to $15
during the first half of 1998. However, in mid-1998, bus package pricing
competition began to increase again, fueled by the expansion at Caesars Atlantic
City Casino (which added approximately 800 slot machines in early 1998), as well
as the opening of Bally Park Place's bus transportation center in the third
quarter of 1998. During the fourth quarter of 1998, in response to this
acceleration of increasing bus coin incentives, New Claridge purposely reduced
its bus program volumes in order to reduce the related costs; the number of bus
passengers brought to the Claridge during the fourth quarter of 1998 was
approximately 37% lower than in the same period of 1997. To offset the decrease
in bus patrons, marketing programs such as double coin incentive bonuses and
one-day gift giveaways were increased, to focus on increasing the drive-in
segment of the business. This marketing strategy continued through the first
half of 1999. During the second half of 1999, while the drive-in promotions
continued, bus program volumes began to be increased slightly, although coin
incentives issued to bus patrons were in line with 1998 levels. During the
second half of 1999, 369,000 patrons arrived at the Claridge by bus, and were
issued an average of $18 in coin incentives per patron, in line with the second
half of 1998 levels of 377,000 patrons, also at an average of $18 per patron.
Management of the Corporation continues to monitor bus package pricing
competition, which in 2000 remained consistent with 1999 levels; a total of
709,000 passengers arrived at the Claridge by bus, and were issued an average of
$18 of coin incentives per passenger. In addition, efforts continue to be
focused on maximizing the drive-in segment of the business through advertising
and direct marketing promotions.

      The Claridge has positioned itself as the "smaller, friendlier"
alternative to the other Atlantic City casinos. This strategy, implemented in
1989, is designed to capitalize on the Claridge's unique physical facility,
which the Corporation believes retains the atmosphere of a grand hotel, and on
the Claridge's smaller, more intimate size relative to the larger Atlantic City
casinos. By emphasizing an environment that is intimate, friendly and
service-oriented, the Claridge targets a market niche different than that of a

                                       9
<PAGE>

majority of its competitors. The Claridge seeks to attract and retain a customer
base whose wagering spans the same market segments serviced by other casino
hotels, but primarily targets the middle, leaving the high-end business to its
competitors. New Claridge believes it is uneconomical to pursue the high-end
market as its core business because of the high maintenance cost and potential
volatility in table games win. The majority of the Claridge's casino revenue is
generated by slot machine play, although efforts have been taken in recent years
to increase table games play. However, in 2000, 77% of the Claridge's casino
revenue came from slot play, as compared to 74% in 1999. Citywide, 72% of total
casino revenue during 2000 was from slot play, as compared to 71% in 1999.

      The key elements of New Claridge's marketing plan include the use of
complimentaries, promotional activities, entertainment events, player
development hosts, a bus program, and the use of commissioned agents to attract
groups from outside the company's traditional market areas. New Claridge also
operates a direct marketing program to attract and retain customers. New
Claridge's Compcard Gold program, which allows patrons to earn various
complimentaries, including coins for slot machine play and gaming chips for
table play, based on their levels of gaming activity, provides a valuable
database of information on playing preferences, frequency and denominations of
play, and the amount of gaming revenues produced by gaming patrons. Because of
the expanded facilities and amenities now offered at the Claridge, the "Because
Smaller is Friendlier" positioning statement was changed to "Smaller, Friendlier
and So Much More." This position retains the equity in the intimacy-seeking
patron, but extends it to communicate that the Claridge now has a facility
capable of comfortably servicing a larger customer base, and offering the same
amenities and entertainment found at larger Atlantic City casino hotels.

      Competition in Atlantic City also extends to the employment market. The
Commission has promulgated regulations which require staffing levels at Atlantic
City casinos which are higher than those for casino-hotels in Nevada. In
addition, although the January 1995 amendments to the Act (see Item 1. "Business
- Gaming Regulation and Licensing" below) have eased the licensing requirements
for some employees, all of New Claridge's casino employees must be licensed.
Partly as a result of the licensing requirements, there has been intense
competition for experienced casino employees in Atlantic City. Difficulties in
hiring personnel licensed by the Commission have elevated labor costs, and
licensed personnel frequently leave their current positions for higher paying
jobs in other casinos. In addition, the expansion of casino gaming into other
jurisdictions has increased the competition for experienced casino management
personnel.

      Casino competition outside of New Jersey includes land-based casinos,
river boat gaming, slot machines at racetracks, and Indian gaming. By far, the
most competitive threat to Atlantic City has been the Indian gaming operations
at Foxwoods and the Mohegan Sun casinos in Connecticut, and the slot machine
facilities at the Delaware racetracks. The two Indian gaming casinos in
Connecticut, with a combined total of approximately 8,900 slot machines as of
December 31, 2000, reported total slot win of $1.308 billion for 2000, an
increase of 6.8% over 1999 slot revenue of $1.225 billion. In Delaware, the
three tracks that are currently authorized to offer slot machine gaming had a
combined total of approximately 5,151 slot machines as of the end of 2000 (an
increase of 23% over the total number of machines as of December 31, 1999).
These machines generated $485.1 million of slot revenue during the year, an
increase of 17.6% over 1999 revenue. In early 1999, the Pennsylvania Senate
voted against a bill which would have allowed the state's voters to consider, in
a non-binding referendum, the authorization of riverboat casinos, slot machines
at racetracks, and video poker in drinking establishments. It is unlikely that
Pennsylvania's Legislature will consider another gambling bill while the current
Governor, whose term ends in January 2003, is in office. The effect of any
future legalization of casino gaming in Pennsylvania on the Atlantic City market
would depend on the form and scope of such gaming.

                                       10
<PAGE>

Gaming Regulation and Licensing

      a. The New Jersey Casino Control Commission and Division of Gaming
Enforcement. The ownership and operation of casino-hotel facilities in Atlantic
City are subject to extensive state regulation under the Act. No casino-hotel
may operate in Atlantic City unless necessary corporate and individual officer,
director and employee licenses are obtained from the Commission. The Commission
is authorized under the Act to adopt regulations covering a broad spectrum of
gaming-related activities.

      The Act also establishes a Division of Gaming Enforcement (the "Division")
to investigate all applications for licenses, enforce the provisions of the Act
and the regulations thereunder, and prosecute before the Commission all
proceedings for violations of the Act or any regulations thereunder. The
Division conducts audits and continually reviews casino operations, maintains
information with respect to any changes in ownership of the casino-hotel and
conducts investigations of casino owners and investors when appropriate.

      Since 1991, changes to the Act have been enacted which have reduced
regulation of the casino industry; such changes have included the implementation
of 24-hour gaming, the introduction of new types of games, and the introduction
of simulcast wagering. In January 1995, significant amendments to the Act were
signed into law, which were intended to further reduce the regulation of the
Atlantic City casino industry. These amendments included changes regarding (i)
the authority and responsibilities of the Commission and the Division; (ii) the
licensing requirements of employees, casinos, and employees of industries which
service the casinos; (iii) the operation of the casinos; and (iv) the operation
of the CRDA.

      b. Licensing Requirements. The Act provides that various categories of
persons or entities must hold casino licenses. The Act also provides that each
officer, director and person who directly or indirectly holds any beneficial
interest or ownership in a casino licensee; or any person who, in the opinion of
the Commission, has the ability to control a casino licensee or elect a majority
of the board of directors; or each principal employee or any other employee of a
casino licensee (and any lender to or underwriter, agent or employee of the
licensee) who the Commission may consider appropriate for approval or
qualification, be qualified for approval pursuant to the provisions of the Act.
In addition, all contracts and leases entered into by the licensee, upon request
of the Commission, must be submitted to the Commission, are subject to its
review, and, if found unacceptable, are voidable. All enterprises which provide
gaming-related services to the licensee must be licensed. All other enterprises
dealing with the licensee must register with the Commission, which may require
that they be licensed if they do $75,000 or more per year in business with a
single licensee, and $225,000 or more per year if with more than one licensee.

      New Claridge holds a casino license because it carries on the casino
business of the Claridge and owns the Casino Assets. As a result, New Claridge's
officers and directors are subject to Commission qualification. The Corporation,
as the sole owner of the stock of New Claridge, is also required to be
qualified. As a part of its determination of the Corporation's qualification,
the Commission will require the qualification of each officer, each director,
and each person who directly or indirectly holds any beneficial interest or
ownership in the Corporation, and who the Commission requires to be qualified,
or any person who, in the opinion of the Commission, has the ability to control
the Corporation or elect a majority of its Board of Directors; or each principal
employee or any other employee whom the Commission may consider appropriate for
approval or qualification. The Commission has determined that no stockholder of
the Corporation owning less than 5% of its stock will be required to be
qualified unless the Commission determines that such stockholder has the ability
to control the Corporation or elect a majority of its Board of Directors. The
names and addresses of all stockholders have been supplied to the Commission and
any changes known to the Corporation are reported when they occur.

                                       11
<PAGE>

      c. Licensing Status. The Commission issues casino licenses, which, as
amended January 1995, are renewable every four years, subject to a series of
requirements including a requirement of demonstrating financial viability. On
September 20, 2000, New Claridge was issued a one-year casino license by the
Commission for the period commencing September 30, 2000. Due to the uncertainty
concerning the disposition of New Claridge's bankruptcy proceedings, the
Commission elected, for the second year in a row, to issue the one-year license,
rather than the typical four-year license. Additionally, the casino license
renewal contains certain financial reporting conditions and requirements
consistent with the previous license conditions, and with the manner in which
the Commission has relicensed other casino licensees who have filed voluntary
petitions under Chapter 11 in the past.

      d. Investigations and Disqualifications. The Commission may find any
holder of any amount of securities of the Corporation not qualified to own
securities of the Corporation. Further, as required by New Jersey, the charter
and the by-laws of the Corporation and New Claridge provide that securities of
the Corporation and New Claridge are held subject to the condition that if a
holder is found to be disqualified by the Commission the holder must dispose of
the securities of the Corporation or New Claridge, as the case may be. The
Corporation will periodically report the names and addresses of owners of record
of Class A Stock to the Commission as is required for all publicly traded
holding companies that have wholly-owned subsidiaries holding casino licenses.

      e. Casino Fees and Taxes. The Act provides for a casino license issue fee
of not less than $200,000, based upon the cost of the investigation and
consideration of the license application, and renewal fee of not less than
$200,000, based upon the cost of maintaining control and regulatory activities.
The renewal fee is charged to the casino licensee on a monthly basis, based on
the cost of actual investigatory time spent monitoring activities at the casino
hotel. In addition, a licensee is subject to (i) a tax of eight percent (8%) of
gaming revenues less a provision for uncollectible accounts; (ii) an annual
license fee of $500 on each slot machine; and (iii) an alcoholic beverage fee
computed on the basis of the cost of investigatory time spent monitoring each
beverage outlet.

      The Act further provides for the imposition of an investment obligation
pursuant to criteria set forth in the Act, or the payment of an alternative tax.
The investment obligation is 1.25% of the total gaming revenues (which are
defined as the total revenues derived from gaming operations less the provision
for uncollectible accounts) for each calendar year. If the casino licensee opts
not to make an investment, it is assessed an alternative tax of 2.5% of total
gaming revenues less the provision for uncollectible accounts. The licensee has
two options in satisfying its investment obligation; it can make a direct
investment in a project approved by the CRDA, which is the agency responsible
for administering this portion of the Act, or it can buy bonds issued by the
CRDA which will, if tax exempt, bear interest at the rate of 66 and 2/3% of the
average rate of the Bond Buyer Weekly 25 Revenue Bond Index for the 26 weeks
preceding the issue of the bonds. If the bonds are not tax exempt they will bear
interest at the rate of 66 and 2/3% of the average rate of Moody's A Rated
Utility Index for the 26 weeks preceding the issue of the CRDA bonds. The
investment obligation must be paid on the fifteenth day of the first, fourth,
seventh, and tenth months of each year based on the estimated gaming revenues
for the three month period immediately preceding the first day of those months.
The alternative tax must be paid not later than April 30 of the following year.

      New laws and regulations as well as amendments to existing laws and
regulations relating to gaming activities in Atlantic City are adopted from time
to time.

                                       12
<PAGE>

Employees

      As of December 31, 2000, New Claridge employed approximately 2,100
persons, of whom approximately 800 were represented by labor unions.
Approximately 650 of the 800 are represented by the Hotel, Restaurant Employees
and Bartender International Union, AFL-CIO, Local 54. In September 1999, the
Corporation's collective bargaining agreement covering the employees represented
by Local 54 was renewed, together with the collective bargaining agreements of
all Atlantic City casinos with respect to Local 54, for a period of five years.

      The management of the Claridge believes that its employee relations are
generally satisfactory. All of the employees represented by labor unions are
covered by collective bargaining agreements which prohibit work stoppages during
their terms.

Item 2. PROPERTIES

      The Claridge hotel was constructed in 1929 at the northeastern end of
Absecon Island, on which Atlantic City is located. After remodeling,
modernization and expansion at a cost of approximately $138 million, the
Claridge opened as a casino-hotel in July 1981. Located in the Boardwalk Casino
section of Atlantic City on Brighton Park, approximately 550 feet north of the
Boardwalk, the Claridge occupies three parcels of property.

      The casino-hotel, situated on the main parcel (41,408 square feet with 138
feet fronting the park and 300 feet deep), is a concrete steel frame structure,
26 stories high at its highest point. The valet-parking garage, situated on an
adjacent parcel of land (21,840 square feet) west of the casino-hotel site, is
an eight- level reinforced concrete ramp structure, built in 1981. Including the
bus drive-through area, a bus patron waiting room and an electrical room, it
totals an area of 197,100 square feet and provides parking for approximately 475
vehicles. In 1996, New Claridge completed the construction of a self-parking
garage, located on a parcel of land (29,120 square feet) connected to the
existing valet-parking garage. The combined garage facility provides parking for
approximately 1,200 vehicles. In April 2000, the Partnership sold the property
which previously had been used as an office building, to Greate Bay Hotel and
Casino Inc., for $3.5 million. The administrative offices that had previously
been located in that building were relocated to newly constructed offices
located within the perimeter of the self-parking garage. With the exception of
the self-parking garage, all of the facilities discussed are owned by the
Partnership and are leased to New Claridge under the Operating Lease and the
Expansion Operating Lease. The self-parking garage and the property on which it
is located are owned by New Claridge.

Item 3. LEGAL PROCEEDINGS

      On August 16, 1999, the Corporation and New Claridge filed voluntary
petitions under Chapter 11 of the Bankruptcy Code. In addition, on October 5,
1999, the Partnership filed a voluntary petition under Chapter 11 of the
Bankruptcy Code. The Corporation continues to operate the business of the
Claridge as a debtor-in-possession. See Item 1. "Business - Current
Developments" for a further discussion of these proceedings.

      During 1995, the Corporation received notice from the Internal Revenue
Service ("IRS") asserting deficiencies in Federal corporate income taxes for the
Corporation's 1990 and 1991 taxable years. Many of the proposed adjustments to
the Corporation's consolidated tax returns have been settled with no adverse
impact to the Corporation's consolidated financial statements. There was a
remaining IRS asserted deficiency for the 1990 and 1991 taxable years. In
January 1999, the Corporation reached a settlement agreement with the IRS
District Counsel, which was confirmed by the United States Tax Court on March 4,
1999. The amount of this settlement is included in "Liabilities Subject to
Compromise" on the

                                       13
<PAGE>

Corporation's consolidated balance sheet. This settlement agreement did not have
a material impact on the Corporation's consolidated financial statements.

      The Corporation and its subsidiaries are not parties to any other material
litigation other than ordinary routine litigation which is incidental to its
business.

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

      None.

















                                       14

<PAGE>
                                     PART II

Item 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
         MATTERS

      All issued and outstanding shares of the Corporation have been offered and
sold in reliance on exemptions from the registration requirements of the
Securities Act of 1933 as amended (the "Securities Act"). Therefore, there is no
established trading market for any class of shares of the Corporation. In
October 1983, 562,500 shares of Class A Stock were sold to Oppenheimer Holdings,
Inc., and certain officers and employees of Oppenheimer & Co., Inc., (placement
agent for the Partnership and the Corporation) at their par value, $.001 per
share, and 4,500,000 shares of Class A Stock were privately offered and sold at
$1.2336306 per share. At the same time, 562,500 shares of Class B Stock were
sold to Webb at their par value, $.001 per share. On March 24, 1989, Oppenheimer
Holdings, Inc. returned to the Corporation all of its shares (273,938) of the
Corporation's Class A Stock. On June 16, 1989, all of the outstanding shares of
the Corporation's Class B Stock, all of which was owned by Webb, was returned to
the Corporation and cancelled. As of March 15, 2001, there were approximately
495 holders of record of the Class A Stock. The Contingent Payment Rights (see
Item 1. "Business - Contingent Payment") received by Releasing Investors may or
may not be securities. The Corporation, the Partnership and Webb filed a
registration statement under the Securities Act with respect to the Contingent
Payment Rights as if they were securities and each of the Corporation, the
Partnership and Webb were an issuer of such securities. However, by such action
none of the Corporation, the Partnership or Webb admitted that the Contingent
Payment Rights are securities or that any of them is the issuer of any such
securities. There is no market for the Contingent Payment Rights.

      The Indenture restricts the declaration or payment of dividends or
distributions or redemptions of capital stock by the Corporation and its
subsidiaries, other than (i) dividends or distributions payable in equity
interests of the Corporation or such subsidiaries; (ii) dividends or
distributions payable to the Corporation or any wholly-owned subsidiary; or
(iii) dividends by a subsidiary on its common stock if such dividends are paid
pro-rata to all holders of such common stock.

      In addition, the Corporation and the Partnership have agreed not to make
any distributions to the holders of their equity securities, whether derived
from operations or from sale or refinancing proceeds, until the Contingent
Payment has been satisfied (see Item 1. "Business - Contingent Payment").















                                       15
<PAGE>

Item 6.   SELECTED FINANCIAL DATA

      The following table summarizes certain selected consolidated financial
data for the years ended December 31, 2000, 1999, 1998, 1997 and 1996.


<TABLE>
<CAPTION>

                                                 2000             1999            1998             1997              1996
                                                 -----            ----            ----             ----              ----
                                                                (in thousands except per share data)
<S>                                            <C>              <C>              <C>              <C>               <C>
Income Statement Data

Net revenues                                   $184,029          188,550         191,000          192,753           193,311

Income (loss) before
  reorganization items                         $  4,198              531          (9,415)          (5,979)          (15,389)

Reorganization items                           $ (3,682)         (38,721)            -0-              -0-               -0-

Net income (loss)                              $    516          (38,190)         (9,415)          (5,979)          (15,389)

Net income (loss) per share                    $    .10            (7.54)          (1.89)           (1.20)            (3.05)

Balance Sheet Data at Year End

Total assets                                   $107,093          102,522         131,776          150,380           164,163

Current assets                                 $ 31,597           28,232          18,403           37,096            31,753

Current liabilities                            $ 20,840           17,280          42,088           41,234            39,027

Liabilities subject to compromise              $146,046          145,259             -0-              -0-               -0-

Long-term debt, net of
  current installments                         $    -0-                1          85,170           85,000            85,000


Stockholders' deficiency                       $(62,902)         (63,418)        (25,228)         (15,813)           (9,834)
</TABLE>


                                       16

<PAGE>

Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

Results of Operations for the Year ended December 31, 2000

      The Corporation had net income for the year ended December 31, 2000 of
$516,000, compared to a net loss of $38,190,000 for the year ended December 31,
1999. The net loss for 1999 includes a $37.6 million impairment loss resulting
from the write down of the Expandable Wraparound Mortgage receivable. Results
for 2000 include approximately $4.5 million of professional fees incurred
related to the Corporation's Chapter 11 filing, compared to approximately $1.3
million of fees in 1999. However, results do not include interest expense on the
Notes, which ceased to accrue on August 16, 1999. For the years ended December
31, 2000 and 1999, contractual interest expense would have been $12,079,000 and
$10,936,000, respectively, of which $42,000 was actually recorded in 2000 and
$6,767,000 was actually recorded in 1999. In addition, results for 1999 include
income from the proceeds received by New Claridge as a result of the settlement
of the self- parking garage arbitration proceedings.

      New Claridge earned total casino revenue during 2000 of $163,979,000,
which was slightly higher than 1999 casino revenue of $163,833,000, which
resulted from increased revenue from slot machines, offset by lower table games
revenue, as further discussed below. Total citywide casino revenue in 2000, as
reported, increased 3.3% over 1999 revenue.

      During 2000, New Claridge's table games drop (the amount of gaming chips
purchased by patrons) decreased 9.1% from 1999 levels. In addition, the "hold"
percentage (the percentage of win to drop) decreased slightly to 13.6% in 2000,
from 13.8% in 1999, resulting in a 10.9% decrease in table games revenue, to
$37,670,000 in 2000, from $42,474,000 in 1999. The decrease in revenue was
offset by lower operating costs, including payroll and related marketing costs.
Total citywide table games drop and revenue for 2000, as reported, remained in
line with 1999 levels.

      Slot machine revenue earned by New Claridge during 2000 totaled
$126,309,000, reflecting a 3.9% increase over 1999 slot revenue of $121,559,000.
This increase was slightly lower than the increase in citywide slot machine
revenue in 2000, as reported, of 4.5%. The increase in Claridge slot machine
revenue is attributable, in part, to increased bus patron volumes during the
first half of 2000 over 1999 volume, which had been reduced in an effort to
reduce bus-related coin redemption costs.

      Atlantic City casinos continued during 2000 to market heavily to patrons
who arrive by bus, and are issued incentives in the form of coin to play slot
machines. During 2000, 709,000 patrons arrived at the Claridge by bus, and were
issued $12,607,000 in coin incentives, for an average per patron of $18. This
compares to 1999, when 677,000 bus patrons arrived at the Claridge and were
issued $12,038,000 of coin incentives, also averaging $18 per patron. In
addition to the bus programs, all Atlantic City casinos, including New Claridge,
offer promotional incentives, in the form of coin or currency, to their
customers through direct marketing programs, based on their level of gaming
activity. Promotional incentives (coin) issued by New Claridge through its
direct marketing programs during 2000 totaled $10,764,000, compared to
$11,845,000 in 1999.

      Total hotel revenue in 2000 totaled $11,673,000, an increase of 8.6% over
1999 hotel revenue. This increase was due to an increase in the average room
rate, to $69 in 2000, from $63 in 1999. Hotel occupancy for 2000 was 91%,
slightly lower than the 1999 occupancy of 92%. Total food and beverage revenues
during 2000 were $19,573,000, a 6.3% increase over 1999 revenues of $18,413,000.
The increase in food and beverage revenues is attributable to an increase in
covers (the number of meals served) to 958,000 in 2000, from 953,000

                                       17

<PAGE>

in 1999, combined with an increase in the average price per cover, to $13.54 in
2000, from $12.92 in 1999. Promotional allowances, which represent the retail
value of rooms, food, beverages, and showroom admissions provided free of charge
to customers under various marketing programs, increased 6.5% in 2000, to
$22,930,000, over 1999 levels. Cash revenues from rooms, food, beverage, and
showroom admissions, increased 10.1% in 2000, to $8,800,000 over 1999 cash
revenues of $7,993,000. Other income during 1999 includes the $2.3 million
received by New Claridge in February 1999 as a result of the settlement of the
self- parking garage arbitration proceedings.

      Total costs and expenses for 2000 were $179,831,000, reflecting a 4.3%
decrease from 1999 expenses, due primarily to lower interest expense as a result
of the Corporation's filing under Chapter 11 of the Bankruptcy Code on August
16, 1999. Casino operating expenses of $99,685,000 decreased slightly from 1999
levels, resulting from lower costs associated with table games operations and
lower total coin redemption costs, offset somewhat by higher slot equipment
rental costs. Food and beverage costs of $6,088,000 increased over 1999 levels
due to increased business volumes. General and administrative expenses of
$25,602,000 decreased 2.3% from 1999 expenses, due in part to decreased legal
fees (which in 1999 related to the self-parking garage arbitration), lower
payroll costs, and expenses in 1999 related to preparation for the "year 2000"
issue. Rent expense to the Partnership for 2000 is higher than 1999, resulting
in part from a $1 million annual decrease in the lease abatements permitted as
per the terms of the sixth amendment to the Operating Lease and Expansion
Operating Lease, as well as increased general and administrative costs of the
Partnership (including legal fees associated with the Partnership's Chapter 11
filing), which are funded by New Claridge through the Operating Lease payments.

      Reorganization items during 2000 of $3,682,000 includes professional fees
incurred as a result of the Corporation's filing for reorganization under
Chapter 11 of $4,542,000, offset by interest earned from the investment of
accumulated cash resulting from the Chapter 11 filing of $860,000. During 1999,
reorganization items included $1,268,000 of professional fees, offset by
$142,000 of interest earned. In addition, the Corporation recorded an adjustment
in 1999 to write down the balance of the Expandable Wraparound Mortgage, to an
amount estimated to be the realizable value of the Hotel Assets. The total
amount of this write down, which was included in reorganization items, was $37.6
million.

Results of Operations for the Year ended December 31, 1999

      The Corporation had a net loss of $38,190,000 for the year ended December
31, 1999, compared to a net loss of $9,415,000 for the year ended December 31,
1998. The net loss for 1999 includes a $37.6 million impairment loss resulting
from the write down of the Expandable Wraparound Mortgage receivable.

      Total Claridge casino revenues during 1999 were $163,833,000, reflecting a
1.3% decrease from 1998 casino revenues of $166,010,000. Citywide casino
revenues for 1999, as reported, increased 3.1% over 1998 citywide revenues.
Total citywide casino square footage as of December 31, 1999 was 1,171,000, a
3.4% decrease from the available casino square footage as of December 31, 1998;
this decrease was primarily due to the closing of the Trump World's Fair Casino
in the fourth quarter of 1998. Trump had announced that this casino was closed
in preparation for the construction of a new "mega-resort" on the property
sometime in the future.

      New Claridge's table games drop for 1999 decreased 4.7% from the 1998
drop; however, due to a slight increase in the "hold" percentage, 1999 table
games revenue of $42,274,000 was 3.4% lower than 1998 table games revenue of
$43,762,000. Table games revenue for 1998 reflected a significant 11.5% increase
over 1997 revenue. Citywide, table games drop and revenue for 1999, as reported,
remained in line with 1998 levels.


                                       18
<PAGE>

      Slot machine revenues reported by New Claridge during 1999 were
$121,559,000, reflecting a slight decline from 1998 slot machine revenues of
$122,248,000. Citywide slot machine revenue, as reported, for 1999 increased
4.5% over 1998 revenues. The average number of slot machines available in 1999,
both at the Claridge and citywide, remained consistent with 1998 levels.

      During the fourth quarter of 1998, in response to the acceleration of
increasing bus coin incentives, New Claridge purposely reduced its bus program
volumes in order to reduce the related costs; the number of bus passengers
brought to the Claridge during the fourth quarter of 1998 was approximately 37%
lower than in the same period of 1997. To offset the decrease in bus patrons,
marketing programs such as double coin incentive bonuses and one-day gift
giveaways were increased, to focus on increasing the drive-in segment of the
business. This marketing strategy continued through the first half of 1999.
During the second half of 1999, while the drive-in promotions continued, bus
program volumes began to be increased, although coin incentives issued to bus
patrons were in line with 1998 levels. During the second half of 1999, 369,000
patrons arrived at the Claridge by bus, and were issued an average of $18 in
coin incentives per patron, in line with the second half of 1998 levels of
377,000 patrons, also at an average of $18 per patron. In total during 1999,
677,000 casino patrons arrived at the Claridge by bus, and were issued
$12,038,000 of coin incentives, for an average of approximately $18 per patron.
This compares to 842,000 bus patrons in 1998, with total coin incentives of
$13,500,000, or an average of $16 per patron. In addition, promotional
incentives issued through New Claridge's direct marketing program (which in 1999
and 1998 included coin and gaming chips) totalled $11,845,000 in 1999, compared
to $11,612,000 in 1998.

      Hotel revenues in 1999 totalled $10,745,000, an increase of 12.2% over
1998 hotel room revenues. This increase was due to a higher rooms occupancy rate
(92% in 1999 compared to 89% in 1998), combined with a higher average room rate
($63 in 1999 compared to $59 in 1998). The higher rooms volume was reflected
primarily in the tour group segment of the business. Food and beverage revenues
during 1999 were $18,413,000, reflecting a 3.0% decrease from 1998 revenues of
$18,989,000. This decrease was primarily due to the closing of New Claridge's
buffet in late 1998 as part of the refocusing of marketing efforts to reduce bus
program volumes. As a result, the total number of covers declined to 953,000 in
1999, from 1,163,000 in 1998; however, the average price per cover increased to
$12.92 in 1999, from $11.22 in 1998. During August 1999, New Claridge opened
"Pronto", a self-service, fast food Italian eatery, to assist in servicing the
increased customer volumes as the bus program volumes began to increase.
Promotional allowances increased 7.3% in 1999, to $21,522,000, over 1998 levels.
Other income for 1999 includes the $2.3 million received by New Claridge in
February 1999 as a result of the settlement of the self-parking garage
arbitration proceedings.

      Total costs and expenses for 1999 were $188,019,000, a 6.2% decrease from
1998 expenses of $200,415,000. This decrease was due, in part, to lower interest
expense; as a result of the Corporation's filing under Chapter 11 of the
Bankruptcy Code on August 16, 1999, interest expense on the Notes and the $3.6
million loan from the Partnership ceased to accrue as of that date. Casino
operating expenses for 1999 were $100,576,000, slightly lower than 1998
expenses, primarily due to lower coin incentive expense, as previously
discussed. Food and beverage expenses of $5,556,000 in 1999 were significantly
lower than 1998 levels, primarily due to the closing of New Claridge's buffet in
late 1998. Rent expense to the Partnership declined from 1998 levels, primarily
due to higher abatements of rent in 1999 resulting from lower cash requirements
of the Partnership for servicing the debt under the Expandable Wraparound
Mortgage. General and administrative expenses of $26,211,000 in 1999 were 5.2%
lower than 1998 expenses, primarily due to decreased legal fees, which in 1998
resulted from the self-parking garage arbitration proceedings.

      Reorganization expenses for 1999 includes professional fees incurred as a
result of the Corporation's filing for reorganization under Chapter 11 of
$1,268,000, offset by interest earned from the investment of accumulated cash
resulting from the Chapter 11 filing. In addition, as a result of the
Corporation's and New

                                       19
<PAGE>

Claridge's Chapter 11 filing, as well as the Partnership's Chapter 11 filing on
October 5, 1999, the Expandable Wraparound Mortgage became impaired. As a
result, the Corporation recorded an adjustment in 1999 to write- down the
balance of the Expandable Wraparound Mortgage, to an amount estimated to be the
realizable value of the Hotel Assets. The total amount of this write-down was
$37.6 million.

      For the year ended December 31, 1999, the Corporation did not record any
income taxes. Since the Corporation was in a loss position, any resulting tax
benefit would be offset by a corresponding increase in the valuation allowance.

Liquidity and Capital Resources

Financial Condition

      On January 31, 1994, the Corporation completed an offering of $85 million
of Notes (see Item 1. "Business - Corporate Structure"). The Notes are secured
by (i) a non-recourse mortgage granted by the Partnership representing a first
lien on the Hotel Assets; (ii) a pledge granted by the Corporation of all
outstanding shares of capital stock of New Claridge; and (iii) a guarantee by
New Claridge. New Claridge's guarantee of the Notes is secured by a collateral
assignment of the second lien Expandable Wraparound Mortgage, and by a lien on
the Claridge's gaming and other assets, which lien would be subordinated to
liens that might be placed on those gaming and other assets to secure any future
revolving credit line arrangement. On January 28, 1997, New Claridge entered
into an agreement to subject the new self-parking garage to the lien of the
mortgage; such lien will not be subordinated to any liens which may be placed on
New Claridge's gaming and other assets to secure any future revolving credit
line arrangement. Interest on the Notes is payable semiannually on February 1
and August 1 of each year.

      The net proceeds of the Notes, totalling $82.2 million, were used as
follows: (i) to repay the then outstanding debt of the Corporation under the
Revolving Credit and Term Loan Agreement of approximately $35 million, including
the outstanding balance of the Corporation's revolving credit line, which was
secured by a first mortgage; (ii) to expand the casino capacity of the Claridge
by 12,000 square feet in 1994, including the addition of approximately 500 slot
machines and the relocation of two restaurants and their related kitchens, at a
cost of approximately $12.7 million; (iii) to purchase property in 1995 and
construct on that property a self- parking garage, which opened in 1996, at a
cost (excluding capitalized interest of approximately $2.2 million) of
approximately $28 million (of which approximately $7.5 million represents the
cost of acquiring the land and approximately $20.5 million represents costs
attributable to building the garage facility); and (iv) to acquire the
Contingent Payment Option (see Item 1. "Business - Contingent Payment") at a
cost of $1 million. With the completion of the construction of the self-parking
garage, the proceeds of the offering of the Notes had largely been expended.

      The Corporation has experienced recurring losses and deterioration in its
cash flow since 1996. Since the Corporation does not have substantial cash
reserves or access to a line of credit, the Corporation needed to experience
significant improvement in operating results in 1997 over 1996 levels in order
to meet its on-going obligations, including the interest due on the Notes.
Although operating results in 1997 did improve over 1996 levels, due primarily
to the positive impact of the availability of the self-parking garage, lower bus
package pricing, and other cost containment initiatives, operating results in
1998 fell below 1997 levels due to increased competition for casino customers.
In 1998, the Corporation experienced a net loss of $9.4 million, compared to a
net loss of $6.0 million in 1997.

      In view of the operating results of New Claridge in 1998, and in order to
meet its obligations, management of the Corporation took several steps to
enhance its cash position, through both operational changes, and certain

                                       20
<PAGE>

transactions with PDS Financial Corporation and the CRDA. In addition, in
February 1999, the Corporation and New Claridge agreed to a settlement of
approximately $2.3 million in the arbitration proceedings concerning the
accident which took place in New Claridge's self-parking garage in July 1996.
The settlement proceeds were received by New Claridge in late February 1999.

      As a result of these transactions, on March 2, 1999, New Claridge was able
to pay the interest due on the Notes on February 1, 1999, under the 30-day grace
period allowed in accordance with the terms of the Indenture. Operating results
for the first half of 1999, however, continued to lag behind prior year levels,
which affected the Corporation's ability to continue to meet its obligation to
pay interest on the Notes. As a result, the Corporation did not pay the interest
due August 2, 1999 on the Notes, and on August 16, 1999, the Corporation and New
Claridge filed voluntary petitions under Chapter 11 of the Bankruptcy Code in
the Bankruptcy Court. The Partnership filed a voluntary petition under Chapter
11 of the Bankruptcy Code on October 5, 1999.

      Management of the Corporation believes that this filing permitted the
Corporation to conserve its cash pending a restructuring of its financial
obligations in the Chapter 11 proceeding. As of December 31, 2000, the
Corporation had approximately $19.5 million of cash and cash equivalents.
General and administrative expenses, primarily for professional fees, have
increased as a result of the bankruptcy proceeding. Through December 31, 2000,
such expenses totalled approximately $5.8 million, of which approximately $3.0
million has been paid as of December 31, 2000.

      The Corporation continues to operate the business, as set forth in the
Bankruptcy Code, under the supervision of the Bankruptcy Court, as a
debtor-in-possession. As debtor-in-possession, the Corporation is authorized to
operate its business, but may not engage in transactions outside of the normal
course of business without the approval of the Bankruptcy Court. Further, the
Corporation is subject to operating within certain weekly cash budgets which
have been approved by the Bankruptcy Court pursuant to certain orders
authorizing the use of its cash. As of the petition date, actions to collect
prepetition indebtedness are stayed, and other contractual obligations may not
be enforced against the Corporation. In addition, the Corporation may reject
executory contracts and lease obligations, and parties affected by these
rejections may file claims with the Bankruptcy Court in accordance with the
reorganization process. As part of the "first day orders," the Bankruptcy Court
approved the Corporation's payment of prepetition employee compensation,
benefits and reimbursable employee expenses, as well as to continue to honor all
existing employee benefit plans and policies. In addition, the Bankruptcy Court
approved the payment of certain prepetition vendor claims, certain prepetition
guest-related claims (such as outstanding direct mail coupons, progressive
jackpots, and safekeeping deposits), and prepetition payroll, gaming and other
taxes and fees.

      While the Corporation and its subsidiaries have sustainable operations,
the cash generated by those operations are not sufficient to (i) permit the
Corporation to meet the debt service on the currently outstanding Notes; (ii) to
make significant capital improvements that management believes are necessary to
improve the Claridge's competitive position in the Atlantic City casino market;
and (iii) regularly make capital improvements in the future to maintain that
competitive position. Accordingly, management of the Corporation intended to
seek, in the Chapter 11 proceeding, to reduce the Corporation's debt obligations
to a level that it believes is consistent with the sustainable level of cash to
be generated by the Claridge. At the same time, management intended to seek to
simplify the ownership structure of the Claridge as between the Corporation, New
Claridge and the Partnership. On January 27, 2000, the Corporation, New
Claridge, and the Partnership filed a joint plan of reorganization and
disclosure statement with the Bankruptcy Court, which plan provided for the
above discussed financial restructuring. On April 5, 2000, in response to
objections raised by the trustee for the noteholders, the United States Trustee,
and others, the Corporation, New Claridge, and the Partnership filed an amended
plan of reorganization and disclosure statement. The adequacy of the amended
plan was approved by the Bankruptcy Court on May 9, 2000, which allowed for the
amended plan to be submitted to the

                                       21
<PAGE>

Corporation's creditors for a vote. On July 18, 2000, the Corporation announced
the results of that vote: the holders of the Corporation's Notes voted to reject
the amended plan; management of the Corporation believes that the unsecured
creditors voted to accept the amended plan. The Corporation had intended to
pursue confirmation of the amended plan under Section 1129B of the Bankruptcy
Code, which allows for the Bankruptcy Court judge to confirm the amended plan
through the "cramdown" procedure, at the confirmation hearing, which was
scheduled to begin September 6, 2000.

      However, on August 11, 2000, the Bankruptcy Court judge granted permission
to the Official Secured Noteholders Committee (the "Committee") to hire an
investment banker to try to locate potential investors to submit competing
reorganization plans. The two primary offers which were considered by the
Corporation's Board of Directors (the "Board") were submitted by Park Place
Entertainment Corporation ("PPE")(owner and operator of Bally's Park Place,
Incorporated, the Atlantic City Hilton Casino Resort, and Caesars Atlantic City
casinos in Atlantic City) and GB Holdings, Incorporated ("GBHI") (owner and
operator of the Sands Hotel and Casino in Atlantic City). After evaluation by
the Board and its financial and legal advisors, the Corporation informed the
Bankruptcy Court judge that it intended to pursue the bid submitted by PPE. The
GBHI offer expired by its own terms on October 13, 2000.

      On November 28, 2000, the Corporation filed a second amended joint plan of
reorganization and a second amended disclosure statement, which included an
executed copy of the purchase and sale agreement between the Corporation and
PPE. The second amended joint plan of reorganization provides for a sale of
substantially all of the assets of New Claridge and the Partnership to PPE.
Certain amendments were subsequently made to this plan, and on March 27, 2001,
the fourth amended joint plan of reorganization and fourth amended disclosure
statement (the "Plan") were approved by the Bankruptcy Court to be submitted to
the creditors for a vote. Pursuant to the terms of the Plan, the secured
noteholders would receive approximately an 83% recovery on their claim of $90.5
million, and the unsecured creditors would receive approximately 61.5% of their
claim. If the creditors vote to accept the Plan, the Bankruptcy Court has
scheduled May 16, 2001 as the date for the confirmation hearing for the Plan.

      At December 31, 2000, the Corporation had working capital of $10,757,000,
compared to working capital of $10,952,000 at December 31, 1999. The decrease in
working capital was principally attributable to an increase in accounts payable
of $1,178,000 and an increase in reorganization costs payable of $2,041,000,
offset by an increase in cash and cash equivalents of $2,632,000 and an increase
in prepaid expenses and other current assets of $601,000.

      For the year ended December 31, 2000, cash provided by operating
activities was $6,165,000, compared to cash provided by operating activities of
$8,698,000 for the year ended December 31, 1999. Cash payments for professional
fees related to the Chapter 11 filing were approximately $2.5 million in 2000,
compared to approximately $455,000 in 1999. As a result of the Chapter 11 filing
on August 16, 1999, the interest payments due on the Notes have not been made;
therefore, interest payments in 2000 were approximately $5 million lower than in
1999. Cash provided by operating activities in 1999 was improved by the
deferral, on March 1, 1999, of $1.1 million of basic rent payable to the
Partnership under the Operating Lease and Expansion Operating Lease, as well as
the $2.3 million received as a result of the settlement of the garage
arbitration proceedings. In addition, rental payments made to the Partnership in
2000 were higher than in 1999, due in part to the $1 million annual decrease in
lease abatements permitted as per the terms of the sixth amendment to the
Operating Lease and Expansion Operating Lease. Cash used in investment
activities in 2000 was $3,408,000, compared to $1,249,000 in 1999. Cash provided
by investment activities in 1999 was primarily from the receipt of Expandable
Wraparound Mortgage principal payments of approximately $1.7 million, offset by
new FF&E Loans made to the Partnership and other purchases of property and
equipment totalling approximately $550,000, and the payment of CRDA obligations
of approximately $2.3 million. During 2000, cash receipts from

                                       22
<PAGE>

Expandable Wraparound Mortgage principal payments were $2.8 million, while cash
used for the purchase of property and equipment was approximately $3.9 million,
and the payment of CRDA obligations was approximately $2.1 million. Cash used in
financing activities in 2000 and 1999 of $125,000 and $413,000, respectively,
represent payments of capital lease obligations for certain gaming equipment.

      For the year ended December 31, 2000, the Corporation's "Adjusted EBITDA"
was $6,866,000, compared to $10,714,000 for the year ended December 31, 1999.
"EBITDA" represents earnings before interest expense, income taxes,
depreciation, amortization, and other non-cash items. "Adjusted EBITDA" is equal
to "EBITDA" plus rent expense to the Partnership, less interest income from the
Partnership, less "Net Partnership Payments", which represent the Corporation's
net cash outflow to the Partnership. Adjusted EBITDA is used by the Corporation
to evaluate its financial performance in comparison to other gaming companies
with more traditional financial structures. Adjusted EBITDA may be used as one
measure of the Corporation's historical ability to service its debt, but should
not be considered as an alternative to operating income (as determined in
accordance with generally accepted accounting principles) as an indicator of
operating performance, or to cash flows from operating activities (as determined
in accordance with generally accepted accounting principles) as a measure of
liquidity, or to other consolidated income or cash flow statement data, as are
determined in accordance with generally accepted accounting principles. For the
year ended December 31, 2000, the ratio of earnings (defined as pre-tax income
(loss) from continuing operations, adjusted to exclude fixed charges consisting
of interest expense, interest capitalized, and such portion of rental expense as
can be demonstrated to be representative of the interest factor) to fixed
charges increased to 1.07, from (1.58) in 1999, and compared to .52 in 1998. The
deficiency of earnings to fixed charges in 1999, 1998 and 1997 was $38,133,000,
$9,358,000, and $5,922,000, respectively. The reduction in this ratio in 1999
from 1998 was primarily due to the impairment loss on the Expandable Wraparound
Mortgage. (See "Relationship with the Partnership", below).

Relationship with the Partnership

      The current relationships and agreements between the Corporation, New
Claridge and the Partnership, each of which would be terminated under the terms
of the proposed Plan, are described in detail in Item 1. "Business - Certain
Agreements between the Corporation, New Claridge and the Partnership".

      Under the terms of the Expandable Wraparound Mortgage, New Claridge is not
permitted to foreclose on the Expandable Wraparound Mortgage and take ownership
of the Hotel Assets so long as a senior mortgage is outstanding. The face amount
outstanding of the Expandable Wraparound Mortgage at December 31, 2000
(including the outstanding FF&E Loans and the $20 million of deferred interest)
was $82.0 million.

      As a result of the Corporation's and New Claridge's filing for
reorganization under Chapter 11 on August 16, 1999, as well as the Partnership's
Chapter 11 filing on October 5, 1999, the Expandable Wraparound Mortgage has
become impaired. Therefore, during the fourth quarter of 1999, the Corporation
recorded an adjustment to write-down the balance of the Expandable Wraparound
Mortgage receivable, to an amount estimated to be the realizable value of the
Hotel Assets. The total amount of this write-down was $37.6 million.

Income Taxes

      No tax expense was recorded for the year ended December 31, 2000, due to a
decrease in the valuation allowance provided. No tax benefit was recorded for
the year ended December 31 1999, due to the increase in the valuation allowance
provided, resulting from the uncertainty of realizing any tax benefit in future
periods as a result of the current financial condition of the Corporation (see
Item 1. "Business - Current Developments").

                                       23

<PAGE>

Recently Issued Accounting Pronouncements

      In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"). In June 2000 the
FASB issued SFAS No. 138, "Accounting for Certain Derivative Instruments and
Certain Hedging Activity, an Amendment of SFAS 133" ("SFAS 138"). SFAS 133 and
SFAS 138 establish accounting and reporting standards for derivative instruments
and hedging activities. It requires that a company recognize all derivatives as
either assets or liabilities in the balance sheet and measure those instruments
at fair value. It also requires that all derivatives be marked to market on an
ongoing basis and applies whether the derivatives are stand-alone instruments or
embedded derivatives. These market value adjustments are to be included either
in the statement of earnings or other comprehensive income, depending on the
nature of the hedged transaction. SFAS 133 and SFAS 138 are effective for all
fiscal quarters of fiscal years beginning after June 30, 2000; the Corporation
will adopt SFAS 133 and SFAS 138 on January 1, 2001. As of December 31, 2000,
the Corporation had no freestanding derivative instruments in place and had no
material amount of embedded derivative instruments. Based on the Corporation's
application of SFAS 133 and SFAS 138, their adoption will have no materially
adverse effect on the Corporation's consolidated financial statements.

Factors Which May Influence the Corporation's Future Operating Results

      If the Corporation's creditors approve the Plan, as to which there can be
no assurance, the Corporation and its subsidiaries would be liquidated.

      As a result of current high room occupancy rates, a more favorable
regulatory climate, the reduced threat of competition from potential new gaming
jurisdictions, and significant infrastructure developments making Atlantic City
more accessible, significant new investments are planned, including the
expansion of existing casinos and the construction of several new casinos. As
more of these facilities are opened, it is possible that the increased casino
capacity will not be absorbed as quickly as it is opened, and competition for
gaming patrons will heighten. In addition, casino activity outside of Atlantic
City could have an impact on the Atlantic City gaming market. Although the
expansion of legalized gaming throughout the United States in recent years has
slowed somewhat, current operations in certain markets, most notably Indian
gaming in Connecticut and slot machine facilities at the Delaware racetracks,
have had, and may continue to have, an impact on the Atlantic City casino
industry. (See Item 1. "Business - Competition".) In addition, although New York
and Pennsylvania have not, to date, been successful in legalizing casino gaming,
management believes that, should casino gaming be legalized in the future in
those states, the effects on Atlantic City casinos would depend on the form and
scope of such gaming.

Item 7(a).  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        No effect.

Item 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

      The Financial Statements and Financial Statement Schedules are set forth
at pages F-1 to F-31 of this report.

Item 9.    DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

        None.

                                       24

<PAGE>
                                    PART III


Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THIS REGISTRANT

      Name                         Office                                   Age
      ----                         ------                                   ---
      James M. Montgomery          Chairman, Director                        61
      David W. Brenner             Director                                  65
      Shannon L. Bybee             Director                                  62
      A. Bruce Crawley             Director                                  55
      Ned P. DeWitt                Director                                  61
      Mark H. Sayers               Director                                  51
      Robert M. Renneisen          Director                                  54
      Frank A. Bellis, Jr.         Chief Executive Officer, Director         47
      Jean I. Abbott               Executive Vice President                  45
      Albert T. Britton            Executive Vice President                  44
      Glenn S. Lillie              Vice President                            52

Business Experience

      Mr. Montgomery has served as a member of the Board of Directors of the
Corporation (the "Board") since March 1995, and as Chairman of the Board since
November 1999. Since 1978, he has served as President of Houze, Shourds, and
Montgomery, Inc., a management consulting firm located in Long Beach,
California. Prior to 1978, Mr. Montgomery held various managerial positions with
Rohr Industries, Inc. and Rockwell International.

      Mr. Brenner has served as a member of the Board since February 1991, and
was Chairman of the Board from August 1993 to June 1998. He served as President
of the Philadelphia Sports Congress from January 1987 through June 1994. Mr.
Brenner served as Chairman of the Hospital and Higher Education Facilities
Authority of Philadelphia from January 1986 to June 1992, as Director of
Commerce of the City of Philadelphia from January 1984 to September 1986, and as
Director of Finance from April 1991 through December 1991. He was with the
accounting firm of Arthur Young & Company from 1957 to September 1983. He was
managing partner of the Philadelphia office of Arthur Young from November 1969
until March 1980.

      Mr. Bybee has served as a member of the Board since July 1988. He
currently is Associate Professor for Gaming Management, Law & Regulation, at
University of Nevada Las Vegas. From July 1993 to August 1994, Mr. Bybee served
as President and Chief Operating Officer for United Gaming, Inc. Mr. Bybee was
the Corporation's Chairman of the Board from November 1988 to July 1993, and
from August 1988 to October 1988. In June 1989, Mr. Bybee was appointed to serve
as the Chief Executive Officer of the Corporation and New Claridge, a position
he held through July 1993. From 1983 to 1987, he was Senior Vice President of
Golden Nugget, Incorporated which operated the Golden Nugget Casino Hotel in
Atlantic City. From 1981 to 1983, Mr. Bybee was President of GNAC Corporation,
which operated the Golden Nugget Casino Hotel in Atlantic City.

      Mr. Crawley has served as a member of the Board since February 1995. He
currently serves as President and Director of Public Relations and Marketing
Services for Crawley, Haskins & Rodgers, a Philadelphia based public relations
and advertising firm. Prior to establishing his own firm in May 1989, Mr.
Crawley was employed at First Pennsylvania Bank and First Pennsylvania
Corporation, where he served as Senior Vice President and Director of Public and
Investor Relations. He also served, from 1976 to 1979, as Vice President

                                       25

<PAGE>

and Director of Advertising for First Pennsylvania Bank and First Pennsylvania
Corporation.

      Mr. DeWitt has served as a member of the Board since May 1995. He
currently serves as President of Crave Entertainment Corporation. From July 1997
to November 1999, Mr. DeWitt was Chairman and Chief Executive Officer of U'Race
Corporation and a member of the Board of Directors of LBE Technologies,
Incorporated, in Saratoga, California. Mr. DeWitt served as President, Chief
Executive Officer of LBE Technologies, Incorporated from November 1994 to
February 1997. From November 1993 to August 1994, he served as President of SEGA
Enterprises, (USA) in Redwood City, California. Mr. DeWitt also served as
President of the Entertainment Group of Madison Square Garden from July 1990 to
August 1991, and as President of Source Service Corporation from December 1986
to April 1989. He also served, from 1973 through 1982, as President and Chief
Executive Officer of Six Flags Corporation.

      Mr. Sayers has served as a member of the Board of Directors of the
Corporation since February 1990. Mr. Sayers has served as Vice President of EMES
Management Corporation, a real estate management and development company, of New
York, New York, since February 1976.

      Mr. Renneisen has served as a member of the Board since June 1991, and
presently serves as the President and Chief Executive Officer of the Miss
America Organization. He served as President of the Corporation from June 1992
until November 1999, and as Chief Executive Officer of the Corporation and New
Claridge from July 1993 until November 1999. He was Vice Chairman of New
Claridge from June 1994 until June 1998. Mr. Renneisen was Executive Vice
President of the Corporation from June 1991 to June 1992. He served as President
of New Claridge from January 1991 to January 1996. He was Chief Operating
Officer of New Claridge from January 1991 to July 1993. Mr. Renneisen was
Executive Vice President of New Claridge, responsible for marketing and later
casino operations, from February 1988 to January 1991. Prior to joining New
Claridge, Mr. Renneisen served from January 1987 to December 1987 as Vice
President of Marketing of Treasure Island Hotel and Casino in St. Maarten. From
June 1986 to May 1987, he served a President of Renneisen, Kincade & Associates,
Inc. of Las Vegas, Nevada, marketing consulting firm. He was Senior Vice
President of Marketing of the Tropicana Hotel and Casino in Atlantic City from
May 1982 to August 1984.

      Mr. Bellis has served as Chief Executive Officer and Director of the
Corporation since November 1999. He has served as Senior Vice President, General
Counsel and Secretary to the Corporation from February 1994 until November 1999.
He also has served as Senior Vice President and General Counsel of New Claridge
since February 1994, as Vice President and General Counsel of New Claridge from
September 1992 to February 1994, and as Secretary of New Claridge since August
1993. Previously, from May 1985 to August 1992, Mr. Bellis was Corporate Counsel
and Secretary to Inductotherm Industries, Inc., Rancocas, New Jersey. During
1984 and 1985, Mr. Bellis was Associate General Counsel for New Claridge. Prior
to joining New Claridge, he was a Deputy Attorney General in the New Jersey
Division of Criminal Justice in the State Attorney General's office.

      Ms. Abbott has served as Executive Vice President of the Corporation since
June 1996, and as Executive Vice President of Finance and Corporate Development
of New Claridge since September 1997. Ms. Abbott has served as Secretary to the
Corporation since November 1999. From September 1996 to August 1997, she served
as Executive Vice President of Operations, and from July 1995 to August 1996,
she was Executive Vice President of Marketing and Casino Operations. Ms. Abbott
served as a member of the Board from August 1989 to June 1994, and served as a
consultant to the Corporation until March 26, 1994, at which time she became a
Vice President of New Claridge. From October 1992 to July 1993, Ms. Abbott was
Finance Director for the United Way of Atlantic County. She was Assistant
Professor at Stockton State College from September 1989 to June 1991. She served
as Senior Vice President, Treasurer of the Corporation and Senior Vice
President, Controller of New Claridge from May 1987 to September 1989. She was
Vice President, Controller of New Claridge from October 1985 to May 1987 and she
was Director of Finance of New Claridge from April 1984

                                       26

<PAGE>

to October 1985. From October 1980 through April 1984, Ms. Abbott held various
executive positions with New Claridge and its corporate predecessor.

      Mr. Britton has served as Executive Vice President of the Corporation
since June 1994 and as President and Chief Operating Officer of New Claridge
since January 1996. He served as Executive Vice President and General Manager of
New Claridge from February 1994 through July 1995, and as Executive Vice
President from August 1995 through December 1995. He served as a Vice President
of the Corporation from June 1992 to June 1994, and as Executive Vice President
of Operations of New Claridge from December 1992 to February 1994. He was Senior
Vice President of Operations of New Claridge from December 1991 to December
1992, and Vice President of Casino Operations from June 1990 to November 1991.
From July 1981 through June 1990, Mr. Britton has held various positions in both
accounting and casino operations with New Claridge and its corporate
predecessor.

      Mr. Lillie has served as Vice President of the Corporation from June 1992
and as Vice President of Marketing Communications of New Claridge since December
1995. He served as Vice President of Public Affairs of New Claridge from
February 1990 to December 1995. He was Vice President of Marketing
Communications of New Claridge from April 1985 to February 1990, Director of
Public Relations from March 1982 to January 1983, and Training Manager from
November 1980 to February 1982. From February 1983 to April 1985, Mr. Lillie was
employed as the Director of Public Relations of the Tropicana Hotel and Casino
in Atlantic City.












                                       27

<PAGE>


Item 11.   EXECUTIVE COMPENSATION

Summary Compensation Table

      The following summary compensation table sets forth the aggregate
compensation paid or accrued by New Claridge for services rendered during the
years ended December 31, 2000, 1999 and 1998 to the Chief Executive Officer and
the four most highly compensated executive offices of New Claridge.

<TABLE>
<CAPTION>
                                           Annual Compensation
                                      ----------------------------          Other Annual                 Other
Name and Position                  Year        Salary        Bonus         Compensation (1)        Compensation (2)
-----------------                  ----        ------        -----         ----------------        ----------------
<S>                                <C>        <C>            <C>            <C>                    <C>
Frank A. Bellis, Jr.               2000       $267,788       $ -0-              $2,000                 $   -0-
Chief Executive Officer            1999        170,384         -0-               2,000                     -0-
 of New Claridge                   1998        151,634         -0-               1,466                     -0-

Albert T. Britton                  2000        215,673         -0-               2,000                     -0-
President/Chief Operating          1999        205,000         -0-               2,000                   8,557
 Officer of New Claridge           1998        205,000         -0-               1,284                  53,816

Jean I. Abbott                     2000        182,115         -0-               2,000                     -0-
Executive Vice President           1999        175,000         -0-               2,000                   5,851
 of Finance/Corporate              1998        171,469         -0-               1,491                  39,051
 Development of New
 Claridge

Howard J. Klein                    2000        160,500         -0-                 -0-                     -0-
Senior Vice President of           1999        160,500         -0-               1,327                     -0-
 Marketing of New Claridge         1998        160,500         -0-                 -0-                     -0-

Roy A. Young                       2000        167,115         -0-               2,000                     -0-
Senior Vice President of           1999        160,000         -0-               1,577                     -0-
 Hotel Operations of New           1998        134,738         -0-                 -0-                     -0-
 Claridge (3)
</TABLE>

(1)  Amounts reported in this column were paid pursuant to the Retirement
     Savings Plan of New Claridge.

(2)  Amounts reported in this column represent amounts accrued with
     respect to the Corporation's future liability pursuant to the
     Corporation's Supplemental Executive Retirement Plan.

(3)  Roy A. Young became an employee of New Claridge effective February 1998.

Employment Agreements

      New Claridge is a party to employment agreements with its executive
officers, effective January 1, 2001. The agreements are for a term ending on
December 31, 2001 and may be extended upon specific action of the Board. In the
event that any of the executive officers are terminated without cause (as
defined in the employment agreements), the executive officer is entitled to
receive a termination payment in an amount equal to 125% of his or her current
base annual salary.

                                       28
<PAGE>

      The current base annual salaries under the agreements are as follows:
Frank A. Bellis, Chief Executive Officer, $302,500; Albert T. Britton,
President/Chief Operating Officer, $242,000; Jean I. Abbott, Executive Vice
President of Finance and Corporate Development, $203,000; John R. Ceresani, Vice
President of Human Resources and Security, $131,000; Howard J. Klein, Senior
Vice President of Marketing, $175,000; Glenn S. Lillie, Vice President of
Marketing Communications, $140,000; Arthur M. Lucchesi, Vice President of
Information Technology, $141,000; Laura L. Palazzo, Vice President - Controller,
$131,000; and Roy A. Young, Senior Vice President of Hotel Operations, $185,000.

      Additionally, in the event of a change of control (as defined in the
employment agreements) of the Corporation and the subsequent termination of the
executive officer's employment consistent with the terms of the employment
agreement, the employment agreements provide for severance amounts equal to two
times the executive officer's current annual salary.

Compensation Plans

      a. Senior Officer Medical Plan. New Claridge maintains a senior officer
medical plan, under which eligibility is limited to officers and certain
employees of New Claridge. The plan covers medical expenses of the participant
(up to a maximum of $7,500 per year) not paid by New Claridge's medical
reimbursement plan, which is available to all employees not covered by
collective bargaining agreements.

      b. Retirement Savings Plan. New Claridge employees participate in a
profit-sharing plan named the "Retirement Savings Plan." This plan is intended
to be qualified under Section 401(k) of the Internal Revenue Code of 1986, as
amended. Under the Retirement Savings Plan, for up to the first 5% of an
employee's salary, which is contributed at the direction of the employee from
amounts he or she would otherwise have received as current compensation, New
Claridge contributed an amount equal to 25% of the employee's contribution in
2000. Employees could contribute a maximum of 20% of their base salary, but not
in excess of $10,500 in 2000. An employee's account may be paid out, at the
employee's election, in one cash payment or in installment payments over a
ten-year period.

      c. Long-Term Management Incentive Plan. In February 1992, the
Corporation's Board of Directors adopted a Long-Term Incentive Plan (the
"Incentive Plan") in which certain key employees of the Corporation and/or New
Claridge participate. The Incentive Plan provided for the grant of the 273,938
shares of the Corporation's Class A stock, which were held as treasury shares of
the Corporation, and for the issuance of 100 Equity Units. The aggregate value
of the 100 Equity Units is equal to 5.41 percent of certain amounts as further
defined in the Incentive Plan. Specified portions of the awarded treasury shares
and Equity Units held by participants vest upon the attainment of specific goals
as described in the Incentive Plan. The treasury shares and Equity Units fully
vest upon a further restructuring or a change in control as defined in the
Incentive Plan. Payment with respect to the Equity Units will only be made (a)
upon the occurrence of a transaction in which substantially all of the assets
and business operations of the Claridge entities are transferred to one or more
entities in a merger, sale of assets or other acquisition-type transaction, (b)
upon termination of employment of any participant in the Incentive Plan within
one year after any change in control of the Corporation occurs, as defined in
the Incentive Plan, or (c) if the Corporation pays dividends to its
stockholders, if the Partnership makes distributions to its partners, or if the
Corporation or the Partnership makes certain distributions under the
Restructuring Agreement. On April 15, 1992, the Commission approved the
Incentive Plan and the treasury shares were delivered to the participants. Upon
the issuance of the Notes and the repayment in full of the Corporation's
outstanding debt under the Loan Agreement, 25% of the shares and Equity Units
awarded under the Incentive Plan vested. A participant is entitled to vote all
awarded treasury shares whether or not vested in such shares.


                                       29

<PAGE>

      On June 5, 1995, the Corporation's Board of Directors amended the
Incentive Plan by creating 100 Additional Equity Units to be issued to certain
key employees and 100 Director Equity Units to be issued to the individual
members of the Board of Directors (the "Directors"). The aggregate value of the
Additional Equity Units is 5.59 percent and the aggregate value of the Director
Equity Units is 4 percent of certain amounts as further defined in the Incentive
Plan. Vesting of the Additional Equity Units occurs if a Transaction results in
the Claimholders of the Claridge receiving cash or marketable securities having
a certain value all as further defined and described in the Incentive Plan.
Vesting of the Director Equity Units occurs according to a vesting schedule
stated in the Incentive Plan and also is tied to the occurrence of a Transaction
having a certain value. The Incentive Plan was further amended, on November 10,
1998, to modify the terms by which the Additional Equity Units and Director
Equity Units will vest. The modification adjusts the value that must be received
by the Claimholders of the Claridge resulting from the occurrence of a
Transaction, all as further defined and described in the Incentive Plan.

      Under the proposed Plan, the Incentive Plan would be terminated, and any
benefits which had previously vested to the participants would have no value.

      d. Supplemental Executive Retirement Plan. In February 1995, New Claridge
adopted a Supplemental Executive Retirement Plan (the "SERP"), to provide extra
and additional retirement income security benefits to certain key management
employees as an inducement for outstanding future services. The SERP is an
unfunded supplemental retirement plan. Participants under the SERP are entitled
to annual payments for a period of fifteen years, commencing on the later of the
participant's termination from service with New Claridge or his or her early
retirement date (as defined in the SERP), in an amount equal to the unit value
assigned to that participant times the number of full years of service of the
participant, after January 1, 1994 for Robert M. Renneisen and Albert T.
Britton, and after January 1, 1996 for Jean I. Abbott. The SERP provides for
commencement of payments on an earlier date in the event of the disability of
the participant, or death of the participant (in which case payments would be
made to a survivor). In addition, the SERP provides for forfeiture of benefits
if a participant fails to comply with the noncompetition or nondisclosure
provisions set forth in his or her employment agreement with New Claridge, or
assumes a position within the gaming industry in Atlantic City, voluntarily
terminates his or her employment before the completion of five years of service,
or is terminated for cause (as defined in the SERP). The SERP also provides for
immediate payment of benefits in the event of a change of control (as defined in
the SERP) of New Claridge.

      Effective November 11, 1998, additional accumulation of SERP benefits
ceased. Participants remain entitled to only those SERP benefits which had
accrued to that date. The participants in the SERP, the value of their units and
their early retirement ages are set forth below:


<TABLE>
<CAPTION>
                                                 Unit             Units             Early
      Name of Participant            Age         Value         Accumulated       Retirement
      -------------------            ---         -----         -----------       ----------
      <S>                            <C>        <C>            <C>               <C>
      Robert M. Renneisen            54         $10,000             5                55
      Albert T. Britton              44           6,000             5                55
      Jean I. Abbott                 45           6,000             3                55
</TABLE>

      The participants in the SERP have an unsecured claim against New Claridge
for the present value of the future payments which were payable as of August 16,
1999.

                                       30

<PAGE>

Compensation of Directors

      Directors who are not employees of the Corporation or New Claridge receive
an annual retainer of $20,000 and a fee of $1,200 for attendance at each meeting
of the Board and for attendance at each meeting of a committee of the Board. The
Chairman of the Board receives an annual retainer of $100,000. There are
currently four committees of the Board: the Audit Committee, the Human Resources
and Compensation Committee, the Finance Committee, and the Governance Committee.
The chairman of each committee receives an annual retainer of $1,500 to serve in
that capacity. In addition to the above stated retainer and meeting attendance
fees, each member of the Board is compensated for additional work performed at a
rate of $2,000 per day, as well as for time spent for extraordinary travel
related to the bankruptcy and reorganization at a rate of $1,200 per day.

Compensation Committee Interlocks and Insider Participation

      The members of the Compensation Committee are A. Bruce Crawley, Chairman,
James M. Montgomery, and Mark H. Sayers. There is no insider participation on
the Compensation Committee, and there is no interlock between any Compensation
Committee member or executive officer of the Corporation or New Claridge, on the
one hand, and the compensation committees of other companies on the other hand.

Item 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      As of December 31, 2000, there were no beneficial owners of more than 5%
of the Corporation's Class A Stock.

      On February 12, 1992, the Corporation's Board of Directors approved a Long
Term Incentive Plan which provided for the grant to certain key officers of the
Corporation and/or New Claridge of the 273,938 shares which were held as
treasury shares by the Corporation. These shares were issued to the key
employees upon approval by the Commission on April 15, 1992, and upon receipt
the transfer of, and right to continue to hold the shares, are subject to
certain vesting restrictions.

Item 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      The Partnership has a direct material interest in the Expandable
Wraparound Mortgage Loan Agreement, the Operating Lease and the Expansion
Operating Lease together with amendments thereto. See Item 1. "Business -
Corporate Structure."










                                       31
<PAGE>
                                     PART IV

Item 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

      (a)(1) and (2): The response to this portion of Item 14 is submitted as a
                      separate section of this report beginning on page F-1.
                      All other schedules have been omitted as inapplicable, or
                      not required, or because the required information is
                      included in the Consolidated Financial Statements or notes
                      thereto.

      (a)(3)  Exhibits. The exhibits required to be filed as part of this annual
              report on Form 10-K are listed in the attached Index to Exhibits.

      (b)     Reports on Form 8-K. The Corporation filed no reports on Form 8-K
              during the last quarter of the period covered by this report.

      (c)     Index to Exhibits and Exhibits filed as a part of this report.

              2(b)   Fourth Amended Joint Chapter 11 Plan of Reorganization of
                     The Claridge Hotel and Casino Corporation, The Claridge at
                     Park Place, Incorporated, and Atlantic City Boardwalk
                     Associates, L.P.

              3(a)   Certificate of Incorporation of the Corporation.
                     Incorporated by reference to Exhibit 3(a) to Form 10-K for
                     the year ended December 31, 1995.

              3(b)  By-Laws of the Corporation as amended. Incorporated by
                     reference to Exhibit 3(b) to Form 10-K for the year ended
                     December 31, 1995.

              3(c)   Certificate of Amendment of The Certificate of
                     Incorporation of the Corporation dated June 15, 1989.
                     Incorporated by reference to Exhibit 3(c) to Form 10-K for
                     the year ended December 31, 1995.

              3(d)   Certificate of Amendment of The Certificate of
                     Incorporation dated June 26, 1991. Incorporated by
                     reference to Exhibit 3(d) to Form 10-K for the year ended
                     December 31, 1995.

              4(a)   Form of Indenture (including the Guarantee of The Claridge
                     at Park Place, Incorporated). Incorporated by reference to
                     Exhibit 4.1 to Pre-Effective Amendment No. 2 to Form S-1
                     Registration Statement (file number 33-71550) dated January
                     18, 1994.

              4(b)   Form of 11 3/4% First Mortgage Note due 2002 certificate.
                     Incorporated by reference to Exhibit 4.2 to Pre-Effective
                     Amendment No. 2 to Form S-1 Registration Statement (file
                     number 33-71550) dated January 18, 1994.

              10(a)  Operating Lease Agreement between New Claridge and Atlantic
                     City Boardwalk Associates, L.P. Incorporated by reference
                     to Exhibit 10(a) to Form 10-K for the year ended December
                     31, 1995.

              10(b)  Expandable Wraparound Mortgage and Security Agreement
                     between New Claridge and Atlantic City Boardwalk
                     Associates, L.P. Incorporated by reference to Exhibit 10(b)
                     to Form 10-K for the year ended December 31, 1995.

                                       32

<PAGE>

              10(c)  Expandable Wraparound Mortgage Loan Agreement between New
                     Claridge and Atlantic City Boardwalk Associates, L.P.
                     Incorporated by reference to Exhibit 10(c) to Form 10- K
                     for the year ended December 31, 1995.

              10(h)  Expansion Operating Lease Agreement between New Claridge
                     and Atlantic City Boardwalk Associates, L.P. Incorporated
                     by reference to Exhibit 10(h) to Form 10-K for the year
                     ended December 31, 1995.

              10(i)  First Supplemental Amendment to Expandable Wraparound
                     Mortgage and Security Agreement between New Claridge and
                     Atlantic City Boardwalk Associates, L.P. Incorporated by
                     reference to Exhibit 10(i) to Form 10-K for the year ended
                     December 31, 1995.

              10(j)  First Supplemental Amendment to Expandable Wraparound
                     Mortgage Loan Agreement between New Claridge and Atlantic
                     City Boardwalk Associates, L.P. Incorporated by reference
                     to Exhibit 10(j) to Form 10-K for the year ended December
                     31, 1995.

              10(n)  Restructuring Agreement, among The Claridge Hotel and
                     Casino Corporation, The Claridge at Park Place,
                     Incorporated, Del Webb Corporation, Del E. Webb New Jersey,
                     Inc., Atlantic City Boardwalk Associates, L.P. and First
                     Fidelity Bank, National Association, New Jersey, dated
                     October 27, 1988. Incorporated by reference to Exhibit
                     10(n) to Form 10-K for the year ended December 31, 1995.

              10(x)  Long Term Management Incentive Plan of The Claridge Hotel
                     and Casino Corporation effective January 1, 1992.
                     Incorporated by reference to Exhibit 10(x) to Form 10-K for
                     the year ended December 31, 1995.

              10(ab) Amendment to Operating Lease Agreement and Expansion
                     Operating Lease Agreement between New Claridge and Atlantic
                     City Boardwalk Associates, L.P., dated June 15, 1989.
                     Incorporated by reference to Exhibit 10.5 to Form S-1
                     Registration Statement (file number 33-71550) dated
                     November 12, 1993.

              10(ac) Second Amendment to Operating Lease Agreement and Expansion
                     Operating Lease Agreement between New Claridge and Atlantic
                     City Boardwalk Associates, L.P., dated March 27, 1990.
                     Incorporated by reference to Exhibit 10.6 to Form S-1
                     Registration Statement (file number 33-71550) dated
                     November 12, 1993.

              10(ad) Third Amendment to Operating Lease Agreement and Expansion
                     Operating Lease Agreement between New Claridge and Atlantic
                     City Boardwalk Associates, L.P., dated August 1, 1991.
                     Incorporated by reference to Exhibit 10.7 to Form S-1
                     Registration Statement (file number 33-71550) dated
                     November 12, 1993.

              10(ae) First Amendment to Expandable Wraparound Mortgage Loan
                     Agreement between New Claridge and Atlantic City Boardwalk
                     Associates, L.P., dated March 17, 1986. Incorporated by
                     reference to Exhibit 10.8 to Form S-1 Registration
                     Statement (file number 33-71550) dated November 12, 1993.

                                       33

<PAGE>

              10(af) Second Amendment to Expandable Wraparound Mortgage Loan
                     Agreement between New Claridge and Atlantic City Boardwalk
                     Associates, L.P., dated June 15, 1989. Incorporated by
                     reference to Exhibit 10.9 to Form S-1 Registration
                     Statement (file number 33-71550) dated November 12, 1993.

              10(ag) Second Amendment to Expandable Wraparound Mortgage and
                     Security Agreement between New Claridge and Atlantic City
                     Boardwalk Associates, L.P., dated June 15, 1989.
                     Incorporated by reference to Exhibit 10.11 to Form S-1
                     Registration Statement (file number 33-71550) dated
                     November 12, 1993.

              10(ah) The 1992 Claridge Management Incentive Plan. Incorporated
                     by reference to Exhibit 10.18 to Form S-1 Registration
                     Statement (file number 33-71550) dated November 12, 1993.

              10(ai) The 1993 Claridge Management Incentive Plan. Incorporated
                     by reference to Exhibit 10.19 to Form S-1 Registration
                     Statement (file number 33-71550) dated November 12, 1993.

              10(aj) Form of Mortgage, Assignment of Leases and Rents, Security
                     Agreement and Financing Statement. Incorporated by
                     reference to Exhibit 4.3 to Pre-Effective Amendment No. 2
                     to Form S-1 Registration Statement (file number 33-71550)
                     dated January 18, 1994.

              10(ak) Form of Collateral Trust Agreement among the Corporation,
                     New Claridge, the Partnership and the Collateral Trustee.
                     Incorporated by reference to Exhibit 4.4 to Pre- Effective
                     Amendment No. 2 to Form S-1 Registration Statement (file
                     number 33-71550) dated January 18, 1994.

              10(al) Form of Corporation Pledge Agreement between the
                     Corporation and the Collateral Trustee. Incorporated by
                     reference to Exhibit 4.5 to Pre-Effective Amendment No. 2
                     to Form S-1 Registration Statement (file number 33-71550)
                     dated January 18, 1994.

              10(am) Form of New Claridge Pledge Agreement between New Claridge
                     and the Collateral Trustee. Incorporated by reference to
                     Exhibit 4.6 to Pre-Effective Amendment No. 2 to Form S-1
                     Registration Statement (file number 33-71550) dated January
                     18, 1994.

              10(an) Form of New Claridge Cash Collateral Pledge Agreement
                     between New Claridge and the Collateral Trustee.
                     Incorporated by reference to Exhibit 4.7 to Pre-Effective
                     Amendment No. 2 to Form S-1 Registration Statement (file
                     number 33-71550) dated January 18, 1994.

              10(ao) Form of New Claridge Security Agreement between New
                     Claridge and the Collateral Trustee. Incorporated by
                     reference to Exhibit 4.8 to Pre-Effective Amendment No. 2
                     to Form S-1 Registration Statement (file number 33-71550)
                     dated January 18, 1994.

              10(ap) Form of New Claridge Trademark Security Agreement between
                     New Claridge and the Collateral Trustee. Incorporated by
                     reference to Exhibit 4.9 to Pre-Effective Amendment No. 2
                     to Form S-1 Registration Statement (file number 33-71550)
                     dated January 18, 1994.

                                       34

<PAGE>

              10(aq) Form of Collateral Assignment of Expandable Wraparound
                     Mortgage and Security Agreement. Incorporated by reference
                     to Exhibit 4.10 to Pre-Effective Amendment No. 2 to Form
                     S-1 Registration Statement (file number 33-71550) dated
                     January 18, 1994.

              10(ar) Form of Collateral Assignment of Lessor's Interest in
                     Operating Leases. Incorporated by reference to Exhibit 4.13
                     to Pre-Effective Amendment No. 2 to Form S-1 Registration
                     Statement (file number 33-71550) dated January 18, 1994.

              10(as) Form of Subordination Agreement among the Partnership, New
                     Claridge and the Collateral Trustee. Incorporated by
                     reference to Exhibit 4.14 to Pre-Effective Amendment No. 2
                     to Form S-1 Registration Statement (file number 33-71550)
                     dated January 18, 1994.

              10(at) Form of Assignment of Leases and Rents and Other Contract
                     Rights. Incorporated by reference to Exhibit 4.15 to
                     Pre-Effective Amendment No. 2 to Form S-1 Registration
                     Statement (file number 33-71550) dated January 18, 1994.

              10(bb) Supplemental Executive Retirement Plan of The Claridge at
                     Park Place, Incorporated effective January 1, 1994.
                     Incorporated by referenece to Exhibit 10(bb) to Form 10-K
                     for the year ended December 31, 1994.

              10(bc) Amendment to Long-Term Management Incentive Plan of The
                     Claridge Hotel and Casino Corporation effective June 5,
                     1995. Incorporated by reference to Exhibit 10(bc) to Form
                     10-K for the year ended December 31, 1995.

              10(bp) Spreader Agreement of a Certain Mortgage, Assignment of
                     Leases and Rents, Security Agreement and Financing
                     Statement by The Claridge at Park Place, Incorporated in
                     favor of IBJ Schroder Bank & Trust Company, as Collateral
                     Trustee, dated January 28, 1997. Incorporated by reference
                     to Exhibit 10(bp) to Form 10-K for the year ended December
                     31, 1996.

              10(bq) Spreader Agreement and Modification of Spreader Agreement
                     of a Certain Mortgage, Assignment of Leases and Rents,
                     Security Agreement and Financing Statement by The Claridge
                     at Park Place, Incorporated in favor of IBJ Schroder Bank &
                     Trust Company, as Collateral Trustee, dated February 18,
                     1997. Incorporated by reference to Exhibit 10(bq) to Form
                     10-K for the year ended December 31, 1996.

              10(br) Fifth Amendment to Operating Lease Agreement and Fourth
                     Amendment to Expansion Operating Lease Agreement between
                     The Claridge at Park Place, Incorporated and Atlantic City
                     Boardwalk Associates, L.P. effective March 1, 1997.
                     Incorporated by reference to Exhibit 10(br) to Form 10-K
                     for the year ended December 31, 1996.


              10(bs) Restructuring Agreement between The Claridge Hotel and
                     Casino Corporation, The Claridge at Park Place,
                     Incorporated and Atlantic City Boardwalk Associates, L.P.
                     effective March 1, 1997. Incorporated by reference to
                     Exhibit 10(bs) to Form 10-K for the year ended December 31,
                     1996.

                                       35

<PAGE>

              10(by) Sixth Amendment to Operating Lease Agreement and Fifth
                     Amendment to Expansion Operating Lease Agreement between
                     The Claridge at Park Place, Incorporated and Atlantic City
                     Boardwalk Associates, L.P. effective September 30, 1998.
                     Incorporated by reference to Exhibit 10(by) to Form 10-K
                     for the year ended December 31, 1998.

              10(bz) Amendment to Restructuring Agreement between The Claridge
                     Hotel and Casino Corporation, The Claridge at Park Place,
                     Incorporated and Atlantic City Boardwalk Associates, L.P.
                     effective September 30, 1998. Incorporated by reference to
                     Exhibit 10(bz) to Form 10-K for the year ended December 31,
                     1998.

              10(ca) Amendment to Wraparound Mortgage Agreement and Note between
                     The Claridge at Park Place, Incorporated and Atlantic City
                     Boardwalk Associates, L.P. effective September 30, 1998.
                     Incorporated by reference to Exhibit 10(ca) to Form 10-K
                     for the year ended December 31, 1998.

              10(cb) Amendment to Exhibit A to the Long-Term Management
                     Incentive Plan of The Claridge Hotel and Casino Corporation
                     effective November 10, 1998. Incorporated by reference to
                     Exhibit 10(cb) to Form 10-K for the year ended December 31,
                     1998.

              10(cc) Amended Employment Agreement between Frank A. Bellis, Jr.
                     and The Claridge at Park Place, Incorporated, effective
                     January 1, 2001.

              10(cd) Amended Employment Agreement between Albert T. Britton and
                     The Claridge at Park Place, Incorporated, effective January
                     1, 2001.

              10(ce) Amended Employment Agreement between Jean I. Abbott and The
                     Claridge at Park Place, Incorporated, effective January 1,
                     2001.

              10(cf) Amended Employment Agreement between Glenn Lillie and The
                     Claridge at Park Place, Incorporated, effective January 1,
                     2001.

              10(cg) Agreement of Purchase and Sale Between The Claridge at
                     Park Place, Incorporated and Atlantic City Boardwalk
                     Associate, L.P., Seller, and Park Place Entertainment
                     Corporation, Buyer, dated November 28, 2000.

              12(a)  Statement of Computation of Ratio of Earnings to Fixed
                     Charges. Incorporated by reference to Exhibit 12.1 to Form
                     S-1 Registration Statement (file number 33-71550) dated
                     November 12, 1993.

              12(b)  Statement of Computation of Ratio of Earnings to Fixed
                     Charges.

              22(a)  Subsidiaries of the Corporation. Incorporated by reference
                     to Exhibit 22(a) to Form 10- K for the year ended December
                     31, 1995.

              99(b)  Fourth Amended Disclosure Statement pursuant to 11 U.S.C.
                     1125 on Debtors' Joint Plan of Reorganization under Chapter
                     11 of the Bankruptcy Code.


                                       36
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                      CLARIDGE HOTEL AND CASINO CORPORATION

<TABLE>
<S>                           <C>                                    <C>
Dated:  March 30, 2001        By: /s/ FRANK A. BELLIS, JR.           By: /s/ JEAN I. ABBOTT
----------------------        ---------------------------            ----------------------
                                  Frank A. Bellis, Jr.                   Jean I. Abbott
                                  Chief Executive Officer                Chief Financial Officer and
                                                                         Principal Accounting Officer
</TABLE>


     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
         Signature                                   Capacity                                        Date
         ---------                                   --------                                        ----
<S>                                                  <C>                                         <C>
/s/ JAMES M. MONTGOMERY                              Chairman, Director                          March 30, 2001
------------------------
James M. Montgomery

/s/ DAVID W. BRENNER                                 Director                                    March 30, 2001
------------------------
David W. Brenner

/s/ SHANNON L. BYBEE                                 Director                                    March 30, 2001
------------------------
Shannon L. Bybee

/s/ A. BRUCE CRAWLEY                                 Director                                    March 30, 2001
------------------------
A. Bruce Crawley

/s/ NED P. DEWITT                                    Director                                    March 30, 2001
------------------------
Ned P. DeWitt

/s/ MARK H. SAYERS                                   Director                                    March 30, 2001
------------------------
Mark H. Sayers

/s/ ROBERT M. RENNEISEN                              Director                                    March 30, 2001
------------------------
Robert M. Renneisen

/s/ FRANK A. BELLIS, JR.                             Chief Executive Officer, Director           March 30, 2001
------------------------
Frank A. Bellis

/s/ JEAN I ABBOTT                                    Executive Vice President                    March 30, 2001
------------------------                             (Chief Financial Officer/
Jean I. Abbott                                        Treasurer/Principal
                                                       Accounting Officer)
</TABLE>



                                       37

<PAGE>

           THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
                (Debtor-In-Possession effective August 16, 1999)


                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                        AND FINANCIAL STATEMENT SCHEDULE


                                                                        Page
                                                                    Reference In
                                                                     Report on
                                                                     Form 10-K
                                                                     ---------

Independent Auditors' Report............................................ F-2

Consolidated Balance Sheets at December 31, 2000 and 1999............... F-3

Consolidated Statements of Operations and Accumulated Deficit
  for the Years Ended December 31, 2000, 1999 and 1998.................. F-4

Consolidated Statements of Cash Flows for the Years Ended
  December 31, 2000, 1999 and 1998...................................... F-5

Notes to Consolidated Financial Statements.............................. F-7

Financial Statement Schedule II - Valuation and Qualifying Accounts..... F-31


         All other schedules for which provision is made in the applicable
         accounting regulations promulgated by the Securities and Exchange
         Commission are not required under the related instructions or are
         inapplicable and therefore have been omitted.


                                       F-1

<PAGE>
                          Independent Auditors' Report


The Board of Directors and Stockholders
The Claridge Hotel and Casino Corporation:


We have audited the consolidated financial statements of The Claridge Hotel and
Casino Corporation and subsidiaries (the Corporation) as listed in the
accompanying index. In connection with our audits of the consolidated financial
statements, we also have audited the financial statement schedule as listed in
the accompanying index. These consolidated financial statements and financial
statement schedule are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of The Claridge Hotel
and Casino Corporation and subsidiaries at December 31, 2000 and 1999, the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 2000 in conformity with accounting
principles generally accepted in the United States of America. Also in our
opinion, the related financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.

The accompanying consolidated financial statements and financial statement
schedule have been prepared assuming that the Corporation will continue as a
going concern. As discussed in Note 2 to the consolidated financial statements,
the Corporation has suffered recurring losses and has experienced diminishing
liquidity as a result of a deterioration in its cash flow and limited
availability of working capital sources, and in August 1999, commenced a
voluntary proceeding under Chapter 11 of the United States Bankruptcy Code.
These matters raise substantial doubt about the Corporation's ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 2. The consolidated financial statements and financial
statement schedule do not include any adjustments that might result from the
outcome of these uncertainties.

                                                           KPMG LLP
Short Hills, New Jersey
March 27, 2001

                                       F-2

<PAGE>
           THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
                (Debtor-In-Possession effective August 16, 1999)
                           Consolidated Balance Sheets
                           December 31, 2000 and 1999
                             (dollars in thousands)
<TABLE>
<CAPTION>
                                                                                                 2000              1999
                                                                                               ---------         --------
<S>                                                                                            <C>               <C>
Assets
Current Assets:
     Cash and cash equivalents                                                                  $ 19,466             16,834
     Receivables, net (including $6,140 and $6,269 in 2000
       and 1999, respectively, due from Partnership) (note 4)                                      8,177              7,977
     Inventories                                                                                     264                332
     Prepaid expenses and other current assets                                                     3,690              3,089
                                                                                                --------            -------
         Total current assets                                                                     31,597             28,232
                                                                                                --------            -------

Property and equipment (notes 5 and 9)                                                            44,595             42,041
Less accumulated depreciation and amortization                                                   (13,591)           (13,699)
                                                                                                --------            -------
         Net property and equipment                                                               31,004             28,342
                                                                                                --------            -------

Long-term receivables due from Partnership (note 4)                                               39,318             41,831
Deferred charges at cost, less accumulated amortization                                              889              1,076
Other assets (note 6)                                                                              4,285              3,041
                                                                                                --------            -------
                                                                                                $107,093            102,522
                                                                                                ========           ========
Liabilities and Stockholders' Deficiency
Current Liabilities Not Subject to Compromise:
     Current maturities of long-term debt (note 8)                                              $      1                125
     Accounts payable                                                                              4,080              2,902
     Other current liabilities (note 7)                                                           16,759             14,253
                                                                                                --------            -------
         Total current liabilities not subject to compromise                                      20,840             17,280
                                                                                                --------            -------

Liabilities Subject to Compromise (note 8)                                                       146,046            145,259

Long-term debt (notes 8 and 9)                                                                       -0-                  1
Deferred income taxes (note 12)                                                                    1,865              2,046
Other noncurrent liabilities (notes 8 and 10)                                                      1,244              1,354

Commitments and contingent liabilities (notes 13 and 15)

Stockholders' deficiency (notes 16 and 17):
     Common stock
       Class A, par value $.001, authorized and issued 5,062,500 shares                                5                  5
     Additional paid-in capital                                                                    5,048              5,048
     Accumulated deficit                                                                         (67,955)           (68,471)
                                                                                                --------            -------
         Total stockholders' deficiency                                                          (62,902)           (63,418)
                                                                                                --------            -------

                                                                                                $107,093            102,522
                                                                                                ========            =======
</TABLE>
          See accompanying notes to consolidated financial statements.

                                       F-3
<PAGE>
           THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
                (Debtor-In-Possession effective August 16, 1999)
          Consolidated Statements of Operations and Accumulated Deficit
              For the Years Ended December 31, 2000, 1999 and 1998
                      (in thousands except per share data)
<TABLE>
<CAPTION>
                                                                             2000                1999               1998
                                                                           --------            --------           --------
<S>                                                                       <C>                  <C>               <C>
Revenue:
     Casino                                                                $163,979             163,833            166,010
     Hotel                                                                   11,673              10,745              9,576
     Food and beverage                                                       19,573              18,413             18,989
     Interest from the Partnership                                            8,907              11,632             12,039
     Interest, other                                                            101                 360                757
     Other                                                                    2,726               5,089              3,685
                                                                           --------            --------           --------
                                                                            206,959             210,072            211,056
     Less promotional allowances (note 11)                                   22,930              21,522             20,056
                                                                           --------            --------           --------
         Net revenues                                                       184,029             188,550            191,000
                                                                           --------            --------           --------

Costs and expenses:
     Casino                                                                  99,685             100,576            102,150
     Hotel                                                                    2,980               2,897              2,470
     Food and beverage                                                        6,088               5,556              7,948
     Other                                                                    2,588               2,782              2,689
     Rent expense to the Partnership (note 13)                               25,762              24,028             26,374
     Rent expense, other (note 13)                                            1,106               1,189              1,253
     General and administrative                                              25,602              26,211             27,662
     Gaming taxes                                                            13,093              13,024             13,194
     Reinvestment obligation expenses (note 6)                                  831               2,127              2,474
     Provision for uncollectible accounts                                       325               1,043              1,128
     Depreciation and amortization                                            1,729               1,819              2,554
     Interest expense (contractual interest of $12,079 in 2000
         and $10,936 in 1999)(note 8)                                            42               6,767             10,519
                                                                           --------            --------           --------
         Total costs and expenses                                           179,831             188,019            200,415
                                                                           --------            --------           --------

Income (loss) before reorganization items                                     4,198                 531             (9,415)
Reorganization items:
     Professional fees                                                       (4,542)             (1,268)               -0-
     Interest earned from accumulated cash resulting
         from Chapter 11 proceeding                                             860                 142                -0-
     Provision for valuation allowance (note 4)                                 -0-             (37,595)               -0-
                                                                           --------            --------           --------
                                                                             (3,682)            (38,721)               -0-
                                                                           --------            --------           --------
Net income (loss)                                                               516             (38,190)            (9,415)
                                                                           --------            --------           --------

Accumulated deficit at beginning of year                                    (68,471)            (30,281)           (20,866)
                                                                           --------            --------           --------

Accumulated deficit at end of year                                         $(67,955)            (68,471)           (30,281)
                                                                           ========            ========           ========

Net income (loss) per share - basic and diluted (note 3(i))                $    .10               (7.54)             (1.89)
                                                                           ========            ========           ========
</TABLE>
           See accompanying notes to consolidated financial statements

                                       F-4
<PAGE>
           THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
                (Debtor-In-Possession effective August 16, 1999)
                      Consolidated Statements of Cash Flows
              For the Years Ended December 31, 2000, 1999 and 1998
                                 (in thousands)
<TABLE>
<CAPTION>
                                                                             2000                1999               1998
                                                                           --------            --------           --------
<S>                                                                        <C>                 <C>                <C>
Cash flows from operating activities:
     Net income (loss)                                                      $   516             (38,190)            (9,415)
     Adjustments to reconcile net income (loss) to net
       cash provided by (used in) operating activities:
        Depreciation and amortization                                         1,729               1,819              2,554
        Deferred rent to the Partnership                                        931               1,242            (10,679)
        Deferred interest receivable and
          discount from the Partnership                                         -0-              (2,314)            (2,014)
        Reinvestment obligation expenses                                        831               2,127              2,474
        (Gain) loss on disposal of assets                                       (80)               (159)                 1
        Deferred income taxes - noncurrent                                     (104)                -0-                 (1)
        Reorganization items                                                  3,682               1,126                -0-
        Change in assets and liabilities:
         Increase in receivables, net, excluding
           current portion of long-term receivables                            (504)             (1,293)              (663)
         Decrease (increase) in inventories                                      68                 (23)               (39)
         (Increase) decrease in prepaid expenses and
           other current assets                                                (601)               (354)               200
         Increase in accounts payable                                         1,085               2,569                333
         Increase in other current liabilities                                  337               4,883                209
         Increase (decrease) in other noncurrent liabilities                    (84)                (17)               305
                                                                             ------             -------            -------

             Net cash provided by (used in) operating
                activities before reorganization items                        7,806             (28,584)           (16,735)

     Reorganization items:
         Professional fees paid                                              (2,501)               (455)               -0-
         Interest earned on accumulated cash resulting from
           Chapter 11 proceeding                                                860                 142                -0-
         Impairment loss                                                        -0-              37,595                -0-
                                                                             ------             -------            -------

             Net cash provided by (used in) operating
                activities                                                    6,165               8,698            (16,735)
                                                                             ------             -------            -------

</TABLE>
                                   (continued)

           See accompanying notes to consolidated financial statements

                                       F-5

<PAGE>
           THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
                (Debtor-In-Possession effective August 16, 1999)
                 Consolidated Statements of Cash Flows (Cont'd.)
              For the Years Ended December 31, 2000, 1999 and 1998
                                 (in thousands)
<TABLE>
<CAPTION>
                                                                             2000                1999               1998
                                                                           --------            --------           --------
<S>                                                                       <C>                 <C>                 <C>
Cash flows from investment activities:
     Increase in deferred charges                                          $   (373)                (93)               (48)
     Additions to property and equipment                                     (3,852)               (239)              (228)
     Additions to other assets                                               (2,075)             (2,276)            (1,662)
     Proceeds from disposition of property                                       75                 -0-              1,826
     Increase in long-term receivables                                          -0-                (309)              (660)
     Collection of long-term receivables                                      2,817               1,668             15,115
                                                                           --------             -------            -------

         Net cash (used in) provided by
           investment activities                                             (3,408)             (1,249)            14,343
                                                                           --------             -------            -------

Cash flows from financing activities -
     Payment of long-term debt                                                 (125)               (413)              (234)
                                                                           --------             -------            -------


         Increase (decrease) in cash and cash equivalents                     2,632               7,036             (2,626)

Cash and cash equivalents at beginning of year                               16,834               9,798             12,424
                                                                           --------             -------            -------

Cash and cash equivalents at end of year                                   $ 19,466              16,834              9,798
                                                                           ========             =======            =======


Supplemental cash flow disclosures:
     Interest paid                                                         $     42               5,218             10,087
                                                                           ========             =======            =======

     Income taxes paid                                                     $    -0-                 -0-               -0-
                                                                           ========             =======            =======

Non-cash financing and investing activities:
     Capital lease obligation incurred to acquire
         Casino Assets                                                     $    -0-                  18                693
                                                                           ========             =======            =======
</TABLE>
          See accompanying notes to consolidated financial statements.

                                       F-6

<PAGE>
           THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
                (Debtor-In-Possession effective August 16, 1999)
                   Notes to Consolidated Financial Statements

1.      THE CORPORATION

        The Claridge Hotel and Casino Corporation (the "Corporation"), was
        formed on August 26, 1983 to hold all of the shares of capital stock of
        The Claridge at Park Place, Incorporated ("New Claridge"), which was
        formed on August 29, 1983. On October 31, 1983, New Claridge acquired
        certain assets of The Claridge Hotel and Casino (the "Claridge"),
        including gaming equipment (the "Casino Assets"), from Del E. Webb New
        Jersey, Inc. ("DEWNJ"), a wholly- owned subsidiary of Del Webb
        Corporation ("Webb"); leased certain other of the Claridge's assets,
        including the buildings, parking facility and non-gaming, depreciable,
        tangible property of the Claridge (the "Hotel Assets"), from Atlantic
        City Boardwalk Associates, L.P. (the "Partnership"); subleased the land
        on which the Claridge is located from the Partnership; assumed certain
        liabilities related to the acquired assets; and undertook to carry on
        the business of the Claridge Casino Hotel, a facility operating in
        Atlantic City, New Jersey.

        In October 1988, the Corporation and New Claridge entered into an
        agreement to restructure the financial obligations of the Corporation
        and New Claridge (the "Restructuring Agreement"). The restructuring,
        which was consummated in June 1989, resulted in (i) a reorganization of
        the ownership interests in the Claridge; (ii) modifications of the
        rights and obligations of certain lenders; (iii) satisfaction and
        termination of the obligations and commitments of Webb and DEWNJ under
        the original structure; (iv) modifications of the lease agreements
        between New Claridge and the Partnership; and (v) the forgiveness by
        Webb of substantial indebtedness.

        On January 31, 1994, the Corporation completed an offering of $85
        million of First Mortgage Notes (the "Notes") due 2002, bearing interest
        at 11 3/4%. The Notes are secured by (i) a non- recourse mortgage
        granted by the Partnership representing a first lien on the Hotel
        Assets; (ii) a pledge granted by the Corporation of all outstanding
        shares of capital stock of New Claridge; and (iii) a guarantee by New
        Claridge. New Claridge's guarantee of the Notes is secured by a
        collateral assignment of the second lien Expandable Wraparound Mortgage,
        and by a lien on the Claridge's gaming and other assets, which lien
        would be subordinated to liens that might be placed on those gaming and
        other assets to secure any future revolving credit line arrangement. On
        January 28, 1997, New Claridge entered into an agreement to subject the
        new self-parking garage to the lien of the mortgage; such lien will not
        be subordinated to any lien which may be placed on New Claridge's gaming
        and other assets to secure any future revolving credit line arrangement.
        Interest on the Notes is payable semiannually on February 1 and August 1
        of each year. (See Note 9, "Long-Term Debt".)

        The net proceeds of the Notes, totalling $82.2 million net of fees and
        expenses, were used as follows: (i) to repay in full on January 31,
        1994, the Corporation's outstanding debt under the Revolving Credit and
        Term Loan Agreement (the "Loan Agreement"), including the outstanding
        balance of the Corporation's revolving credit line, which was secured by
        a first mortgage; (ii) to expand New Claridge's casino capacity by
        12,000 square feet in 1994, including the addition of approximately 500
        slot machines and the relocation of two restaurants and their related
        kitchens; (iii) to purchase property in 1995, and construct on that
        property a self-parking garage, which opened in mid-1996; and (iv) to
        acquire the Contingent Payment option in 1996 (see Note 10, "Other
        Noncurrent Liabilities").

                                       F-7

<PAGE>
           THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
                (Debtor-In-Possession effective August 16, 1999)
             Notes to Consolidated Financial Statements (continued)

2.      SIGNIFICANT EVENTS

        The Corporation has experienced recurring losses and deterioration in
        its cash flow since 1996, which has affected the Corporation's ability
        to continue to meet its obligation to pay interest on the Notes. The
        Corporation did not pay the interest due on August 2, 1999 on the Notes,
        and, on August 16, 1999, the Corporation and New Claridge filed
        voluntary petitions under Chapter 11 of the United States Bankruptcy
        Code (the "Bankruptcy Code") in the United States Bankruptcy Court for
        the District of New Jersey (the "Bankruptcy Court"). The Corporation
        continues to operate the business, as set forth in the Bankruptcy Code,
        under the supervision of the Bankruptcy Court, as a
        debtor-in-possession. The Partnership filed a voluntary petition under
        Chapter 11 of the Bankruptcy Code on October 5, 1999.

        On January 27, 2000, the Corporation, New Claridge, and the Partnership
        filed a joint plan of reorganization and disclosure statement with the
        Bankruptcy Court. On April 5, 2000, in response to objections raised by
        the trustee for the noteholders, the United States Trustee, and others,
        the Corporation, New Claridge, and the Partnership filed an amended plan
        of reorganization and disclosure statement. The adequacy of the amended
        plan was approved by the Bankruptcy Court on May 9, 2000, which allowed
        for the amended plan to be submitted to the Corporation's creditors for
        a vote. On July 18, 2000, the Corporation announced the results of that
        vote: the holders of the Corporation's Notes voted to reject the amended
        plan; management of the Corporation believes that the unsecured
        creditors voted to accept the amended plan. The Corporation had intended
        to pursue confirmation of the amended plan under Section 1129B of the
        Bankruptcy Code, which allows for the Bankruptcy Court judge to confirm
        the amended plan through the "cramdown" procedure, at the confirmation
        hearing, which was scheduled to begin September 6, 2000.

        However, on August 11, 2000, the Bankruptcy Court judge granted
        permission to the Official Secured Noteholders Committee (the
        "Committee") to hire an investment banker to attempt to locate potential
        investors to submit competing reorganization plans. The two primary
        offers which were considered by the Corporation's Board of Directors
        (the "Board") were submitted by Park Place Entertainment Corporation
        ("PPE") (owner and operator of Bally's Park Place, Incorporated, the
        Atlantic City Hilton Casino Resort, and Caesars Atlantic City casinos in
        Atlantic City) and GB Holdings, Incorporated ("GBHI") (owner and
        operator of the Sands Hotel and Casino in Atlantic City). After
        evaluation by the Board and its financial and legal advisors, the
        Corporation informed the Bankruptcy Court judge that it intended to
        pursue the bid submitted by PPE. The GBHI offer expired by its own terms
        on October 13, 2000.

        On November 28, 2000, the Corporation filed a second amended joint plan
        of reorganization and a second amended disclosure statement, which
        included an executed copy of the purchase and sale agreement between the
        Corporation and PPE. The second amended joint plan of reorganization
        provides for a sale of substantially all of the assets of New Claridge
        and the Partnership to PPE. Certain amendments were subsequently made to
        this plan, and on March 27, 2001, the fourth amended joint plan of
        reorganization and fourth amended disclosure statement (the "Plan") were
        approved by the Bankruptcy Court to be submitted to the creditors for a
        vote. Pursuant to the terms of the Plan, the secured noteholders would
        receive


                                       F-8

<PAGE>
           THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
                (Debtor-In-Possession effective August 16, 1999)
             Notes to Consolidated Financial Statements (continued)

2.      SIGNIFICANT EVENTS (continued)

        approximately an 83% recovery on their claim of $90.5 million, and the
        unsecured creditors would receive approximately 61.5% of their claim. If
        the creditors vote to accept the Plan, the Bankruptcy Court has
        scheduled May 16, 2001 as the date for the confirmation hearing of the
        Plan.

        The accompanying consolidated financial statements have been prepared in
        conformity with generally accepted accounting principles and in
        accordance with Statement of Position 90-7, "Financial Reporting By
        Entities in Reorganization under the Bankruptcy Code," and include
        disclosure of liabilities subject to compromise (see Note 8). The
        accompanying consolidated financial statements do not show (i) as to
        assets, their realizable value on a liquidation basis or their
        availability to satisfy liabilities; (ii) contingencies, or the status
        and priority thereof; or (iii) as to stockholder accounts, the effect of
        any changes that may be made in the Corporation's business. The eventual
        outcome of these matters is not presently determinable.

3.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

        a)     Basis of Presentation

               The consolidated financial statements are prepared in accordance
               with generally accepted accounting principles. The consolidated
               financial statements include the accounts of the Corporation and
               its wholly-owned subsidiaries, New Claridge and Claridge Gaming
               Incorporated ("CGI"). CGI was formed in March 1994 for the
               purpose of developing gaming opportunities in other
               jurisdictions. All material intercompany accounts and
               transactions have been eliminated in consolidation.

               The separate financial statements of New Claridge, which is a
               guarantor of the Notes, are not included because the aggregate
               assets, liabilities, operations and equity of New Claridge are
               substantially equivalent to the assets, liabilities, operations
               and equity of the Corporation on a consolidated basis, and
               because the separate financial statements and other disclosures
               concerning New Claridge are not deemed material to holders of
               Notes. There are no separate financial statements for CGI, which
               is the only other subsidiary of the Corporation and is not a
               guarantor of the Notes.

        b)     Use of Estimates

               The preparation of financial statements in conformity with
               generally accepted accounting principles requires management to
               make estimates and assumptions that affect the reported amounts
               of assets and liabilities and disclosure of contingent assets and
               liabilities at the date of the financial statements and the
               reported amounts of revenues and expenses during the reporting
               period. Actual results could differ from those estimates.


                                       F-9

<PAGE>
           THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
                (Debtor-In-Possession effective August 16, 1999)
             Notes to Consolidated Financial Statements (continued)

3.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

        c)     Cash and cash equivalents

               Cash and cash equivalents include investments in interest bearing
               repurchase agreements in government securities and other
               investments as permitted in accordance with the terms of the
               indenture governing the Notes, with maturities of three months or
               less when purchased. Interest income is recorded as earned.

        d)     Casino Receivables and Revenues

               Credit is issued to certain casino customers and the Corporation
               records all unpaid credit as casino receivables on the date the
               credit was issued. Allowances for estimated uncollectible casino
               receivables are provided to reduce these receivables to amounts
               anticipated to be collected. The Corporation recognizes as casino
               revenue, the net win (which is the difference between amounts
               wagered and amounts paid to winning patrons) from gaming
               activity.

        e)     Inventories

               Inventories are stated at the lower of cost or market, cost being
               determined principally on a first-in, first-out basis.

        f)     Property and Equipment

               Property and equipment are recorded at cost, and are depreciated
               using the straight-line method over the following estimated
               useful lives:

                         Buildings                              39 years
                         Building improvements                  10 years
                         Automobiles                             3 years
                         Gaming equipment                        5 years
                         Computers and related equipment         5 years
                         Other equipment                         7 years

               Interest costs related to the construction of the garage facility
               were capitalized in 1996, and are being amortized over the
               estimated useful life of the garage.

        g)     Deferred Charges

               Deferred charges primarily relate to the January 31, 1994
               issuance of the Notes. These charges, which totaled approximately
               $3.7 million, are being amortized over the term of the Notes. The
               unamortized amount of these charges would be written off upon
               confirmation of the proposed Plan. Accumulated amortization of
               these charges as of December 31, 2000 and 1999 was $3,233,000 and
               $2,766,000, respectively.

                                      F-10

<PAGE>
           THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
                (Debtor-In-Possession effective August 16, 1999)
             Notes to Consolidated Financial Statements (continued)

3.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

        h)     Income Taxes

               Deferred income taxes are provided for temporary differences
               between financial statement reporting and income tax reporting
               for rent leveling provisions, asset basis differences, and
               various other expenses recorded for financial statement purposes.

        i)     Income (Loss) Per Share

               Income (loss) per share is calculated by dividing net income
               (loss) by the weighted average shares outstanding (5,062,500 for
               the years ended December 31, 2000 and 1999, and 4,983,804 for the
               year ended December 31, 1998). Basic and diluted net income
               (loss) per share are the same for the years ended December 31,
               2000, 1999, and 1998.


                                      F-11

<PAGE>
           THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
                (Debtor-In-Possession effective August 16, 1999)
             Notes to Consolidated Financial Statements (continued)

4.      RECEIVABLES

        Receivables at December 31, 2000 and 1999 consist of the following:
<TABLE>
<CAPTION>
        Current Receivables                                                                    2000            1999
                                                                                               ----            ----
                                                                                                 (in thousands)
<S>                                                                                         <C>               <C>
                  Casino, less allowance for uncollectible accounts
                    of $859,000 and $1,180,000 at
                    December 31, 2000 and 1999, respectively                                $  1,042            1,092
                  Hotel, less allowance for uncollectible accounts
                    of $16,000 and $24,000 at December 31,
                    2000 and 1999, respectively                                                  217              126
                  Interest receivable due from the Partnership                                 1,583            1,591
                  Current portion of FF&E Promissory notes                                     2,865            3,169
                  Other, less allowance for uncollectible accounts
                    of $10,000 and $10,000 at December 31,
                    2000  and 1999, respectively                                               2,470            1,999
                                                                                             -------          -------
                                                                                             $ 8,177            7,977
                                                                                             =======          =======

         Long-Term Receivables

                  $127,000,000 Expandable Wraparound
                    Mortgage 14%, maturities through September
                    30, 2000 (net of $2,211,000 discount at
                    December 31, 2000 and 1999, respectively)                               $ 47,839           48,289
                  Deferred interest receivable, due
                    September 30, 2000                                                        20,000           20,000
                  FF&E promissory notes, 14%                                                   9,074           11,137
                  Valuation allowance                                                        (37,595)         (37,595)
                                                                                            --------          -------
                                                                                            $ 39,318           41,831
                                                                                            ========          =======
</TABLE>
         The Expandable Wraparound Mortgage Loan Agreement ("Expandable
         Wraparound Mortgage") was executed and delivered by the Partnership to
         New Claridge in 1983, and is secured by all property of the
         Partnership. Under the terms of the Expandable Wraparound Mortgage, New
         Claridge is not permitted to foreclose on the Expandable Wraparound
         Mortgage and take ownership of the Hotel Assets so long as a senior
         mortgage is outstanding. $20 million in interest was deferred between
         1983 and 1988 and will be due upon maturity. Principal payments
         required under the Expandable Wraparound Mortgage commenced in 1988,
         and continued through 1998.

         Under the terms of the Expandable Wraparound Mortgage, New Claridge was
         obligated to loan the Partnership up to $25 million in the form of FF&E
         promissory notes ("FF&E Loans"), secured under the Expandable
         Wraparound Mortgage, for the purchase of property and equipment ("FF&E
         Replacements"). One half of the FF&E Loan principal is due in 48 months
         and the remaining balance is due 60 months from the date of issuance of
         the respective FF&E


                                      F-12

<PAGE>
           THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
                (Debtor-In-Possession effective August 16, 1999)
             Notes to Consolidated Financial Statements (continued)

4)       RECEIVABLES (continued)

         Loan. In connection with the offering of $85 million of Notes on
         January 31, 1994, the Corporation agreed to use not less than $8
         million from the net proceeds of the offering to finance certain
         internal improvements to the Claridge which were funded through
         additional FF&E Loans. In connection therewith, the Expandable
         Wraparound Mortgage Loan agreement, as well as the Operating Lease and
         the Expansion Operating Lease, were amended to provide that the
         principal on these additional FF&E Loans will be payable at final
         maturity of the Expandable Wraparound Mortgage.

         As a result of the Corporation and New Claridge's Chapter 11 filing on
         August 16, 1999, and the Partnership's Chapter 11 filing on October 5,
         1999, the Partnership no longer provides furniture, fixture, and
         equipment replacements to the Claridge; rather, New Claridge now
         provides such replacements.

         The Expandable Wraparound Mortgage has been amended from time to time.
         In the most recent amendment, which was effective September 30, 1998,
         the Corporation, New Claridge, and the Partnership agreed to amend the
         March 1997 restructuring agreement to provide for an extension of the
         maturity date of the Expandable Wraparound Mortgage to January 1, 2005.
         In addition, the Expandable Wraparound Mortgage Agreement and Note were
         amended to defer the principal payments which were payable during the
         fourth quarter of 1998 (totaling $3.5 million) to the earlier of (i)
         the maturity date of the Expandable Wraparound Mortgage Agreement and
         Note; (ii) such earlier date, if any, as the entire principal amount of
         the Expandable Wraparound Mortgage becomes due and payable; or (iii)
         the date on which any merger, consolidation or similar transaction to
         which the Corporation or New Claridge is a party, or any sale of all or
         substantially all of the assets of the Corporation or New Claridge is
         consummated, or any change of control of the Corporation or New
         Claridge occurs.

         If the Partnership should fail to make any payment due under the
         Expandable Wraparound Mortgage, New Claridge may exercise a right of
         offset against rent or other payments due under the Operating Lease and
         Expansion Operating Lease to the extent of any such deficiency. As a
         result of the Corporation and New Claridge's Chapter 11 filing, under
         the terms of the indenture governing the Notes (the "Indenture"), an
         "Event of Default" has occurred (as defined in the Indenture). As a
         result of this Event of Default, the Corporation and New Claridge are
         precluded from receiving any further payments of principal or interest
         on the Expandable Wraparound Mortgage. As a result, the Corporation and
         New Claridge have exercised this right of offset against rental
         payments required to be made subsequent to August 16, 1999.

         As a result of the Corporation's and New Claridge's filing for
         reorganization under Chapter 11 on August 16, 1999, as well as the
         Partnership's Chapter 11 filing on October 5, 1999, the Expandable
         Wraparound Mortgage became impaired. Therefore, during the fourth
         quarter of 1999, the Corporation recorded an adjustment to write-down
         the balance of the Expandable Wraparound Mortgage receivable to an
         amount estimated to be the realizable value of the Hotel Assets. The
         total amount of this write-down was $37.6 million.

                                      F-13

<PAGE>
           THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
                (Debtor-In-Possession effective August 16, 1999)
             Notes to Consolidated Financial Statements (continued)

5.       PROPERTY AND EQUIPMENT

         Property and equipment at December 31, 2000 and 1999 consist of the
         following:

                                                         2000           1999
                                                       --------        -------
                                                             (in thousands)

         Gaming equipment                              $ 12,345         12,593
         Land and land improvements                       7,598          7,598
         Building                                        20,070         20,070
         Building improvements                            1,260            -0-
         Leasehold improvements                             745            745
         Capital lease assets                               822            822
         Other furniture, fixtures and equipment          1,755            213
                                                       --------       --------

                                                       $ 44,595         42,041
                                                       ========       ========

6.       OTHER ASSETS

         The Casino Control Act (the "Act") provides for the imposition of an
         investment obligation, calculated at 1.25% of the total revenues from
         gaming operations less the provision for uncollectible accounts. If a
         casino licensee opts not to make the investment as required, it is
         assessed an alternative tax of 2.5% of total gaming revenues less the
         provision for uncollectible accounts. The licensee can satisfy its
         obligation by making a direct investment in a project approved by the
         Casino Reinvestment Development Authority ("CRDA"), the agency
         responsible for administering this portion of the Act, or it can buy
         bonds issued by the CRDA. These bonds bear interest at two-thirds of
         market rates, as set forth in the Act.

         New Claridge has opted to deposit its reinvestment obligation funds
         with the State Treasurer. Through December 31, 2000, the Corporation
         has deposited approximately $24 million with the CRDA, of which
         $3,446,000 has been used to purchase bonds issued by the CRDA,
         approximately $17 million was subsequently donated to the CRDA (see
         discussion below), and $3,430,000 remains on deposit. Since interest on
         these bonds and funds deposited is paid at a discounted rate, New
         Claridge records a valuation allowance of approximately one-third of
         the reinvestment obligation. In addition, certain bonds issued by the
         CRDA have become impaired, and the payment of principal and interest on
         these bonds remains uncertain. As a result, New Claridge has recorded a
         valuation allowance for the full amount of its investment in these
         bonds, totaling $1,670,000.

         From time to time, New Claridge has made donations to the CRDA of funds
         which had previously been deposited with the State Treasurer. In
         exchange for certain of these donations, New Claridge received credits
         towards future obligations or cash credits, from the CRDA equal to 51%
         of the donations. As of December 31, 2000, all of these credits had
         been used.

                                      F-14

<PAGE>
           THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
                (Debtor-In-Possession effective August 16, 1999)
             Notes to Consolidated Financial Statements (continued)

7.       OTHER CURRENT LIABILITIES

         Other current liabilities at December 31, 2000 and 1999 consist of the
         following:

                                                         2000             1999
                                                         ----             ----
                                                            (in thousands)

         Deferred rent                                 $   800            1,100
         Accrued payroll and related benefits            8,761            8,232
         Auto/general insurance reserves                   831              228
         Reorganization costs                            2,854              813
         Other current liabilities                       3,513            3,880
                                                       -------           ------
                                                       $16,759           14,253
                                                       =======           ======

         Effective September 30, 1998, the Operating Lease and Expansion
         Operating Lease were amended, pursuant to a Sixth Amendment to the
         Operating Lease and Fifth Amendment to the Expansion Operating Lease
         (the "Sixth Amendment"). The Sixth Amendment provided for the deferral
         of $1.1 million of rent in either February 1999 or March 1999,
         dependent upon certain conditions being met. These conditions were met,
         and the $1.1 million of rent was deferred in March 1999. The $1.1
         million of basic rent deferred is paid to the Partnership in monthly
         installments of $25,000, commencing January 1, 2000, until paid in full
         (subject to acceleration under certain circumstances).

         As of December 31, 2000 and 1999, deferred rent, current (which
         resulted from the 1989 restructuring transaction); accrued interest,
         First Mortgage Notes; accrued interest due to Partnership; and the auto
         and general liability reserves incurred prior to August 16, 1999 are
         included in "Liabilities Subject to Compromise" (see Note 8) as a
         result of the Corporation's filing for reorganization under Chapter 11
         (see Note 2) on August 16, 1999.


                                      F-15

<PAGE>
           THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
                (Debtor-In-Possession effective August 16, 1999)
             Notes to Consolidated Financial Statements (continued)

8.       LIABILITIES SUBJECT TO COMPROMISE

         Liabilities subject to compromise are subject to future adjustments
         depending on Bankruptcy Court actions and further developments with
         respect to disputed claims. Payment of these liabilities may not be
         made except pursuant to an approved plan of reorganization or under the
         order of the Bankruptcy Court while the Corporation continues to
         operate as a debtor-in- possession. As of December 31, 2000 and 1999,
         liabilities subject to compromise consist of the following (in
         thousands):
<TABLE>
<CAPTION>
                                                                           2000             1999
                                                                          ------           ------
<S>                                                                   <C>                <C>
         Accounts payable and accrued expenses                         $   3,158            3,251
         11 3/4% Notes (note 9)                                           85,000           85,000
         Accrued interest (note 7)                                         9,832            9,832
         Loan from the Partnership                                         3,600            3,600
         Deferred rent due to the Partnership (notes 7 and 13)            23,078           22,147
         Contingent Payment (note 10)                                     19,000           19,000
         Auto and general liability reserves (note 13)                       771            1,086
         Other (note 12)                                                   1,607            1,343
                                                                       ---------         --------
                                                                       $ 146,046          145,259
                                                                       =========         ========
</TABLE>
         In accordance with the terms of the Restructuring Agreement, on June
         16, 1989 the Partnership loaned to New Claridge $3.6 million, which
         represented substantially all cash and cash equivalents remaining in
         the Partnership other than funds needed to pay expenses incurred
         through the closing of the restructuring. This loan is evidenced by an
         unsecured promissory note and will become payable (i) upon a sale or
         refinancing of the Claridge; (ii) upon full or partial satisfaction of
         the Expandable Wraparound Mortgage; and (iii) upon full satisfaction of
         any first mortgage then in place. Interest, which contractually accrues
         at 12% per annum, is payable in full upon maturity.

         Accrued interest as of December 31, 2000 and 1999 of $9,832,000
         consists of $5,440,000 of interest due on the Notes, and $4,392,000 of
         interest due on the $3.6 million loan from the Partnership. Interest on
         both of these items ceased to accrue as of August 16, 1999. Contractual
         interest expense for the years ended December 31, 2000 and 1999 would
         have been $12,079,000 and $10,936,000, respectively, of which $42,000
         and $6,767,000 was actually recorded for the years ended December 31,
         2000 and 1999, respectively.

9.       LONG-TERM DEBT

         On January 31, 1994, the Corporation completed an offering of $85
         million of Notes due 2002, bearing interest at 11 3/4%. The Notes are
         secured by (i) a non-recourse mortgage granted by the Partnership
         representing a first lien on the Hotel Assets; (ii) a pledge granted by
         the Corporation of all outstanding shares of capital stock of New
         Claridge; and (iii) a guarantee by New Claridge. New Claridge's
         guarantee of the Notes is secured by a collateral assignment of the
         second lien Expandable Wraparound Mortgage, and by a lien on the
         Claridge's gaming and other assets, which lien would be subordinated to
         liens that might be placed on those gaming

                                      F-16

<PAGE>
           THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
                (Debtor-In-Possession effective August 16, 1999)
             Notes to Consolidated Financial Statements (continued)

9.       LONG-TERM DEBT (continued)

         and other assets to secure any future revolving credit line
         arrangement. On January 28, 1997, New Claridge entered into an
         agreement to subject the new self-parking garage to the lien of the
         mortgage; such lien will not be subordinated to any lien which may be
         placed on New Claridge's gaming and other assets to secure any future
         revolving credit line arrangement. Interest on the Notes is payable
         semiannually on February 1 and August 1 of each year. A portion of the
         net proceeds of $82.2 million was used to repay in full the
         Corporation's outstanding debt under the Loan Agreement, including the
         outstanding balance of the Corporation's revolving credit line, which
         was secured by a first mortgage. In conjunction with the full
         satisfaction of the Loan Agreement, the Corporation's $7.5 million
         revolving credit line arrangement was terminated.

         The Indenture restricts the declaration or payment of dividends or
         distributions or redemptions of capital stock by the Corporation and
         its subsidiaries, other than (i) dividends or distributions payable in
         equity interests of the Corporation or such subsidiaries; (ii)
         dividends or distributions payable to the Corporation or any
         wholly-owned subsidiary; or (iii) dividends by a subsidiary on its
         common stock if such dividends are paid pro-rata to all holders of such
         common stock.

         As of December 31, 2000 and 1999, the principal amount due on the Notes
         is included in "Liabilities Subject to Compromise" (see Note 8), as a
         result of the Corporation's filing for reorganization under Chapter 11
         (see Note 2), on August 16, 1999. In addition, interest on the Notes
         ceased to accrue as of August 16, 1999. The interest payable on the
         Notes, as accrued through August 16, 1999 of $5,440,000, is also
         included in "Liabilities Subject to Compromise" (see Note 8).

10.      OTHER NONCURRENT LIABILITIES

         Other noncurrent liabilities at December 31, 2000 and 1999 consist of
         the following:

                                     2000           1999
                                    ------         ------
                                       (in thousands)
         License agreement          $ 1,219         1,294
         Other                           25            60
                                    -------        ------
                                    $ 1,244         1,354
                                    =======        ======

         Pursuant to the Restructuring Agreement, Webb retained an interest,
         which was assigned to the Valley of the Sun United Way on April 2,
         1990, equal to $20 million plus interest at a rate of 15% per annum,
         compounded quarterly, commencing December 1, 1988, in any proceeds
         ultimately recovered from operations and/or the sale or refinancing of
         the Claridge facility in excess of the first mortgage loan and other
         liabilities ("Contingent Payment"). Consequently, New Claridge has
         deferred the recognition of $20 million of forgiveness income with
         respect to the Contingent Payment obligation. Interest on the
         Contingent Payment has not been recorded in the accompanying
         consolidated financial statements since the likelihood of paying such
         amount is considered remote at this time. As of December 31, 2000,
         accrued interest would have amounted to approximately $98.5 million.

                                      F-17
<PAGE>
           THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
                (Debtor-In-Possession effective August 16, 1999)
             Notes to Consolidated Financial Statements (continued)

10.      OTHER NONCURRENT LIABILITIES (continued)

         In connection with the restructuring, Webb agreed to grant those
         investors in the Corporation and the Partnership ("Releasing
         Investors"), from whom Webb had received written releases from all
         liabilities, rights ("Contingent Payment Rights") to receive certain
         amounts to the extent available for application to the Contingent
         Payment. Approximately 84% in interest of the investors provided
         releases and became Releasing Investors. Payments to Releasing
         Investors are to be made in accordance with a schedule of priorities,
         as defined in the Restructuring Agreement.

         On February 23, 1996, the Corporation acquired an option to purchase,
         at a discount from the carrying value, the Contingent Payment. The
         purchase price of the option of $1 million was recorded as an offset to
         the Contingent Payment liability which, prior to the Corporation's
         filing under Chapter 11, was included in other noncurrent liabilities
         on the Corporation's consolidated balance sheet. The option could have
         been exercised any time prior to December 31, 1997. Given its operating
         results (see Note 2), the Corporation was not able to exercise this
         Contingent Payment option, and it expired in accordance with its terms
         on December 31, 1997.

         As of December 31, 2000 and 1999, the Contingent Payment is included in
         "Liabilities Subject to Compromise" (see Note 8), as a result of the
         Corporation's filing for reorganization under Chapter 11 on August 16,
         1999.

         On February 28, 1997, New Claridge entered into an agreement with
         Thermal Energy Limited Partnership I ("Atlantic Thermal"), pursuant to
         which Atlantic Thermal was granted an exclusive license for a period of
         twenty years to use, operate, and maintain certain steam and chilled
         water production facilities at the Claridge. In consideration for this
         license agreement, Atlantic Thermal paid New Claridge $1.5 million.
         This amount is being recognized as income over the term of the
         agreement, commencing April 1997.

11.      PROMOTIONAL ALLOWANCES

         The retail value of complimentary rooms, food and beverages and other
         complimentaries furnished to patrons is included in gross revenue and
         then deducted as promotional allowances. The estimated cost of
         providing such promotional allowances, summarized below, for the years
         ended December 31, 2000, 1999 and 1998 has been charged to casino
         expenses (in thousands):

                                  2000                 1999               1998
                                  ----                 ----               ----

         Hotel                  $ 4,370                4,051              3,800
         Food and beverage       13,450               13,434             13,716
         Entertainment            1,095                1,000              1,073
                                -------               ------             ------

              Total             $18,915               18,485             18,589
                                =======               ======             ======


                                      F-18

<PAGE>
           THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
                (Debtor-In-Possession effective August 16, 1999)
             Notes to Consolidated Financial Statements (continued)

12.      INCOME TAXES

         Income taxes are accounted for under the asset and liability method.
         Deferred tax assets and liabilities are recognized for the estimated
         future tax consequences attributable to temporary differences between
         the financial statement carrying amounts of existing assets and
         liabilities and their respective tax basis.

         The expense (benefit) for income taxes is comprised of the following
         (in thousands):

                          2000                 1999               1998
                          ----                 ----               ----
         Current:
           Federal       $ 181                  -0-                -0-
           State           -0-                  -0-                -0-
         Deferred         (181)                 -0-                -0-
                         -----                -----              -----

                         $ -0-                  -0-                -0-
                         =====                =====              =====

         The expense (benefit) for income taxes differs from the amount computed
         at the statutory rate as follows (in thousands):
<TABLE>
<CAPTION>
                                                            2000                 1999               1998
                                                            ----                 ----               ----

<S>                                                      <C>                  <C>                 <C>
         Computed "expected" tax expense (benefit)       $   175              (12,985)            (3,201)
         Increase (reduction) in income taxes
           resulting from:
           Change in the valuation allowance                (170)              15,515              4,391
           Expected state income tax, net of
             federal income tax expense (benefit)             31               (2,291)              (565)
           Meals and entertainment                           -0-                  -0-               (454)
           Other                                             (36)                (239)              (171)
                                                         -------              -------            -------

                                                         $   -0-                  -0-                -0-
                                                         =======              =======            =======
</TABLE>
                                      F-19

<PAGE>
           THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
                (Debtor-In-Possession effective August 16, 1999)
             Notes to Consolidated Financial Statements (continued)

12.      INCOME TAXES (continued)

         The tax effects of temporary differences that give rise to significant
         portions of the deferred tax assets and deferred tax liabilities at
         December 31, 2000 and 1999 are presented below: thousands):
<TABLE>
<CAPTION>
                                                                                          2000               1999
                                                                                          ----               ----
<S>                                                                                    <C>                <C>
         Deferred tax assets:
           Net operating loss                                                           $ 16,825             19,220
           Rent leveling                                                                   4,313              3,940
           Accrued expenses                                                                1,743              1,641
           Deferred revenue                                                                  521                550
           Tax credit                                                                      1,121                940
           Difference between book and tax basis
              of other liabilities                                                         5,316              3,748
           Other                                                                             901                619
                                                                                        --------            -------
                  Total gross deferred tax assets                                         30,740             30,658
                  Less valuation allowance                                               (24,929)           (25,099)
                                                                                        --------            -------

                  Net deferred tax assets                                                  5,811              5,559
                                                                                        --------            -------

         Deferred tax liabilities:
           Gaming equipment, due to differences in depreciation                             (711)              (597)
           Difference between book and tax basis of
             Expandable Wraparound Mortgage receivable                                    (6,124)            (6,303)
           Difference between book and tax basis of receivables                             (841)              (705)
                                                                                        --------            -------

                  Total gross deferred tax liabilities                                    (7,676)            (7,605)
                                                                                        --------            -------

                  Net deferred tax liability                                            $ (1,865)            (2,046)
                                                                                        ========            =======
</TABLE>
         The valuation allowance for deferred tax assets as of December 31, 1999
         was $25,099,000. The net change in the total valuation allowance for
         the year ended December 31, 2000 was a decrease of $170,000.

         At December 31, 2000, the Corporation had net operating loss
         carryforwards for federal income tax purposes of approximately $44.3
         million, none of which expire before the year 2016. These net operating
         loss carryforwards are available to offset future federal taxable
         income, if any. The Corporation also has tax credit carryforwards for
         income tax purposes of approximately $1,121,000, which are available to
         reduce future federal income taxes, if any, through 2002.

         During 1995 the Corporation received notice from the Internal Revenue
         Service ("IRS") asserting deficiencies in Federal corporate income
         taxes for the Corporation's 1990 and 1991 taxable years. Many of the
         proposed adjustments to the Corporation's tax returns were settled
         resulting in no additional expense to the Corporation's consolidated
         financial statements. There was a remaining IRS asserted deficiency for
         the 1990 and 1991 taxable years. In January

                                      F-20
<PAGE>
           THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
                (Debtor-In-Possession effective August 16, 1999)
             Notes to Consolidated Financial Statements (continued)

12.      INCOME TAXES (continued)

         1999, the Corporation reached a settlement agreement with the IRS
         District Counsel, which was confirmed by the United States Tax Court on
         March 4, 1999. This settlement agreement did not have a material impact
         on the Corporation's consolidated financial statements. As of December
         31, 2000 and 1999, the amount of this settlement, including interest,
         has been included in "Liabilities Subject to Compromise" (see Note 8),
         as a result of the Corporation's filing for reorganization under
         Chapter 11 (see Note 2) on August 16, 1999.

13.      OPERATING LEASE

         The Hotel Assets are owned by the Partnership and leased by the
         Partnership to New Claridge under the terms of the Operating Lease
         originally entered into on October 31, 1983, and an Expansion Operating
         Lease, which covered the expansion improvements made to the Claridge in
         1986. The initial terms of both leases expired on September 30, 1998,
         and each lease provided for three ten-year renewal options at the
         election of New Claridge. New Claridge exercised the first of the
         ten-year renewal options, extending the term of the Operating Lease and
         Expansion Operating Lease through September 30, 2008.

         Basic rent during the renewal term of each lease is calculated pursuant
         to a defined formula, with such rent for the lease year commencing
         October 1, 1998 through September 30, 1999 not to be more than $29.5
         million nor less than $24 million for the Operating Lease, and not to
         be more than $3 million nor less than $2.5 million for the Expansion
         Operating Lease. In addition, in each subsequent lease year, rent will
         be calculated pursuant to a defined formula, but may not exceed 10%
         more than the basic rent for the immediately preceding lease year.
         Basic rent, as calculated pursuant to the defined formula for the lease
         years commencing October 1, 1998 1999, and 2000 was $24 million for the
         Operating Lease and $2.5 million for the Expansion Operating Lease.

         New Claridge is also required to pay, as additional rent, certain
         amounts including certain taxes, insurance, and other charges related
         to the occupancy of the land and Hotel Assets, certain expenses and
         debt service related to furniture, fixture and equipment replacements
         and building improvements, and the general and administrative costs of
         the Partnership.

         The terms of the Operating Lease and Expansion Operating Lease have
         been amended from time to time. The most recent amendment (the "Sixth
         Amendment"), which was effective September 30, 1998, allowed for the
         deferral of $1.1 million of rent in either February 1999 or March 1999,
         dependent upon certain conditions being met. These conditions, which
         must have occurred prior to March 2, 1999, included (i) New Claridge
         having received the proceeds in connection with its settlement of the
         parking garage arbitration; and (ii) the Corporation or New Claridge
         having paid the interest that was due on the Notes on February 1, 1999.
         New Claridge received the proceeds from the settlement of the parking
         garage litigation in February 1999, and paid the interest due on the
         Notes on March 2, 1999, within the 30-day grace period allowed in
         accordance with the terms of the Indenture. The $1.1 million of basic
         rent deferred in 1999 is to be paid to the Partnership in monthly
         installments of $25,000 commencing January 1, 2000

                                      F-21
<PAGE>
           THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
                (Debtor-In-Possession effective August 16, 1999)
             Notes to Consolidated Financial Statements (continued)

13.      OPERATING LEASE (continued)

         until paid in full (subject to acceleration in certain circumstances).
         This amendment also provided for additional abatements of rent, through
         December 31, 2004, as necessary to reduce the Partnership's cash flow
         to an amount necessary only to meet the Partnership's cash
         requirements; these abatements, however, are to be reduced by specified
         amounts for each period commencing January 1, 2000 and ending December
         31, 2004 ($83,333 per month in 2000, $130,000 per month in 2001,
         $180,000 per month in 2002 and 2003, and $130,000 per month in 2004).

         In addition to the deferral and abatements of rent provided for in the
         Sixth Amendment, the amendment provides for the payment of $3.5 million
         of additional basic rent on the earlier of (i) the maturity date of the
         Expandable Wraparound Mortgage Note; (ii) such earlier date, if any, as
         the entire principal amount of the Expandable Wraparound Mortgage
         becomes due and payable; or (iii) the date on which any merger,
         consolidation, or similar transaction to which the Corporation or New
         Claridge is a party, or any sale of all or substantially all of the
         assets of the Corporation or New Claridge is consummated, or any change
         in control of the Corporation or New Claridge occurs.

         If the Partnership should fail to make any payment due under the
         Expandable Wraparound Mortgage, New Claridge may exercise a right of
         offset against rent or other payments due under the Operating Lease and
         Expansion Operating Lease to the extent of any such deficiency. As a
         result of the Corporation and New Claridge's Chapter 11 filing, under
         the terms of the Indenture, an "Event of Default" has occurred (as
         defined in the Indenture). As a result of this Event of Default, the
         Corporation and New Claridge are precluded from receiving any further
         payments of principal or interest on the Expandable Wraparound
         Mortgage. As a result, the Corporation and New Claridge have exercised
         this right of offset against rental payments required to be made
         subsequent to August 16, 1999. Operating Lease payments are being made
         monthly by New Claridge to an escrow account, for the benefit of the
         secured Noteholders, which can only be accessed with the approval of
         the Bankruptcy Court.

         For the years ended December 31, 2000, 1999, and 1998, total expense
         resulting from the Operating Lease and Expansion Operating Lease
         amounted to $25,762,000, $24,028,000, and $26,374,000, respectively, of
         which $931,000, $1,242,000, and ($10,679,000), respectively, of rental
         expense is attributable to the requirement under Statement of Financial
         Accounting Standards No. 13 to provide a level rent expense for those
         leases with escalating payments.

         New Claridge also leases supplemental office, warehouse, and surface
         parking spaces in nearby lots. For the years ended December 31, 2000,
         1999, and 1998, operating lease expense for these facilities amounted
         to $1,106,000, $1,189,000, and $1,253,000, respectively. In addition,
         New Claridge leases certain slot machines used on the casino floor.
         Future lease payments under noncancellable operating leases (with
         initial or remaining lease terms in excess of one year) as of December
         31, 2000 (in thousands) are as follows:

                                      F-22
<PAGE>
           THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
                (Debtor-In-Possession effective August 16, 1999)
             Notes to Consolidated Financial Statements (continued)

13.      OPERATING LEASE (continued)

                                                              Operating
                                                                Leases

              2001                                              $1,836
              2002                                                 838
              2003                                                 263
              2004                                                 240
              2005                                                 240
                                                               -------

              Total minimum lease payments                     $ 3,417
                                                               =======

14.      FAIR VALUE OF FINANCIAL INSTRUMENTS

         Statement of Financial Accounting Standards No. 107 ("SFAS No. 107"),
         "Disclosures about Fair Value of Financial Instruments" requires the
         Corporation to disclose estimated fair value for its financial
         instruments. The estimates of fair value are subjective in nature and
         involve uncertainties and matters of significant judgement, and
         therefore cannot be determined with precision; changes in these
         assumptions could significantly affect the estimates. The carrying
         amounts and estimated fair values of the Corporation's financial
         instruments as of December 31, 2000 and 1999 are as follows (in
         thousands):
<TABLE>
<CAPTION>
                                                                               2000                     1999
                                                                       -------------------        ------------------
                                                                       Carrying     Fair          Carrying    Fair
                                                                        Amount      Value          Amount     Value
                                                                        ------     -------         ------     ------
<S>                                                                    <C>        <C>             <C>       <C>
         Financial Assets:
           Cash and cash equivalents                                    $19,466    19,466          16,834    16,834
           Current receivables, net (excluding current
             portion of long-term receivable due
             from the Partnership)                                        5,312     5,312           4,808     4,808
           Long-term receivables due from the
             Partnership (including current portion)                     42,183    42,183          45,000    45,000
           Reinvestment obligation funds                                  3,876     3,876           2,730     2,730
         Financial Liabilities:
           Accounts payable                                               4,080     4,080           2,902     2,902
           Loan from the Partnership                                      3,600      n/a            3,600      n/a
           Long term debt                                                85,000    56,100          85,001    49,089
           Deferred rent due to the Partnership                           8,000      n/a            7,069      n/a
           Contingent payment                                            19,000      n/a           19,000      n/a
</TABLE>
         The following assumptions were used to estimate the fair value of each
         class of financial instruments:

                                      F-23
<PAGE>
           THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
                (Debtor-In-Possession effective August 16, 1999)
             Notes to Consolidated Financial Statements (continued)

14.      FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)

         Cash and cash equivalents

         The carrying amounts reflected on the Corporation's Consolidated
         Balance Sheet approximate the fair value because of the short maturity
         (90 days or less) of these instruments.

         Current receivables, net and Accounts payable

         The carrying amounts reflected on the Corporation's Consolidated
         Balance Sheet approximate the fair value due to the short term nature
         of these items.

         Reinvestment obligation funds

         The reinvestment obligation funds, which are included in Other assets
         on the Corporation's Consolidated Balance Sheet, consist of required
         investments imposed by the Casino Control Act. The reinvestment
         obligation funds are stated net of a valuation allowance reflecting the
         below market interest rates associated with the investments. As a
         result, the carrying values of these investments approximate their fair
         values.

         Long-term debt

         The fair value of the Corporation's long-term debt is estimated based
         on the quoted market price of the Notes as of December 31, 2000 and
         1999, respectively.

         Long-term receivables due from Partnership

         As a result of the Corporation's and New Claridge's filing for
         reorganization under Chapter 11 on August 16, 1999, as well as the
         Partnership's Chapter 11 filing on October 5, 1999, the Expandable
         Wraparound Mortgage became impaired. Therefore, during 1999, the
         Corporation recorded an adjustment to write-down the balance of the
         Expandable Wraparound Mortgage receivable, to an amount estimated to be
         the realizable value of the Hotel Assets.

         Loan from the Partnership, Deferred rent due to the Partnership

         Due to the nature of the relationship between the Corporation and the
         Partnership, estimation of the fair value of the financial instruments
         due to and due from the Partnership is not practical as there is no
         trading market for these financial instruments. (See Note 8,
         "Liabilities Subject to Compromise" and Note 13, "Operating Lease", for
         a description of the terms of these instruments.)

         Contingent Payment

         There is no market for the Contingent Payment; therefore, estimation of
         the fair value of the Contingent Payment is not practical. (See Note
         10, "Other Noncurrent Liabilities" for a

                                      F-24

<PAGE>
           THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
                (Debtor-In-Possession effective August 16, 1999)
             Notes to Consolidated Financial Statements (continued)

14.      FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)

         description of the Contingent Payment and the option to purchase the
         Contingent Payment.)

15.      CONTINGENCIES

         a)       Licensing

                  On September 20, 2000, New Claridge was issued a one-year
                  casino license by the Commission for the period commencing
                  September 30, 2000. Due to the uncertainty concerning the
                  disposition of New Claridge's bankruptcy proceedings, the
                  Commission elected, for the second year in a row, to issue the
                  one-year license, rather than the typical four-year casino
                  license. Additionally, the casino license renewal contains
                  certain financial reporting conditions and requirements
                  consistent with the previous license conditions, and with the
                  manner in which the Commission has relicensed other casino
                  licensees that have filed voluntary petitions under Chapter 11
                  in the past.

         b)       Legal Proceedings

                  On August 16, 1999, the Corporation and New Claridge filed
                  voluntary petitions under Chapter 11 of the Bankruptcy Code.
                  In addition, on October 5, 1999, the Partnership filed a
                  voluntary petition under Chapter 11 of the Bankruptcy Code.
                  The Corporation continues to operate the business of the
                  Claridge as a debtor-in-possession. See Note 2, "Significant
                  Events" for a further discussion of these proceedings.

                  The Corporation and New Claridge are also defendants in
                  various legal proceedings arising in the normal course of
                  business. In the opinion of management, it is not reasonably
                  likely that any such matters individually or collectively
                  would result in an outcome having a material adverse effect on
                  the consolidated financial statements.

16.      RELATED PARTY TRANSACTIONS

         a.       The Restructuring Agreement provided for Webb to retain an
                  interest, which was assigned to the United Way of Arizona on
                  April 2, 1990, equal to $20 million plus interest at a rate of
                  15% per annum, compounded quarterly, commencing December 1,
                  1988, in any proceeds ultimately recovered from operations
                  and/or in the sale or refinancing of the Claridge facility in
                  excess of the first mortgage loan. Webb was also entitled to
                  retain a seat on the Board of Directors of the Corporation and
                  New Claridge (a right it subsequently relinquished). Effective
                  with the closing of the Restructuring on June 16, 1989, all or
                  substantially all of the financial, contractual, ownership,
                  guarantee and other relationships of the Corporation and New
                  Claridge with Webb were terminated.

         b.       The Partnership has a direct material interest in the
                  Expandable Wraparound Mortgage Loan Agreement, the Operating
                  Lease and the Expansion Operating Lease together with

                                      F-25
<PAGE>
           THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
                (Debtor-In-Possession effective August 16, 1999)
             Notes to Consolidated Financial Statements (continued)

16.      RELATED PARTY TRANSACTIONS (continued)

                  the amendments thereto as described in the preceding notes.
                  Approximately 92% of the Corporation's common stock is owned
                  by persons who also own over 90% of the limited partnership
                  interests in the Partnership.

         c.       In February 1992, the Corporation's Board of Directors adopted
                  a Long-Term Incentive Plan (the "Incentive Plan") in which
                  certain key employees of the Corporation and/or New Claridge
                  participate. The Incentive Plan provided for the grant of the
                  273,938 shares of the Corporation's Class A stock, which were
                  held as treasury shares of the Corporation, and for the
                  issuance of 100 Equity Units. The aggregate value of the 100
                  Equity Units is equal to 5.41 percent of certain amounts as
                  further defined in the Incentive Plan. Specified portions of
                  the awarded treasury shares and Equity Units held by
                  participants vest upon the attainment of specific goals as
                  described in the Incentive Plan. The treasury shares and
                  Equity Units fully vest upon a further restructuring or a
                  change in control as defined in the Incentive Plan. Payment
                  with respect to the Equity Units will only be made (a) upon
                  the occurrence of a transaction in which substantially all of
                  the assets and business operations of the Claridge entities
                  are transferred to one or more entities in a merger, sale of
                  assets or other acquisition-type transaction, (b) upon
                  termination of employment of any participant in the Incentive
                  Plan within one year after any change in control of the
                  Corporation occurs, as defined in the Incentive Plan, or (c)
                  if the Corporation pays dividends to its stockholders, if the
                  Partnership makes distributions to its partners, or if the
                  Corporation or the Partnership makes certain distributions
                  under the Restructuring Agreement. On April 15, 1992, the
                  Commission approved the Incentive Plan and the treasury shares
                  were delivered to the participants. Upon the issuance of the
                  Notes and the repayment in full of the Corporation's
                  outstanding debt under the Loan Agreement, 25% of the shares
                  and Equity Units awarded under the Incentive Plan vested. A
                  participant is entitled to vote all awarded treasury shares
                  whether or not vested in such shares.

                  On June 5, 1995, the Corporation's Board of Directors amended
                  the Incentive Plan by creating 100 Additional Equity Units to
                  be issued to certain key employees and 100 Director Equity
                  Units to be issued to the individual members of the Board of
                  Directors (the "Directors"). The aggregate value of the
                  Additional Equity Units is 5.59 percent and the aggregate
                  value of the Director Equity Units is 4 percent of certain
                  amounts as further defined in the Incentive Plan. Vesting of
                  the Additional Equity Units occurs if a Transaction results in
                  the Claimholders of the Claridge receiving cash or marketable
                  securities having a certain value all as further defined and
                  described in the Incentive Plan.

                  Vesting of the Director Equity Units occurs according to a
                  vesting schedule stated in the Incentive Plan and also is tied
                  to the occurrence of a Transaction having a certain value. The
                  Incentive Plan was further amended, on November 10, 1998, to
                  modify the terms by which the Additional Equity Units and
                  Director Equity Units will vest. The modification adjusts the
                  value that must be received by the Claimholders of the

                                      F-26
<PAGE>
           THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
                (Debtor-In-Possession effective August 16, 1999)
             Notes to Consolidated Financial Statements (continued)

16.      RELATED PARTY TRANSACTIONS (continued)

                  Claridge resulting from the occurrence of a Transaction, all
                  as further defined and described in the Incentive Plan.

                  Under the proposed Plan, the Incentive Plan would be
                  terminated, and any benefits which had previously vested to
                  the participants would have no value.

17.      PARENT COMPANY INFORMATION

         The Corporation owns all of the outstanding common stock of New
         Claridge, which it purchased for $5,000,000. The balance sheet accounts
         of the Corporation as of December 31, 2000 and 1999 include the
         following (in thousands):
<TABLE>
<CAPTION>
                                                                           2000            1999
                                                                           ----            ----
<S>                                                                      <C>              <C>
         Investment in New Claridge                                      $ 87,206         87,206
         Other assets                                                      11,283         11,939
                                                                         --------        -------

                  Total assets                                           $ 98,489         99,145
                                                                         ========        =======

         Liabilities Subject to Compromise                               $ 90,440         90,440
         Other liabilities                                                 16,271         11,529
         Stockholders' deficiency                                          (8,222)        (2,824)
                                                                         --------        -------

                  Total liabilities and stockholders' deficiency         $ 98,489         99,145
                                                                         ========        =======
</TABLE>
         As of December 31, 2000 and 1999, "Liabilities Subject to Compromise"
         include the Notes and accrued interest thereon through August 16, 1999
         of $5,440,000.

                                      F-27
<PAGE>
           THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
                (Debtor-In-Possession effective August 16, 1999)
             Notes to Consolidated Financial Statements (continued)

17.      PARENT COMPANY INFORMATION (continued)

         The Statements of Operations for the Corporation for the years ended
         December 31, 2000, 1999 and 1998 were as follows (in thousands):
<TABLE>
<CAPTION>
                                                                       2000                 1999              1998
                                                                     --------             -------           -------
<S>                                                                 <C>                  <C>               <C>
         Dividend income from New Claridge                           $    -0-               5,049             9,988
         Interest income                                                  -0-                 -0-                 1
                                                                     --------             -------           -------
                         Total income                                     -0-               5,049             9,989
                                                                     --------             -------           -------

         Costs and expenses:
           General and administrative                                     436                 621               545
           Amortization                                                   524                 524               524
           Interest (contractual interest of $11,605 in 2000
              and $10,335 in 1999)                                        -0-               6,328             9,988
                                                                     --------             -------           -------
                         Total costs and expenses                         960               7,473            11,057
                                                                     --------             -------           -------

         Loss before reorganization items and
           income taxes                                                  (960)             (2,424)           (1,068)
         Reorganization items:
              Professional fees                                        (4,542)             (1,268)              -0-
                                                                     --------             -------           -------

         Loss before income taxes                                      (5,502)             (3,692)           (1,068)
         Income tax benefit                                              (104)                -0-               (31)
                                                                     --------             -------           -------

         Net loss                                                    $ (5,398)             (3,692)           (1,037)
                                                                     =========            =======           =======
</TABLE>
         The above amounts represent the results of operations of the
         Corporation for the respective periods before equity in the results of
         New Claridge. For the year ended December 31, 2000, New Claridge had
         net income of $5,914,000, as compared to a net loss of $29,449,000 for
         the year ended December 31, 1999, and net income of $1,610,000 for the
         year ended December 31, 1998.

                                      F-28
<PAGE>
           THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
                (Debtor-In-Possession effective August 16, 1999)
             Notes to Consolidated Financial Statements (continued)

17.      PARENT COMPANY INFORMATION (continued)

         Changes in the Corporation's financial position for the years ended
         December 31, 2000, 1999 and 1998 were as follows (in thousands):
<TABLE>
<CAPTION>
                                                                     2000                1999            1998
                                                                    ------              ------          ------
<S>                                                               <C>                 <C>              <C>
         Cash flows from operating activities:
              Net loss                                             $ (5,398)            (3,692)         (1,037)
              Adjustments to reconcile net loss
                to net  cash provided by operating
                activities:
                  Amortization                                          524                524             524
                  Deferred income taxes - noncurrent                    -0-                -0-             (31)
                  Change in assets and liabilities:
                     Decrease (increase) in other assets                132               (325)            -0-
                     Increase in other liabilities                    4,742              3,493             544
                                                                   --------             ------          ------

              Net cash provided by operating activities                 -0-                -0-             -0-
                                                                   --------             ------          ------

         Increase in cash and cash equivalents                          -0-                -0-             -0-

         Cash and cash equivalents at beginning of year                 -0-                -0-             -0-
                                                                   --------             ------          ------

         Cash and cash equivalents at end of year                  $    -0-                -0-             -0-
                                                                   ========             ======          ======

         Supplemental cash flow disclosures:
           Interest paid, net of amounts capitalized               $    -0-              5,049           9,988
                                                                   ========             ======          ======
</TABLE>
                                      F-29

<PAGE>
           THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
                (Debtor-In-Possession effective August 16, 1999)
             Notes to Consolidated Financial Statements (continued)

18.      QUARTERLY FINANCIAL DATA

         The following table summarizes certain selected consolidated financial
         data by quarter for the years ended December 31, 2000 and 1999 (in
         thousands except per share data):
<TABLE>
<CAPTION>
                                                            First         Second         Third        Fourth
                                                           Quarter        Quarter       Quarter       Quarter
                                                           -------        -------       -------       -------
<S>                                                       <C>            <C>           <C>           <C>
         For the year ended December 31, 2000:

         Net revenues                                     $ 43,386        49,175         50,027        41,441

         Income (loss) before
               reorganization items                           (210)        3,206          3,984        (2,782)

         Reorganization items                                 (931)         (656)        (1,428)         (667)

         Net income (loss)                                  (1,141)        2,550          2,556        (3,449)

         Net income (loss) per share - basic
              and diluted                                     (.23)          .50            .50          (.68)

         For the year ended December 31, 1999:

         Net revenues                                     $ 43,853        49,138         52,448        43,111

         Income (loss) before
               reorganization items                         (1,248)         (269)         3,288        (1,240)

         Reorganization items                                  -0-           -0-           (797)      (37,924)

         Net income (loss)                                  (1,248)         (269)         2,491       (39,164)

         Net income (loss) per share - basic
              and diluted                                     (.25)         (.05)           .49         (7.74)
</TABLE>

                                      F-30
<PAGE>
                                   SCHEDULE II


           THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
                (Debtor-In-Possession effective August 16, 1999)
                        Valuation and Qualifying Accounts
                  Years Ended December 31, 2000, 1999 and 1998
                                 (in thousands)
<TABLE>
<CAPTION>
                                  Balance           Charged to             Charged to                                   Balance
                                 Beginning          Costs and                 Other                                    at End of
Description                      of Period           Expenses               Accounts            Deductions               Period
-----------                      ----------         -----------            ----------           ----------             ----------
<S>                              <C>                <C>                   <C>                  <C>                     <C>
Year ended
December 31, 2000

Allowance for
Uncollectible Accounts            $ 1,207               325                   -0-                   647 (a)                885

Year ended
December 31, 1999

Allowance for
Uncollectible Accounts            $ 1,339             1,043                   -0-                 1,175 (a)              1,207

Year ended
December 31, 1998

Allowance for
Uncollectible Accounts            $   758             1,128                   -0-                   547 (a)              1,339
</TABLE>

(a) Accounts written-off.

                                      F-31

<PAGE>
                                INDEX TO EXHIBITS


Exhibit
-------

EX2(b)        Fourth Amended Joint Chapter 11 Plan of Reorganization of The
              Claridge Hotel and Casino Corporation, The Claridge at Park Place,
              Incorporated, and Atlantic City Boardwalk Associates, L.P.

EX10(cc)      Amended Employment Agreement between Frank A. Bellis, Jr. and The
              Claridge at Park Place, Incorporated, effective January 1, 2001.

EX10(cd)      Amended Employment Agreement between Albert T. Britton and The
              Claridge at Park Place, Incorporated, effective January 1, 2001.

EX10(ce)      Amended Employment Agreement between Jean I. Abbott and The
              Claridge at Park Place, Incorporated, effective January 1, 2001.

EX10(cf)      Amended Employment Agreement between Glenn Lillie and The Claridge
              at Park Place, Incorporated, effective January 1, 2001.

EX10(cg)      Agreement of Purchase and Sale between The Claridge at Park Place,
              Incorporated and Atlantic City Boardwalk Associates, L.P., Seller,
              and Park Place Entertainment Corporation, Buyer, dated November
              28, 2000.

EX12(b)       Statement of Computation of Ratio of Earnings to Fixed Charges.

EX99(b)       Fourth Amended Disclosure Statement pursuant to 11 U.S.C. 1125 on
              Debtors' Joint Plan of Reorganization under Chapter 11 of the
              Bankruptcy Code.