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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, 1999
                                             -----------------

         [    ]       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



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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 29, 2000
                           --------------------------

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 93% 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
will be subordinated to liens that may be placed on those gaming and other
assets to secure any future revolving

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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

      During 1995, the cash provided by operations of the Claridge was
sufficient to meet the Corporation's obligations to pay interest on the Notes,
as well as to make moderate capital improvements. Commencing in the latter part
of 1995, however, competition in the Atlantic City casino market for bus
customers, a principal source of customers for the Claridge at the time,
increased; this competition intensified even more during 1996 as additional
casino square footage was added, principally due to the opening of the Trump
World's Fair casino. During 1996, the average coin incentive issued per bus
patron at the Claridge increased to approximately $19, from approximately $13 in
1995. Total cash incentives issued to Claridge's casino patrons (in the form of
coin to play slot machines and gaming chips to play table games) increased to
approximately $30.5 million in 1996, from approximately $25.2 million in 1995.
While the Corporation's promotional costs increased significantly, total casino
revenues in 1996 actually decreased from 1995 levels. It had been the
expectation of the Corporation that, upon the opening of its new self-parking
garage, the Corporation would be able to reduce its reliance on the bus patron
market; however, the Corporation was forced to close the garage facility on July
10, 1996, only ten days after its opening, following a fatal accident. Because
the facility was not able to reopen until the end of September 1996, the
Corporation lost any possible benefit of the facility during the normally busy
summer season. In addition, severe winter weather in the first quarter of 1996
adversely affected revenues. As a result, the Corporation experienced a net loss
for 1996 of $15.4 million, compared to a net loss of $1.9 million in 1995.

      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.
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. However, 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
transactions with PDS Financial Corporation ("PDS") and the New Jersey Casino
Reinvestment Development Authority ("CRDA"). In addition, in February 1999, the
Corporation and New

                                        2

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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 governing the Notes
(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 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 will permit the
Corporation to conserve its cash pending a restructuring of its financial
obligations in the Chapter 11 proceeding. As of December 31, 1999, the
Corporation had approximately $16.8 million of cash and cash equivalents,
including approximately $9.9 million of "bankroll" used in casino operations.
Management anticipates an increase in ongoing general and administrative
expenses, primarily for professional fees, during the pendency of the bankruptcy
proceeding. Through December 31, 1999, such expenses totalled approximately
$1,268,000.

      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.

      Under the Bankruptcy Code, the Corporation had an exclusive period of 120
days to file a plan of reorganization with the Bankruptcy Court, which would
have expired on December 14, 1999. In November 1999, the Corporation petitioned
the Bankruptcy Court for, and was granted, an extension of this exclusivity
period to February 14, 2000; a further extension was subsequently granted,
extending the exclusivity period to May 14, 2000. On January 27, 2000, the
Corporation, New Claridge, and the Partnership filed a joint plan of
reorganization and disclosure statement (the "Plan") with the Bankruptcy Court.

      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, the Plan proposes

                                        3

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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, the Plan proposes to simplify the ownership structure of the
Claridge as between the Corporation, New Claridge and the Partnership. Any such
restructuring of the financial obligations of the Claridge and of its ownership
structure will be subject to the outcome of the Chapter 11 proceeding and, in
particular, the approval of the holders of the requisite percentage of the
outstanding Notes, as to which there can be no assurance.

      In summary, the Plan, as proposed jointly by the Corporation, New
Claridge, and the Partnership on January 27, 2000, called for the following to
occur, subject to certain conditions contained in the Plan:

     (i)      the existing Class A Stock of the Corporation will be cancelled;

     (ii)     the holders of the Notes will be entitled to receive a pro rata
              amount of new common stock in the reorganized Corporation ("New
              Common Stock"). As an alternative to receiving only the New Common
              Stock, the holders of the Notes may instead elect to receive new
              first mortgage notes ("New Notes"), in a principal amount up to
              the greater of $100,000 or 15% of the principal amount of their
              Notes. Such New Notes, which will be issued by the reorganized
              Corporation, will be guaranteed by New Claridge and secured by the
              Hotel Assets. The New Notes will be issued in maximum principal
              amount of $15 million, will have a term of 10 years and will bear
              interest at a rate of 8% per year. To the extent that holders of
              the Notes elect to receive New Notes, they will receive a reduced
              amount of New Common Stock; and

     (iii)    the Partnership will transfer the Hotel Assets to New Claridge in
              full satisfaction of its obligations under the Expandable
              Wraparound Mortgage (see "Certain Agreements between the
              Corporation, New Claridge, and the Partnership"). All debts owed
              by New Claridge to the Partnership will be forgiven, and the
              Partnership will liquidate.

      On March 21, 2000, the Corporation filed an amendment to the Plan. This
amendment provides for the holders of the existing Notes to receive, on a pro
rata basis, (i) 100% of the equity of the reorganized Corporation, and (ii) debt
not to exceed $15 million. The Bankruptcy Court will issue its opinion in mid-
April regarding the adequacy of the Plan to be submitted to the creditors for a
vote.

      The Corporation had previously announced that it had entered into a letter
of intent with Schottenstein Realty Corporation ("Schottenstein") regarding an
investment in the Claridge in connection with any such restructuring. The letter
of intent contemplated a $10 million investment by Schottenstein in the Claridge
in exchange for a substantial equity interest in a new entity that would own all
of the assets used by the Claridge, (including the assets currently owned by the
Partnership), except for the casino assets. The letter of intent contemplated
that this new entity would exchange new notes and equity in the entity for the
currently outstanding Notes. The new notes would have a substantially smaller
principal amount than the existing Notes, together with a lower interest rate
and a later maturity date. The letter of intent also called for providing a
limited amount of equity in the new entity to the Partnership and for setting
aside a portion of the equity in the new entity as incentive compensation for
the management of the Claridge. The above described terms of the letter of
intent were not binding on the Corporation or Schottenstein until reflected in a
definitive agreement, and, in any case, were subject to negotiation and approval
by holders of the Notes and the Partnership and to approval by the Bankruptcy
Court. On November 10, 1999, the Corporation announced that it would no longer
pursue the relationship contemplated by this letter of intent. The Board of
Directors of the Corporation, after careful consideration, determined that it
would be in the best interest of its creditors to file a separate and
independent "stand alone" plan of reorganization. However, management of the
Corporation will continue to consider alternate strategic initiatives.

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Certain Agreements between the Corporation, New Claridge and 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 below:

      Operating Lease/Expansion Operating Lease. The Casino Assets are owned by
      New Claridge. In addition, the new 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 year commencing October 1, 1998, was
      $24 million for the Operating Lease and $2.5 million for the Expansion
      Operating Lease, and will remain the same for the lease year commencing
      October 1, 1999.

      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).


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      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.

      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.

      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

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      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.

      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.

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
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, 1999, the

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aggregate amount payable in respect of the Contingent Payment was $102.3
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 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 1,750 slot machines and sixty-four table
games, including thirty-two blackjack tables, eight craps tables, five roulette
tables, three mini-baccarat and two baccarat tables, and fourteen 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 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").

                                        8

<PAGE>



Competition

      Competition in the Atlantic City casino-hotel market is intense. As of
December 31, 1999, the twelve existing casino facilities offered approximately
1,171,000 square feet of gaming space, a 3.4% decrease from the casino square
footage as of December 31, 1998 of approximately 1,212,000 square feet. This
decrease was primarily due to the closing of the Trump World's Fair Casino in
the fourth quarter of 1999. The increase in casino square footage in 1998 over
1997 was approximately 3.3%, resulting primarily from a casino expansion at
Caesars Atlantic City Casino ("Caesars"), which added approximately 800 slot
machines to its existing casino in the second quarter of 1998. For the years
ended December 31, 1999 and 1998, citywide gaming revenues, as reported,
increased 3.1% and 3.6%, 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.

      The Atlantic City gaming market is not expected to experience significant
growth over the next several years, until Atlantic City transforms itself from a
"day-trip" market to a "destination resort." 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, over $4.6
billion of new investment has been announced or recently completed in the
Atlantic City gaming market. In addition to recent increases in casino space and
hotel rooms at the existing casinos, several Las Vegas casino operators have
announced plans to construct new casinos in Atlantic City.

      In addition to the major casino expansions and the announced new casinos,
major infrastructure improvements have begun. 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 tunnel, which will provide access from
the Atlantic City Expressway to the marina casino district, began in late 1998.

      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. During
1996, the number of hotel rooms available citywide increased by approximately
1,100 rooms, with the opening of the Trump World's Fair casino (which was
subsequently closed in the fourth quarter of 1999) and the Tropicana's hotel
room tower. Several existing Atlantic City casinos also increased their hotel
space in 1997, including Harrah's (approximately 400 rooms), Hilton
(approximately

                                        9

<PAGE>



300 rooms), and Caesars (approximately 600 rooms), for a total increase in 1997
of approximately 1,500 hotel rooms. 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 continued to rely on its bus customers as a
significant source of business in 1997 and 1998. In 1997, citywide bus package
pricing competition eased somewhat; the average coin cost per patron arriving by
bus to the Claridge decreased to $16 in 1997. However, in 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, and 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
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

                                       10

<PAGE>



recent years to increase table games play. In both 1999 and 1998, 74% of the
Claridge's casino revenue came from slot play as compared to 71% in 1999 and 70%
in 1998 reported for all Atlantic City properties.

      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, 1999, reported total slot win of $1.225 billion for 1999, an
increase of 9.9% over 1998 slot revenue of $1.115 billion. In Delaware, the
three tracks that are currently authorized to offer slot machine gaming had a
combined total of approximately 4,200 slot machines as of the end of 1999. These
machines generated $412.5 million of slot revenue during the year, an increase
of 17.6% over 1998 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.

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

                                       11

<PAGE>



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.

      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 22, 1999, New Claridge was issued a one-year casino license by the
Commission for the period commencing September 30, 1999. Although New Claridge
had reapplied for a four-year casino license, the filing of the voluntary
petition under Chapter 11 of the Bankruptcy Code on

                                       12

<PAGE>



August 16, 1999 prompted the Commission to renew New Claridge's license for the
reduced period of time. Additionally, the casino license renewal contains
certain financial reporting conditions and requirements consistent 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. For example, effective July 1, 1993, the New Jersey state legislature
passed a law requiring the payment of parking fees by casinos in New Jersey in
the amount of $2.00 per day for each motor vehicle parked in a casino parking
space. In 1992 the New Jersey state legislature passed a law requiring the
payment of a tourism marketing fee of $2.00 per occupied room by casino hotels
in Atlantic City.

Employees

      As of December 31, 1999, New Claridge employed approximately 2,110
persons, of whom approximately 760 were represented by labor unions.
Approximately 650 of the 760 are represented by the

                                       13

<PAGE>



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. The office building, situated on an adjacent
parcel of land (7,766 square feet), is a two-story reinforced concrete and brick
structure with a flat roof. Constructed about 50 years ago, its interior has
been modernized. The building is utilized as an administration facility, and
totals an area of 14,020 square feet. 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.

      On July 10, 1996, ten days after its opening, a fatal accident occurred at
New Claridge's self-parking garage, in which the vehicle of two patrons breached
a cable restraint system, permitting their vehicle to drive through the side
wall of the self-parking garage. The vehicle fell four stories to the sidewalk
and street below, killing both occupants. As a result, New Claridge's
self-parking garage was closed until the end of September 1996, while various
investigations sought to determine the cause of the accident. At the same time,
New Claridge determined to remove the exterior wall cable restraint system and
replace it with a rigid I-beam barrier system.


                                       14

<PAGE>


      New Claridge retained the law firm of Zelle and Larson LLP of Minneapolis,
Minnesota to assist in the recovery of certain expenses incurred in reopening
the self-parking garage and potential lost profit claims. On July 22, 1997, New
Claridge filed a Complaint and Demand for Arbitration in the amount of $10
million against the general contractor and the architect for the garage,
alleging negligence, breach of warranty and breach of contract in the design and
construction of the garage. In February 1999, the Corporation and New Claridge
entered into a settlement agreement of approximately $2.3 million in the
arbitration proceedings.

      A wrongful death action was commenced by the estates of the two patrons
who died in the July 1996 accident in the self-parking garage. New Claridge is
fully insured and indemnified for any financial liability that may have resulted
due to either an award to or a negotiated settlement with the plaintiffs in this
action. Subsequent to year end 1999, a settlement agreement and release was
signed among the parties settling all final outstanding claims. The settlement
with respect to New Claridge was within its general liability insurance.

      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 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.

                                       15

<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 2, 2000, there were approximately 494
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").



                                       16

<PAGE>



Item 6.           SELECTED FINANCIAL DATA

      The following table summarizes certain selected consolidated financial
data for the years ended December 31, 1999, 1998, 1997, 1996 and 1995.
<TABLE>
<CAPTION>

                                               1999             1998            1997             1996              1995
                                               -----            ----            ----             ----              ----
                                                            (in thousands except per share data)
Income Statement Data

<S>                                         <C>                <C>              <C>              <C>              <C>
Net revenues                                $ 188,550          191,000          192,753          193,311          203,348

Income (loss) before
  reorganization items                      $     531           (9,415)          (5,979)         (15,389)          (1,908)

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

Net loss                                    $ (38,190)          (9,415)          (5,979)         (15,389)          (1,908)

Net loss per share                          $   (7.54)           (1.89)           (1.20)           (3.05)            (.38)

Balance Sheet Data at Year End

Total assets                                $ 102,522          131,776          150,380          164,163          189,074

Current assets                              $  28,232           18,403           37,096           31,753           55,542

Current liabilities                         $  17,280           42,088           41,234           39,027           40,420

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

Long-term debt, net of
  current installments                      $       1           85,170           85,023           85,000           85,000


Stockholders' (deficiency) equity           $ (63,418)         (25,228)         (15,813)          (9,834)           5,555


</TABLE>


                                       17

<PAGE>



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

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 (the amount of gaming chips purchased by
patrons) for 1999 decreased 4.7% from the 1998 drop; however, due to a slight
increase in the "hold" percentage (the percentage of win to drop), 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.

        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 to the bus program,
New Claridge offers promotional incentives to its customers through its direct
marketing programs, based on their level of gaming activity. Promotional
incentives issued through this program (which includes 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,

                                       18

<PAGE>



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 (meals served) 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, which represent the value of goods and services provided free of
charge to customers under various marketing programs, 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 Claridge's Chapter 11 filing, as well as the Partnership's
Chapter 11 filing on October 5, 1999, the Expandable Wraparound Mortgage has
become 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.

Results of Operations for the Year Ended December 31, 1998

        The Corporation had a net loss of $9,415,000 for the year ended December
31, 1998, compared to a net loss of $5,979,000 for the year ended December 31,
1997.

        Total Claridge casino revenues during 1998 were $166,010,000, a slight
increase over 1997 total casino revenues of $165,371,000. Citywide casino
revenues, as reported, for the year ended December 31, 1998 increased 3.6% over
1997 revenues. As of December 31, 1998, the twelve existing casino facilities
offered approximately 1,212,000 square feet of gaming space, a 3.3% increase
over the casino square footage as of December 31, 1997 of approximately
1,173,000 square feet. This increase was primarily due to a casino expansion at
Caesars, which added approximately 800 slot machines to its existing casino in
the second quarter of 1998.

        New Claridge's table games revenue for 1998 was $43,762,000, reflecting
an 11.5% increase over 1997 table games revenue of $39,256,000. Table games drop
increased 16.1% in 1998 over the 1997 drop; however,

                                       19

<PAGE>



the hold percentage declined, to 13.7% in 1998, from 14.2% in 1997. The increase
in table games drop was attributable to ongoing efforts to increase that segment
of New Claridge's casino business, through various marketing programs aimed at
domestic Asian table games business, junket business, and player development
programs. Citywide table games drop, as reported, decreased slightly in 1998
from 1997 levels; however, the citywide hold percentage increased to 15.8% (from
15.5% in 1997), resulting in an increase in citywide table games revenue of 1.9%
in 1998 over the prior year.

        New Claridge's slot machine revenues during 1998 were $122,248,000, a
decrease of 3.1% from 1997 slot machine revenues. Citywide slot machine
revenues, as reported, increased 3.9% in 1998 over 1997 revenues. However, as a
result of the 4.9% increase in the average number of slot machines available
citywide (primarily resulting from the casino expansion at Caesars), the
citywide win per machine per day actually decreased 1.4% from 1997 levels. The
average number of slot machines at the Claridge in 1998 was in line with the
1997 average, while New Claridge's win per slot machine per day decreased 3.1%.

        Citywide competition for attracting customers who arrive in Atlantic
City by bus continued to accelerate in the second half of 1998, as companies
struggled to increase revenues to support recently expanded properties, such as
the opening of Caesars and the new bus center at Bally's Park Place Casino. As a
result, coin incentives issued to bus customers increased. During the fourth
quarter of 1998, New Claridge redirected its bus program to reduce the number of
customers who arrive by bus, and, thereby, related costs. During 1998, 842,000
casino customers arrived at the Claridge by bus, and were issued $13,500,000 in
coin incentives, for an average incentive per passenger of $16. This compares to
the 955,000 bus customers who arrived at the Claridge in 1997 and were issued a
total of $15,023,000 of coin incentives, also an average of $16 per passenger.
Marketing efforts have been directed toward the mid-level slot customer through
the use of direct promotions and advertising. Promotional incentives issued
through New Claridge's direct marketing programs in 1998 totalled $11,612,000,
compared to $11,366,000 in 1997.

        Hotel revenues in 1998 were $9,576,000, an increase of 1.3% over 1997
revenues of $9,456,000. Hotel occupancy in 1998 was 89%, slightly lower than the
91% occupancy in 1997; however, the average room rate in 1998 increased to $59,
from $58 in 1997. Food and beverage revenues in 1998 were $18,989,000,
reflecting a 3.2% decrease from prior year revenues of $19,609,000; this
decrease was primarily due to a reduction in complimentary beverages served on
the casino floor. Although food revenues in 1998 were in line with the prior
year, the number of covers decreased to 1,163,000, from 1,364,000 in 1997, while
the average price per cover increased to $11.22 in 1998 from $9.56 in 1997. The
reduction in the number of covers was reflected primarily in the buffet; this
outlet was temporarily closed in early 1998 for renovations, and was permanently
closed at the end of November 1998 as part of the refocusing of marketing
efforts away from the bus program. Promotional allowances increased 4.1 % in
1998 to $20,056,000, from $19,272,000 in 1997.

        Total costs and expenses during 1998 of $200,415,000 were slightly
higher than 1997 expenses. Casino operating expenses of $102,150,000 increased
5.6% over 1997 expenses, resulting from higher payroll costs and marketing costs
related to the initiatives to increase table games business, higher costs of
providing promotional allowances, and higher slot equipment rental costs as a
result of the limited capital expenditure funding available and certain popular
varieties of slots being available for lease only. Hotel and food and beverage
expenses during 1998 decreased 15.9% from 1997 expenses, primarily due to lower
cash revenues. Rent expense to the Partnership of $26,374,000 is lower than 1997
expense of $30,554,000 resulting primarily from increased abatements of rent,
which are recorded as a reduction to rent expense; during 1998, approximately
$11.1 million of rent was abated, compared to approximately $9.0 million in
1997.

        For the year ended December 31, 1998, the Corporation recorded an income
tax benefit of $4,391,000, which represents the tax benefit likely to be
realized as a result of the carry forward of Federal net operating

                                       20

<PAGE>



losses, offset by an increase in the valuation allowance of $4,391,000. For the
year ended December 31, 1997, the Corporation recorded an income tax benefit of
$2,311,000, which represents the tax benefit likely to be realized as a result
of the carry forward of Federal net operating losses, offset by an increase in
the valuation allowance of $2,311,000.

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 will be subordinated to liens
that may 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.
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. However, 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
transactions with PDS 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.

                                       21

<PAGE>



        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 will permit the
Corporation to conserve its cash pending a restructuring of its financial
obligations in the Chapter 11 proceeding. As of December 31, 1999, the
Corporation had approximately $16.8 million of cash and cash equivalents,
including approximately $9.9 million of "bankroll" used in casino operations.
Management anticipates an increase in ongoing general and administrative
expenses, primarily for professional fees, during the pendency of the bankruptcy
proceeding. Through December 31, 1999, such expenses totalled approximately
$1,268,000.

        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.

        Under the Bankruptcy Code, the Corporation had an exclusive period of
120 days to file a plan of reorganization with the Bankruptcy Court, which would
have expired on December 14, 1999. In November 1999, the Corporation petitioned
the Bankruptcy Court for, and was granted, an extension of this exclusivity
period to February 14, 2000; a further extension was subsequently granted,
extending the exclusivity period to May 14, 2000. On January 27, 2000, the
Corporation, New Claridge, and the Partnership filed a joint plan of
reorganization and disclosure statement (the "Plan") with the Bankruptcy Court.

        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, the Plan proposes 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, the Plan
proposes to simplify the ownership structure of the Claridge as between the
Corporation, New Claridge and the Partnership. Any such restructuring of the
financial obligations of the Claridge and of its ownership structure will be
subject to the outcome of the Chapter 11 proceeding and, in particular, the
approval of the holders of the requisite percentage of the outstanding Notes, as
to which there can be no assurance.


                                       22

<PAGE>



        In summary, the Plan, as proposed jointly by the Corporation, New
Claridge, and the Partnership, calls for the following to occur, subject to
certain conditions contained in the Plan:

      (i)     the existing Class A Stock of the Corporation will be cancelled;

      (ii)    the holders of the Notes will be entitled to receive a pro rata
              amount of new common stock in the reorganized Corporation ("New
              Common Stock"). As an alternative to receiving only the New Common
              Stock, the holders of the Notes may instead elect to receive new
              first mortgage notes ("New Notes"), in a principal amount up to
              the greater of $100,000 or 15% of the principal amount of their
              Notes. Such New Notes, which will be issued by the reorganized
              Corporation, will be guaranteed by New Claridge and secured by the
              Hotel Assets. The New Notes will be issued in maximum principal
              amount of $15 million, will have a term of 10 years and will bear
              interest at a rate of 8% per year. To the extent that holders of
              the Notes elect to receive New Notes, they will receive a reduced
              amount of New Common Stock; and

      (iii)   the Partnership will transfer the Hotel Assets to New Claridge in
              full satisfaction of its obligations under the Expandable
              Wraparound Mortgage (see "Certain Agreements between the
              Corporation, New Claridge, and the Partnership"). All debts owed
              by New Claridge to the Partnership will be forgiven, and the
              Partnership will liquidate.

        On March 21, 2000, the Corporation filed an amendment to the Plan. This
amendment provides for the holders of the existing Notes to receive, on a pro
rata basis, (i) 100% of the equity of the reorganized Corporation, and (ii) debt
not to exceed $15 million. The Bankruptcy Court will issue its opinion in
mid-April regarding the adequacy of the Plan to be submitted to the creditors
for a vote.

        At December 31, 1999, prior to the reclassification of liabilities
subject to compromise resulting from the Chapter 11 filing on August 16, 1999,
the Corporation would have had a working capital deficiency of $21,895,000, as
compared to a working capital deficiency of $23,685,000 at December 31, 1998.
The decrease in the working capital deficiency is principally attributable to an
increase in cash and cash equivalents of $7,036,000, offset by an increase in
accounts payable of $2,569,000, an increase in the interest payable on the Notes
of $1,279,000 (all primarily resulting from the Corporation's Chapter 11 filing
on August 16, 1999), as well as an increase in accrued payroll of $1,661,000.
Interest on the Notes ceased to accrue as of August 16, 1999. As a result of the
reclassification of certain items to liabilities subject to compromise, the
Corporation had working capital of $10,952,000 at December 31, 1999.

        For the year ended December 31, 1999, cash provided by operating
activities was $8,698,000, compared to cash used in operating activities of
$16,735,000 for the year ended December 31, 1998. As a result of the Chapter 11
filing on August 16, 1999, the interest payment due on the Notes on August 2,
1999 was not made; therefore, interest payments in 1999 were approximately $5
million lower than in 1998. Cash provided by operating activities in 1999 was
also 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 1999 were approximately $14.3 million lower than during 1998, due
to the decreased cash requirements of the Partnership for servicing the debt
under the Expandable Wraparound Mortgage. (This decrease in rental payments to
the Partnership was offset by a decrease in Expandable Wraparound Mortgage
payments received from the Partnership, which are included in cash provided by
investing activities.) Cash used in investment activities in 1999 was
$1,249,000, compared to cash provided by investment activities for 1998 of
$14,343,000. Cash provided by investment activities in 1998 was primarily from
the receipt of Expandable Wraparound Mortgage principal payments of
approximately $15.1 million, in addition to the approximately $1.8

                                       23

<PAGE>



million in proceeds received from PDS for the sale of certain slot machines
under a sale lease-back arrangement, offset by new FF&E Loans made to the
Partnership and the payment of CRDA obligations. During 1999, cash receipts from
Expandable Wraparound Mortgage principal payments were $1.7 million. Cash used
in financing activities in 1999 and 1998 of $413,000 and $234,000, respectively,
represent payments of capital lease obligations for certain gaming equipment.

        For the year ended December 31, 1999, the Corporation's "Adjusted
EBITDA" was $10,714,000, compared to $8,554,000 for the year ended December 31,
1998. "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, 1999, 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 decreased to (1.58), from .52 in 1998, and compared to .71 in 1997. 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,
1999 (including the outstanding FF&E Loans and the $20 million of deferred
interest) was $84.8 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 benefit was recorded for the years ended December 31 1999 and
1998, 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"). The components of income tax expense did not change
significantly from the prior years except for the increase in the valuation
allowance of $25,099,000 and $4,391,000, which was provided against deferred tax
assets as

                                       24

<PAGE>



of December 31, 1999 and 1998, respectively.

Year 2000

        The "year 2000" problem related to certain computer programs which were
written using two digits rather than four to define the applicable year, which
could have caused certain computer systems to recognize the year 2000 as the
year 1900. In preparation for the beginning of the year 2000, the Corporation
assessed its hardware, software, and other non-information technology ("IT")
systems. The process for addressing potential problems, which commenced in 1995,
included using internal staff to identify, correct, and test certain systems for
year 2000 compliance, as well as the replacement of certain other software
programs and hardware systems. In addition to addressing its internal systems,
the Corporation contacted its significant vendors concerning their year 2000
readiness, and formulated contingency plans, in the event that certain vendors
were not able to fulfill their obligations to the Corporation. Although
non-essential, non-year 2000 IT projects may have been delayed, adequate
resources were available to address essential non-year 2000 projects, such as
regulatory requirements and marketing programs. As a result of these efforts, no
disruption resulted from the beginning of the year 2000.

        The total cost of addressing the year 2000 issue is estimated to be $1.9
million, which includes approximately $64,000 for certain follow-up work during
the first half of 2000. Approximately 65% of the total cost related to internal
labor, while the remaining 35% related to the cost of supplies, equipment,
software and hardware.

Factors Which May Influence the Corporation's Future Operating Results

        The Atlantic City gaming market is not expected to experience
significant growth over the next several years, until Atlantic City transforms
itself from a "day-trip" market to a "destination resort." 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 to the expansion of the Atlantic City gaming market (see
Item 1. Business - "Competition"), casino activity outside of Atlantic City
could have an impact on the Corporation's future operating results. 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. In 1999, the three racetracks in Delaware which offer slot machines
reported revenues of $412.5 million, an increase of 17.6% over 1998 revenues of
$350.8 million. The Foxwoods Casino and the Mohegan Sun Resort in Connecticut
reported total slot win of $1.225 billion in 1999, an increase of 9.9% over 1998
slot revenues of $1.115 million. 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 and on the Claridge would depend on the
form and scope of such gaming.

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

        No effect.




                                       25

<PAGE>



Item 8.        FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

        The Financial Statements and Financial Statement Schedules are set forth
at pages F-1 to F-32 of this report.

Item 9.        DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

        None.


                                       26

<PAGE>



                                    PART III


Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THIS REGISTRANT

    Name                         Office                                   Age
    ----                         ------                                   ---
    James M. Montgomery          Chairman, Director                        60
    David W. Brenner             Director                                  64
    Shannon L. Bybee             Director                                  61
    A. Bruce Crawley             Director                                  54
    Ned P. DeWitt                Director                                  60
    Mark H. Sayers               Director                                  50
    Robert M. Renneisen          Director                                  53
    Frank A. Bellis, Jr.         Chief Executive Officer, Director         46
    Jean I. Abbott               Executive Vice President                  44
    Albert T. Britton            Executive Vice President                  43
    Glenn S. Lillie              Vice President                            51

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 and
Director

                                       27

<PAGE>



of Advertising for First Pennsylvania Bank and First Pennsylvania Corporation.

        Mr. DeWitt has served as a member of the Board since May 1995. 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 to October 1985. From October 1980 through April 1984, Ms. Abbott
held various executive positions with New

                                       28

<PAGE>



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.












                                       29

<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, 1999, 1998 and 1997 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.               1999       $170,384       $ -0-              $2,000             $    -0-
Chief Executive Officer            1998        151,634         -0-               1,466                  -0-
 of New Claridge                   1997        131,306         -0-                 -0-                  -0-

Robert M. Renneisen                1999        297,676         -0-               2,000               27,406
Former Chief Executive             1998        330,000         -0-                 923              217,881
 Officer of New Claridge           1997        330,865         -0-                 -0-               52,251

Albert T. Britton                  1999        205,000         -0-               2,000                8,557
President/Chief Operating          1998        205,000         -0-               1,284               53,816
 Officer of New Claridge           1997        205,306         -0-                 -0-               20,262

Jean I. Abbott                     1999        175,000         -0-               2,000                5,851
Executive Vice President           1998        171,469         -0-               1,491               39,051
 of Finance/Corporate              1997        163,066         -0-                 -0-               24,673
 Development of New
 Claridge

Howard J. Klein                    1999        160,500         -0-               1,327                  -0-
Senior Vice President of           1998        160,500         -0-                 -0-                  -0-
 Marketing of New Claridge         1997        162,607         -0-                 -0-                  -0-

Roy A. Young                       1999        160,000         -0-               1,577                  -0-
Senior Vice President of           1998        134,738         -0-                 -0-                  -0-
 Hotel Operations of New           1997          -0-           -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 November 10, 1998. The agreements are for a term ending on
December 31, 2000 and may be extended upon specific action

                                       30

<PAGE>



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.

         The base annual salaries under the agreements will be as follows,
effective April 3, 2000: Frank A. Bellis, Chief Executive Officer, $275,000;
Albert T. Britton, President/Chief Operating Officer, $220,000; Jean I. Abbott,
Executive Vice President of Finance and Corporate Development, $185,000; John R.
Ceresani, Vice President of Human Resources and Security, $120,000; Howard J.
Klein, Senior Vice President of Marketing, $160,500; Glenn S. Lillie, Vice
President of Marketing Communications, $128,000; Arthur M. Lucchesi, Vice
President of Information Technology, $130,000; Laura L. Palazzo, Vice President
- Controller, $120,000; and Roy A. Young, Senior Vice President of Hotel
Operations, $170,000.

           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
three times the average of the executive officer's total compensation for the
preceding five years.

           Mr. Renneisen terminated his employment with New Claridge on November
3, 1999. New Claridge agreed to honor Mr. Renneisen's employment agreement in
regards to his termination payment in the amount of 125% of his base annual
salary. In addition, in consideration for agreeing to the "non-compete" clause
included in his employment agreement, Mr. Renneisen will receive additional
compensation in the amount of 25% of his base annual salary. As a result of the
Chapter 11 proceeding, Mr. Renneisen has an administrative claim against the
Corporation and New Claridge, which is expected to be paid upon confirmation of
the Plan. Mr. Renneisen continues to serve as a member of the Board.

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
1999. Employees could contribute a maximum of 20% of their base salary, but not
in excess of $10,000 in 1999. 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.

                                       31

<PAGE>



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 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:



                                       32

<PAGE>



                                           Unit         Units         Early
     Name of Participant        Age        Value     Accumulated   Retirement
     -------------------        ---        -----     -----------   ----------

     Robert M. Renneisen        53       $10,000         5            55
     Albert T. Britton          43         6,000         5            55
     Jean I. Abbott             44         6,000         3            55

           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.

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. During 1999, the firm of Crawley, Haskins and Rodgers, of which
A. Bruce Crawley is President and Director of Public Relations and Marketing,
was paid $8,139 for public relations and marketing research services provided to
New Claridge.

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, 1999, 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."


                                       33

<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.

                   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.



                                       34

<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.



                                       35

<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.


                                       36

<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.



                                       37

<PAGE>



                   10(bt)    Amended Employment Agreement between Robert M.
                             Renneisen and The Claridge at Park Place,
                             Incorporated effective November 10, 1998.
                             Incorporated by reference to Exhibit 10(bt) to Form
                             10-K for the year ended December 31, 1998.

                   10(bu)    Amended Employment Agreement between Albert T.
                             Britton and The Claridge at Park Place,
                             Incorporated effective November 10, 1998.
                             Incorporated by reference to Exhibit 10(bu) to Form
                             10-K for the year ended December 31, 1998.

                   10(bv)    Amended Employment Agreement between Jean I. Abbott
                             and The Claridge at Park Place, Incorporated
                             effective November 10, 1998. Incorporated by
                             reference to Exhibit 10(bv) to Form 10-K for the
                             year ended December 31, 1998.

                   10(bw)    Amended Employment Agreement between Frank A.
                             Bellis, Jr. and The Claridge at Park Place,
                             Incorporated effective November 10, 1998.
                             Incorporated by reference to Exhibit 10(bw) to Form
                             10-K for the year ended December 31, 1998.

                   10(bx)    Amended Employment Agreement between Glenn Lillie
                             and The Claridge at Park Place, Incorporated
                             effective November 10, 1998. Incorporated by
                             reference to Exhibit 10(bx) to Form 10-K for the
                             year ended December 31, 1998.

                   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.

                   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.

                                       38

<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>
<CAPTION>

<S>                           <C>                                   <C>
Dated:  March 29, 2000        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 29, 2000
------------------------
James M. Montgomery

 /s/ DAVID W. BRENNER                 Director                                    March 29, 2000
---------------------
David W. Brenner

/s/ SHANNON L. BYBEE                  Director                                    March 29, 2000
--------------------
Shannon L. Bybee

 /s/ A. BRUCE CRAWLEY                 Director                                    March 29, 2000
---------------------
A. Bruce Crawley

/s/ NED P. DEWITT                     Director                                    March 29, 2000
-----------------
Ned P. DeWitt

 /s/ MARK H. SAYERS                   Director                                    March 29, 2000
-------------------
Mark H. Sayers

 /s/ ROBERT M. RENNEISEN              Director                                    March 29, 2000
------------------------
Robert M. Renneisen

/s/ FRANK A. BELLIS, JR.              Chief Executive Officer, Director           March 29, 2000
------------------------
Frank A. Bellis

 /s/ JEAN I ABBOTT                    Executive Vice President                    March 29, 2000
------------------                    (Chief Financial Officer/
Jean I. Abbott                        Treasurer/Principal
                                      Accounting Officer)

</TABLE>


                                       39

<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, 1999 and 1998............    F-3

Consolidated Statements of Operations and Accumulated Deficit
  for the Years Ended December 31, 1999, 1998 and 1997...............    F-4

Consolidated Statements of Cash Flows for the Years Ended
  December 31, 1999, 1998 and 1997...................................    F-5

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

Financial Statement Schedule II - Valuation and Qualifying Accounts..   F-32


         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 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 generally accepted auditing
standards. 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, 1999 and 1998, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1999 in conformity with generally accepted
accounting principles. 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 3, 2000

                                       F-2

<PAGE>



           THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
                (Debtor-In-Possession effective August 16, 1999)
                           Consolidated Balance Sheets
                           December 31, 1999 and 1998
                             (dollars in thousands)
<TABLE>
<CAPTION>

                                                                             1999         1998
                                                                          ---------    ---------
Assets
Current Assets:
<S>                                                                       <C>              <C>
     Cash and cash equivalents                                            $  16,834        9,798
     Receivables, net (including $6,269 and $3,111 in 1999
       and 1998, respectively, due from Partnership) (note 4)                 7,977        5,561
     Inventories                                                                332          309
     Prepaid expenses and other current assets                                3,089        2,735
                                                                          ---------    ---------
         Total current assets                                                28,232       18,403
                                                                          ---------    ---------

Property and equipment (notes 5 and 10)                                      42,041       41,785
Less accumulated depreciation and amortization                              (13,699)     (12,408)
                                                                          ---------    ---------
         Net property and equipment                                          28,342       29,377
                                                                          ---------    ---------

Long-term receivables due from Partnership (note 4)                          41,831       79,593
Deferred charges at cost, less accumulated amortization                       1,076        1,510
Other assets (note 6)                                                         3,041        2,893
                                                                          ---------    ---------
                                                                          $ 102,522      131,776
                                                                          =========    =========
Liabilities and Stockholders' Deficiency
----------------------------------------
Current Liabilities Not Subject to Compromise:
     Current maturities of long-term debt (note 9)                        $     125          351
     Accounts payable                                                         2,902        3,535
     Loan from the Partnership (notes 7 and 9)                                  -0-        3,600
     Other current liabilities (note 8)                                      14,253       34,602
                                                                          ---------    ---------
         Total current liabilities not subject to compromise                 17,280       42,088
                                                                          ---------    ---------

Liabilities Subject to Compromise (note 9)                                  145,259          -0-

Long-term debt (notes 9 and 10)                                                   1       85,170
Deferred rent due to Partnership (notes 9 and 14)                               -0-        5,827
Deferred income taxes (note 13)                                               2,046        2,579
Other noncurrent liabilities (notes 9 and 11)                                 1,354       21,340

Commitments and contingent liabilities (notes 14 and 16)

Stockholders' deficiency (notes 17 and 18):
     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                                                    (68,471)     (30,281)
                                                                          ---------    ---------
         Total stockholders' deficiency                                     (63,418)     (25,228)
                                                                          ---------    ---------

                                                                          $ 102,522      131,776
                                                                          =========    =========
</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, 1999, 1998 and 1997
                      (in thousands except per share data)
<TABLE>
<CAPTION>

                                                                     1999         1998         1997
                                                                  ---------    ---------    ---------
Revenue:
<S>                                                               <C>            <C>          <C>
     Casino                                                       $ 163,833      166,010      165,371
     Hotel                                                           10,745        9,576        9,456
     Food and beverage                                               18,413       18,989       19,609
     Interest from the Partnership                                   11,632       12,039       14,230
     Interest, other                                                    360          757          439
     Other                                                            5,089        3,685        2,920
                                                                  ---------    ---------    ---------
                                                                    210,072      211,056      212,025
     Less promotional allowances (note 12)                           21,522       20,056       19,272
                                                                  ---------    ---------    ---------
         Net revenues                                               188,550      191,000      192,753
                                                                  ---------    ---------    ---------

Costs and expenses:
     Casino                                                         100,576      102,150       96,760
     Hotel                                                            2,897        2,470        2,570
     Food and beverage                                                5,556        7,948        9,811
     Other                                                            2,782        2,689        2,617
     Rent expense to the Partnership (note 14)                       24,028       26,374       30,554
     Rent expense, other (note 13)                                    1,189        1,253        1,283
     General and administrative                                      26,211       27,662       27,157
     Gaming taxes                                                    13,024       13,194       13,215
     Reinvestment obligation expenses (note 6)                        2,127        2,474          684
     Provision for uncollectible accounts                             1,043        1,128          218
     Depreciation and amortization                                    1,819        2,554        3,296
     Interest expense (contractual interest of $10,936 in 1999)       6,767       10,519       10,567
                                                                  ---------    ---------    ---------
         Total costs and expenses                                   188,019      200,415      198,732
                                                                  ---------    ---------    ---------

Income (loss) before reorganization items                               531       (9,415)      (5,979)
Reorganization items:
     Professional fees                                               (1,268)         -0-          -0-
     Interest earned from accumulated cash resulting
         from Chapter 11 proceeding                                     142          -0-          -0-
     Provision for impairment loss (note 4)                         (37,595)         -0-          -0-
                                                                  ---------    ---------    ---------
                                                                    (38,721)         -0-          -0-
                                                                  ---------    ---------    ---------
Net loss                                                            (38,190)      (9,415)      (5,979)
                                                                  ---------    ---------    ---------

Accumulated deficit at beginning of year                            (30,281)     (20,866)     (14,887)
                                                                  ---------    ---------    ---------

Accumulated deficit at end of year                                $ (68,471)     (30,281)     (20,866)
                                                                  =========    =========    =========

Net loss per share - basic and diluted (note 3(i))                $   (7.54)       (1.89)       (1.20)
                                                                  =========    =========    =========

</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, 1999, 1998 and 1997
                                 (in thousands)


<TABLE>
<CAPTION>


                                                                 1999        1998        1997
                                                               --------    --------    --------

Cash flows from operating activities:
<S>                                                            <C>           <C>         <C>
     Net loss                                                  $(38,190)     (9,415)     (5,979)
     Adjustments to reconcile net loss to net cash
       provided by (used in) operating activities:
        Depreciation and amortization                             1,819       2,554       3,296
        Deferred rent to the Partnership                          1,242     (10,679)    (11,504)
        Deferred interest receivable and
          discount from the Partnership                          (2,314)     (2,014)     (1,752)
        Reinvestment obligation expenses                          2,127       2,474         684
        Loss on disposal of assets                                  -0-         133          30
        Deferred gain on disposal of assets                        (159)       (132)        -0-
        Deferred income taxes - noncurrent                          -0-          (1)         (1)
        Reorganization items                                      1,126         -0-         -0-
        Change in assets and liabilities:
         Increase in receivables, net, excluding
           current portion of long-term receivables              (1,293)       (663)       (228)
         (Increase) decrease in inventories                         (23)        (39)          8
         (Increase) decrease in prepaid expenses and
           other current assets                                    (354)        200         264
         Increase in accounts payable                             2,569         333         205
         Increase in other current liabilities                    4,883         209       1,963
         (Decrease) increase in other noncurrent liabilities        (17)        305       1,471
                                                               --------    --------    --------

             Net cash used in operating activities before
                reorganization items                            (28,584)    (16,735)    (11,543)

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

             Net cash provided by (used in) operating
                activities                                        8,698     (16,735)    (11,543)
                                                               --------    --------    --------
</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, 1999, 1998 and 1997
                                 (in thousands)


<TABLE>
<CAPTION>


                                                              1999        1998        1997
                                                            --------    --------    --------

<S>                                                        <C>          <C>         <C>
Cash flows from investment activities:
     Increase in deferred charges                           $    (93)        (48)         (7)
     Additions to property and equipment, net                   (239)       (228)       (136)
     Additions to other assets                                (2,276)     (1,662)     (1,905)
     Proceeds from disposition of property                       -0-       1,826         587
     Increase in long-term receivables                          (309)       (660)       (208)
     Receipt of long-term receivables                          1,668      15,115      17,120
                                                            --------    --------    --------

         Net cash (used in) provided by
           investment activities                              (1,249)     14,343      15,451
                                                            --------    --------    --------

Cash flows from financing activities -
     Payment of long-term debt                                  (413)       (234)        (16)
                                                            --------    --------    --------


         Increase (decrease) in cash and cash equivalents      7,036      (2,626)      3,892

Cash and cash equivalents at beginning of year                 9,798      12,424       8,532
                                                            --------    --------    --------

Cash and cash equivalents at end of year                    $ 16,834       9,798      12,424
                                                            ========    ========    ========


Supplemental cash flow disclosures:
     Interest paid                                          $  5,218      10,087      10,135
                                                            ========    ========    ========

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

Non-cash financing and investing activities:
     Capital lease obligation incurred to acquire
         Casino Assets                                      $     18         693          78
                                                            ========    ========    ========

</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 will
        be subordinated to liens that may 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 10, "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 11, "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. Since the Corporation does not have
        substantial cash reserves or access to a line of credit, the Corporation
        needed to experience a 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 citywide 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 financial transactions with PDS Financial Corporation
        ("PDS") and the Casino Reinvestment Development Authority ("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 governing the Notes (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 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 will permit the
        Corporation to conserve its cash pending a restructuring of its
        financial obligations in the Chapter 11 proceeding. As of December 31,
        1999, the Corporation had approximately $16.8 million of cash and cash
        equivalents, including approximately $9.9 million of "bankroll" used in
        casino operations. Management anticipates an increase in ongoing general
        and administrative expenses, primarily for professional fees, during the
        pendency of the bankruptcy proceeding. Through December 31, 1999, such
        expenses totalled approximately $1,268,000.

        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

                                       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)

        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.

        Under the Bankruptcy Code, the Corporation had an exclusive period of
        120 days to file a plan of reorganization with the Bankruptcy Court,
        which would have expired on December 14, 1999. In November 1999, the
        Corporation petitioned the Bankruptcy Court for, and was granted, an
        extension of this exclusivity period to February 14, 2000; a further
        extension was subsequently granted, extending the exclusivity period to
        May 14, 2000. On January 27, 2000, the Corporation, New Claridge, and
        the Partnership filed a joint plan of reorganization and disclosure
        statement (the "Plan") with the Bankruptcy Court.

        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, the Plan proposes 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, the Plan proposes to simplify the ownership structure of the
        Claridge as between the Corporation, New Claridge and the Partnership.
        Any such restructuring of the financial obligations of the Claridge and
        of its ownership structure will be subject to the outcome of the Chapter
        11 proceeding and, in particular, the approval of the holders of the
        requisite percentage of the outstanding Notes, as to which there can be
        no assurance.

        In summary, the Plan, as proposed jointly by the Corporation, New
        Claridge, and the Partnership, calls for the following to occur, subject
        to certain conditions contained in the Plan:

               (i)         the existing Class A Stock of the Corporation will be
                           cancelled;

               (ii)        the holders of the Notes will be entitled to receive
                           a pro rata amount of new common stock in the
                           reorganized Corporation ("New Common Stock"). As an
                           alternative to receiving only the New Common Stock,
                           the holders of the Notes may instead elect to receive
                           new first mortgage notes ("New Notes"), in a
                           principal amount up to the greater of $100,000 or 15%
                           of the principal amount

                                       F-9

<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)

                           of their Notes. Such New Notes, which will be issued
                           by the reorganized Corporation, will be guaranteed by
                           New Claridge and secured by the Hotel Assets. The New
                           Notes will be issued in maximum principal amount of
                           $15 million, will have a term of 10 years and will
                           bear interest at a rate of 8% per year. To the extent
                           that holders of the Notes elect to receive New Notes,
                           they will receive a reduced amount of New Common
                           Stock (see Note 19, "Subsequent Events" for a
                           discussion of the amendment to the Plan which was
                           submitted to the Bankruptcy Court on March 21, 2000);
                           and

               (i)         the Partnership will transfer the Hotel Assets to New
                           Claridge in full satisfaction of its obligations
                           under the Expandable Wraparound Mortgage (see
                           "Certain Agreements between the Corporation, New
                           Claridge, and the Partnership"). All debts owed by
                           New Claridge to the Partnership will be forgiven, and
                           the Partnership will liquidate.

        The Corporation had previously announced that it had entered into a
        letter of intent with Schottenstein Realty Corporation ("Schottenstein")
        regarding an investment in the Claridge in connection with any such
        restructuring. The letter of intent contemplated a $10 million
        investment by Schottenstein in the Claridge in exchange for a
        substantial equity interest in a new entity that would own all of the
        assets used by the Claridge, (including the assets currently owned by
        the Partnership), except for the casino assets. The letter of intent
        contemplated that this new entity would exchange new notes and equity in
        the entity for the currently outstanding Notes. The new notes would have
        a substantially smaller principal amount than the existing Notes,
        together with a lower interest rate and a later maturity date. The
        letter of intent also called for providing a limited amount of equity in
        the new entity to the Partnership and for setting aside a portion of the
        equity in the new entity as incentive compensation for the management of
        the Claridge. The above described terms of the letter of intent were not
        binding on the Corporation or Schottenstein until reflected in a
        definitive agreement, and, in any case, were subject to negotiation and
        approval by holders of the Notes and the Partnership and to approval by
        the Bankruptcy Court. On November 10, 1999, the Corporation announced
        that it would no longer pursue the relationship contemplated by this
        letter of intent. The Board of Directors of the Corporation, after
        careful consideration, determined that it would be in the best interest
        of its creditors to file a separate and independent "stand alone" plan
        of reorganization. However, management of the Corporation will continue
        to consider alternate strategic initiatives.

        The 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.




                                      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

        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.

        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.




                                      F-11

<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)

        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 and improvements             39 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, 1999 and 1998 was $2,766,000 and
               $2,298,000, respectively.

        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)     Loss Per Share

               Loss per share is calculated by dividing net loss by the weighted
               average shares outstanding (5,062,500 for the year ended December
               31, 1999, 4,983,804 for the year ended December 31, 1998, and
               4,995,219 for the year ended December 31, 1997). Basic and
               diluted net loss per share are the same for the years ended
               December 31, 1999, 1998, and 1997.



                                      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

        Receivables at December 31, 1999 and 1998 consist of the following:
<TABLE>
<CAPTION>

        Current Receivables                                                                    1999            1998
        -------------------                                                                    ----            ----
                                                                                                 (in thousands)
<S>                                                                                         <C>                <C>
                  Casino, less allowance for uncollectible accounts
                    of $1,180,000 and $1,305,000 at
                    December 31, 1999 and 1998, respectively                                $  1,092            1,571
                  Hotel, less allowance for uncollectible accounts
                    of $17,000 and $24,000 at December 31,
                    1999 and 1998, respectively                                                  126              100
                  Interest receivable due from the Partnership                                 1,591              804
                  Current portion of FF&E Promissory notes                                     3,169            2,046
                  Other, less allowance for uncollectible accounts
                    of $10,000 and $10,000 at December 31,
                   1999  and 1998, respectively                                                1,999            1,040
                                                                                            --------          -------
                                                                                            $  7,977            5,561
                                                                                            ========          =======

         Long-Term Receivables

                  $127,000,000 Expandable Wraparound Mortgage 14%, maturities
                    through September 30, 2000 (net of $2,211,000 discount and
                    $4,525,000 discount at
                    December 31, 1999 and 1998, respectively)                               $ 48,289           45,975
                  Deferred interest receivable, due
                    September 30, 2000                                                        20,000           20,000
                  FF&E promissory notes, 14%                                                  11,137           13,618
                  Allowance for impairment                                                   (37,595)             -0-
                                                                                            -------           -------
                                                                                            $ 41,831           79,593
                                                                                            ========          =======
</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

                                      F-13

<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)

         and the remaining balance is due 60 months from the date of issuance of
         the respective FF&E 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 (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.

         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 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. (As
         previously noted, the Plan calls for the Partnership to transfer the
         Hotel Assets to

                                      F-14

<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)

         New Claridge in full satisfaction of its obligations under the
         Expandable Wraparound Mortgage.) The total amount of this write-down
         was $37.6 million.

5.       PROPERTY AND EQUIPMENT

         Property and equipment at December 31, 1999 and 1998 consist of the
following:

                                                   1999             1998
                                                 --------         ------
                                                     (in thousands)

         Gaming equipment                        $ 12,593           12,457
         Land and land improvements                 7,598            7,598
         Building                                  20,070           20,070
         Leasehold improvements                       745              745
         Capital lease assets                         822              808
         Other equipment                              213              107
                                                 --------         --------

                                                 $ 42,041           41,785
                                                 ========         ========


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
         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, 1999, the Corporation
         has deposited $22.4 million, of which $3,160,000 has been used to
         purchase bonds issued by the CRDA. 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, in January 1990 and April 1999, it was
         determined that certain bonds issued by the CRDA had become impaired,
         and that the payment of principal and interest on these bonds was
         uncertain. As a result, New Claridge has recorded a valuation allowance
         for the full amount of its investment in these bonds, totalling
         $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

                                      F-15

<PAGE>


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

6.       OTHER ASSETS (continued)

         donations, New Claridge received credits towards future obligations or
         cash credits, from the CRDA equal to 51% of the donations. As of
         December 31, 1999, all of these credits had been used.

7.       LOAN FROM THE PARTNERSHIP

         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 is not due and payable until such time as
         the full or partial satisfaction of the Expandable Wraparound Mortgage
         and the First Mortgage has been made in connection with a refinancing
         or sale of all or a partial interest in the Claridge.

         Interest, which contractually accrues at 12% per annum, is payable in
         full upon maturity. Interest on this loan ceased to accrue as a result
         of the Corporation's filing for reorganization under Chapter 11 (see
         Note 2, "Significant Events") on August 16, 1999. The loan and accrued
         interest through August 16, 1999 are included in "Liabilities Subject
         to Compromise" (see Note 9) as of December 31, 1999.

8.       OTHER CURRENT LIABILITIES

         Other current liabilities at December 31, 1999 and 1998 consist of the
following:

                                                        1999            1998
                                                        ----           -----
                                                           (in thousands)

         Deferred rent, current                       $   -0-           15,078
         Deferred rent                                  1,100              475
         Accrued payroll and related benefits           8,232            6,571
         Accrued interest, Notes                          -0-            4,161
         Auto/general insurance reserves                  228            1,424
         Accrued interest due to Partnership              -0-            4,122
         Reorganization costs                             813              -0-
         Other current liabilities                      3,880            2,771
                                                      --------          ------
                                                      $14,253           34,602
                                                      =======           ======

         Deferred rent of $15,078,000 represents the maximum deferral allowed in
         accordance with the Operating Lease Agreement and Expansion Operating
         Lease Agreement, as amended. The deferred rent liability 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.


                                      F-16

<PAGE>


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

8.       OTHER CURRENT LIABILITIES (continued)

         The Fifth Amendment to the Operating Lease and the Fourth Amendment to
         the Expansion Operating Lease, which were effective on March 1, 1997
         provided for the abatement of $867,953 of basic rent and for the
         deferral of $1.3 million of basic rent on March 1, 1997, and for
         additional monthly abatements of rent beginning April 1, 1997. The $1.3
         million of basic rent deferred on March 1, 1997 was paid to the
         Partnership as additional rent of $25,000 per month for the period
         April 1, 1997 through December 31, 1997, and $50,000 per month for the
         period January 1998 through October 1999.

         Effective September 30, 1998, the Operating Lease and Expansion
         Operating Lease were further 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 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).

         As of December 31, 1999, deferred rent, current; 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 9) as a
         result of the Corporation's filing for reorganization under Chapter 11
         (see Note 2, "Significant Events") on August 16, 1999.

9.       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, 1999,
         liabilities subject to compromise consist of the following (in
         thousands):
                                                                  December 31,
                                                                      1999

         Accounts payable and accrued expenses                     $    3,251
         11 3/4% Notes (note 10)                                       85,000
         Accrued interest (note 8)                                      9,832
         Loan from the Partnership (note 7)                             3,600
         Deferred rent due to the Partnership (notes 8 and 14)         22,147
         Contingent Payment (note 11)                                  19,000
         Auto and general liability reserves (note 14)                  1,086
         Other (note 13)                                                1,343
                                                                   ----------
                                                                   $  145,259
                                                                   ==========

                                      F-17

<PAGE>


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

9.       LIABILITIES SUBJECT TO COMPROMISE (continued)

         Accrued interest as of December 31, 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.

10.      LONG-TERM DEBT

         Long-term debt at December 31, 1999 and 1998 consists of the following:

                                                    1999           1998
                                                    ----          -----
                                                       (in thousands)
         11 3/4% Notes due 2002                 $     -0-           85,000
         Capital lease obligation                     126              521
                                                ---------          -------
                                                      126           85,521
         Less current installments                    125              351
                                                ---------          -------

                                                $       1           85,170
                                                =========          =======

         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 will be subordinated to
         liens that may 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. 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, 1999, the principal amount due on the Notes is
         included in "Liabilities Subject to Compromise" (see Note 9), as a
         result of the Corporation's filing for reorganization under Chapter 11
         (see Note 2, "Significant Events"), on August 16, 1999. In addition,
         interest

                                      F-18

<PAGE>


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

10.      LONG-TERM DEBT (continued)

         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 9).

11.      OTHER NONCURRENT LIABILITIES

         Other noncurrent liabilities at December 31, 1999 and 1998 consist of
the following:

                                                     1999              1998
                                                  ----------         -------
                                                          (in thousands)
         Contingent Payment                       $    -0-            19,000
         License agreement                           1,294             1,369
         Other                                          60               971
                                                  --------            ------

                                                  $  1,354            21,340
                                                  ========            ======

         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, 1999,
         accrued interest would have amounted to approximately $82.3 million.

         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, "Significant Events"), the Corporation was not
         able to exercise this Contingent Payment option, and it expired in
         accordance with its terms on December 31, 1997.

                                      F-19

<PAGE>


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

11.      OTHER NONCURRENT LIABILITIES (continued)

         As of December 31, 1999, the Contingent Payment is included in
         "Liabilities Subject to Compromise" (see Note 9), 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 will be recognized as income over the term of the
         agreement, commencing April 1997.

12.      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, 1999, 1998 and 1997 has been charged to casino
         expenses (in thousands):

                                           1999         1998         1997
                                           ----         ----         ----

         Hotel                           $ 4,051        3,800         3,828
         Food and beverage                13,434       13,716        11,815
         Entertainment                     1,000        1,073         1,134
                                         -------      -------       -------

              Total                      $18,485       18,589        16,777
                                         =======      =======        ======

13.      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. No benefit for income taxes
         was recorded for the reasons set forth below.


                                      F-20

<PAGE>


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

13.      INCOME TAXES (continued)

         The benefit for income taxes differs from the amount computed at the
         statutory rate as follows (in thousands):
                                               1999        1998        1997
                                           --------    --------    --------

Computed "expected" tax benefit            $(12,985)     (3,201)     (2,033)
Increase (reduction) in income taxes
  resulting from:
  Change in the valuation allowance          15,515       4,391       2,311
  State income tax, net of federal
    income tax benefit                       (2,291)       (565)       (359)
  Meals and entertainment                       -0-        (454)        454
  Contingent Payment option                     -0-         -0-        (400)
  Other                                        (239)       (171)         27
                                           --------    --------    --------

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

         The tax effects of temporary differences that give rise to significant
         portions of the deferred tax assets and deferred tax liabilities at
         December 31, 1999 and 1998 are presented below: thousands):
<TABLE>
<CAPTION>

                                                                       1999        1998
                                                                     --------    --------
            Deferred tax assets:
<S>                                                                  <C>           <C>
              Net operating loss                                     $ 19,220      21,566
              Rent leveling                                             3,940       3,204
              Accrued expenses                                          1,641       1,354
              Deferred revenue                                            550         633
              Tax credit                                                  940         940
              Difference between book and tax basis
                 of other liabilities                                   3,748       2,285
              Other                                                       619         637
                                                                     --------    --------
                     Total gross deferred tax assets                   30,658      30,619
                     Less valuation allowance                         (25,099)     (9,584)
                                                                     --------    --------
                     Net deferred tax assets                            5,559      21,035
                                                                     --------    --------

            Deferred tax liabilities:
              Gaming equipment, due to differences in depreciation       (597)       (852)
              Difference between book and tax basis of
                Expandable Wraparound Mortgage receivable              (6,303)    (20,683)
              Difference between book and tax basis of receivables       (705)       (679)
              Difference between book and tax basis of
                Operating Lease expense                                   -0-      (1,400)
                                                                     --------    --------
                     Total gross deferred tax liabilities              (7,605)    (23,614)
                                                                     --------    --------

                     Net deferred tax liability                      $ (2,046)     (2,579)
                                                                     ========    ========

</TABLE>
                                      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.      INCOME TAXES (continued)

         The valuation allowance for deferred tax assets as of December 31, 1998
         was $9,584,000. The net change in the total valuation allowance for the
         year ended December 31, 1999 was an increase of $15,515,000.

         At December 31, 1999, the Corporation had net operating loss
         carryforwards for federal income tax purposes of approximately $48.5
         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 $940,000, 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
         settledresulting 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 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,
         1999, the amount of this settlement, including interest, has been
         included in "Liabilities Subject to Compromise" (see Note 9), as a
         result of the Corporation's filing for reorganization under Chapter 11
         (see Note 2, "Significant Events") on August 16, 1999.

14.      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
         year commencing October 1, 1998 was $24 million for the Operating Lease
         and $2.5 million for the Expansion Operating Lease, and will remain the
         same for the lease year which commenced October 1, 1999.

         New Claridge is also required to pay, as additional rent, certain
         amounts including certain taxes,

                                      F-22

<PAGE>


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

14.      OPERATING LEASE (continued)

         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 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 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.

         For the years ended December 31, 1999, 1998, and 1997, total expense
         resulting from the

                                      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.      OPERATING LEASE (continued)

         Operating Lease and Expansion Operating Lease amounted to $24,028,000,
         $26,374,000, and $30,554,000, respectively, of which $1,242,000,
         ($10,679,000), and ($11,504,000), 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, 1999,
         1998, and 1997, operating lease expense for these facilities amounted
         to $1,189,000, $1,253,000, and $1,283,000, respectively. In addition,
         New Claridge leases certain slot machines used on the casino floor
         under various capital and operating leases. Future lease payments under
         noncancellable operating leases (with initial or remaining lease terms
         in excess of one year) and minimum capital lease payments as of
         December 31, 1999 (in thousands) are as follows:
<TABLE>
<CAPTION>

                                                                        Present Value of
                                                                          Minimum Lease              Operating
                                                                             Payments                  Leases

              <S>                                                          <C>                         <C>
              2000                                                          $    129                    2,268
              2001                                                                 1                    1,481
              2002                                                               -0-                      873
              2003                                                               -0-                      600
              2004                                                               -0-                      600
                                                                            --------                   ------
              Total minimum lease payments                                       130                    5,822
                                                                                                       ======
              Less amount representing interest
                  (at rates ranging from 11% to 12%)                               4
                                                                            --------

              Present value of minimum lease payments                            126
              Less current portion of capital lease obligations                  125
                                                                            --------

              Long-term portion of capital lease obligations                $      1
                                                                            ========
</TABLE>


15.      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, 1999 and 1998 are as follows (in
         thousands):


                                      F-24

<PAGE>


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

15.      FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)
<TABLE>
<CAPTION>

                                                                    1999                        1998
                                                              ---------------------------------------------
                                                              Carrying     Fair          Carrying   Fair
                                                                Amount     Value           Amount   Value
<S>                                                            <C>        <C>             <C>        <C>
         Financial Assets:
           Cash and cash equivalents                            $16,834    16,834           9,798     9,798
           Current receivables, net (excluding current
             portion of long-term receivable due
             from the Partnership)                                4,808     4,808           3,515     3,515
           Long-term receivables due from the
             Partnership (including current portion)             45,000    45,000          81,639       n/a
           Reinvestment obligation funds                          2,730     2,730           2,823     2,823
         Financial Liabilities:
           Accounts payable                                       2,902     2,902           3,535     3,535
           Loan from the Partnership                              3,600     n/a             3,600       n/a
           Long term debt                                        85,001    49,089          85,170    59,776
           Deferred rent due to the Partnership                   7,069     n/a             5,827       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:

         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, 1999 and
         1998, respectively.

                                      F-25

<PAGE>


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

15.      FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)

         Long-term receivables due from Partnership

         As previously noted, the Plan calls for the Partnership to transfer the
         Hotel Assets to New Claridge in full satisfaction of its obligations
         under the Expandable Wraparound Mortgage. 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 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, or $45 million.

         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 7, "Loan from
         the Partnership" and Note 14, "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
         11, "Other Noncurrent Liabilities" for a description of the Contingent
         Payment and the option to purchase the Contingent Payment.)

16.      CONTINGENCIES

         a)       Licensing

                  On September 22, 1999, New Claridge was issued a one-year
                  casino license by the Commission for the period commencing
                  September 30, 1999. Although New Claridge had reapplied for a
                  four-year casino license, the filing of the voluntary petition
                  under Chapter 11 of the United States Bankruptcy Code on
                  August 16, 1999 prompted the Commission to renew New
                  Claridge's license for the reduced period of time.
                  Additionally, the casino license renewal contains certain
                  financial reporting conditions and requirements consistent
                  with the manner in which the Commission has relicensed other
                  casino licensees who 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

                                      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.      CONTINGENCIES (continued)

                  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.

                  On July 10, 1996, ten days after its opening, a fatal accident
                  occurred at New Claridge's self-parking garage, in which the
                  vehicle of two patrons breached a cable restraint system,
                  permitting their vehicle to drive through the side wall of the
                  self-parking garage. The vehicle fell four stories to the
                  sidewalk and street below, killing both occupants. As a
                  result, New Claridge's self-parking garage was closed until
                  the end of September 1996, while various investigations sought
                  to determine the cause of the accident. At the same time, New
                  Claridge determined to remove the exterior wall cable
                  restraint system and replace it with a rigid I-beam barrier
                  system.

                  New Claridge retained the law firm of Zelle and Larson LLP of
                  Minneapolis, Minnesota to assist in the recovery of certain
                  expenses incurred in reopening the self-parking garage and
                  potential lost profit claims. On July 22, 1997, New Claridge
                  filed a Complaint and Demand for Arbitration in the amount of
                  $10 million against the general contractor and the architect
                  for the garage, alleging negligence, breach of warranty and
                  breach of contract in the design and construction of the
                  garage. In February 1999, the Corporation and New Claridge
                  entered into a settlement agreement of approximately $2.3
                  million in the arbitration proceedings. This settlement amount
                  is included in "Other income" on the Corporation's
                  Consolidated Statement of Operations for 1999.

                  A wrongful death action was commenced by the estates of the
                  two patrons who died in the July 1996 accident in the
                  self-parking garage. New Claridge is fully insured and
                  indemnified for any financial liability that may have resulted
                  due to either an award to or a negotiated settlement with the
                  plaintiffs in this action. Subsequent to year end 1999, a
                  settlement agreement and release was signed among the parties
                  settling all final outstanding claims. The settlement with
                  respect to New Claridge was within its general liability
                  insurance.

                  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.

17.      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

                                      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.      RELATED PARTY TRANSACTIONS (continued)

                  (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 the
                  amendments thereto as described in the preceding notes.
                  Approximately 93% 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.

                                      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.      RELATED PARTY TRANSACTIONS (continued)

                  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.


                                      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.      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, 1999 and 1998 include the
         following:
<TABLE>
<CAPTION>

                                                                                            1999               1998
                                                                                            ----               ----
                                                                                               (in thousands)
<S>                                                                                     <C>                 <C>
         Cash                                                                           $    -0-                -0-
         Investment in New Claridge                                                       87,206             87,206
         Other assets                                                                     11,939             12,138
                                                                                        --------            -------
                  Total assets                                                          $ 99,145             99,344
                                                                                        ========            =======

         Liabilities Subject to Compromise                                              $ 90,440                -0-
         Other liabilities                                                                11,529             13,476
         Long-term debt                                                                      -0-             85,000
         Stockholders' (deficiency) equity                                                (2,824)               868
                                                                                        --------          ---------
                  Total liabilities and stockholders' (deficiency) equity               $ 99,145             99,344
                                                                                        ========          =========
</TABLE>

         As of December 31, 1999, "Liabilities Subject to Compromise" include
         the Notes and accrued interest thereon through August 16, 1999 of
         $5,440,000.

         The Statements of Operations for the Corporation for the years ended
         December 31, 1999, 1998 and 1997 were as follows (in thousands):
<TABLE>
<CAPTION>

                                                                            1999       1998       1997
                                                                          -------    -------    -------

<S>                                                                       <C>          <C>       <C>
                   Dividend income from New Claridge                      $ 5,049      9,988     10,070
                   Interest income                                            -0-          1          4
                                                                          -------    -------    -------
                                   Total income                             5,049      9,989     10,074
                                                                          -------    -------    -------

                   Costs and expenses:
                     General and administrative                               621        545      2,065
                     Amortization                                             524        524        524
                     Interest (contractual interest of $10,335 in 1999)     6,328      9,988     10,070
                                                                          -------    -------    -------
                                   Total costs and expenses                 7,473     11,057     12,659
                                                                          -------    -------    -------

                   Loss before reorganization items and
                     income taxes                                          (2,424)    (1,068)    (2,585)
                   Reorganization items:
                        Professional fees                                  (1,268)       -0-        -0-
                                                                          -------    -------    -------

                   Loss before income taxes                                (3,692)    (1,068)    (2,585)
                   Income tax benefit                                         -0-        (31)    (2,751)
                                                                          -------    -------    -------

                   Net (loss) income                                      $(3,692)    (1,037)       166
                                                                          =======    =======    =======
</TABLE>


                                      F-30

<PAGE>


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

18.      PARENT COMPANY INFORMATION (continued)

         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, 1999, New Claridge had a
         net loss of $29,449,000, as compared to net income of $1,610,000 and
         $3,925,000 for the years ended December 31, 1998 and 1997,
         respectively.

         Changes in the Corporation's financial position for the years ended
         December 31, 1999, 1998 and 1997 were as follows (in thousands):
<TABLE>
<CAPTION>

                                                                                  1999            1998           1997
                                                                               ---------         ------         ------
                     Cash flows from operating activities:
<S>                                                                            <C>               <C>               <C>
                          Net (loss) income                                    $  (3,692)        (1,037)           166
                          Adjustments to reconcile net (loss)
                           income to net  cash provided by operating
                           activities:
                              Amortization                                           524            524            524
                              Deferred income taxes - noncurrent                     -0-            (31)        (2,751)
                              Change in assets and liabilities:
                                 Increase in other assets                           (325)           -0-            -0-
                                 Increase in other liabilities                     3,493            544          2,061
                                                                               ---------         ------         ------

                          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 period                -0-            -0-            -0-
                                                                               ---------         ------         ------

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

                     Supplemental cash flow disclosures:
                       Interest paid, net of amounts capitalized               $   5,049          9,988         10,075
                                                                               =========         ======         ======

                       Income taxes paid                                       $     -0-            -0-            -0-
                                                                               =========         ======         ======
</TABLE>

19.      SUBSEQUENT EVENTS - UNAUDITED

         On March 21, 2000, the Corporation filed an amendment to the Plan. This
         amendment provides for the holders of the existing Notes to receive, on
         a pro rata basis, (i) 100% of the equity of the reorganized
         Corporation, and (ii) debt not to exceed $15 million. The Bankruptcy
         Court will issue its opinion in mid-April regarding the adequacy of the
         Plan to be submitted to the creditors for a vote. (See Note 2,
         "Significant Events".)


                                      F-31

<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, 1999, 1998 and 1997
                                 (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, 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

Year ended
December 31, 1997

Allowance for
Uncollectible Accounts                 $ 899              218                   -0-                   359 (a)                758


</TABLE>


(a)   Accounts written-off.


                                      F-32

<PAGE>





                                INDEX TO EXHIBITS


                  Exhibit

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