As filed with the Securities and Exchange Commission on June 30, 2000



                                     UNITED STATES

                          SECURITIES AND EXCHANGE COMMISSION

                                 Washington, D.C. 20549

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


                                     FORM 20-F
                      ANNUAL REPORT PURSUANT TO SECTION 13 OF
                        THE SECURITIES EXCHANGE ACT OF 1934
                    for the fiscal year ended December 31, 1999
                           Commission file number 0-22794

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


                          SUN INTERNATIONAL HOTELS LIMITED
               (Exact name of Registrant as specified in its charter)

                            Commonwealth of The Bahamas
                  (Jurisdiction of incorporation or organization)

                                 Executive Offices
                                    Coral Towers

                            Paradise Island, The Bahamas
                      (Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

                                                      Name of each exchange
            Title of each class                        on which registered

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

Ordinary Shares, $.001 par value per share            New York Stock Exchange
-------------------------------------------------------------------------------

Securities  registered or to be registered pursuant to Section 12(g) of the Act:
None

Securities for which there is a reporting  obligation  pursuant to Section 15(d)
of the Act: None

Indicate the number of  outstanding  shares of each of the  issuer's  classes of
capital  or common  stock as of the close of the  period  covered  by the annual
report. Ordinary Shares: 32,681,480

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports)  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days.

               Yes           X              No
                        -----------                 -----------

Indicate by check mark which financial statement item the Registrant has elected
to follow.
               Item 17                      Item 18       X
                        -----------                 -----------











<PAGE>




                              TABLE OF CONTENTS

                                   PART I

                                                                         Page

Items 1 & 2     Description of Business and Properties                     3
Item 3          Legal Proceedings                                         27
Item 4          Control of Registrant                                     27
Item 5          Nature of Trading Market                                  29
Item 6          Exchange Controls and Other Limitations Affecting
                Security Holders                                          29
Item 7          Taxation                                                  30
Item 8          Selected Financial Data                                   32
Item 9          Management's Discussion and Analysis of Financial
                Condition and Results of Operations                       35
Item 9A         Quantitative and Qualitative Disclosures About
                Market Risk                                               44
Item 10         Directors and Officers of Registrant                      45
Item 11         Compensation of Directors and Officers                    48
Item 12         Options to Purchase Securities from Registrant or
                Subsidiaries                                              49
Item 13         Interest of Management in Certain Transactions            49


                                  PART II*


                                  PART III

Item 15         Defaults Upon Senior Securities                           50
Item 16         Changes in Securities and Changes in Security for
                Registered Securities                                     50

                                  PART IV

Item 17         Financial Statements                                      50
Item 18         Financial Statements                                      50
Item 19         Financial Statement and Exhibits                          50

*  Omitted pursuant to General Instruction G(b) of Form 20-F





<PAGE>



                                            PART I

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

ITEMS 1. & 2.  DESCRIPTION OF BUSINESS AND PROPERTIES

GENERAL

Sun  International  Hotels Limited ("Sun  International" or the "Company") is an
international  resort and  gaming  company  incorporated  in The  Bahamas  which
develops and manages premier resort and casino properties.  The Company, through
its  subsidiaries,  currently  operates  resort  hotels  and/or  casinos  in The
Bahamas,  Atlantic  City, the Indian Ocean and Dubai.  In addition,  the Company
earns  income  based on the  gross  revenues  of a casino  in  Connecticut.  The
Company's  largest  property is the  Atlantis  Resort and Casino,  a  2,317-room
resort and casino located on Paradise Island, The Bahamas.

Sun  International  was  established  in 1993 in order to acquire  the  Paradise
Island Resort and Casino and related operations from Resorts International, Inc.
In May 1995, the Company  acquired from Sun  International  Investments  Limited
("SIIL")  equity  interests  in Sun Resorts  Limited  ("Sun  Indian  Ocean") and
Societe de Participation et d'Investissement dans les Casinos ("Sun France") and
SIIL's project  development and management  businesses.  SIIL and certain of its
direct and indirect  shareholders own  approximately  54% of the Company's $.001
par value capital stock (the "Ordinary  Shares").  The Company sold its interest
in Sun France in early 1997. The Company is SIIL's sole  investment  vehicle for
the development of entertainment,  resort and gaming operations  outside Africa.
SIIL is a private holding company in which each of Caledonia Investments Plc, an
English  company  publicly  traded on the London Stock  Exchange  ("Caledonia"),
Kersaf  Investments  Limited, a South African company traded on the Johannesburg
Stock  Exchange  ("Kersaf"),  and a trust for the  benefit  of the family of Mr.
Solomon Kerzner,  Chairman and Chief Executive Officer of the Company,  controls
approximately a one-third interest.

In December 1996, the Company  acquired  Griffin Gaming &  Entertainment,  Inc.,
which was subsequently  re-named Sun International North America, Inc. ("SINA").
SINA is a holding  company which,  through  Resorts  International  Hotel,  Inc.
("RIH"),  its indirect wholly owned subsidiary,  is engaged in the ownership and
operation of Resorts Atlantic City ("Resorts Atlantic City"). In addition, SINA,
through its wholly  owned  subsidiary  Sun Cove  Limited  ("Sun Cove") has a 50%
interest in Trading Cove Associates ("TCA"), a Connecticut general  partnership.
SINA also provides management services to certain affiliated  companies and owns
a  tour  operator  which  wholesales  tour  packages  and  provides  reservation
services.  SINA owns  approximately  15 acres of land  immediately  adjacent  to
Resorts  Atlantic  City,  and  approximately  nine acres at various sites in the
Atlantic City area.

In 1996,  the Mohegan Sun Casino in  Uncasville,  Connecticut  (the "Mohegan Sun
Casino") was  developed  for the Mohegan  Tribe of Indians of  Connecticut  (the
"Mohegan  Tribe")  by TCA.  Prior to  January  1,  2000,  TCA held a  management
agreement (the "Management  Agreement") with the Mohegan Tribal Gaming Authority
(the  "MTGA")  relating  to  the  management  of the  Mohegan  Sun  Casino.  The
Management


<PAGE>



Agreement  provided that TCA was entitled to receive  between 30% and 40% of the
net profits,  as defined,  of the Mohegan Sun Casino and was scheduled to expire
in 2003.  TCA was  obligated  to pay  certain  amounts to its  partners or their
affiliates  as priority  payments  from its  management  fee income for services
provided.  These amounts were paid as TCA received sufficient management fees to
meet the priority distributions.

In February 1998, the Mohegan Tribe  appointed TCA to develop its  approximately
$800  million  expansion  of the Mohegan Sun Casino.  In  addition,  TCA and the
Mohegan  Tribe  agreed  that  effective  January  1,  2000,  TCA would turn over
management  of the Mohegan Sun Resort  complex  (which  comprises  the  existing
operations  and the proposed  expansion) to the Mohegan  Tribe.  In exchange for
relinquishing its rights under its previous agreements, including the Management
Agreement,  beginning  January 1, 2000,  TCA  receives  annual  payments of five
percent of the gross  revenues of the  Mohegan Sun Resort  complex for a 15-year
period.

On May 18,  1999,  the Company  announced  that it had entered into an Asset and
Land Purchase  Agreement (the "DI Purchase  Agreement") with Starwood Hotels and
Resorts Worldwide Inc.  ("Starwood") pursuant to which the Company had agreed to
acquire  the Desert Inn Hotel and  Casino in Las Vegas  (the  "Desert  Inn") for
approximately $275 million,  subject to certain  adjustments.  On March 2, 2000,
the Company and Starwood announced that they agreed to terminate the DI Purchase
Agreement  and that if Starwood  sold the Desert Inn for less than the  purchase
price  originally  agreed by the Company,  then the Company will pay to Starwood
50% of such deficit,  as defined,  up to a maximum of $15 million.  In the event
that  Starwood  sold the property for an amount in excess of the purchase  price
originally agreed by the Company, then the Company will share 50% of such excess
as defined.  Should the Company be required to pay $15 million of any  potential
deficit, it would be paid from a $15 million deposit (the "Deposit")  previously
paid to Starwood.  The Deposit is included in deferred  charges and other assets
in the accompanying  consolidated  balance sheets.  On April 28, 2000,  Starwood
announced  that it had  agreed to sell the  Desert  Inn for  approximately  $270
million,  subject to certain  post-closing  adjustments,  and on June 23,  2000,
Starwood announced that it had closed on this transaction.  Based on preliminary
discussions  with Starwood,  the Company expects to be obligated to pay Starwood
approximately $8 million and, accordingly,  Starwood would return to the Company
approximately $7 million of the Deposit.

On January 19, 2000, the Company  announced that it had received a proposal from
SIIL to acquire in a merger  transaction  all Ordinary Shares of the Company not
already owned by SIIL or its shareholders for $24 per share in cash. To consider
the proposal, the Company formed a committee of independent members of the Board
of Directors  (the  "Special  Committee")  which  retained its own financial and
legal  advisors.  The proposed  transaction  was subject to various  conditions,
including  approval  by the Special  Committee.  On June 16,  2000,  the Company
announced  that  SIIL  was  not  able  to  negotiate  a  mutually   satisfactory
transaction  with the Special  Committee  and that SIIL advised the Company that
its proposal had been withdrawn.


<PAGE>



In order to allow  shareholders  of the  Company  to sell at least a portion  of
their  Ordinary  Shares at the price  formerly  proposed  by SIIL,  the Board of
Directors  of the  Company  approved  a  self-tender  offer for up to  5,000,000
Ordinary  Shares  at a $24 per  share  cash  price.  The  self-tender  offer was
commenced  on June 26,  2000 and was made by an Offer to  Purchase  and  related
materials,  copies  of  which  were  filed  with  the  Securities  and  Exchange
Commission and mailed to the Company's  shareholders.  The self-tender  offer is
subject  to the  terms  and  conditions  set  forth in the  Offer  to  Purchase,
including  the  condition  that the  Ordinary  Shares  continue to be listed for
trading on the New York Stock  Exchange and that the Company  remain  subject to
periodic  reporting  requirements  of the  Securities  Exchange Act of 1934. The
Company has been advised that the approximately 54% of the outstanding  Ordinary
Shares held by SIIL and its shareholders will not be sold in the self-tender.

In order to effect the self-tender,  the Company amended its existing  Revolving
Bank Credit Agreement (the "Revolving  Credit Facility") to allow the Company to
repurchase  up to  $175  million  worth  of  Ordinary  Shares.  As  part of this
amendment,  the Revolving  Credit Facility was reduced from $625 million to $500
million.

THE PROPERTIES

The Bahamas

Sun   International,   through  its  wholly  owned  Bahamian   subsidiary,   Sun
International  Bahamas Limited ("Sun Bahamas"),  owns approximately 600 acres or
almost 70% of Paradise  Island.  Approximately  90 acres  remain  available  for
future development. Paradise Island has extensive existing infrastructure and is
easily accessible from the densely  populated  eastern United States.  There are
regularly  scheduled  airline  flights  from  South  Florida,  New York City and
various other major US cities to neighboring Nassau.  Flights from South Florida
and New York City have  flight  times of  approximately  50 minutes  and two and
one-half hours, respectively.

The Company's largest property is the ocean-themed  environment of "Atlantis" on
Paradise Island.  The property  includes a 14-acre saltwater marine life habitat
which  features  the world's  largest  open air  aquarium,  showcasing  over 100
species of marine life, waterfalls,  lagoons, adventure walks and a clear tunnel
submerged in a predator lagoon through which visitors can walk and be surrounded
by sharks,  sea turtles,  stingrays  and other marine life.  The total number of
guest rooms at Atlantis is 2,317,  which  includes the  1,200-room  Royal Towers
which opened in December 1998 as part of a major expansion.

The expansion also included a new 100,000  square foot casino and  entertainment
center and expansive marine habitats,  adventure rides, swimming pools and other
entertainment  attractions,  as well as the Marina at Atlantis. The new Atlantis
Casino, with approximately 1,000 slot machines and 78 table games, is the center
of the new entertainment  complex,  which spans a seven-acre lagoon and connects
the Royal Towers to the Coral Towers.  The final project cost for this expansion
totaled  approximately  $500  million,  excluding  $40  million  of  capitalized
interest.


<PAGE>



During the first  quarter of 1999,  the  Company  completed  several  additional
development  projects  including a 30,000 square foot retail link connecting the
Coral  Towers to the new  entertainment  center,  the new porte  cochere for the
Coral Towers,  an 1,800 car parking garage,  a new laundry  facility and an arts
and crafts market for 100 Bahamian  tenants.  During the second quarter of 1999,
the Company  completed the conversion of the previously  existing  30,000 square
foot casino space into a convention  center and  construction of a sports center
which includes an 18-hole  putting course and a tennis center.  These  projects,
excluding the convention center, which is part of the expansion described above,
cost approximately $100 million.

During the second half of 2000,  the Company  expects to  implement an extensive
maintenance   capital  expenditure  program  of  approximately  $15  million  at
Atlantis'  Beach  Towers.  This  program is  scheduled to begin in August and be
completed  in  December  and will  include  the  renovation  of all of the Beach
Towers' 425 rooms and improvements to certain public spaces.

During the fourth quarter of 1999, the redevelopment of the Paradise Island Golf
Club into a first  class  championship  venue,  designed  by Tom  Weiskopf,  was
started.  In early 2000, the Company began work on the infrastructure to support
the Ocean Club Estates housing development, which comprises 121 luxury homesites
surrounding the golf course.  The cost of the golf course  redevelopment and the
infrastructure  will be approximately  $50 million.  As of mid-June 2000, 100 of
the  available  sites  have  been  sold  and  the  Company  expects  to  realize
approximately $100 million in net proceeds by June 30, 2000.

In  addition to  Atlantis  and the  Paradise  Island  Golf Club,  the  Company's
Paradise Island operations include the Ocean Club, a luxury resort hotel with 59
guest rooms. The Company is in the process of expanding the Ocean Club to add an
additional forty deluxe rooms, ten luxurious suites, two new restaurants--one of
which will be  associated  with the  renowned  restaurateur  Jean  Georges,  and
significant   enhancements  to  the  existing  pool  and  garden  areas.  It  is
anticipated  that the Ocean Club expansion will be completed by October 2000 and
will cost approximately $50 million.

Sun Bahamas also owns and operates shops, restaurants,  bars and lounges, tennis
courts and other  resort  facilities  on Paradise  Island,  as well as roads and
other land improvements on Paradise Island,  and a water and sewage system which
serves,  at stated  charges,  substantially  all facilities on Paradise  Island,
including  non-affiliated  customers. In connection with the Company=s expansion
on Paradise Island, the Bahamian Government  constructed a new bridge connecting
New  Providence/Nassau  and Paradise  Island and the Paradise Island Tourist and
Development  Authority,  a non-profit  entity formed to promote Paradise Island,
implemented a $20 million road and infrastructure improvement program.

In an attempt to further  diversify the product mix  available at Atlantis,  the
Company has formed a joint venture with Vistana, Inc. ("Vistana"),  a subsidiary
of Starwood, to develop a timeshare project. The Company and Vistana each have a
50% interest in the joint  venture.  The Company=s  current plans are to develop
198 timeshare units with Vistana with the first phase consisting of 82 units. As
part of its joint venture  agreement,  the Company  contributed land and Vistana
contributed cash based on the number of


<PAGE>



timeshare units to be developed. During the second quarter of 2000, construction
began on the first phase and timeshare sales began in May 2000.

Sun Bahamas owns a 100-room beach front resort hotel,  Paradise  Paradise.  This
property was closed to the public in September 1998 and has been used since then
to house expatriate professionals and construction staff.

The Company  previously  had plans for an  additional  700-room  Phase III hotel
project at Atlantis.  However,  considering its available  development resources
and alternative uses of capital,  the Company has postponed this project, and as
a result,  annual tax incentives of  approximately  $3.0 million pursuant to the
Company's agreement with the Bahamian Government have been suspended. See "Items
1&2.  Description  of Business and  Properties - Certain  Matters  Affecting the
Company's  Bahamian  Operations - Heads of Agreement" for a description of these
tax  incentives.  In the event the Company begins  construction of the Phase III
project, these tax incentives will be reinstated. Although the Company currently
has no plans to proceed  with the Phase III  development,  it will  continue  to
consider  the  results  at its  Paradise  Island  operations  as well as general
business trends and alternative uses of its capital in determining the timing of
proceeding with Phase III.

In September 1999, Paradise Island was hit by Hurricane Floyd, a hurricane rated
by the United States  National  Weather  Service as a category five, its highest
rating.  The Paradise Island  properties  suffered  approximately $45 million of
property  damage.  At  Atlantis,  230 rooms were taken out of service  for three
months and the Ocean Club was closed for approximately  three and a half months.
The Company had full property and business  interruption  insurance coverage and
remedial  work was  completed by year-end  1999.  Hurricane  Floyd was the first
significant hurricane to hit Paradise Island in over thirty years.

Sun  International   Resorts,  Inc.,  a  Florida  corporation  and  an  indirect
wholly-owned subsidiary of the Company,  together with its subsidiaries based in
Florida,  provides  general  and  administrative  support  services,   marketing
services,  travel  reservations  and  wholesale  tour services for the Company's
Paradise Island operations.

Atlantic City

Resorts  Atlantic  City  commenced  operations  in May  1978  and was the  first
casino/hotel opened in Atlantic City. This was accomplished by the conversion of
the former Haddon Hall Hotel, a classic hotel structure  originally built in the
early 1900's,  into a casino/hotel.  It is situated on approximately seven acres
of land  with  approximately  310 feet of  Boardwalk  frontage  overlooking  the
Atlantic Ocean. Resorts Atlantic City consists of two hotel towers, the 15-story
Ocean Tower and the nine-story Atlantic City Tower, a 700 car parking garage and
approximately  three  acres of surface  lot  parking.  In addition to the casino
facilities described below, the casino/hotel complex includes  approximately 644
guest rooms, the 1,400-seat Superstar Theater, seven restaurants, a VIP slot and
table player lounge, an indoor swimming pool, a public lounge, a health club and
retail  stores.  The  complex  also  has  approximately  50,000  square  feet of
convention  facilities,  including eight large meeting rooms and a 16,000 square
foot ballroom.


<PAGE>



Resorts Atlantic City has approximately 77,000 square feet of gaming space which
includes a 59,000 square foot casino,  a 13,000 square foot satellite  simulcast
facility and a simulcast  pari-mutuel betting area of approximately 5,000 square
feet.  Within the  facilities  Resorts  Atlantic  City  operates  70 table games
comprising 33 blackjack tables,  seven roulette tables,  seven craps tables, and
23 other specialty games that include Caribbean Stud,  Baccarat,  Mini-Baccarat,
Let It Ride,  Three-card  Poker,  Pai Gow Poker,  Big Six,  Pai Gow, and Spanish
Twenty One. There are also 2,330 slot machines and five betting windows and four
customer-operated terminals for simulcast pari-mutuel betting.

In July 1999, the Company  completed a renovation of Resorts Atlantic City which
included extensive renovations to the casino floor, hotel lobby, guest rooms and
suites, room corridors,  restaurants,  the hotel porte cochere, public areas and
the addition of a new VIP player  lounge.  The total cost of the 1999  expansion
was approximately $47 million. In the third quarter of 2000, the Company expects
to begin an additional renovation of the casino which includes construction of a
new  nine-bay  bus depot,  a waiting  area with  seating for  approximately  250
patrons and various other amenities. The relocation of the bus waiting area will
provide better access to certain slot machines which is currently  hindered when
the  existing  waiting  area is full.  Additionally,  the  casino  floor will be
expanded to include an additional  148 slot  machines,  4 to 5 table games and a
simulcast   machine.   The  total  cost  of  this  project  is  expected  to  be
approximately $5 million.

In  addition  to Resorts  Atlantic  City,  SINA owns  approximately  15 acres of
additional  developable  land  immediately  adjacent to Resorts  Atlantic  City.
Approximately  4.4 acres of this land is currently  utilized by Resorts Atlantic
City for  parking.  SINA,  through  a wholly  owned  subsidiary,  also  owns the
approximate  5.5 acre site of the former  Steeplechase  Pier directly across the
Boardwalk  from Resorts  Atlantic  City. A portion of this site is available for
future  development.  In total,  Resorts Atlantic City and adjacent  development
parcels approximate 27 acres. The Company is currently reviewing the development
potential of Resorts Atlantic City and the adjacent real estate.

SINA also owns a 2.5 acre site in Atlantic City which is utilized as a warehouse
for Resorts Atlantic City and various other non-operating sites approximating 15
acres.

Connecticut

Sun Cove has a 50% interest in, and is a managing partner of, TCA, a Connecticut
general  partnership,  that developed  and,  until January 1, 2000,  managed the
Mohegan  Sun  Casino,  a  casino  and   entertainment   complex  in  Uncasville,
Connecticut.  TCA  managed the  Mohegan  Sun Casino  pursuant to the  Management
Agreement.  The Management  Agreement  provided that TCA was entitled to receive
between 30% and 40% of the net  profits,  as defined,  of the Mohegan Sun Casino
and was scheduled to expire in 2003.

The Tribe appointed TCA to develop its  approximately  $800 million expansion of
the Mohegan Sun Casino. The expansion includes an additional 120,000 square foot
casino,  a  1,200-room  hotel,  an arena  and  additional  retail  space.  It is
anticipated that the new casino will open in the fourth quarter of 2001 with the
hotel opening in the second  quarter of 2002.  In addition,  TCA and the Mohegan
Tribe agreed that effective


<PAGE>



January  1, 2000,  TCA would  turn over  management  of the  Mohegan  Sun Resort
complex (which comprises the existing  operations and the proposed expansion) to
the Mohegan Tribe. In exchange for  relinquishing  its rights under its previous
agreements,  including the Management Agreement,  beginning January 1, 2000, TCA
receives  income of five percent of the gross revenues of the Mohegan Sun Resort
complex for a 15-year period.

The Mohegan  Sun Casino has a Native  American  theme that is  conveyed  through
architectural  features and the use of natural  design  elements such as timber,
stone and water.  Guests enter the Mohegan Sun Casino  through one of four major
entrances,  each of which is distinguished by a separate seasonal theme; winter,
spring,  summer and fall,  emphasizing the importance of the seasonal changes to
tribal life. The Mohegan Sun Casino  currently  includes  approximately  150,000
square feet of gaming  space and  features  more than 3,000 slot  machines,  152
table  games,  42 poker  tables and  parking  for 7,200  cars.  The site for the
Mohegan Sun Casino is located  approximately  one mile from the  interchange  of
Interstate  395 and  Connecticut  Route 2A, which is a four-lane  expressway.  A
four-lane  access  road from Route 2A (with its own exit)  gives  patrons of the
Mohegan Sun Casino  direct  access to  Interstate  395,  which is  connected  to
Interstate 95, the main highway  linking  Boston,  Providence and New York. This
road system  allows  customers  to drive  directly  into the  property  from the
interstate highway system without encountering any traffic light.

In connection with the original  development of the Mohegan Sun Casino,  in 1996
the  Company  acquired  $20  million of  subordinated  notes (the  "Subordinated
Notes") issued by MTGA. The Subordinated Notes earned interest at 15% per annum.
Interest  payable on the  Subordinated  Notes was  satisfied  by the issuance of
additional  Subordinated  Notes.  Interest payments through December 31, 1999 of
approximately  $17  million on the  Subordinated  Notes were  satisfied  in this
manner.

In 1996,  the Company  also  acquired  $50.0  million of notes (the  "Additional
Subordinated Notes") from MTGA related to a construction  completion  guarantee,
which  bore  interest  at prime  plus 1%.  Interest  payable  on the  Additional
Subordinated   Notes  was  satisfied  by  the  further  issuance  of  Additional
Subordinated Notes. Interest payments through December 31, 1999 of approximately
$15.5  million  on the  Additional  Subordinated  Notes were  satisfied  in this
manner.  In each of October 1999,  1998 and 1997,  the Company sold $2.8 million
Additional  Subordinated  Notes, which included accrued interest thereon, to its
partner in TCA.

On December 31, 1999, the aggregate  balance on the  Subordinated  Notes and the
Additional Subordinated Notes of $94.1 million,  including accrued interest, was
repaid in full.

Sun Cove, an indirect,  wholly owned  subsidiary  of the Company,  is one of two
managing  partners of TCA. All  decisions of the managing  partners  require the
concurrence of Sun Cove and the other managing partner, Waterford Gaming, L.L.C.
In the event of deadlock there are mutual buy-out provisions.


<PAGE>



Indian Ocean

Through June 16, 2000,  Sun  International  owned a 22.8% interest in Sun Indian
Ocean,  a Mauritian  company  which is publicly  traded on the  Mauritius  Stock
Exchange.  Effective June 16, 2000, Sun Indian Ocean issued additional shares of
stock under a rights issue in which the Company did not participate, effectively
reducing the Company's ownership interest to 20.4%. Sun Indian Ocean is regarded
as one of the premier  resort  operators in the Indian Ocean and owns five beach
resort  hotels in  Mauritius:  the  175-room  Le Saint  Geran  Hotel  ("Le Saint
Geran"),  the 200-room Le Touessrok Hotel & Ile Aux Cerfs ("Le Touessrok"),  the
248-room La Pirogue Hotel ("La  Pirogue"),  the 333-room Le CoCo Beach ("Le CoCo
Beach") and the 238-room  Sugar Beach Resort Hotel ("Sugar  Beach").  Sun Indian
Ocean  also owns the  187-room  Le Galawa  Beach  Resort  ("Le  Galawa")  in the
Comoros.  Mauritius and the Comoros are tropical  islands  located in the Indian
Ocean approximately 1,200 miles and 200 miles, respectively, from the east coast
of mainland Africa.

Le Saint  Geran was  closed in April 1999 for  reconstruction  and  reopened  in
December 1999.

The resorts in Mauritius  and the Comoros are  marketed  primarily to luxury and
mid-market  tourists  from  Europe and  southern  Africa.  Le Saint Geran and Le
Touessrok  offer  deluxe  accommodations  and are  acknowledged  by the European
travel trade to be among the finest beach  resorts in the world.  The Conde Nast
Awards for Tourism recently rated Le Touessrok as the number one beach resort in
the world and Le Saint Geran was also  included  in the top ten. La Pirogue,  Le
CoCo Beach, Sugar Beach and Le Galawa cater to mid-market and budget travelers.

Mauritius'  tourist  industry  mainly  comprises  visitors  from Great  Britain,
Germany,  France,  Italy and South  Africa.  Scheduled  air  service to and from
Mauritius is provided through scheduled  flights on numerous airlines  including
Air France, British Airways, Cathay Pacific,  Singapore Airlines, Air India, Air
Mauritius,  Condor and South  African  Airlines.  Sun Indian  Ocean is a leading
resort operator at the upper end of the market.

Pursuant  to the  management  agreements  with Sun  Indian  Ocean,  the  Company
provides   comprehensive   management   services  under  individual   management
agreements  with each of Le Saint Geran, Le Touessrok,  La Pirogue,  Sugar Beach
and Le CoCo Beach.  The term of each of these  management  agreements  (the "Sun
Indian Ocean Management Agreements") continues through December 2008.

Under each of the Sun Indian Ocean Management Agreements, the Company receives a
management fee  calculated as a percentage of revenues (2%) and adjusted  EBITDA
(15%). The Company receives project consulting fees charged at 2.5% of the total
project costs for construction and refurbishment at each resort.

The Company also has a management  agreement to provide services to Le Galawa in
the Comoros.  The terms of this  agreement are identical to the terms of the Sun
Indian  Ocean  Management  Agreements  except  that the  Company is  entitled to
receive a basic fee of 3.5% of revenues rather than 2%.


<PAGE>



Dubai

The Company has entered into an  agreement  to manage the 258-room  Royal Mirage
Hotel in Dubai which opened in August 1999.  The  agreement has a term of twenty
years  from  the  opening  of the  hotel.  Under  the  terms  of the  management
agreement,  the Company  receives a management fee calculated as a percentage of
revenues (1.5%) and gross operating  profits,  as defined (10%).  The management
fee schedule may be renegotiated after ten years.

SEASONALITY AND WEATHER

The Company's  business has historically been seasonal,  with the largest number
of patrons visiting The Bahamas,  Mauritius and the Comoros during late December
and the first three  months of the  calendar  year.  Accordingly,  revenues  and
operating profits for the Company have historically been higher during the first
calendar  quarter  than  in  successive  quarters.  In  addition,  The  Bahamas,
Mauritius and the Comoros are subject to tropical  weather and storms which,  if
severe,  can interrupt the normal  operations of the Company and affect tourism.
Similarly,  inclement  weather  can  adversely  affect  the  operations  of  the
Company's  Atlantic City and  Connecticut  operations as the principal  means of
transportation  to these properties is by automobile or bus. Higher revenues and
earnings  are  typically   realized  from  the  Atlantic  City  and  Connecticut
operations during the middle third of the year.

During the third and fourth quarter of 1999, the Company's  Bahamian  operations
were  negatively  impacted by the effects of Hurricane  Floyd in September 1999.
The Company's  property in The Bahamas sustained some damage, for which remedial
work was  completed  by  year-end  1999,  and  experienced  a number of customer
cancellations.  The Company was fully  insured for  property  loss and  business
interruption.  The Company expects to remain fully insured against  property and
business  interruption  damage  resulting from storms.  However,  as a result of
Hurricane  Floyd,  as well as  substantial  losses  experienced  by the  overall
insurance industry throughout the past year, effective July 1, 2000, the Company
anticipates that premiums on its insurance coverage will increase substantially.

COMPETITION

General

The  resort  and  casino  industries  are  characterized  by a  high  degree  of
competition  among a large number of participants  and are largely  dependent on
tourism. The Company competes with resorts both with and without gaming and with
gaming facilities generally,  including land-based casinos, river boat, dockside
and cruise ship  on-board  casinos  and other forms of gaming,  as well as other
forms of  entertainment.  A number of the Company's  competitors  are larger and
have greater  financial and other  resources  than the Company.  In addition,  a
number of jurisdictions have recently  legalized gaming and other  jurisdictions
are  considering  the  legalization  of gaming.  The Company cannot predict what
effect a  continued  proliferation  of  gaming  and the  resulting  increase  in
competition  could have on the Company's  ability to compete  effectively in the
future.


<PAGE>



The Company  believes that the ability to compete  effectively in the resort and
gaming industries, particularly the destination resort and gaming industries, is
based  on  several  factors,   including  the  scope,   quality,   location  and
accessibility of resort and gaming  facilities and amenities,  the effectiveness
of marketing efforts,  customer service,  the relative  convenience of available
transportation,  service and the quality and price of rooms, food and beverages,
convention facilities and entertainment.

The Bahamas

The Company's  Paradise  Island  operations  compete with cruise ships and other
hotels and resorts,  particularly  those on Paradise  Island and New  Providence
Island in The Bahamas as well as those on Grand Bahama  Island and the Caribbean
islands.  There are  approximately  8,300 rooms for overnight guests on Paradise
Island and New Providence  Island  combined,  of which  approximately  3,700 are
located on Paradise Island,  including 2,376 in hotels owned and operated by the
Company.  The Marriott  Crystal  Palace,  a resort and casino with a theater and
other  amenities  located on New  Providence  Island,  across Nassau harbor from
Paradise  Island,  is Atlantis'  primary  competitor on Paradise  Island and New
Providence Island.

Atlantis also competes with the Princess Casino and Hotel and The Lucayan, which
are both located on Grand Bahama  Island,  approximately  40 minutes by air from
Paradise  Island.  The Princess  Casino and Hotel  includes a 30,000 square foot
casino, a 960-room hotel, restaurants and other leisure facilities.  The Lucayan
is a new  property  which opened its first phase in May 2000  consisting  of 550
hotel rooms.  An additional  800 rooms are  scheduled to open in December  2000,
bringing the total room count to 1,350.  Once  completed,  The Lucayan will also
include 14 restaurants and lounges,  a 36-hole golfing complex and 40,000 square
feet of meeting space.  In addition,  a new 30,000 square foot casino is planned
at The  Lucayan  and is  expected  to open in the summer of 2001.  The  Atlantis
Casino also competes with gaming casino facilities located in hotels and resorts
in Puerto Rico, with cruise ships which effectively provide additional rooms and
with resorts and casinos located on other Caribbean  islands,  in Atlantic City,
in Las Vegas and elsewhere in the United States.

Atlantic City

Competition in the Atlantic City casino/hotel  market is intense.  Casino/hotels
compete on a number of different bases,  including promotional  allowances given
to customers, entertainment,  advertising, services provided to patrons, caliber
of  personnel,  attractiveness  of  the  hotel  and  casino  areas  and  related
amenities, and parking facilities.  Resorts Atlantic City competes directly with
11 casino/hotels in Atlantic City which, in the aggregate, contain approximately
1,173,000  square feet of gaming  area,  including  simulcast  betting and poker
rooms, and over 11,000 hotel rooms. Significant additional expansion is expected
in the near  future  due to  expansion  projects  to be  financed  by the Casino
Reinvestment  Development Authority (the "CRDA"), a public authority, as well as
the  construction  of new  casino/hotels  announced  for the Marina area and the
South Inlet section.

Resorts Atlantic City is located at the eastern end of the Boardwalk adjacent to
the Trump Taj  Mahal  Casino  Resort  (the  "Taj  Mahal"),  which is next to the
Showboat Casino Hotel (the "Showboat"). These three


<PAGE>



properties  have a total of  approximately  2,700 hotel rooms and  approximately
325,000 square feet of gaming space in close  proximity to each other. A 28-foot
wide enclosed  pedestrian bridge between Resorts Atlantic City and the Taj Mahal
allows  patrons of both  hotels  and  guests  for  events  being held at Resorts
Atlantic City and the Taj Mahal to move between the facilities  without exposure
to the weather.  A similar enclosed  pedestrian  bridge connects the Showboat to
the  Taj  Mahal,   allowing   patrons  to  walk  under  cover  among  all  three
casino/hotels.  The  remaining  nine  Atlantic  City  casino/hotels  are located
approximately  one-half  mile  to one  and  one-half  miles  to the  west on the
Boardwalk or in the Marina area of Atlantic City.

In recent years,  competition for the gaming patron outside of Atlantic City has
become  extremely  intense.  In 1988,  only Nevada and New Jersey had  legalized
casino operations.  Currently,  almost every state in the United States has some
form of legalized gaming. Also, The Bahamas and other destination resorts in the
Caribbean and Canada have increased the competition for gaming revenue. Directly
competing with Atlantic City for the day-trip  patron are two gaming  properties
on Indian  reservations  in  Connecticut.  One is  Foxwoods  Resort  and  Casino
("Foxwoods")  operated by the Pequot  Tribe.  Foxwoods  currently  has more than
5,800 slot  machines,  and for the year 1999 had slot  revenue of  approximately
$730  million,  which  is more  than  twice  the  slot  revenue  of the  largest
casino/hotel in Atlantic City. The other,  the Mohegan Sun Casino,  which opened
in October  1996 and until  December  31, 1999 was managed by TCA, has more than
3,000 slot machines and had slot revenue of approximately  $490 million in 1999.
The Oneida Indians operate a casino near Syracuse, New York. Other Indian tribes
in the states of New York,  Rhode  Island and  Connecticut  are seeking  federal
recognition in order to establish gaming operations which would further increase
the competition for day-trip patrons. In addition, three racetracks in the State
of Delaware, combined, operate more than 4,000 slot machines.

This rapid expansion of casino gaming,  particularly  that which has been or may
be introduced into jurisdictions in close proximity to Atlantic City,  adversely
affects RIH's operations as well as the Atlantic City gaming industry.

Connecticut

Because the Mohegan Sun Casino is marketed primarily to day-trip  customers,  it
competes  primarily  with  Foxwoods  and, to a lesser  extent,  with  casinos in
Atlantic  City,  New Jersey,  certain of which have greater  resources  and name
recognition than the Mohegan Sun Casino. Currently,  Foxwoods is the only casino
in  operation  within 150 miles of the  Mohegan  Sun Casino  site.  Foxwoods  is
located approximately 10 miles from the Mohegan Sun Casino site and is currently
the largest gaming  facility in the United States in terms of the number of slot
machines,  with more  than  5,800  slot  machines  currently  in  operation.  In
addition, Foxwoods offers a number of amenities that the Mohegan Sun Casino does
not currently  offer,  including hotels and extensive  non-gaming  entertainment
facilities.

Casino  gaming in the  northeastern  United States may be conducted by federally
recognized  Indian tribes  operating  under the Indian Gaming  Regulatory Act of
1988  ("IGRA").  In addition to the Pequot Tribe,  which  operates  Foxwoods,  a
federally  recognized tribe in Rhode Island and a federally  recognized tribe in
Massachusetts   are  each  seeking  to  establish  gaming  operations  in  their
respective states. In April 1999, the


<PAGE>



St.  Regis  Mohawk  Tribe  opened a casino in upstate  New York while the Oneida
Tribe, which operates a previously existing gaming facility in upstate New York,
is seeking to expand its operations.  In addition,  a number of Indian tribes in
the  northeastern  United  States are seeking  federal  recognition  in order to
establish  gaming  operations.  The Company cannot predict  whether any of these
tribes will be successful in establishing gaming operations and, if established,
whether  such  gaming  operations  will have a  material  adverse  effect on the
operations of the Mohegan Sun Casino.

Under  the  tribal-state  compact  between  the  Mohegan  Tribe and the State of
Connecticut,  if Connecticut  were to legalize any gaming  operations other than
pursuant to IGRA (i.e., by an Indian tribe on Indian land) with slot machines or
other commercial  casino games, the Mohegan Tribe would no longer be required to
make payments to the State of Connecticut related to slot machine revenues.  The
Company is unable to predict  whether the  Connecticut  state  legislature  will
accept any other casino proposal and, if such proposal results in a casino being
constructed and opened,  whether such casino will have a material adverse effect
on the Mohegan Sun Casino.

Other Existing Operations

Sun  Indian  Ocean's   resorts  on  Mauritius  and  the  Comoros,   as  vacation
destinations,  are in competition  with other  locations  offering  vacations to
tourists from Europe, southern Africa and parts of Asia. In Mauritius,  there is
also  competition  from other  resorts on the island.  In the Comoros,  however,
there are no  competitive  resorts at the current time. In the luxury end of the
Mauritian  hotels  market,  Sun Indian Ocean owns two of the five luxury  hotels
offering a total of 375 rooms,  while the competing hotels offers a combined 344
rooms. A sixth hotel, with 90 rooms,  which would be further  competition in the
luxury end market is scheduled to open in September 2000. Sun Indian Ocean faces
more  competition  for the  mid-market  La Pirogue  and Sugar  Beach and for the
budget Le CoCo Beach.  In total,  there are  approximately  4,000 hotel rooms of
international  quality  available in  Mauritius,  of which 1,500 are marketed in
approximately  the same  price  bracket as La  Pirogue,  Le CoCo Beach and Sugar
Beach.

CERTAIN MATTERS AFFECTING THE COMPANY'S BAHAMIAN OPERATIONS

Airline Arrangements

The  majority  of patrons at the  Company's  resorts on Paradise  Island  arrive
through Nassau  International  Airport  located on New Providence  Island.  This
large facility is served by several carriers offering scheduled jet service from
New York, Atlanta,  Toronto,  Miami and other cities.  Ground  transportation is
facilitated by two bridges linking Paradise Island and New Providence Island.

Union Contract Arrangements

In The Bahamas,  approximately  2,600  employees are  represented by The Bahamas
Catering and Allied Workers Union (the "Union"). Sun Bahamas participates in The
Bahamas Hotel Employers Association (the "Association"), which represents resort
operators in the Paradise Island-New Providence Island area. The



<PAGE>



Association's  existing  contract with the Union expires January 1, 2003.  Labor
relations  in The  Bahamas  have not been  stable  over the last few years  with
occasional work stoppages occuring,  not only at Atlantis,  but also at publicly
run entities,  such as the Bahamian  Electric  Corporation and Bahamas Telephone
Company.  As the country's  largest private  employer,  the Company is often the
target of labor disputes.

Casino License

Paradise  Enterprises Limited, a subsidiary of Sun Bahamas ("PEL"), is currently
licensed to operate  the  Atlantis  Casino  under the  Bahamian  Gaming Act (the
"Gaming Act"). In accordance with Bahamian casino licensing requirements, PEL is
obligated to have its casino license  renewed  annually by the Gaming Board.  In
addition,  other  than an  existing  contingent  obligation  to grant two casino
licenses,  the Bahamian  Government  has agreed that it will grant no new casino
licenses with respect to gaming  operations on Paradise Island or New Providence
Island  until 2013,  provided  that Sun Bahamas  achieves  75% of its  projected
minimum  employment  growth  of  2,000  full-time  jobs in  connection  with its
expansion  and  development  plans  by  year  ten of  the  renewal  period.  The
moratorium on granting new casino licenses will remain in place, however, in the
event such growth is not  achieved  because of overall  poor  market  conditions
rather than inadequate management by Sun International.

Basic License Fee

Currently, the Gaming Act provides for taxes on casino revenues consisting of an
annual basic license fee of $200,000.

Casino Win Tax

In  replacement  of the higher gaming taxes and fees  previously  payable to The
Hotel  Corporation of The Bahamas,  the Bahamian  Government  agreed,  beginning
January 1,  1998,  until  December  2018 to set annual  casino  license  fees at
$100,000 per thousand square feet of casino space,  plus a minimum annual casino
win tax of $4.1  million  on all  gaming  win up to $20  million  and 10% on all
gaming win over $20 million.  Additionally,  during the 11 years beginning 1998,
the Bahamian Government will reduce the annual casino license fees by $5 million
and reduce by 50% the win tax to be paid on gaming win over $20  million.  These
terms are subject to an agreement with the Bahamian  Government  described below
under "Heads of Agreement".

The following table  summarizes,  for the periods shown, the taxes and fees paid
or accrued by Sun Bahamas under the Gaming Act and certain  agreements  with the
Bahamian Government:

                                            Years Ended December 31,
                                    ------------------------------------------
                                         1999           1998          1997
                                    ------------------------------------------
Casino win                          $  9,631,000   $  7,327,000   $  7,400,000
Basic license and operating fees         200,000        200,000      6,500,000
                                    ------------   ------------   ------------
  Total                             $  9,831,000   $  7,527,000   $ 13,900,000
                                    ============   ============   ============




<PAGE>



Heads of Agreement

In 1995,  the Company  reached an agreement  with the Bahamian  Government  that
provided for certain investment incentives to encourage the Company to undertake
an expansion program at Atlantis (the "1995 Agreement"). In 1997, this agreement
was amended to provide additional tax incentives (the "1997 Agreement") provided
that certain  conditions  were met by the Company.  The tax structure  under the
1997 Agreement, which became effective January 1, 1998, is described above under
"Casino Win Tax".

In order to  secure  the tax  incentives  provided  in the 1997  Agreement,  the
Company was  obligated to begin  construction  of at least 562 rooms on Paradise
Island in place of the Pirate's Cove Beach Resort (a 562-room  hotel on Paradise
Island)  which the Company  demolished  during the fourth  quarter of 1998.  The
Company previously had plans for an additional  700-room Phase III hotel project
at Atlantis which would have satisfied this condition.  However, considering its
available development resources and alternative uses of capital, the Company has
postponed this project.  As a result,  in June 2000, the Company was notified by
the  Bahamian  Government  that some of these  additional  incentives  have been
suspended.  Effective  July 1, 2000,  the casino win tax will revert back to the
structure  in the 1995  Agreement,  as  follows.  There is no change in the $4.1
million win tax on gaming win up to $20 million, however, the Company will incur
12.5% win tax on gaming win between $20  million and $120  million,  and 10% win
tax on gaming win in excess of $120 million.  The $5 million annual reduction of
fees will still apply;  however, in lieu of the 50% credit on win tax to be paid
on gaming win over $20 million, the Company will receive a 45% credit on win tax
to be paid on gaming win between $20  million  and $120  million.  The effect of
these  changes is expected  to  approximate  a $3 million  per year  increase of
gaming win tax. Under its agreement with the Bahamian Government, the additional
tax  incentives  under the 1997  Agreement  will be  reinstated in the event the
Company begins  construction  of these  additional  rooms.  Although the Company
currently  has no plans to  proceed  with the  Phase  III  development,  it will
continue to consider the results at its Paradise  Island  operations  as well as
general  business trends and alternative  uses of its capital in determining the
timing of proceeding with Phase III.

The 1997 Agreement also provides for a new five-year joint marketing  agreement,
pursuant  to  which  the   Bahamian   Government   shall  match  the   Company=s
contribution,  up to $4 million  annually,  toward the direct  costs  related to
staging certain marketing events, public relations activities and the production
and placement of advertisements in all media.

Control of Sun International

SIIL has agreed to control a majority of Sun International's  Board of Directors
through June 30, 2004.


<PAGE>



CERTAIN MATTERS AFFECTING THE COMPANY'S ATLANTIC CITY OPERATIONS

Convention Center and Casino/Hotel Expansion

In May 1997, the State of New Jersey opened a convention  center. The convention
center has 500,000 square feet of continuous  exhibit  space,  and an additional
109,000 square feet of meeting rooms,  making it the largest center from Atlanta
to Boston.

The convention  center was part of a broader plan that included the expansion of
the Atlantic City International  Airport, a new 500-room convention hotel, which
opened in  November  1997,  and the  transformation  of the main  entryway  into
Atlantic City into a new corridor.  In 1997, this new corridor,  which links the
new convention center and hotel with the Boardwalk,  was completed.  In all, six
blocks were  transformed  into an  expansive  park with  extensive  landscaping,
night-time  lighting,  and a large fountain and pool with an 86-foot lighthouse.
Officials have commented upon the need for improved  commercial air service into
Atlantic City as a factor in the success of the convention  center.  See further
discussion under "Transportation Facilities" below.

It is  believed  that  additional  hotel  rooms are  necessary  to  support  the
convention  center as well as to allow  Atlantic  City to  become a  competitive
destination  resort.  To  further  spur  construction  of new  hotel  rooms  and
renovation of  substandard  hotel rooms into deluxe  accommodations,  a total of
$175 million has been set aside by the CRDA, to aid in financing  such projects.
To date, the CRDA has  authorized  financing in the amount of $105 million which
has resulted in the construction of approximately  2,680 new hotel rooms and has
reserved funding in the amount of $70 million to four casinos, including Resorts
Atlantic City for the construction of up to 3,770 additional hotel rooms.  RIH's
share of the funding  reserved by the CRDA is $27.3  million to  construct up to
1,500  rooms.  Also,  Mirage  Resorts,  Inc.  ("Mirage"),  a Las  Vegas,  Nevada
casino/hotel  company,  has been selected to be the developer of an  approximate
180-acre  tract in the Marina  area of  Atlantic  City (the  "H-Tract").  Mirage
previously announced plans to build a 2,000-room  destination resort and entered
into an agreement  with Boyd Gaming Corp.  to build a $750  million,  1,500-room
casino/hotel  to be  called  the  Borgata.  Groundbreaking  for the  Borgata  is
expected in the third quarter of 2000 with an opening in 2002.  Also included in
the  development  of the H-Tract is the  construction  of a tunnel and connector
road link between the Atlantic City  Expressway  and the Marina area,  for which
infrastructure  improvements  were  considered  requisite to the expansion plans
announced for the Marina area. The  groundbreaking  for the tunnel  construction
occurred in November  1998 and the tunnel is expected to be  completed  in 2001.
Mirage had  indicated  that its proposed  resort  would open  shortly  after the
roadway is complete.  MGM Grand,  Inc.  ("MGM") had also announced plans for the
construction of a new  casino/hotel in the South Inlet section of Atlantic City,
the size and  scope of which has yet to be  formally  announced.  In the  second
quarter of 2000,  MGM acquired  all of the  outstanding  shares of Mirage.  As a
result of this merger,  the scope and timing of the Mirage and MGM  developments
in Atlantic City is uncertain.

Although these  developments  are viewed as positive and favorable to the future
prospects  of the  Atlantic  City gaming  industry,  management  of RIH, at this
point, can make no representations as to whether, to what extent or to how these
developments may affect RIH's operations.


<PAGE>



Transportation Facilities

The lack of an adequate transportation  infrastructure in the Atlantic City area
continues to negatively  affect the industry's  ability to attract  patrons from
outside its core  geographic  area.  In 1996,  the Atlantic  City  International
Airport  (located  approximately  12 miles from  Atlantic  City) was expanded to
double the size of the terminal and add departure  gates, to improve the baggage
handling  system and provide  sheltered  walkways  connecting  the  terminal and
planes. However, scheduled service to that airport from major cities by national
air carriers remains extremely limited.

Since the  inception  of gaming in Atlantic  City there has been no  significant
change  in  the  industry's   marketing  base  or  in  the  principal  means  of
transportation  to Atlantic City,  which  continues to be by automobile and bus.
The resulting  geographic  limitations  and traffic  congestion  have restricted
Atlantic City's growth as a major destination resort.

RIH continues to utilize day-trip bus programs. A non-exclusive easement enables
Resorts  Atlantic  City to utilize a bus tunnel  under the  adjacent  Taj Mahal,
which connects  Pennsylvania and Maryland Avenues,  and a service road exit from
the bus tunnel.  This  reduces  congestion  around the  Pennsylvania  Avenue bus
entrance to Resorts  Atlantic  City.  To  accommodate  its bus patrons,  Resorts
Atlantic City currently has a temporary  waiting area which is located  adjacent
to the  casino.  As noted  above in "Items 1 & 2  Description  of  Business  and
Properties - Atlantic  City",  in the third quarter of 2000, the Company expects
to begin  construction  of a new bus depot and waiting area  consisting  of nine
bays, seats for approximately 250 patrons and other various amenities.

In conjunction with a street  beautification  and housing project that was given
approval  by the CRDA,  that  agency has  engaged  consultants  to  explore  the
feasibility of the  beautification  and widening of North Carolina  Avenue which
would allow for improved traffic flow in a more appealing  corridor from Absecon
Boulevard  (Route 30) to the main entrance of Resorts  Atlantic  City.  Also, as
noted in "Convention Center and Casino/Hotel Expansions" above,  construction of
a tunnel and connector  road link between the Atlantic City  Expressway  and the
Marina area began in November 1998.

Union Contract Arrangements

At Resorts  Atlantic  City,  approximately  1,400  employees  of the total 3,300
workforce are covered under collective bargaining agreements with RIH. There are
four separate unions  representing  hotel and restaurant  employees,  electrical
workers,  engineers and painters and maintenance  workers. The contract relating
to hotel and  restaurant  employees,  which  includes  1,100 of RIH's  unionized
waiters, was renewed in September 1999 for a term of five years, while the other
contracts run until December 2001.


<PAGE>



Regulation, Gaming Taxes and Fees

General

The Company's  operations  in Atlantic City are subject to regulation  under the
New Jersey Casino Control Act (the "NJCCA"),  which authorizes the establishment
of casinos in Atlantic City, provides for licensing,  regulation and taxation of
casinos  and  related  persons and  entities  and created the New Jersey  Casino
Control  Commission  (the  "NJCCC")  and the Division of Gaming  Enforcement  to
administer the NJCCA. In general,  the provisions of the NJCCA concern:  (i) the
ability,  reputation,  character,  financial  stability  and integrity of casino
operators,  their  officers,  directors  and  employees  and others  financially
interested  in or in control of a casino;  (ii) the  nature and  suitability  of
hotel  and  casino  facilities,  operating  methods  and  conditions;  and (iii)
financial and accounting practices. Gaming operations are subject to a number of
restrictions  relating to the rules of games,  types of games permitted,  credit
play, size of hotel and casino operations,  hours of operation,  persons who may
be employed  and  licensure  of such  persons,  persons or entities  that may do
business  with  casinos,   the   maintenance  of  accounting  and  cash  control
procedures, security and other aspects of the business.

Casino License

A casino license is initially  issued for a term of one year and must be renewed
annually by action of the NJCCC for the first two renewal periods succeeding the
initial  issuance of a casino  license.  Thereafter the NJCCC may renew a casino
license  for a period of four  years,  although  the NJCCC may reopen  licensing
hearings  at any time.  A license is not  transferable  and may be  conditioned,
revoked or suspended at any time upon proper action by the NJCCC. The NJCCA also
requires an operations certificate which, in effect, has a term coextensive with
that of a casino  license.  On February  26,  1979,  the NJCCC  granted a casino
license to RIH for the operation of the Resorts  Hotel Casino.  In January 2000,
RIH's license was renewed until January 31, 2004. In order for a casino  license
to be renewed,  the licensee must show by clear and convincing  evidence that it
meets all of the criteria set out in the NJCCA,  including the  qualification of
holding,  intermediary and subsidiary  companies of a casino licensee and of the
directors, officers and certain employees of such companies.

Restrictions on Ownership of Securities

The NJCCA imposes certain  restrictions  upon the ownership of securities issued
by a corporation  which holds a casino license or is a holding,  intermediary or
subsidiary company of a corporate licensee  (collectively,  "holding  company").
Among  other  restrictions,  the  sale,  assignment,  transfer,  pledge or other
disposition of any security issued by a corporation which holds a casino license
is conditional  and shall be  ineffective  if  disapproved by the NJCCC.  If the
NJCCC finds that an individual  owner or holder of any securities of a corporate
licensee or its holding company must be qualified and is not qualified under the
NJCCA, the NJCCC has the right to propose any necessary  remedial action. In the
case of corporate holding companies and affiliates whose securities are publicly
traded,  the  NJCCC  may  require  divestiture  of  the  security  held  by  any
disqualified holder who is required to be qualified under the NJCCA.


<PAGE>



In the event that entities or persons required to be qualified refuse or fail to
qualify and fail to divest themselves of such security  interest,  the NJCCC has
the right to take any necessary  action,  including the revocation or suspension
of the casino  license.  If any  security  holder of the licensee or its holding
company or affiliate who is required to be qualified is found  disqualified,  it
will be  unlawful  for the  security  holder to (i)  receive  any  dividends  or
interest  upon any such  securities,  (ii)  exercise,  directly  or through  any
trustee or nominee,  any right conferred by such securities or (iii) receive any
remuneration  in any form from the corporate  licensee for services  rendered or
otherwise.  The Company's Articles of Association,  as amended, provide that all
securities of the Company are held subject to the  condition  that if the holder
thereof is found to be  disqualified  by the NJCCC pursuant to provisions of the
NJCCA, then that holder must dispose of his or her interest in the securities.

Remedies Under the NJCCA

In the event that it is  determined  that a licensee has  violated,  or fails to
affirmatively  prove that it meets all of the  criteria  of, the NJCCA,  or if a
security holder of the licensee  required to be qualified is found  disqualified
but does not dispose of his securities in the licensee or holding company, under
certain circumstances the licensee could be subject to fines or have its license
suspended,  conditioned  or  revoked.  The  NJCCA  provides  for  the  mandatory
appointment  of a  conservator  to operate  the casino and hotel  facility  if a
license is revoked or not renewed and permits the  appointment  of a conservator
if a license is suspended  for a period in excess of 120 days.  If a conservator
is appointed,  the  suspended or former  licensee is entitled to a "fair rate of
return out of net earnings,  if any,  during the period of the  conservatorship,
taking  into  consideration  that which  amounts to a fair rate of return in the
casino or hotel industry." Under certain circumstances, upon the revocation of a
license or failure to renew,  the  conservator,  after approval by the NJCCC and
consultation  with the former licensee,  may sell,  assign,  convey or otherwise
dispose of all of the property of the  casino/hotel.  In such cases,  the former
licensee is entitled to a summary  review of such proposed sale by the NJCCC and
creditors of the former  licensee and other  parties in interest are entitled to
prior written notice of sale.

License Fees, Taxes and Investment Obligations

The NJCCA  provides for casino license  renewal fees,  other fees based upon the
cost of maintaining  control and regulatory  activities and various license fees
for the various classes of employees.  In addition, a casino licensee is subject
annually to a tax of 8% of "gross  revenue"  (defined  under the NJCCA as casino
win,  less  provision  for  uncollectible  accounts  up to 4% of casino win) and
license fees of $500 on each slot machine.  Also,  the NJCCA has been amended to
create an Atlantic City fund (the "AC Fund") for economic  development  projects
other than the construction and renovation of casino/hotels. Beginning in fiscal
year 1995/1996 and for the following  three fiscal years, if the amount of money
expended  by the  NJCCC and the  Division  of  Gaming  Enforcement  is less than
$57,300,000,  the prior  year's  budget  for these  agencies,  the amount of the
difference  is to be  contributed  to the AC Fund.  Thereafter,  beginning  with
fiscal year 1999/2000 and for the following  three fiscal years, an amount equal
to the average paid into the AC Fund for the previous four fiscal years shall be
contributed to the AC Fund. Each licensee's share of the amount


<PAGE>



to be  contributed  to the AC Fund is based  upon its  percentage  of the  total
industry  gross  revenue for the relevant  fiscal year.  After eight years,  the
casino licensee's requirement to contribute to this fund ceases.

The following  table  summarizes,  for the periods  shown,  the fees,  taxes and
contributions assessed upon RIH by the NJCCC.

                                          Years Ended December 31,
                                -------------------------------------------
                                     1999            1998           1997
                                -------------------------------------------
Gaming tax                      $ 17,701,000    $ 18,785,000   $ 19,581,000
License and other fees             3,603,000       3,733,000      3,453,000
Contribution to AC Fund              307,000         496,000        392,000
                                ------------    ------------   ------------
Total                           $ 21,611,000    $ 23,014,000   $ 23,426,000
                                ============    ============   ============

The NJCCA, as originally adopted,  required a licensee to make investments equal
to 2% of the licensee's  gross revenue (the  "investment  obligation")  for each
calendar  year,  commencing in 1979,  in which such gross  revenue  exceeded its
"cumulative  investments"  (as defined in the NJCCA).  A licensee had five years
from the end of each  calendar  year to satisfy this  investment  obligation  or
become  liable  for an  "alternative  tax" in the same  amount.  In 1984 the New
Jersey legislature  amended the NJCCA so that these provisions now apply only to
investment obligations for the years 1979 through 1983.

Effective for 1984 and subsequent  years,  the amended NJCCA requires a licensee
to satisfy its  investment  obligation by  purchasing  bonds to be issued by the
CRDA or by making other  investments  authorized by the CRDA, in an amount equal
to 1.25% of a licensee's  gross  revenue.  If the  investment  obligation is not
satisfied, then the licensee will be subject to an investment alternative tax of
2.5% of gross revenue.  Licensees are required to make  quarterly  deposits with
the CRDA against their current year  investment  obligations.  RIH's  investment
obligations  for the years 1999,  1998 and 1997 amounted to $2.8  million,  $2.9
million and $3.1 million respectively,  and, with the exception of minor credits
received for making  donations,  have been  satisfied by deposits  made with the
CRDA. At December 31, 1999, RIH held $8.2 million face amount of bonds issued by
the CRDA and had $18.2  million on deposit with the CRDA.  The CRDA bonds issued
through 1999 have interest  rates  ranging from 3.6% to 7.0% and have  repayment
terms of between 20 and 50 years.

CERTAIN MATTERS AFFECTING THE COMPANY'S CONNECTICUT OPERATIONS

Regulation

The Mohegan Tribe is a federally  recognized  Native  American Indian tribe with
approximately 1,100 members,  whose federal recognition became effective May 15,
1994. In May 1994, the Mohegan Tribe and the State of Connecticut entered into a
gaming  compact to authorize  and  regulate  Class III gaming  operations  (slot
machines and table games).  TCA managed the  development and  construction  and,
until  January 1, 2000,  managed the  operation and marketing of the Mohegan Sun
Casino.


<PAGE>



Each of the partners of TCA and certain employees of the Mohegan Sun Casino must
be licensed by relevant  tribal and state  authorities.  Each of the partners of
TCA has received a gaming license from the  Commissioner of Revenue  Services of
the State of Connecticut.  In addition, gaming licenses or management agreements
held or  subsequently  acquired by the Company or its  subsidiaries  pursuant to
applicable  law and  regulations,  including  the IGRA and the  National  Indian
Gaming  Commission (the "NIGC")  regulations,  may require  review,  approval or
licensing  of any  person  or  entity  directly,  or  indirectly  possessing  or
acquiring  10% or  more  of the  Company's  equity  securities  (a  "Substantial
Interest"). The NIGC is required to review and approve any such person or entity
and make a finding of suitability pursuant to the IGRA and NIGC regulations.  If
the NIGC  were to  determine  that a person  or  entity  holding  a  Substantial
Interest in a gaming management agreement was unsuitable,  prior approval of the
management agreement could be revoked, subsequent approvals or renewals could be
blocked and certain  required gaming  licenses could be suspended,  rescinded or
denied.

Expansion

In February 1998, the Mohegan Tribe  appointed TCA to develop its  approximately
$800 million  expansion of the Mohegan Sun Casino,  which includes an additional
120,000 square foot casino,  an entertainment  arena and additional retail space
expected to open by the end of 2001, as well as a 1,200-room  hotel  expected to
open in the second quarter of 2002.

TCA Management Agreement

The Mohegan  Tribe and TCA entered  into the  Management  Agreement  pursuant to
which the Mohegan Tribe engaged TCA to develop, operate, manage and maintain the
Mohegan Sun Casino in exchange  for an annual fee which is  calculated  in three
tiers based upon net revenues (as defined) as set forth below (in thousands):

<TABLE>
<CAPTION>

                                      I               II               III
                                 -----------------------------------------------
                                               Annual Fee         Annual Fee
                                               From Tier I        From Tiers I &
                                 40% of        Plus 35% of        II Plus 30% of
                                 Net Revenues  Net Revenues       Net Revenues
                                 Up To         Between            Above
                                 ------------  ------------------ --------------
<S>                               <C>           <C>                 <C>
Year 1                            $ 50,546     $ 50,547 -  63,183   $  63,183
Year 2                              73,115       73,116 -  91,394      91,394
Year 3                              91,798       91,799 - 114,747     114,747
Year 4                              95,693       95,694 - 119,616     119,616
Year 5                             104,107      104,108 - 130,134     130,134
Year 6 (subject to buyout option)  114,335      114,336 - 142,919     142,919
Year 7 (subject to buyout option)  130,944      130,945 - 163,680     163,680

</TABLE>




<PAGE>


Management Fees

The monthly  management  fee payments to TCA were  calculated  against 1/12th of
targeted  annual net revenue  amounts set forth in the TCA Management  Agreement
and then adjusted to actual net revenue amounts realized annually within 60 days
of the close of each fiscal year. As defined in the Management  Agreement,  "Net
Revenues"  of the Mohegan Sun Casino  means the amount of gross  revenues of the
facility,  less operating expenses and certain specified  categories of revenue,
such as income from any financing or refinancing, taxes or charges received from
patrons on behalf of and remitted to a  governmental  entity,  proceeds from the
sale of capital assets, insurance proceeds and interest on the reserve fund. Net
revenues  include "Net Gaming  Revenues",  which are equal to the amount of "net
win" (the  difference  between  gaming wins and losses) less all gaming  related
operational expenses. In addition, TCA was required to establish,  and, together
with the Mohegan Tribe,  make monthly  contributions  to, a replacement  reserve
fund (the  "Reserve  Fund"),  which was used to pay  approved  budgeted  capital
expenditures  for the Mohegan Sun Casino.  The annual TCA  contribution  to such
fund was $1.2 million.

Term

The  term of the  Management  Agreement  was  seven  years  from the date of the
opening of the Mohegan Sun Casino. However, pursuant to an agreement between TCA
and the Mohegan Tribe,  effective January 1, 2000, TCA turned over management of
the Mohegan Sun Resort complex (which comprises the existing  operations and the
proposed  expansion) to the Mohegan  Tribe.  In exchange for  relinquishing  its
rights  under its  existing  agreements,  including  the  Management  Agreement,
beginning  January 1, 2000, TCA receives  annual payments of five percent of the
gross  revenues of the Mohegan Sun Resort  complex for a 15-year  period.  Until
January 1, 2000,  there were no changes in TCA's  existing  agreements  with the
Mohegan Tribe.

Priority Payments

Pursuant   to   subcontracts   for   management   services,   organization   and
administrative services and marketing services provided to TCA, prior to January
1, 2000 the Company received  priority payments from TCA. Each of these priority
payments were paid from TCA's management fees prior to the pro rata distribution
to TCA's partners of TCA's profits.  For seven years beginning  January 1, 2000,
TCA will pay to the Company the first $5 million  from the five percent of gross
revenues it receives  from the MTGA as a priority  payment  prior to the prorata
distributions to its partners.

Waiver of Sovereign Immunity

Pursuant to the  Management  Agreement and the Company's new agreement  with the
Mohegan Tribe, the Mohegan Tribe has waived  sovereign  immunity for the purpose
of permitting,  compelling or enforcing arbitration and has agreed to be sued by
TCA in any  court  of  competent  jurisdiction  for the  purpose  of  compelling
arbitration or enforcing any  arbitration or judicial award arising out of TCA's
agreement with the Mohegan Tribe.  The parties have agreed that all disputes and
claims  arising out of TCA's  agreement  with the  Mohegan  Tribe or the Mohegan
Tribe's gaming ordinance will be submitted to binding arbitration, which


<PAGE>



shall be the sole remedy of the parties,  and that  punitive  damages may not be
awarded  to  either  party by any  arbitrator.  The  Mohegan  Tribe's  waiver of
sovereign immunity is limited to enforcement of money damages from undistributed
or future net revenues of the Mohegan Sun Casino (or, under certain  conditions,
net revenues of other gaming operations of the Mohegan Tribe).  Funds earned and
paid to the Mohegan Tribe as the Mohegan  Tribe's share of net revenues prior to
any  judgment or award are not subject to the waiver and would not be  available
for levy pursuant to any judgment or award.

Gaming Disputes Court

The Mohegan Tribe's Constitution (the "Mohegan  Constitution")  provides for the
governance of the Mohegan Tribe by a tribal  council,  in which the  legislative
and  executive  powers of the  Mohegan  Tribe are vested,  and a  constitutional
review board.  On July 20, 1995, the tribal council  enacted a tribal  ordinance
creating the Gaming  Disputes Court (the "Court"),  which is composed of a trial
and an  appellate  branch.  The Mohegan  Constitution  and the tribal  ordinance
establishing  the Court give the Court  exclusive  jurisdiction  for the Mohegan
Tribe over all disputes and  controversies  related to gaming between any person
or entity and the MTGA, the Mohegan Tribe or TCA. The Court has been  authorized
by the Mohegan Constitution to consist of at least four judges, none of whom may
be  members  of the  Mohegan  Tribe  and each of whom  must be  either a retired
federal  judge  or  Connecticut  Attorney  Trial  Referee  (who  is an  attorney
appointed by the Connecticut Supreme Court).

ENVIRONMENTAL MATTERS

The Company is subject to federal, state and local laws and regulations that (i)
govern  activities or operations  that may have adverse  environmental  effects,
such as discharges  to air and water as well as handling and disposal  practices
for solid and  hazardous  wastes,  and (ii)  impose  liability  for the costs of
cleaning up, and certain damages resulting from, past spills, disposals or other
releases of hazardous substances (together,  "Environmental Laws"). From time to
time,  the  Company's   operations  have  resulted  or  may  result  in  certain
noncompliance with applicable  Environmental Laws. However, the Company believes
that any such  noncompliance  would not have a  material  adverse  effect on the
Company's financial position, results of operations or cash flows.

The  Mohegan  Sun Casino site was  formerly  occupied  by UNC, a naval  products
manufacturer  of, among other things,  nuclear  reactor fuel  components.  UNC's
facility  was  officially  decommissioned  on June 8,  1994,  when  the  Nuclear
Regulatory  Commission (the "NRC")  confirmed that all licensable  quantities of
special  nuclear  material  ("SNM") had been removed from the Mohegan Sun Casino
site and that any residual SNM  contamination  was remediated in accordance with
the NRC-approved decommissioning plan.

From 1991 through 1993, UNC commissioned an environmental  consultant to perform
a series of environmental  assessments on the Mohegan Sun Casino site, including
extensive soil  investigations  and groundwater  monitoring.  The  environmental
assessments  detected  among other things,  volatile  organic  chemicals,  heavy
metals and fuel hydrocarbons in the soil and groundwater.  Extensive remediation
of  contaminated  soils  and  additional  investigations  were  then  completed.
Although the Mohegan Sun Casino


<PAGE>



site currently meets applicable  remediation  requirements,  no assurance can be
given that the various environmental assessments with respect to the Mohegan Sun
Casino site  revealed  all  existing  environmental  conditions,  that any prior
owners or tenants of the  Mohegan  Sun Casino  site did not create any  material
environmental  condition not known to the Mohegan Gaming Authority,  that future
laws,  ordinances  or  regulations  will not impose any  material  environmental
liability or that a material environmental condition does not otherwise exist on
the Mohegan Sun Casino site.  Future  remediation may be necessary if excavation
and  construction  exposes  contaminated  soil which has  otherwise  been deemed
isolated  and not  subject  to  cleanup  requirements.  Such  remediation  could
adversely  impact  the  results  of  operations  of the  Mohegan  Sun Casino and
therefore the results of operations and financial conditions of the Company.

In  addition,  the  Environmental  Protection  Agency  (the  "EPA")  has named a
predecessor  to  SINA as a  potentially  responsible  party  ("PRP")  under  the
Comprehensive  Environmental  Response,  Compensation  and Liability Act of 1980
("CERCLA")  for the cleanup of  contamination  resulting  from past disposals of
hazardous waste at the Bay Drum site in Florida, to which the predecessor, among
others, sent waste in the past. CERCLA requires PRPs to pay for cleanup of sites
at which there has been a release or threatened release of hazardous substances.
Courts have  interpreted  CERCLA to impose strict,  joint and several  liability
upon all persons liable for cleanup costs. As a practical  matter,  however,  at
sites  where  there are  multiple  PRPs,  the  costs of  cleanup  typically  are
allocated among the parties according to a volumetric or other standard. Because
the Company has only limited  information  at this time  regarding this site and
the wastes sent to it by the predecessor, the Company is unable to determine the
extent of its potential liability, if any, at this site.

RECENT EVENTS

Nevada

On May 17,  1999,  the  Company  entered  into the DI  Purchase  Agreement  with
Starwood  pursuant  to which the  Company  agreed to acquire  the Desert Inn for
approximately $275 million, subject to certain adjustments. On June 1, 1999, the
Company paid the $15 million Deposit into an escrow account. On May 1, 2000, the
Company and Starwood  announced  that they agreed to  terminate  the DI Purchase
Agreement  and that if Starwood  sold the Desert Inn for less than the  purchase
price  originally  agreed by the Company,  then the Company will pay to Starwood
50% of such deficit,  as defined,  up to a maximum of $15 million.  In the event
that  Starwood  sold the  property in excess of the  purchase  price  originally
agreed by the  Company,  then the  Company  will  share 50% in such  excess,  as
defined.  On April 28, 2000,  Starwood  announced that it had agreed to sell the
Desert Inn for  approximately  $270  million,  subject to certain  post- closing
adjustments, and on June 23, 2000, Starwood announced that it had closed on this
transaction. Based on preliminary discussions with Starwood, the Company expects
to be  obligated  to pay Starwood  approximately  $8 million  and,  accordingly,
Starwood would return to the Company approximately $7 million of its $15 million
Deposit.

<PAGE>



Proposed Acquisition of Ordinary Shares

In January 19, 2000, the Company  announced that it had received a proposal from
SIIL to acquire in a merger  transaction  all Ordinary Shares of the Company not
already owned by SIIL or its shareholders for $24 per share in cash. In response
to the proposal, the Company formed the Special Committee which retained its own
financial and legal  advisors.  The proposed  transaction was subject to various
conditions,  including approval by the Special Committee.  On June 16, 2000, the
Company  announced  that SIIL was not able to negotiate a mutually  satisfactory
transaction  with the Special  Committee  and that SIIL advised the Company that
its proposal has been withdrawn.

In order to allow  shareholders  of the  Company  to sell at least a portion  of
their  Ordinary  Shares at the price  formerly  proposed  by SIIL,  the Board of
Directors  of the Company has approved a  self-tender  offer for up to 5,000,000
shares at a $24 per share cash price.  The  self-tender  offer was  commenced on
June 26, 2000 and was made by an Offer to Purchase and related materials, copies
of which were filed with the  Securities  and Exchange  Commission and mailed to
the Company's  shareholders.  The self-tender  offer is subject to the terms and
conditions set forth in the Offer to Purchase,  including the condition that the
Ordinary Shares continue to be listed for trading on the New York Stock Exchange
and that the Company remain subject to periodic  reporting  requirements  of the
Securities  Exchange  Act of  1934.  The  Company  has  been  advised  that  the
approximately  54% of the  outstanding  Ordinary  Shares  held by  SIIL  and its
shareholders will not be sold in the self-tender.

Forecast Earnings Announcement

The  Company  recently  announced  that it expects  its  second  quarter of 2000
earnings per share (excluding land sales and certain  non-recurring items) to be
in the  range of $.53 to $.58.  The  second  quarter's  results  were  adversely
affected  by  disappointing  trading at Resorts  Atlantic  City and a lower than
expected hold percentage at the Atlantis Casino.

THE COMMONWEALTH OF THE BAHAMAS

The  Commonwealth  of The Bahamas had a population of  approximately  300,000 in
1999. The Bahamas includes approximately 700 islands, 29 of which are inhabited,
and extends from east of the Florida coast to just north of Cuba and Haiti. Over
60% of the population lives on New Providence Island,  where Nassau, the capital
of The Bahamas, is located. The Bahamas first obtained internal  self-government
in 1964 and became an  independent  nation  within the British  Commonwealth  in
1973. The first  elections  under universal adult suffrage were held in November
1962.  The present  government was first elected in 1992 and re-elected in March
1997,  having  succeeded a government  that was in power for over 20 years.  The
official language is English.

The currency of The Bahamas has been tied to the U.S.  dollar since 1970 with an
official exchange rate of U.S. $1.00 = 1.00 Bahamian dollar.


<PAGE>



The Ministry of Tourism spends over $35 million  annually to promote The Bahamas
and in recent years the government  has made large  investments in the expansion
of both Nassau Harbor and Nassau International Airport.

THE REPUBLIC OF MAURITIUS

The  Republic  of  Mauritius  is  a  small,  multi-ethnic,  independent  country
consisting of several  islands with a land area of about 720 square  miles.  The
Republic of Mauritius  is located in the Indian  Ocean and has a  population  of
approximately  1,100,000. The main island,  Mauritius,  lies approximately 1,200
miles off the east coast of mainland  Africa.  The other  islands are  Rodrigues
Island,  the Agalega  Islands and the Cargados  Carajos  Shoals.  The climate is
subtropical and generally humid. Most residents are bilingual,  speaking English
and French. Mauritius has been independent since 1968 and a republic since 1991.
Presidential  elections  are held every five years and the next election will be
held in 2001.


ITEM 3.  LEGAL PROCEEDINGS

Shareholder Litigation

Beginning on or about January 20, 2000,  eight class action  lawsuits were filed
in courts  of the  states  of New  York,  New  Jersey  and  Florida  by  certain
shareholders of the Company. These actions, purportedly brought as class actions
on behalf of all public  shareholders,  name SIIL,  the Company and directors of
the Company (including  Chairman and Chief Executive Officer Solomon Kerzner) as
defendants,  alleging  generally  that they breached their  fiduciary  duties to
shareholders  in connection  with SIIL's proposal to acquire all of the Ordinary
Shares not owned by SIIL or its shareholders for $24 per share. Currently,  SIIL
and its  shareholders  own  approximately  54% of the outstanding  shares of the
Company.  Answers  were filed to each of the  complaints  on or about  March 27,
2000. Subsequently,  the eight class action lawsuits were consolidated into one,
the Sun International Hotels Limited Class Action Lawsuit, and in May 2000, this
consolidated  complaint  was filed  with the  Supreme  Court of the State of New
York, County of New York, docket No. 600250.


ITEM 4.  CONTROL OF THE REGISTRANT

SIIL  owns  approximately  42% of the  outstanding  Ordinary  Shares  and is the
principal  shareholder of the Company.  World Leisure Group Limited  ("WLG"),  a
company  controlled  by a trust for the  benefit  of the  family of Mr.  Solomon
Kerzner,  Chairman of the Board of Directors and Chief Executive  Officer of the
Company,   indirectly  controls  through  intermediate  entities   approximately
one-third of the outstanding  ordinary shares of SIIL. Peter Buckley, a director
of the  Company  and SIIL,  is also  chairman  and chief  executive  officer  of
Caledonia,  which indirectly owns through  intermediate  entities  approximately
one-third of the outstanding  ordinary shares of SIIL.  Derek Hawton, a director
of the Company and SIIL, is also


<PAGE>



chairman  and chief  executive  officer of  Kersaf,  which  indirectly  controls
through  intermediate  entities  approximately   one-third  of  the  outstanding
ordinary shares of SIIL.

SIIL has agreed with the Bahamian  Government,  among other things, to control a
majority of the Board of Directors of the Company until June 30, 2004.

Ownership  participation in SIIL is governed by a Subscription and Shareholders'
Agreement.  Rosegrove Limited ("Rosegrove") owns approximately two-thirds of the
outstanding  equity of SIIL and World  Leisure  Investments  Limited,  a Bermuda
corporation  ("WLI"),  owns the remaining shares.  WLI is owned by WLG, which is
owned by a trust for the  benefit  of the  Kerzner  family.  Rosegrove  is owned
indirectly  and  equally by Kersaf and  Caledonia.  Caledonia  is a  diversified
trading and investment company listed on The London Stock Exchange. Kersaf is an
industrial conglomerate whose interests span casino resorts, hotels, cinemas and
entertainment  centers.  Kersaf is listed on The Johannesburg Stock Exchange. In
addition to its holdings in SIIL,  Rosegrove  owns directly  2,625,000  Ordinary
Shares,  or approximately 8% of the outstanding  Ordinary Shares of the Company.
Certain  subsidiaries  of Kersaf own  directly  1,610,000  Ordinary  Shares,  or
approximately  4% of the  outstanding  Ordinary  Shares of the Company and Kerry
International  Investments  Limited,  a subsidiary of WLG, owns directly 150,000
Ordinary Shares.

The following table sets forth certain information as of June 15, 2000 regarding
the ownership of Ordinary  Shares by: (i) any person who is known to the Company
to be the owner of more than 10% of any class of the Company's voting securities
and (ii) the directors and officers of the Company as a group:

<TABLE>
Class of Shares      Owner                         Amount     Percent of Class
---------------      -----                       ----------   ----------------
<S>                  <C>                         <C>               <C>
Ordinary Shares      SIIL                        13,787,383        42.0%
Ordinary Shares      Baron Capital Group, Inc.    5,878,000        17.5%
Ordinary Shares      Directors and Officers as
                      a Group  (excluding shares          -    less than 1%
                      deemed owned by WLG)


</TABLE>




<PAGE>



ITEM 5.  NATURE OF TRADING MARKET

As of June 15,  2000,  the  Company had  approximately  837 holders of record of
approximately  32,682,350 Ordinary Shares,  excluding one million shares held as
treasury stock.  As of June 15, 2000,  there were an estimated 825 US holders of
record holding  approximately 46% of the Ordinary Shares. The Ordinary Shares do
not trade on any  foreign  exchange.  The  Ordinary  Shares have been listed and
traded on the New York Stock  Exchange  (the  "NYSE")  since March 1, 1996.  The
following  table sets forth the range of high and low closing sale prices of the
Ordinary Shares as reported on the NYSE during the periods shown.

                                                High             Low

2000:   1st quarter                            $22.50           $15.88
        2nd quarter (through June 15, 2000)     21.00            17.00
1999:   1st quarter                             43.88            32.88
        2nd quarter                             47.19            33.00
        3rd quarter                             44.63            20.19
        4th quarter                             24.13            17.31
1998:   1st quarter                             47.38            35.06
        2nd quarter                             50.38            42.00
        3rd quarter                             46.75            34.63
        4th quarter                             45.44            31.00


ITEM 6.  EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY
        HOLDERS

The Central Bank of The Bahamas (the  "Central  Bank") must approve any payments
made to companies,  including the Company,  which are non-resident companies for
exchange  control  purposes.  The Central Bank has granted  approved  investment
status in respect of the Company's  holding of the capital stock of Sun Bahamas.
The  granting of such status  will mean that all  payments of a current  nature,
including the  repatriation of dividends or other  distributions  to the Company
out of the  revenues of the  Company's  Bahamian  subsidiaries  and any proceeds
received  on the sale of such  subsidiaries  will be  routinely  approved by the
Central Bank following proper application.  Any other payments to the Company by
its Bahamian subsidiaries will require standard approval by the Central Bank.

There currently are no limitations on the right of nonresident or foreign owners
to hold or vote the Ordinary  Shares  imposed by foreign law or by the Company=s
Articles of Association.


<PAGE>



ITEM 7.  TAXATION

Certain United States Federal Income Tax Considerations

The following is a general  discussion of certain  United States  federal income
tax  consequences  to the  acquisition,  ownership and  disposition  of Ordinary
Shares.  For purposes of this  discussion,  a "United  States  Holder"  means an
individual  citizen or resident of the United  States,  a corporation  organized
under the laws of the  United  States or of any state of  political  subdivision
thereof, any partner in a partnership (only to the extent that the partnership's
income is subject to United States federal income tax) or an estate or trust the
income of which is includible in gross income for United States  federal  income
tax purposes regardless of its source.

This  discussion  is not  intended to be  exhaustive  and is based on  statutes,
regulations, rulings and judicial decisions currently in effect. This discussion
does not consider any specific  circumstances  of any  particular  United States
Holder and applies only to United States Holders that hold Ordinary  Shares as a
capital asset.  Investors are urged to consult their tax advisors  regarding the
United States federal tax  consequences  of acquiring,  holding and disposing of
Ordinary Shares,  as well as any tax consequences  that may arise under the laws
of any foreign, state, local or other taxing jurisdiction.

Ownership of Ordinary Shares

Dividends on Ordinary  Shares paid to United  States  Holders will be treated as
dividend  income for United States  federal income tax purposes to the extent of
the  Company's  undistributed  current or  accumulated  earnings  and profits as
computed for federal  income tax purposes.  Such dividends will generally not be
eligible for the dividends received deduction available to certain United States
corporations under Section 243 of the Internal Revenue Code of 1986, as amended.

The Company is not a "passive foreign investment company" (a "PFIC"), a "foreign
personal  holding company" (a "FPHC") or a "controlled  foreign  corporation" (a
"CFC") for United States federal income tax purposes.

The Company is not a CFC or a FPHC mainly due to SIIL's  approximate  42% voting
interest in the  Company.  If more than 50% of the voting  power or value of the
Company=s  stock were owned  (directly,  indirectly or by attribution) by United
States persons who each owned  (directly,  indirectly or by attribution)  10% or
more of the voting power of the stock of the Company ("10%  Shareholders"),  the
Company  would become a CFC and each such 10%  Shareholder  would be required to
include in its taxable income as a constructive  dividend an amount equal to its
share of certain  undistributed  income of the Company.  If more than 50% of the
voting  power or value of the Company  were owned  (directly,  indirectly  or by
attribution)  by five or fewer  individuals who are citizens or residents of the
United States and if at least 60% of the Company=s  income  consisted of certain
interest,  dividend or other enumerated types of income, the Company would be an
FPHC. If the Company were an FPHC, each United States Holder  (regardless of the
amount of stock owned by such United States Holder) would be required to include
in its taxable income


<PAGE>



as a constructive  dividend its share of the Company's  undistributed  income of
specified  types. If SIIL's  ownership  interest were to decrease,  or if United
States persons were to acquire a greater ownership  interest in SIIL, then it is
possible that the Company  could become a CFC or FPHC if it otherwise  satisfied
the tests set forth above.

The Company is not a PFIC  because it is  anticipated  that less than 75% of its
annual gross income will consist of certain  "passive"  income and less than 50%
of the  average  value of its  assets in any year will  consist  of assets  that
produce,  or are held for the production of, such passive income. If such income
and asset tests were not met and the Company  were to become a PFIC,  all United
States  Holders  would be required to include in their  taxable  income  certain
undistributed amounts of the Company's income, or in certain  circumstances,  to
pay an interest  charge together with tax calculated at maximum rates on certain
"excess distributions"(defined to include any gain on the sale of stock).

Any gain or loss on sale or  exchange  of  Ordinary  Shares  by a United  States
Holder will be a capital gain or loss. If the United States Holder has held such
Ordinary  Shares for more than one year,  such gain or loss will be a  long-term
capital gain or loss.

Any  United  States  person  who owns 5% or more in  value  of the  stock of the
Company may be  required  to file IRS form 5471 with  respect to the Company and
its  non-United   States   subsidiaries   to  report  certain   acquisitions  or
dispositions  of stock of the  Company.  Annual  filings  of Form 5471  would be
required  from any United  States  person  owning 5% or more of the stock of the
Company or, if the Company  were an FPHC or a CFC,  from certain  United  States
persons owning 10% or more of the stock of the Company.

Certain Bahamian Tax Considerations

The following is a brief and general summary of certain  Bahamian tax matters as
they may relate to the  Company and the  holders of the  Ordinary  Shares of the
Company. The discussion is not exhaustive and is based on Bahamian law currently
in effect.

The Bahamas  does not impose any income,  capital  gains or  withholding  taxes.
Therefore,  the  Company  will not be subject to income tax in The Bahamas on an
ongoing basis and dividends paid on Ordinary  Shares to holders thereof will not
be subject to a Bahamian  withholding tax (the Company,  however,  is subject to
gaming taxes and other governmental fees and charges).


<PAGE>



ITEM 8. SELECTED FINANCIAL DATA

The  following  table  sets  forth  certain  historical  consolidated  financial
information  of the Company for each of the five years ended  December 31, 1999.
The historical  financial  information as of December 31, 1999 and 1998, and for
each of the three  years ended  December  31,  1999,  1998 and 1997 as set forth
below, has been derived from the audited  consolidated  financial  statements of
the Company,  included in this Form 20- F. All financial  information  should be
read in  conjunction  with  "Management's  Discussion  and Analysis of Financial
Condition  and  Results  of  Operations",  the  audited  consolidated  financial
statements and the related notes thereto, all included in this Form 20-F.


<PAGE>

<TABLE>
<CAPTION>

                                                                For the Year Ended December 31,
                                               ----------------------------------------------------------------
                                                   1999         1998         1997          1996        1995
                                                  (a)(c)       (b)(c)       (c)(d)          (e)
---------------------------------------------------------------------------------------------------------------
                                                       (Dollars in thousands, except per share data)
<S>                                          <C>           <C>            <C>           <C>           <C>
STATEMENT OF OPERATIONS DATA:

Gross revenues                                $  789,207   $   591,670    $  600,670    $  252,218    $ 223,214
Net revenues                                     738,967       550,878       558,912       240,116      213,940
Income from operations                           114,432        52,206        84,624        34,258       22,990
Net income                                        69,822        57,746        83,008        45,722       18,359
Diluted earnings per share (f)                      2.05          1.70          2.44          1.58         0.87

BALANCE SHEET DATA:

Total assets                                  $1,671,471    $1,625,733    $1,374,740    $1,122,619    $ 370,427
Long-term debt, net of current maturities        578,033       565,752       412,209       262,618      116,153
Redeemable common stock                                -             -             -             -       63,543
Shareholders' equity                             899,831       850,621       790,283       702,989      135,611

(a)  The results of operations for the year ended 1999 include pre-opening costs of $5.4 million related to a
     renovation  completed at Resorts Atlantic City in July 1999.

(b)  The results of operations for the year ended 1998 include only two weeks of operations of the Royal Towers
     on Paradise Island after its grand opening in  mid-December.  Income from operations and net income for
     the year ended 1998 reflect $26 million in pre-opening costs.

(c)  The Company acquired SINA on December 16, 1996. Accordingly, the results of operations  for the years
     ended  December 31,  1999,  1998 and 1997 include results of operations related to the SINA acquired
     assets including Resorts Atlantic  City. The results of operations for the last 16 days of 1996 were
     considered immaterial and were not included in the Company's results of operations for that year.

(d)  The results of operations  for the year ended  December 31, 1997 included a gain of $13.4  million  on
     the sale of the Company's casino interest in France.

</TABLE>



<PAGE>




(e)  The Company  opened the Mohegan Sun Casino in  Uncasville,  Connecticut  in
     October 1996. Accordingly,  the results in 1996 reflect the Company's share
     of revenues from two months of operations at this facility.

(f)  Effective  January 1, 1997,  the Company  adopted  Statement  of  Financial
     Accounting Standards No. 128, "Earnings Per Share".





<PAGE>



ITEM 9.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
      RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Consolidated Results

1999 vs. 1998 The Company recorded net income of $69.8 million compared to $57.7
million  in 1998.  Diluted  earnings  per  share  increased  to $2.05 in 1999 as
compared to $1.70 in 1998. In July 1999,  the Company  completed a renovation of
Resorts  Atlantic City. Net income in 1999 included the write-off of incremental
and  non-recurring   pre-opening   expenses  of  $5.4  million  related  to  the
renovation.  In 1998,  net income  included  the  write-off of  incremental  and
non-recurring  pre-opening  expenses of $26.0 million  related  primarily to the
opening at  Atlantis in December  1998 of The Royal  Tower,  a 1,200 room deluxe
hotel,  a new 100,000  square-foot  casino and  entertainment  center,  expanded
marine  habitats  and other  entertainment  attractions.  On a  proforma  basis,
excluding  these  non-recurring  items,  the Company  earned net income of $75.2
million,  or $2.21 per share on a diluted basis, and $83.7 million, or $2.46 per
share in 1999 and 1998,  respectively.  Net revenues were $739.0 million in 1999
as compared to $550.1 million in 1998,  excluding  income received from Showboat
pursuant to a lease that was terminated in February 1998 (the "Showboat Lease").
Operating expenses  excluding the write-off of pre-opening  expenses were $619.1
million in 1999 versus $472.7 million in 1998.  This increase was largely due to
the opening of the Royal Tower.

1998 vs. 1997 The Company  recorded net income of $57.7 million in 1998 compared
to $83.0 million in 1997.  Diluted earnings per share decreased to $1.70 in 1998
as compared to $2.44 in 1997.  As noted above,  net income in 1998  included the
write-off of incremental and non-recurring pre-opening expenses of $26.0 million
related primarily to the opening of the Royal Towers. In addition,  in 1997, net
income reflected an  extraordinary  loss on the  extinguishment  of debt of $3.0
million  and a  non-recurring  gain of $13.4  million  on the sale of an  equity
interest in an associated  company.  On a proforma basis, giving effect to these
non-recurring  items,  the Company earned net income of $83.7 million,  or $2.46
per share on a diluted basis, and $72.6 million,  or $2.14 per share in 1998 and
1997,  respectively.  Excluding income received  pursuant to the Showboat Lease,
net revenues were $550.1  million in 1998 as compared to $549.9 million in 1997.
Operating expenses  excluding the write-off of pre-opening  expenses were $472.7
million in 1998 versus $474.3 million in 1997.

Segment Results

Segment results stated below conform to the Segment Information included in Note
16 of Notes to Consolidated Financial Statements included herein.

Paradise Island

1999 vs. 1998 The Company's  Paradise Island  operations  generated  income from
operations of $93.6  million in 1999, as compared to $42.1 million in 1998.  The
Company's  largest  property on Paradise Island,  Atlantis,  achieved an average
occupancy of 81%, compared to 87% in 1998, while the average daily rate


<PAGE>



increased by 13% to $211. The number of room nights available at Atlantis nearly
doubled  over 1998 as a result of the  opening of The Royal  Towers in  December
1998. The casino  generated  gaming win of $130.5 million in 1999 as compared to
$84.6 million in 1998. In 1999, table game win of $82.5 million,  an increase of
$32.5 million,  was a result of increased  table game drop (the dollar amount of
chips  purchased)  of  $177.7  million  (or  52%),  as  well as  increased  hold
percentage  (ratio of table game win to dollar amount of chips  purchased)  from
14.9% to 16.1%.  Slot win, of $48.1  million in 1999  reflected an increase from
$34.6  million  achieved in 1998 as a result of an  increase  in handle  (dollar
amounts  wagered) of $147.2 million (or 41.6%),  partially offset by a reduction
in hold percentage from 9.8% to 9.7%.

The increase in income from  operations  reflects a substantial  contribution in
1999 from Atlantis' new  1,200-room  Royal Towers  Complex,  100,000 square foot
casino and associated recreational and entertainment  facilities.  In the fourth
quarter of 1999,  operations at Atlantis were negatively impacted by the effects
of Hurricane  Floyd in September  1999. The Company  recorded  revenues of $14.2
million as business interruption  insurance recovery.  During the fourth quarter
of 1999, the average  occupancy at Atlantis was 74% with an average room rate of
$204.

Other factors effecting Paradise Island income from operations were increases in
depreciation  expense  and  management  services  fees  paid  to  an  affiliate.
Depreciation  expense  increased by $23.6 million  largely due to the opening of
Royal Towers and related  facilities in December 1998. In 1999,  management fees
paid to  affiliates  increased  by  approximately  $4.3  million  as a result of
changes in the management services agreement.

1998 vs. 1997 The Company's  Paradise Island  operations  generated  income from
operations before pre- opening expenses of $42.1 million in 1998, as compared to
the $46.2 million realized in 1997.  Atlantis  achieved an average  occupancy of
87% for the year  compared  to 88% in 1997,  while the  average  daily room rate
increased  by 8% to $187.  The casino  generated  gaming  win of $84.6  million,
including  table game win of $50.0 million,  an increase in table game win of 4%
over 1997.  Slot win of $34.6  million  represented  a  decrease  of 7% from the
previous  year.  The growth in table game win resulted from an increase in table
game drop of $25.2 million (or 8%) which was  partially  offset by a decrease in
the hold percentage  from 15.5% to 14.9%.  Slot win decreased due to a reduction
in handle of $11.2 million (or 3%) and a reduction in slot hold  percentage from
10.3% to 9.8%.

A  significant  factor in the  decrease in  operating  earnings  was the loss of
earnings from Pirate's Cove Beach Resort,  a 562-room hotel,  which beginning in
September 1997, was only used to house expatriate professionals and construction
staff engaged in  construction on Paradise Island and was not open to the public
after that date. In 1997, Pirate's Cove Beach Resort contributed $3.1 million to
income from  operations.  In October  1998,  the Pirate's  Cove Beach Resort was
demolished.  In addition,  general and administrative expenses increased in 1998
by $3.2 million over the previous year, due primarily to the settlement of a new
union  contract,  and  operating  earnings  in  1998  included  depreciation  of
approximately $1.0 million related to the Royal Towers for the last two weeks of
the year  after  its  opening.  These  reductions  were  partially  offset by an
increase in room  revenues and increased  casino  department  earnings,  some of
which were attributable to the opening of the Royal Towers in December 1998. The
improved  contribution  from the casino was due  primarily to a reduction in the
rates of taxes and fees payable to the Government on casino win.


<PAGE>



During the year, the property was negatively impacted by the construction of the
Royal  Towers  which  caused  some  rooms to be taken  out of  service  to house
construction  workers and  discounts to be given on patron room rates due to the
disruption  caused by the  construction  activities.  In  addition,  the  casino
results  reflected  disruption  during  the  process  of  its  relocation.   The
entertainment  center  opened in  October  1998 and the Royal  Towers  opened in
December 1998.

Atlantic City

1999 vs. 1998 The Company  operates in  Atlantic  City,  New Jersey  through its
wholly-owned  hotel and casino,  Resorts  Atlantic  City. In 1999,  the property
generated net revenues of $243.1  million as compared to $260.7 million in 1998.
Net revenues in 1999 included gaming win of $221.0 million,  a decrease of $13.7
million  (or 5.8%) from  gaming win of $234.7  million  in 1998.  Slot  revenues
decreased  by $15.7  million  (or 9.2%)  mainly due to a  decrease  in handle of
$138.9 million (or 7.6%). Commencing in February 1999, the Company had taken out
of  service  and/or  removed  from the floor as many as 800 slot units at a time
during the  renovation of Resorts  Atlantic City described  below.  As a result,
there was an  average  of 2,033 slot  machines  in service  during the year 1999
compared to 2,253 in 1998.

The lower slot  revenues  were  partially  offset by an  increase  in table game
revenues  of $2.2  million  (or 3.6%) over 1998.  This was  primarily  due to an
increase  in table  game drop of $39.2  million  (or 9.4%)  which was  partially
offset by a reduction  in hold  percentage  to 14.1% in 1999 from 14.9% in 1998.
The property also  experienced  slight  decreases in rooms and food and beverage
revenues in 1999 as a result of the renovation. Throughout the year, in order to
complete the renovation of its existing hotel rooms,  Resorts Atlantic City took
out of service an average of 45 rooms of its  existing  inventory  of 658.  Upon
completion of the  renovation,  the number of available  rooms  decreased to 644
compared  to 662 in 1998.  The  decrease  in  other  casino/hotel  revenues  was
primarily  due  to  lower  complimentary   entertainment   revenues.   With  the
availability of "Club 1133", an entertainment lounge which offers free admission
to patrons,  there were fewer  headliner  shows in the main  theater.  Operating
earnings  decreased  by $20.2  million.  While gaming  revenues  were down $13.7
million for the year 1999,  gaming expense  increased by $5.5 million.  This was
primarily due to increased  promotional costs. The effect of fewer slot machines
on the floor and lower hold percentage on table games had an unfavorable  impact
on casino  revenues.  Therefore,  the property was not able to fully realize the
effects  of  the  increased   promotional  costs.   Partially  offsetting  these
unfavorable  variances  was a  reduction  in casino  win tax which is based on a
percentage of casino win.

On June 30, 1999,  management completed the renovation of Resorts Atlantic City.
The  construction  included  extensive  renovations to the casino,  hotel lobby,
guestrooms and suites, room corridors,  restaurants, the hotel porte cochere and
public areas.  In addition,  three new restaurants  were created,  replacing two
older  restaurants and a VIP player lounge was  constructed.  As of December 31,
1999, RIH had spent $47.3 million on the renovation.

1998 vs. 1997 In 1998,  Resorts  Atlantic City  generated net revenues of $260.7
million as compared to $270.6 million in 1997. Net revenues  included gaming win
of $234.7  million  and  $244.2  million  in 1998 and 1997,  respectively.  Slot
revenues were $170.4  million in 1998 as compared to $170.0 million in 1997. The
marginal  increase in slot revenues  resulted from an improved hold  percentage,
from 8.7% in 1997 to 9.4% in 1998,  which was  partially  offset by a decline in
handle of $124.6 million. The improvement in hold


<PAGE>



percentage  was due to a  change  in the  mix of  business  in  favor  of  lower
denomination machines, which generally have a higher hold percentage.  Beginning
in September 1997, management began the process of upgrading its slot product to
include more of the popular $.25 machines.  Table game win totaled $62.1 million
in 1998 compared to $69.0  million in 1997.  The decrease was due primarily to a
decrease  of $43.0  million  in table  game  drop.  The  reduced  drop  resulted
primarily from the  elimination  of less  profitable  junket  business and lower
volumes of summer walk-in business. Poker, simulcast and keno revenues were $2.2
million in 1998 as compared to $5.2 million in 1997,  as the Company  eliminated
both poker and keno in March 1998.  Operating earnings decreased by $1.7 million
as reduced revenues were significantly  offset by a cost containment program and
cost  reductions  associated  with the  discontinued  pursuit of certain  market
segments.

Connecticut

Until January 1, 2000, TCA earned  management  fees of between 30% to 40% of the
Mohegan Sun Casino=s earnings after depreciation and interest. The percentage of
profits  distributed to the partnership started at 40% and declined to 30% based
on  predetermined  profitability  thresholds.  Prior to distributing its profits
equally to its partners,  TCA contributed $1.2 million per annum to the casino=s
capital  reserve  account,  funded its own operating costs and then made certain
priority payments to its partners or their affiliates.

In 1998,  the Mohegan  Tribe  appointed  TCA to develop its  approximately  $800
million  expansion  of  the  Mohegan  Sun  Casino.  The  expansion  includes  an
additional  120,000  square  foot  casino,  a  1,200-room  hotel,  an arena  and
additional  retail space. It is anticipated that the new casino will open in the
fourth  quarter of 2001 with the hotel opening in the second quarter of 2002. In
addition,  TCA and the Mohegan Tribe agreed that effective  January 1, 2000, TCA
would turn over  management of the Mohegan Sun Resort complex  (which  comprises
the existing  operations and the proposed  expansion) to the Mohegan  Tribe.  In
exchange for relinquishing its rights under its existing  agreements,  including
the  Management  Agreement,  beginning  January 1,  2000,  TCA  receives  annual
payments of five percent of the gross revenues of the Mohegan Sun Resort Complex
for a 15-year period.

1999 vs. 1998 During  1999,  the Mohegan Sun Casino  generated  net  revenues of
$684.3  million as compared to $605.6  million in 1998.  Net  revenues  included
gaming win of $653.4 million and $576.7 million in 1999 and 1998,  respectively.
Slot win  increased  by $63.1  million  to $485.2  million  in 1999 from  $422.1
million  in1998.  This was due to an  increase  in handle of $913.4  million  to
$6.201 billion,  partially offset by a slight decrease in hold  percentage.  The
gross win per slot machine per day increased  from $395 in 1998 to $447 in 1999.
Table game win  increased by $7.8 million to $151.1  million in 1999 from $143.3
million in 1998.  An increase in table game drop of $89.5 million (or 11.2%) was
partially  offset by a decreased hold  percentage,  from 17.9% in 1998 to 17% in
1999. Operating earnings before bingo (which is not managed by TCA) increased by
$9.6 million (or 4.8%) to $209.0 million in 1999 from $199.4 million in 1998.

The overall  Connecticut  gaming  market  continued to  demonstrate  good growth
during 1999 with slot revenues increasing by 9.9% over 1998.


<PAGE>



TCA earned management fees of $59.6 million in 1999 as compared to $53.7 million
in 1998.  The Company earned fees from TCA of $32.6 million and $34.6 million in
1999 and 1998,  respectively.  The Company also earned  development fees of $6.7
million in 1999.

1998 vs. 1997 During  1998,  the Mohegan Sun Casino  generated  net  revenues of
$605.6  million as compared to $495.2  million in 1997.  Net  revenues  included
gaming win of $576.7 million and $469.4 million in 1998 and 1997,  respectively.
Slot win in 1998 was $422.1 million as compared to $333.0 million in 1997.  This
was due  primarily  to an  increase  in the  handle of $1.040  billion to $5.288
billion. The hold percentage increased from 7.8% in 1997 to 8.0% in 1998 and the
gross win per slot machine per day increased  from $327 in 1997 to $395 in 1998.
Table game win totaled  $143.3  million in 1998  compared  to $128.1  million in
1997.  Table game drop increased by $60.3 million to $800.1 million and the hold
percentage increased by 0.6 percentage points to 17.9%. The increase in level of
play resulted from strong market growth in the region. Operating earnings before
bingo and management fees increased by $77.7 million to $199.4 million.

TCA earned management fees of $53.7 million in 1998 as compared to $28.3 million
in 1997.  The Company earned fees from TCA of $34.6 million and $17.4 million in
1998 and 1997, respectively.

Indian Ocean

Through June 16, 2000,  Sun  International  owned a 22.8% interest in Sun Indian
Ocean.  Effective  June 16, 2000, Sun Indian Ocean issued  additional  shares of
stock under a rights issue in which the Company did not participate, effectively
reducing the Company's  ownership  interest to 20.4%. Sun Indian Ocean owns five
beach resort hotels in Mauritius and one in the Comoro Islands. The Company also
has long-term management contracts with these properties, which expire in 2008.

1999 vs. 1998 In 1999,  the Indian  Ocean  resorts  generated  revenues of $84.0
million as compared to $88.8 million in 1998 and had net income of $11.9 million
in 1999  compared  to $10.8 in 1998.  Although  revenues  and net income in 1999
reflect slight decreases compared to 1998, the hotels in the Mauritius performed
extremely  well over the previous  year.  The decreased  operating  results were
primarily due to reduced revenues at Le St. Geran, a high-end luxury hotel which
closed  in  April  1999  for  renovations  and did not  reopen  until  December.
Operating results included  approximately  $4.6 million of costs associated with
the closing and re-opening of Le Saint Geran.  Exclusive of Le Saint Geran,  the
other four hotels in the Mauritius had aggregate favorable variances in revenues
and  operating  profits of $9.0 million and $5.2  million,  respectively.  These
results were partially offset by reduced operating profit in the Comoro Islands.
In 1999,  the occupancy  and average room rate in the  Mauritius  were 82.3% and
$131, as compared to 80% and $133 in 1998.

In 1999 the Company earned management fees from Sun Indian Ocean of $5.7 million
as  compared  to $5.9  million in 1998.  The  Company  also  earned  $760,000 of
development fees in 1999 compared to $90,000 in 1998.  Equity earnings were $2.6
million and $2.7 million in 1999 and 1998, respectively.

1998 vs.1997  In 1998,  the Indian  Ocean  resorts  generated  revenues of $88.8
million as compared to $87.6 million in 1997 and had net income in 1998 of $10.8
million as compared to $7.4 million in 1997. As a



<PAGE>



result of the effective devaluation of the Mauritian Rupee to the US dollar, the
operating  margin  in  1998  improved  over  the  prior  year as  revenues  were
maintained in US dollar terms, although costs in US dollar terms were lower than
in 1997. This was partially  offset by reduced  operating  profit in the Comoros
Islands. In Mauritius,  the average occupancy and average room rate in 1998 were
80% and $133, as compared to 76% and $134 in 1997.  The decrease in average room
rate reflected a decrease in the dollar value of the Mauritian currency.

In 1998,  the  Company  earned  management  fees from Sun  Indian  Ocean of $5.9
million as compared to $5.3 million in 1997.  The Company also earned $90,000 of
development fees in 1998.  Equity earnings in 1998 were $2.7 million as compared
to $1.7 million in 1997.

Dubai

The Company  entered  into an  agreement  to manage the Royal  Mirage  Hotel,  a
258-room  beach  resort  hotel on Jumeira  Beach in Dubai which opened in August
1998.  During its four months of operation in 1999, the property earned revenues
of $8.9 million and achieved net income of $873,000 after  pre-opening  costs of
$1.0 million.  In 1999, the Company earned  management fees from the property of
$538,000.

France

In June 1997,  the Company sold its 25%  investment  in Sun France for a gain of
$13.4 million.  In 1997, prior to its sale, the Company recorded equity earnings
of $523,000 and technical services fees of $350,000.

Other Factors Affecting Earnings

1999 vs. 1998 In 1999,  pre-opening expenses were $5.4 million compared to $26.0
million in 1998. All of the pre-opening  expenses in 1999 related to the opening
of the  renovation  completed  at  Resorts  Atlantic  City  in  July.  In  1998,
pre-opening  expenses  related to the  opening of the Royal  Towers  amounted to
$25.3  million.   These  represented   incremental  and  non-recurring   charges
specifically  associated  with the  expansion  and included  payroll  during the
training  period,  non-recurring  marketing  of the new resort and the cost of a
grand opening promotion.  In addition, in 1998, $631,000 of pre-opening expenses
were incurred related to the establishment of a new tour operation subsidiary in
France. Such costs were not related to the ongoing operations of the Company and
included no allocations of operating department costs.

General  corporate  expenses  were $16.9  million in 1999 as  compared  to $19.5
million in 1998.  The  decrease was due  primarily to lower  payroll and related
costs as no bonuses  were  earned in 1999 under the  executive  incentive  bonus
plan.  Bonuses under this plan are based on the Company meeting certain earnings
per share thresholds.

Other segments in 1999 include net revenues of $2.9 million received from Kersaf
as a contribution against certain overhead costs. This contribution was fixed at
$2.4  million in 1994 and  increases at a rate of 3% per annum and has been paid
annually.  The Company is currently in  discussions  with Kersaf  regarding  the
duration  of  Kersaf's  obligation  to make this  contribution.  Other  segments
contributed  $2.3  million  to  consolidated  operating  income as  compared  to
$621,000 in 1998. In 1999, $1 million of notes that were


<PAGE>



previously  included in long-term  debt were  canceled and written off.  Also in
1999, the Company received $600,000 as a final installment on the 1996 sale of a
management  contract as a result of certain  conditions being met. Costs related
to the Company's Year 2000 compliance were lower by $500,000 in 1999 compared to
1998.  Other segments in 1998 included  $754,000  rental from the Showboat Lease
which was terminated in February 1998.

Interest  expense of $50.7  million in 1999 was higher than the previous year by
$46.2  million.  In 1999,  the amount of  capitalized  interest was $4.9 million
compared to $35.3 million in 1998. Also in 1999, interest costs on the Company's
revolving  credit  facility  were $18.3  million  higher than 1998 due to higher
average borrowing levels.

1998 vs. 1997 In 1998,  pre-opening expenses related to the opening of the Royal
Towers totaled $25.3 million. In addition, $631,000 of pre-opening expenses were
incurred  related to the  establishment  of a new tour  operator  subsidiary  in
France.

General  corporate  expenses  were $19.5  million in 1998 as  compared  to $14.7
million in 1997.  The  increase  was due  primarily to the creation in 1998 of a
management incentive bonus plan.

In 1998, the Company opened a corporate marketing and public relations office in
New York City. The total cost to operate this office in 1998 was $4.4 million.

Other segments  contributed $621,000 in 1998 as compared to $9.7 million in 1997
due primarily to the  termination  of the Showboat  Lease in January  1998.  The
Showboat Lease contributed $754,000 in 1998 and $9.0 million in 1997.

Interest  expense of $4.5 million in 1998 was lower than the prior year by $19.9
million.  Interest  expense before  capitalization  increased by $8.6 million in
1998 due to a net increase in total debt  outstanding.  This increase was offset
by an increase in amounts capitalized of $28.5 million.

Liquidity, Capital Resources and Capital Spending

At December 31, 1999,  the Company's  current  liabilities  exceeded its current
assets by $30.4 million.  Current liabilities  included $17.0 million in capital
creditors  related to development  projects on Paradise Island.  At December 31,
1999,  unrestricted  cash and cash  equivalents  were $39.2 million.  During the
year, the Company generated $110 million in operating cash flow.

In November 1997, the Company filed a registration statement with the Securities
and Exchange  Commission  pursuant to which the Company may,  from time to time,
issue in one or more series an aggregate of $300 million of debt securities (the
"Shelf Registration"). Pursuant to the Shelf Registration, in December 1997, the
Company issued $100 million of senior subordinated  unsecured notes due December
2007.  The notes bear  interest  at 8.625% and have the same terms as the Senior
Notes. The issuance generated net proceeds of $98.1 million.


<PAGE>



On June 26, 2000, a self-tender offer, pursuant to which the Company is offering
to purchase up to 5,000,000  Ordinary Shares at a $24 per share cash price,  was
made by an Offer to Purchase and related  materials,  copies of which were filed
with  the  Securities  and  Exchange  Commission  and  mailed  to the  Company's
shareholders.  The self-tender  offer is subject to the terms and conditions set
forth in the Offer to Purchase, including the condition that the Ordinary Shares
continue  to be listed for trading on the New York Stock  Exchange  and that the
Company  remain  subject to periodic  reporting  requirements  of the Securities
Exchange Act of 1934.

In order to effect the self-tender,  the Company amended its existing  Revolving
Credit  Facility to allow the Company to  repurchase up to $175 million worth of
Ordinary  Shares.  As part of this amendment,  the Revolving Credit Facility was
reduced from $625 million to $500 million.  As of December 31, 1999,  borrowings
under the Revolving Credit Facility amount to $278 million. Effective August 12,
2001,  the maximum  amount of borrowings  outstanding  on the  Revolving  Credit
Facility will be $375 million.

During the fourth quarter of 1999, the redevelopment of the Paradise Island Golf
Club was started. In early 2000, the Company began work on the infrastructure to
support the Ocean Club Estates housing  development,  which comprised 121 luxury
homesites surrounding the golf course. The cost of the golf course redevelopment
and the infrastructure  will be approximately $50 million.  As of mid-June 2000,
100 of the  available  sites have been sold and the  Company  expects to realize
approximately $100 million in net proceeds by June 30, 2000.

The Company is in the process of expanding  the Ocean Club to add an  additional
50 deluxe  rooms,  including ten suites,  two new  restaurants  and  significant
enhancements to the existing pool and garden areas.  It is anticipated  that the
Ocean  Club   expansion  will  be  completed  by  October  2000  and  will  cost
approximately $50 million.

During the second half of 2000,  the Company  expects to  implement an extensive
maintenance   capital  expenditure  program  of  approximately  $15  million  at
Atlantis'  Beach  Tower.  This  program is  scheduled  to begin in August and be
completed  in  December  and will  include  the  renovation  of all of the Beach
Tower's 425 rooms and  improvements  to certain  public  spaces.  The disruption
caused by this program is expected to reduce revenues for the second half of the
year by approximately two to three million dollars.

In June 2000,  the Company began a renovation of the casino at Resorts  Atlantic
City  which  includes  construction  of a new bus depot and  waiting  area.  The
relocation  of the bus waiting area will provide  better  access to certain slot
machines  which is currently  hindered  when the existing  waiting area is full.
Additionally,  the casino  floor will be expanded to include an  additional  148
slot  machines,  4 to 5 table games and a simulcast  machine.  The total cost of
this project is expected to be approximately $5 million.

Management  believes that available cash on hand at December 31, 1999,  combined
with funds generated from operations, funds available under the Revolving Credit
Facility,  and proceeds  received from the sale of Ocean Club Estates  homesites
will be sufficient to finance its planned  operating and development  activities
for at least the next twelve months.


<PAGE>



OTHER MATTERS

Year 2000 Compliance

In order to address  the impact of the date  change in the year 2000  ("Y2K") on
its computer programs,  resort facilities and third party suppliers, the Company
established a dedicated Year 2000 Program Office and contracted with independent
consultants  to coordinate  the  compliance  efforts and ensure that the project
status was monitored and reported  throughout the  organization.  As a result of
these efforts,  the Company did not experience any  significant  negative impact
from Y2K.

New Accounting Pronouncements

In the first  quarter of 1999,  the Company  adopted  Statement of Position 98-5
which states that all start up costs,  including  pre-opening  expenses  will be
charged to expense as incurred.  Adoption of this  Statement of Position did not
have a material impact on the consolidated financial statements.

In June 1999, the Financial Accounting Standards Board ("FASB") issued Statement
of  Financial   Accounting   Standards  No.  137,   "Accounting  for  Derivative
Instruments  and Hedging  Activities  - Deferral of the  Effective  Date of FASB
Statement  No. 133" ("SFAS  137").  SFAS 137 amends FASB  Statement of Financial
Accounting  Standards 133,  "Accounting  for Derivative  Instruments and Hedging
Activities"  ("SFAS 133") by deferring the effective  date of SFAS 133 to fiscal
years beginning after June 15, 2000. SFAS 133, as further amended by SFAS 138 in
June 2000,  establishes  accounting and reporting standards requiring that every
derivative  instrument  (including  certain derivative  instruments  embedded in
other  contracts)  be  recorded  in the  balance  sheet  as  either  an asset or
liability  measured at its fair value.  SFAS 133  requires  that  changes in the
derivative's  fair value be  recognized  currently in earnings  unless  specific
hedge  accounting  criteria are met.  The Company will adopt SFAS 133  beginning
January 1, 2001, and does not anticipated that it will have a material impact on
its consolidated financial statements.


<PAGE>



ITEM 9A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
      MARKET RISK

The information below provides  information about the Company's market sensitive
financial instruments and constitutes  "forward-looking  statements".  All items
described are non-trading.

The Company's  major market risk  exposure is changing  interest  rates.  Due to
current governmental policies in The Bahamas which equate one Bahamian dollar to
one  United  States  dollar  and to its  limited  foreign  operations  in  other
jurisdictions, the Company does not have material market risk exposures relative
to changes in foreign exchange rates. The Company's policy is to manage interest
rates  through the use of a combination  of fixed and floating rate debt.  These
interest  rate swaps were entered  into with a group of  financial  institutions
with  investment  grade credit  ratings,  thereby  minimizing the risk of credit
loss. Expected maturity dates for variable rate debt and interest rate swaps are
based upon  contractual  maturity  dates.  The  Company  uses  variable to fixed
interest  rate swap  agreements to manage the impact of interest rate changes on
the Company's  variable rate debt.  Average pay rates under  interest rate swaps
are based upon  contractual  fixed rates.  Average  variable receive rates under
interest rate swaps are based on implied forward rates in the yield curve at the
reporting date.

Fair value  estimates  are made at a specific  point in time,  based on relevant
market  information  about  the  financial   instrument.   These  estimates  are
subjective  in nature and  involve  uncertainties  and  matters  of  significant
judgment.  The fair value of variable rate debt  approximates the carrying value
since interest rates are variable and, thus,  approximate  current market rates.
The fair value of interest  rate swaps is  determined  from  representations  of
financial  institutions and represents the discounted  future cash flows through
maturity or expiration  using current rates,  and is effectively  the amount the
Company would pay or receive to terminate the agreements.

<TABLE>
<CAPTION>

December 31, 1999
(In Thousands                                                                  Fair Value
 of Dollars)                     Expected Maturity Date                        December
Asset (liability)      2000   2001     2002    2003  2004  Thereafter  Total   31, 1999
---------------------  ---------------------------------------------- -------- ----------
<S>                    <C>   <C>     <C>       <C>   <C>     <C>       <C>      <C>

Variable rate debt      $-    $-     $278,000   $-    $-      $-      $278,000  $278,000

Average interest rates
Interest rate swaps      -    50,000   75,000    -     -       -       125,000      (644)
Average pay rate               6.78%    6.96%
Average receive rate           5.16%    5.31%

</TABLE>







<PAGE>




ITEM 10. DIRECTORS AND OFFICERS OF REGISTRANT

The current directors of the Company are:

                                   Country of                      Director
     Name                          Citizenship                     Since
     ----                          -----------                     --------
     Solomon Kerzner               South Africa                    1993
     Derek Hawton                  South Africa                    1993
     Peter Buckley                 United Kingdom                  1994
     Howard Marks                  United States                   1994
     Eric Siegel                   United States                   1994

Pursuant to the  Company's  Articles  of  Association,  as amended,  the maximum
number of  directors of the Company is fixed at five.  The current  directors of
the Company were elected at the annual general meeting held in May 2000 and will
hold office until the date of the annual general  meeting to be held in 2001. At
the  annual  general  meeting to be held in 2001 and at each  subsequent  annual
general  meeting,  directors  will be appointed by  resolution of the holders of
Ordinary  Shares  to hold  office  until  the  date of the next  annual  general
meeting.

The Board of  Directors of the Company has  appointed an Audit  Committee of the
Board consisting of Messrs. Marks and Siegel.  Currently, the Audit Committee is
required to consist of at least two  independent  directors  with an increase to
three by June 2001 to comply with  requirements  of the New York Stock Exchange.
Members of the Audit Committee comprise  individuals who have no relationship to
the Company  that may  interfere  with the exercise of their  independence  from
management and the Company. To ensure complete independence, Arthur Andersen LLP
has full and free access to meet with the Audit  Committee,  without  management
representatives  present,  to discuss the results of the audit,  the adequacy of
internal controls, and the quality of financial reporting.  The primary function
of the  Audit  Committee  is to  assist  the  Company's  Board of  Directors  in
fulfilling its oversight responsibilities by reviewing the financial information
which will be provided to the stockholders  and others,  the systems of internal
controls which the Company's management and Board of Directors have established,
and the audit process. The Audit Committee meets four times per year.

The Company also has a Remuneration  Committee consisting of Messrs. S. Kerzner,
Buckley and Hawton.  The Remuneration  Committee is mandated to review and adopt
the Company's executive compensation plans and policies,  including the adoption
of  stock  option  plans  and the  granting  of  options  to  senior  executives
thereunder.  The Company's  Stock Option  Committee,  consisting  of Messrs.  S.
Kerzner,  H. Kerzner and Adamo,  is  authorized to grant stock options under the
Company's  stock  options  plans in amounts not to exceed (i) 100,000  Ordinary
Shares in any one quarter or (ii) 15,000 per grant for any one individual.



<PAGE>



The current executive officers of the Company are:

                                                           Executive Officer
Name                                               Age           Since
-----                                              ---     -----------------

Solomon Kerzner
Chairman and Chief Executive Officer                64            1993

Howard B. Kerzner
President                                           36            1995

Charles D. Adamo
Executive Vice President-Corporate Development &
General Counsel                                     39            1995

John R. Allison
Executive Vice President-Chief Financial Officer    54            1994

James Boocher
Executive Vice President-Project Development        44            1996

Kevin DeSanctis
Chief Operating Officer-North American Operations   47            1995



The  backgrounds  of each of the  directors  and the  executive  officers of the
Company are described below:

Solomon Kerzner,  Chairman and Chief Executive Officer. Mr. Kerzner has been the
Chairman and Chief Executive Officer of Sun International since October 1993 and
from October  1993 to June 1996 was  President.  Mr.  Kerzner is the Chairman of
SIIL, the Company's controlling shareholder,  and of WLG, which owns an indirect
interest in SIIL. Mr. Kerzner is one of the visionary  leaders of the resort and
gaming industries.  Prior to founding Sun  International,  Mr. Kerzner pioneered
the concept of an  entertainment  and gaming  destination  resort  designed  and
managed to appeal to multiple  market  segments by developing Sun City.  Located
approximately  100 miles northwest of Johannesburg,  South Africa,  Sun City has
been expanded in phases since its opening in 1979.  The resort has been designed
to cater to a broad  public  market by  combining  gaming with a wide variety of
nongaming  entertainment  experiences.  Today, Sun City covers approximately 620
acres and attracts over two million  visitors  annually.  The  facilities at Sun
City include four hotels with approximately 1,300 rooms, an entertainment center
that  includes  a  6,000-seat  indoor  superbowl,  a 46-acre  man-made  lake for
watersports and  approximately  55,000 square feet of gaming space. In 1992, Sun
City was expanded to include The Lost City, a $275 million  themed  resort which
recreates a forgotten African civilization that has been rediscovered.  The Lost
City  covers  approximately  60 acres and its  center  includes  The  Palace,  a
350-room luxury hotel.  The resort also includes a man-made jungle in which over
one million trees were transplanted and the Valley of the

<PAGE>

Waves, which includes a wave pool, adventure rides and sand beaches.  During Mr.
Kerzner's  30-year  career he has been  responsible  for the  development  of 21
hotels with over 5,500 rooms,  and was the founder of the largest hotel chain in
southern  Africa.  The Company does not have any interest in any of the southern
African  properties  developed by Mr. Kerzner.  Mr. Kerzner is the father of Mr.
Howard B. Kerzner.

Howard B. Kerzner,  President.  Mr. Kerzner joined Sun International in May 1995
as Executive Vice President-Corporate  Development and has been President of the
Company  since  June  1996.  Prior  to  that  time,  he  was  Director-Corporate
Development of SIIL from September 1992. Previously Mr. Kerzner was an Associate
of Lazard Freres & Co. LLC from September 1991. Prior to that Mr. Kerzner worked
for the First Boston Corporation. Mr. Kerzner is the son of Mr. Solomon Kerzner.

Charles D.  Adamo,  Executive  Vice  President-Corporate  Development  & General
Counsel.  Mr. Adamo joined Sun  International in May 1995 as General Counsel and
has been responsible for corporate development since January 1997. Prior to that
time, he was Group Legal Advisor of SIIL from September  1994.  Previously,  Mr.
Adamo was engaged in the practice of law at the firm of Cravath,  Swaine & Moore
in New York from  1986.  Mr.  Adamo is  admitted  to the bar in the State of New
York.

John R. Allison,  Executive Vice President-Chief  Financial Officer. Mr. Allison
joined Sun  International  in May 1995 as Chief Financial  Officer.  Mr. Allison
joined SIIL in March 1994 as Group Financial Director.  From December 1987 until
February  1994,  Mr. Allison was Financial  Director of Sun  International  Inc.
("SII"), a resort and management holding company with interests in approximately
27 hotels in southern  Africa.  Prior to that time,  he was the Group  Financial
Director of Kimberly-Clark (South Africa) Limited for four years. He is a fellow
of the Institute of Chartered  Accountants  in England and Wales and a member of
the South African Institute of Chartered Accountants.

James Boocher, Executive Vice President-Project  Development. Mr. Boocher joined
Sun  International  in  November  1996.  He is the  executive  in  charge of Sun
International's  expansion on Paradise Island. Before joining Sun International,
Mr.  Boocher was  President  of Ellis-Don  Construction  Ltd.,  Canada's  second
largest  construction  company.  Prior to joining  Ellis-Don,  Mr. Boocher was a
construction  Director  for Olympia  and York  Development.  He was  involved in
projects in the World Financial Center, New York, Canary Wharf, London,  England
and two office  buildings in Dallas,  Texas.  Mr.  Boocher  attended  Ball State
University.

Peter Buckley,  Director.  Mr. Buckley has been a Director of Sun  International
since  April  1994.  Mr.  Buckley is  Chairman  and Chief  Executive  Officer of
Caledonia.  In 1994 he was  appointed  Chairman of Caledonia  having been Deputy
Chairman  and Chief  Executive  since  1987.  He is also  Chairman  of  Sterling
Industries  plc-Ca listed company  associated with  Caledonia-Cas  well as being
Chairman  of English &  Scottish  Investors  plc and  Bristow  Helicopter  Group
Limited.   He  is  a  non-executive   Director  of  Close  Brothers  Group  plc,
Intercapital  plc, RHS  Enterprises  Ltd.,  Offshore  Logistics,  Inc. (a NASDAQ
linked company), SIIL and The Telegraph plc.


<PAGE>



Kevin  DeSanctis,  Chief  Operating  Officer - North  American  Operations.  Mr.
DeSanctis joined Sun International in July 1995 as President,  Gaming.  Prior to
joining Sun International,  Mr. DeSanctis served as Executive Vice President and
Chief Operating  Officer of Hemmeter  Enterprises since April 1994. From 1991 to
1994, Mr. DeSanctis served as President and Chief Operating Officer of the Trump
Plaza Hotel and Casino.  From August 1989 to February 1991, Mr. DeSanctis served
as Vice  President  of Casino  Operations  of The Mirage Hotel and Casino in Las
Vegas,  Nevada.  Prior to August 1989, Mr. DeSanctis served in various positions
in the casino industry.

Derek  Hawton,  Director.  Mr.  Hawton has been a Director of Sun  International
since December  1993. Mr. Hawton is Executive  Chairman of Kersaf . He is also a
Director  of  South  African  Mutual  Life  Assurance  (South  Africa's  largest
insurance  company  with  assets in excess of $40  billion)  and a  Director  of
Standard Bank Investment Corporation (South Africa's largest banking group). Mr.
Hawton is a fellow of South Africa's Chartered Institute of Secretaries.

Howard Marks, Director. Mr. Marks has been a Director of Sun International since
April 1994. Mr. Marks is Chairman of Oaktree Capital  Management,  LLC ("Oaktree
Capital").   Oaktree  Capital  manages  funds  in  excess  of  $17  billion  for
institutional  investors.  Previously  Mr.  Marks was employed by The TCW Group,
Inc.  where he became Chief  Investment  Officer for  Domestic  Fixed Income and
President of its largest affiliate, TCW Asset Management Company.

Eric Siegel, Director. Mr. Siegel has been a Director of Sun International since
April  1994.  Mr.  Siegel is a Principal  of Pegasus  Insurance  Partners  and a
retired limited partner of Apollo Advisors,  L.P. Lion Advisors, L.P. Mr. Siegel
is also a Director and member of the  executive  committee  of El Paso  Electric
Company, a publicly traded utility company.


ITEM 11.  COMPENSATION OF DIRECTORS AND OFFICERS

The  aggregate  compensation  for  directors and officers of the Company for the
year ended December 31, 1999 was  $5,574,000.  None of the directors or officers
participate in the Company's pension plan.

The  Company  has  adopted an  executive  level  bonus plan (the  ABonus  Plan@)
effective  for 1998  pursuant  to which  certain  executives  of the Company may
qualify for bonuses if the Company  attains  certain  target level  Earnings Per
Share  ("EPS") in the years  ending 1998,  1999 and 2000.  Under the Bonus Plan,
bonuses could range between 20% to 100% of the respective employee's base salary
if target  EPS is  reached  in the given year with 50% of the bonus paid in cash
and 50% paid in  restricted  capital  stock.  The  restricted  stock  would vest
equally over three years. In 1998,  executive  officers of the Company earned an
aggregate of $3.1 million in cash bonuses, which were paid by the Company by the
first quarter of 1999, and approximately  75,000 shares of restricted stock (the
"Restricted Stock"). In June 2000, the Bonus Plan was eliminated and the Company
canceled  approximately  42,000 shares  of the Restricted  Stock and paid to the
holders thereof approxiately $1.6 million. In 1999, no bonuses were earned under
the Bonus Plan.

<PAGE>



ITEM 12.  OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT OR SUBSIDIARIES

The Company has adopted a Stock Option Plan (the "1995 Plan") which was approved
by  shareholders  at the annual general meeting held in 1995, and a Stock Option
Plan (the "1997 Plan"), which was approved by shareholders at the annual general
meeting held in 1997 and amended by  shareholders  at the annual general meeting
in 1998 and 1999.  The 1995 Plan  provides for options to be granted to purchase
up to 2,000,000  Ordinary Shares, of which options to acquire 2,000,000 Ordinary
Shares at exercise  prices  ranging from $11.6875 to $35.00 have been granted as
of June 15, 2000.  The 1997 Plan  provides for options to be granted to purchase
up to 2,500,000  Ordinary Shares, of which options to acquire 2,500,000 Ordinary
Shares at exercise  prices ranging from $19.25 to $44.63 have been granted as of
June 15, 1999.  The 1995 Plan  provides  for the options to become  exercisable,
unless otherwise  specified by the Board of Directors of the Company and subject
to certain  acceleration  and termination  provisions,  after two years from the
date of grant in respect of 20% of such options and  thereafter in  installments
of 20% per year over a  four-year  period.  Options  issued  under the 1997 Plan
become  exercisable  one year from the date of grant with respect to 20% of such
options and thereafter in installments of 20% per year over a four-year  period.
All options have a term of 10 years from the date of grant. Employees,  officers
and  directors  of the  Company and  subsidiaries  of the Company may be granted
options under the plans.  Such options may be transferred to trusts with respect
to which any such  participants  are  beneficiaries  and  corporations  or other
entities  controlled by such  participants.  As of December 31, 1999, options to
acquire  3,918,000  Ordinary  Shares were  outstanding,  of which 1,014,000 were
exercisable as of that date.

In connection with the self-tender offer for up to 5,000,000  Ordinary Shares at
$24 per share  launched by the  Company on June 26,  2000,  unvested  options to
acquire  approximately  700,000 Ordinary Shares under the 1995 Plan and the 1997
Plan with exercise prices below $24 per share were vested.

The Company is currently  evaluating its  compensation  policies and plans,  and
intends to modify  existing plans and/or adopt new plans,  including  adopting a
new stock  option plan and  granting  stock  options  pursuant  thereto,  as the
Company deems necessary and appropriate to retain and motivate management.

As of June 27, 2000, the officers and directors of the Company, as a group, hold
options  to  acquire   approximately   2,300,000   Ordinary  Shares,   of  which
approximately 1,500,000 are currently exercisable.

ITEM 13.  INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS

Not applicable.








<PAGE>



                                   PART III

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

ITEM 15.   DEFAULTS UPON SENIOR SECURITIES

Not applicable.


ITEM 16.  CHANGES IN SECURITIES AND CHANGES IN SECURITY FOR REGISTERED
        SECURITIES

Not applicable.


                                  PART IV

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

ITEM 17.  FINANCIAL STATEMENTS

Not applicable.


ITEM 18.  FINANCIAL STATEMENTS

Reference is made to Item 19(a) for a list of all financial  statements filed as
part of this Annual Report.

ITEM 19.  FINANCIAL STATEMENTS AND EXHIBITS

(a) List of Financial Statements and Financial Statement Schedules

                                                                   Page

       Report of Independent Public Accountants                     F-2
       Consolidated Balance Sheets                                  F-3
       Consolidated Statements of Income                            F-4
       Consolidated Statements of Changes in Shareholders' Equity   F-5
       Consolidated Statements of Cash Flows                        F-6
       Notes to Consolidated Financial Statements                   F-7






<PAGE>



(2)   List of Exhibits

                                                         Sequentially
 Exhibit No.        Description                          Numbered Page

    3.1    Termination  Agreement among Sheraton    Incorporated by reference
           Desert Inn Corporation,  Starwood,       to Exhibit 2 to Sun
           Sheraton Gaming Corporation, Sun         International's Form 6-K
           International and Sun International      Current Report dated
           Nevada, Inc. ("Sun Nevada") dated as     March 17, 2000, in
           of February 29, 2000, terminating        File No. 0-22794
           the Asset and Land Purchase Agreement
           among the parties, dated as of May
           17, 1999.

    3.2    Third Amended and Restated Revolving     Incorporated by reference
           Credit Agreement, dated as of November   to Exhibit 99(b)(1)
           1, 1999, among Sun International, Sun    to Sun International's
           International Bahamas Limited ("SIB"),   Tender Offer Statement
           RIH and Sun Nevada as the Borrowers      dated June 26, 2000, in
           and Guarantors, and The Bank of Nova     File No. 005-48645
           Scotia as the Administrative Agent
           and Various Financial Institutions as
           the Lenders.

    3.3    First Amendment to the Third Amended     Incorporated by reference
           and Restated Credit Agreement, dated     to Exhibit 99(b)(2)
           as of June 13, 2000, among Sun           to Sun International's
           International, SIB, RIH and Sun Nevada   Tender Offer Statement
           as the Borrowers and Guarantors, and     dated June 26, 2000, in
           The Bank of Nova Scotia as the           File No. 005-48645
           Administrative Agent and Various
           Financial Institutions as the Lenders.

    3.4    Sun International Hotel Limited          86
           Audit Committee Charter




<PAGE>



                      ENFORCEABILITY OF CIVIL LIABILITIES

The Company is a Bahamian  international business company incorporated under the
International  Business  Companies Act, 1989 of the  Commonwealth of The Bahamas
(the "Companies  Act").  Certain of the directors and executive  officers of the
Company reside outside the United States. A substantial portion of the assets of
such  persons and of the  Company is located  outside  the United  States.  As a
result,  in the opinion of Harry B. Sands and Company,  Bahamian  counsel to the
Company,  it may be difficult or impossible to effect  service of process within
the United  States upon such  persons,  to bring suit in the United States or to
enforce,  in the U.S. courts,  any judgment  obtained there against such persons
predicated upon any civil liability  provisions of the U.S.  federal  securities
laws. It is unlikely  that  Bahamian  courts would  entertain  original  actions
against Bahamian  companies,  their directors or officers predicated solely upon
U.S. federal securities laws.  Furthermore,  judgments predicated upon any civil
liability  provisions  of the U.S.  federal  securities  laws  are not  directly
enforceable in The Bahamas.  Rather, a lawsuit must be brought in The Bahamas on
any such judgment.  Subject to  consideration of private  international  law, in
general,   a  judgment  obtained  after  due  trial  by  a  court  of  competent
jurisdiction,  which is final and conclusive as to the issues in connection,  is
actionable in Bahamian  courts and is  impeachable  only upon the grounds of (i)
fraud, (ii) public policy and (iii) natural justice.


                DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

Certain information  included in this Form 20-F filing contains  forward-looking
statements,  within the meaning of Section 27A of the Securities Act of 1933, as
amended,  and Section 21E of the  Securities  Exchange Act of 1934,  as amended.
These forward-looking  statements are based on current expectations,  estimates,
projections, management's beliefs and assumptions made by management. Words such
as "expects",  "anticipates",  "intends",  "plans", "believes",  "estimates" and
variations of such words and similar  expressions  are intended to identify such
forward-looking  statements.  Such statements  include  information  relating to
plans for future expansion and other business development  activities as well as
other  capital  spending,  financing  sources  and  the  effects  of  regulation
(including  gaming and tax regulation)  and  competition.  Such  forward-looking
information  involves important risks and uncertainties that could significantly
affect  anticipated  results in the future and  accordingly,  such  results  may
differ from those expressed in any forward-looking statements made herein. These
risks and  uncertainties  include,  but are not  limited to,  those  relating to
development  and  construction  activities,  dependence on existing  management,
leverage and debt service  (including  sensitivity to  fluctuations  in interest
rates),  availability of financing,  democratic or global  economic  conditions,
pending  litigation,  changes in tax laws or the administration of such laws and
changes in gaming laws or regulations  (including the  legalization of gaming in
certain jurisdictions).

<PAGE>






















                        SUN INTERNATIONAL HOTELS LIMITED

           Consolidated Financial Statements as of December 31, 1999





















<PAGE>








                     REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To Sun International Hotels Limited:

We  have  audited  the   accompanying   consolidated   balance   sheets  of  Sun
International  Hotels Limited and subsidiaries as of December 31, 1999 and 1998,
and the related  consolidated  statements  of income,  changes in  shareholders=
equity and cash flows for each of the three years in the period  ended  December
31, 1999.  These financial  statements are the  responsibility  of the Company=s
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position of Sun  International  Hotels
Limited and  subsidiaries  as of  December  31, 1999 and 1998 and the results of
their  operations and their cash flows for each of the three years in the period
ended  December 31, 1999 in  conformity  with  accounting  principles  generally
accepted in the United States.


                                 ARTHUR ANDERSEN LLP



Roseland, New Jersey
January 18, 2000 (except for the matters
 discussed in Notes 15 and 20 as to which
 the date is June 23, 2000)



<PAGE>


<TABLE>

                      SUN INTERNATIONAL HOTELS LIMITED
                        CONSOLIDATED BALANCE SHEETS
                        (In thousands of US dollars)
<CAPTION>
                                                     December 31,
                                                1999           1998
                                             -----------    -----------
<S>                                          <C>            <C>
ASSETS
 Current assets:
   Cash and cash equivalents                 $    39,229    $    61,206
   Restricted cash equivalents                       981          1,917
   Trade receivables, net                         44,425         36,319
   Due from affiliates                            14,212          7,062
   Inventories                                    13,742          8,899
   Prepaid expenses                                8,412          5,126
                                             -----------    -----------
     Total current assets                        121,001        120,529
   Property and equipment, net                 1,378,138      1,257,165
   Subordinated notes receivable                       -         87,385
   Deferred charges and other assets, net         49,884         36,889
   Investment in associated companies             28,593         26,894
   Goodwill, net                                  93,855         96,871
                                             -----------    -----------
     Total assets                            $ 1,671,471    $ 1,625,733
                                             ===========    ===========

 LIABILITIES AND SHAREHOLDERS' EQUITY
 Current liabilities:
   Current maturities of long-term debt      $     1,100    $     2,382
   Accounts payable and accrued liabilities      133,334        130,989
   Capital creditors                              16,950         33,736
                                             -----------    -----------
     Total current liabilities                   151,384        167,107
 Long-term debt, net of current maturities       578,033        565,752
 Deferred income taxes                            42,223         42,253
                                             -----------    -----------
     Total liabilities                           771,640        775,112
                                             -----------    -----------
 Commitments and contingencies

 Shareholders' equity:
   Ordinary Shares                                    34             34
   Capital in excess of par                      677,918        675,595
   Cumulative other comprehensive income          (5,569)        (3,611)
   Retained earnings                             248,425        178,603
                                             -----------    -----------
                                                 920,808        850,621
   Treasury stock                                (20,977)             -
                                             -----------    -----------
      Total shareholders' equity                 899,831        850,621
                                             -----------    -----------
      Total liabilities and shareholders'
        equity                               $ 1,671,471    $ 1,625,733
                                             ===========    ===========

The accompanying notes are an integral part of these balance sheets.

</TABLE>

<PAGE>


<TABLE>

                        SUN INTERNATIONAL HOTELS LIMITED
                        CONSOLIDATED STATEMENTS OF INCOME
               (In thousands of US dollars, except per share data)
<CAPTION>

                                            For The Year Ended December 31,
                                            1999          1998           1997
                                         -----------  ------------  -----------
<S>                                        <C>            <C>          <C>
Revenues:
 Gaming                                     $351,545      $319,342     $329,610
 Rooms                                       164,831        94,942       96,846
 Food and beverage                           137,100        86,593       91,329
 Tour operations                              28,714        14,757       15,403
 Management and other fees                    46,898        40,645       22,979
 Other revenues                               45,910        35,391       44,503
 Insurance recovery                           14,209             -           -
                                           ---------     ---------    ---------
   Gross revenues                            789,207       591,670      600,670
 Less: promotional allowances                (50,240)      (40,792)     (41,758)
                                           ---------     ---------    ---------
   Net revenues                              738,967       550,878      558,912
                                           ---------     ---------    ---------

Costs and expenses:
 Gaming                                      209,177       190,543      199,269
 Rooms                                        30,448        15,352       15,696
 Food and beverage                            91,539        59,145       60,750
 Other operating expenses                     92,705        72,102       75,982
 Selling, general and administrative          93,962        70,024       64,846
 Tour operations                              27,816        14,653       14,913
 Corporate expenses                           16,260        18,811       14,193
 Depreciation and amortization                57,230        32,081       28,639
 Pre-opening expenses                          5,398        25,961            -
                                           ---------     ---------    ---------
  Total cost and expenses                    624,535       498,672      474,288
                                           ---------     ---------    ---------

  Income from operations                     114,432        52,206       84,624
                                           ---------     ---------    ---------

Other income (expense):
 Interest income                              12,725        15,651       16,144
 Interest expense, net of capitalization     (50,699)       (4,516)     (24,370)
 Equity in earnings of associated companies    2,628         2,730        2,214
 Gain on sale of equity interest in
  associated company                               -             -       13,386
 Other, net                                       60         (316)          335
                                           ---------     ---------    ---------
  Total other income (expense), net          (35,286)       13,549        7,709
                                           ---------     ---------    ---------
Income before provision for income taxes
 and extraordinary item                       79,146        65,755       92,333
Provision for income taxes                    (9,324)       (8,009)      (6,368)
                                           ---------     ---------    ---------
Income before extraordinary item              69,822        57,746       85,965
Extraordinary item, net                            -             -       (2,957)
                                           ---------     ---------    ---------
  Net income                               $  69,822     $  57,746    $  83,008
                                           =========     =========    =========

Earnings per share:
  Basic                                    $    2.09     $    1.74    $    2.52
                                           =========     =========    =========
  Diluted                                  $    2.05     $    1.70    $    2.44
                                           =========     =========    =========

 The accompanying notes are an integral part of these statements.
</TABLE>


<PAGE>




<TABLE>


                                         SUN INTERNATIONAL HOTELS LIMITED
                          CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                                  (In thousands)
<CAPTION>

                                                                            Retained Earnings
                                                                          -----------------------
                                                                                     Accumulated
                                      Ordinary Shares                                   Other                          Comprehensive
                                     -----------------    Capital in      Retained   Comprehensive  Treasury    Total    Income for
                                      Share     Amount    Excess of Par   Earnings      Income        Stock     Equity   the Period
                                     --------   ------    -------------   --------   -------------  ---------  --------  ----------
<S>                                    <C>         <C>      <C>           <C>          <C>          <C>        <C>         <C>
Balance at December 31, 1996           32,707      $32      $666,262      $ 37,849     $ (1,154)    $     -    $702,989

Translation reserves                        -        -             -             -         (314)          -        (314)   $  (314)
Exercise of share options                 254        1         4,599             -            -           -       4,600          -
Net income                                  -        -             -        83,008            -           -      83,008     83,008
                                      -------      ---      --------      --------     --------    --------    --------    -------
  Balance at December 31, 1997         32,961       33       670,861       120,857       (1,468)          -     790,283    $82,694
                                                                                                                           =======
Translation reserves                        -        -             -             -       (2,143)          -      (2,143)   $(2,143)
Exercise of share options                 393        1         4,734             -            -           -       4,735          -
Exercise of warrants                      223        -             -             -            -           -           -          -
Net income                                  -        -             -        57,746            -           -      57,746     57,746
                                      -------      ---      --------      --------     --------    --------    --------    -------
  Balance at December 31, 1998         33,577       34       675,595       178,603       (3,611)          -     850,621    $55,603
                                                                                                                           =======
Translation reserves                        -        -             -             -       (1,958)          -      (1,958)   $(1,958)
Repurchase of 1 million Ordinary Share      -        -             -             -            -     (20,977)    (20,977)         -
Exercise of share options                 112        -         2,696             -            -           -       2,696          -
Shares canceled                            (7)       -          (373)            -            -           -        (373)         -
Net income                                  -        -             -        69,822            -           -      69,822     69,822
                                      -------      ---      --------      --------     --------    --------    --------    -------
   Balance at December 31, 1999        33,682      $34      $677,918      $248,425     $ (5,569)   $(20,977)   $899,831    $67,864
                                      =======      ===      ========      ========     ========    ========    ========    =======


The accompanying notes are an integral part of these statements.
</TABLE>


<PAGE>


<TABLE>

                        SUN INTERNATIONAL HOTELS LIMITED
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                          (In thousands of US dollars)
<CAPTION>
                                               For the Year Ended December 31,
                                                  1999       1998       1997
                                               ---------   ---------  ---------
<S>                                            <C>         <C>         <C>
Cash flows from operating activities:
 Net income                                     $  69,822  $  57,746  $  83,008
 Adjustments to reconcile net income  to
  net cash provided by operating activities:
    Extraordinary item                                  -          -      2,957
    Depreciation and amortization                  60,147     34,960     30,640
    Gain on sale of equity interest in
     associated company                                 -          -    (13,386)
    (Gain) loss on sale of assets                     (60)       316       (628)
    Equity in earnings of associated companies,
     net of dividends received                         23       (670)      (625)
    Utilization of tax benefits acquired
     in merger                                          -      1,887      4,085
    Provision for doubtful receivables              6,466      2,189      1,314
    Provision for discount on CRDA
     obligations, net                                 587        572        987
    Net change in working capital accounts:
      Receivables                                 (20,440)   (19,744)   (10,475)
      Due from affiliates                          (7,150)       839     (2,833)
      Inventories and prepaid expenses             (8,129)    (1,896)       (49)
      Accounts payable and accrued liabilities      4,198     22,603      6,587
    Net change in deferred charges and other
     assets                                         4,548     (4,953)       733
    Net change in deferred tax liability              (30)    (3,747)         -
                                                 --------  ---------  ---------
      Net cash provided by operating activities   109,982     90,102    102,315
                                                 --------  ---------  ---------

  Cash flows from investing activities:
    Payments for capital expenditures            (205,046)  (443,996)  (219,700)
    Proceeds from sale of investment                    -          -     18,785
    Proceeds from sale of assets                    5,186    110,313      7,712
    Proceeds from redemption of Subordinated
     Notes                                         94,126          -          -
    Purchase of Additional Subordinated Notes           -          -     (8,000)
    Desert Inn acquisition costs                  (16,117)         -          -
    Payments for investment in joint venture         (600)         -          -
    Sale of Additional Subordinated Notes           2,798      2,798      2,800
    Payments for expenses of merger                     -       (745)    (8,057)
    Payment received from loan to affiliate             -          -      1,108
    CRDA deposits                                  (2,746)    (2,955)    (3,122)
                                                 --------   --------   --------
      Net cash used in investing activities      (122,399)  (334,585)  (208,474)
                                                 --------   --------   --------

  Cash flows from financing activities:
    Proceeds from exercise of share options         2,696      4,735      4,600
    Early redemption of debt                            -          -   (153,712)
    Borrowings                                    129,000    264,000    299,084
    Repurchase of Ordinary Shares                 (20,977)         -          -
    Debt issuance and modification costs           (2,361)      (694)   (12,762)
    Repayment of borrowings                      (118,854)  (113,596)      (754)
                                                 --------   --------   --------
     Net cash provided by (used in) financing
      activities                                  (10,496)   154,445    136,456
                                                 --------   --------   --------

  Increase (decrease) in cash and cash
   equivalents                                    (22,913)   (90,038)    30,297
  Cash and cash equivalents at beginning
   of period                                       63,123     153,161   122,864
                                                 --------    --------  --------
  Cash and cash equivalents at end of period     $ 40,210    $ 63,123  $153,161
                                                 ========    ========  ========

  The accompanying notes are an integral part of these statements.
</TABLE>


<PAGE>




                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1-Organization and Basis of Presentation

Sun International  Hotels Limited ("SIHL") is an international resort and gaming
company  that  develops,   operates  and  manages   premier  resort  and  casino
properties.   The  term   "Company"  as  used  herein   includes  SIHL  and  its
subsidiaries.  The Company  currently  operates or manages  resort hotels and/or
casinos in The Bahamas,  Atlantic City, Indian Ocean and Dubai. In addition, the
Company earns income based on the gross revenues of a casino in Connecticut. The
Company=s  largest property is Atlantis,  a 2,317-room resort and casino located
on Paradise Island, The Bahamas.

The Bahamas

SIHL was  incorporated  under the laws of the  Commonwealth  of The  Bahamas  on
August 13, 1993. The Company,  through certain Bahamian  subsidiaries,  owns and
operates the Atlantis  Resort and Casino  Complex,  which includes the Coral and
Beach  Towers,  as well as the Royal Towers which opened in December  1998,  the
Ocean  Club  Golf & Tennis  Resort,  a golf  course,  a water  plant,  and other
improvements  on  Paradise  Island,  as  well  as  land  available  for  sale or
development.

In December 1998, the Company completed a major expansion at the Atlantis Resort
and Casino (the "Paradise  Island  Expansion").  The Paradise  Island  Expansion
included  a  deluxe   1,200-room  hotel,  a  new  100,000   square-foot   casino
entertainment  complex,  a new marina,  as well as a dramatic  expansion  to the
ocean-themed  adventure  environment  of Atlantis.  During the second quarter of
1999, the Company completed  construction of a new convention facility. In 1999,
the Company  commenced  construction  of the new Villas at the Ocean  Club,  the
renovation  of the golf  course and  clubhouse,  as well as the  development  of
infrastructure at the east-end of Paradise Island in preparation for the sale of
lots at Ocean Club Estates.

Atlantic City

Through its wholly  owned  subsidiary  Sun  International  North  America,  Inc.
("SINA"),  the Company  owns and operates  the Resorts  Atlantic  City hotel and
casino in Atlantic City, New Jersey ("Resorts  Atlantic City").  SINA, which has
been doing business since 1958, was acquired by SIHL in a merger  transaction in
December 1996. Resorts Atlantic City includes two hotel towers which comprise of
644  guest  rooms,  a  70,000  square  foot  casino  and an  5,000  square  foot
pari-mutual betting and slot machine area.

Connecticut

The Company has a 50%  interest in, and is a managing  partner of,  Trading Cove
Associates ("TCA"), a Connecticut general partnership that developed,  and until
December 31, 1999,  had a management  agreement  with the Mohegan  Tribal Gaming
Authority  ("MTGA"),  an  instrumentality  of the  Mohegan  Tribe of  Indians of
Connecticut (the "Tribe"), to operate, a casino resort and entertainment complex
situated in the town of Uncasville,  Connecticut (the "Mohegan Sun Casino"). The
Mohegan Sun Casino opened on October 12, 1996. The management  agreement,  which
covered development, management, marketing and


<PAGE>



administration  services,  provided that TCA was entitled to receive between 30%
and 40% of the net profits, as defined, of the Mohegan Sun Casino.

On February 9, 1998, the Tribe  appointed TCA to develop its proposed  expansion
of the Mohegan Sun Casino,  which is  currently  expected to cost  approximately
$800.0  million.  In  addition,  effective  January  1, 2000,  TCA  turned  over
management  of the Mohegan Sun Resort  Complex  (which  comprises  the  existing
operations  and  the  proposed   expansion)  to  the  Tribe.   In  exchange  for
relinquishing  its rights under its previously  existing  agreements,  beginning
January 1, 2000, TCA will receive  annual  payments of five percent of the gross
revenues of the Mohegan Sun Resort Complex for a 15-year period.

In connection with the original  development of the Mohegan Sun Casino,  in 1996
the Company  acquired  $20.0 million of  subordinated  notes (the  "Subordinated
Notes") issued by MTGA. The Subordinated Notes earned interest at 15% per annum.
Interest  payable on the  Subordinated  Notes was  satisfied  by the issuance of
additional  Subordinated  Notes.  Interest payments through December 31, 1999 of
approximately  $17.0 million on the  Subordinated  Notes were  satisfied in this
manner.

In 1996,  the Company  also  acquired  $50.0  million of notes (the  "Additional
Subordinated Notes") from MTGA related to a construction  completion  guarantee,
which  bore  interest  at prime  plus 1%.  Interest  payable  on the  Additional
Subordinated   Notes  was  satisfied  by  the  further  issuance  of  Additional
Subordinated Notes. Interest payments through December 31, 1999 of approximately
$15.5  million  on the  Additional  Subordinated  Notes were  satisfied  in this
manner.  In each of October 1999,  1998 and 1997,  the Company sold $2.8 million
Additional  Subordinated  Notes, which included accrued interest thereon, to its
partner in TCA.

On December 31, 1999, the aggregate  balance on the  Subordinated  Notes and the
Additional Subordinated Notes of $94.1 million,  including accrued interest, was
repaid in full.

Note 2-Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying  consolidated financial statements include the accounts of SIHL
and its  subsidiaries.  All significant  intercompany  transactions and balances
have been  eliminated in  consolidation.  Investments  in associated  companies,
which are less than 50% and more than 20%  owned,  are  accounted  for under the
equity method of accounting.

Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States  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.


<PAGE>



The Company provides allowances for doubtful accounts arising from casino, hotel
and  other  services,  which  are  based  upon  a  specific  review  of  certain
outstanding  receivables.  In  determining  the amounts of the  allowances,  the
Company is required to make certain estimates and assumptions and actual results
may differ from these estimates and assumptions.

Revenue Recognition

The Company recognizes the net win from casino gaming activities (the difference
between  gaming wins and  losses) as casino  revenues.  Revenues  from hotel and
related  services are  recognized at the time the related  service is performed.
Management   fees  and  other  operating   revenues   include  fees  charged  to
unconsolidated affiliates for casino hotel management,  executive management and
project consulting. Revenues are recorded at the time the service is provided.

Promotional Allowances

The retail value of accommodations,  food,  beverage and other services provided
to  customers  without  charge is included  in gross  revenues  and  deducted as
promotional  allowances.  The  estimated  departmental  costs of providing  such
promotional allowances are included in gaming costs and expenses as follows:

<TABLE>
                                 For The Year Ended December 31,
                                 -------------------------------
 (In thousands of US dollars)      1999        1998       1997
                                 -------     --------   --------
<S>                              <C>         <C>        <C>
 Rooms                           $ 7,894     $ 6,671    $ 5,965
 Food and beverage                21,692      17,921     19,315
 Other                             7,762       5,819      5,402
                                 -------     -------    -------
                                 $37,348     $30,411    $30,682
                                 =======     =======    =======
</TABLE>

Pre-Opening Expenses

In 1998, the Company capitalized  pre-opening costs,  substantially all of which
were associated with the Paradise Island Expansion,  as they were incurred.  All
such  costs  were  charged  to  operations  in the  fourth  quarter  of  1998 in
conjunction with the opening.  Effective 1999, the Company adopted  Statement of
Position  98-5  which  states  that all such costs will be charged to expense as
incurred.  In 1999,  pre-opening  expenses  related to the  opening of the newly
renovated casino at Resorts Atlantic City.

Foreign Currency

Transactions denominated in foreign currencies are recorded in local currency at
actual  exchange  rates  at the date of the  transaction.  Monetary  assets  and
liabilities  denominated  in foreign  currencies  at the balance sheet dates are
reported at the rates of exchange prevailing at those dates. Any gains or losses
arising on  monetary  assets and  liabilities  from a change in  exchange  rates
subsequent  to the date of the  transaction  have  been  included  in  corporate
expenses in the accompanying  consolidated  financial statements.  These amounts
were not significant for the years ended December 31, 1999, 1998 and 1997.


<PAGE>



The financial  statements of the Company's  equity method  investees and certain
subsidiaries  are translated  from their  functional  currencies into US dollars
using current and historical exchange rates.  Translation  adjustments resulting
from this  process are reported  separately  and  accumulated  as a component of
other   comprehensive   income.  Upon  sale  or  liquidation  of  the  Company's
investments,  the translation adjustment is reported as part of the gain or loss
on sale or liquidation.

Derivative Financial Instruments

The Company utilizes interest rate protection agreements with two counterparties
to manage the impact of interest  rate changes on the  Company=s  variable  rate
debt obligation.  The Company does not use derivative financial  instruments for
trading  purposes.  Under  interest  rate swaps,  the Company  agrees with other
parties to exchange,  at specified intervals,  the difference between fixed-rate
and floating-rate interest amounts calculated by reference to an agreed notional
principal amount.  Income or expense on derivative financial instruments used to
manage  interest rate exposure is recorded on an accrual basis, as an adjustment
to the yield of the  underlying  indebtedness  over the  periods  covered by the
contracts.  If an interest rate swap is terminated  early, any resulting gain or
loss is deferred and  amortized  as an  adjustment  of the interest  cost of the
underlying  indebtedness  over the remaining periods  originally  covered by the
terminated  swap. If all or part of an underlying  position is  terminated,  the
related  pro-rata  portion  of any  unrecognized  gain or  loss  on the  swap is
recognized  in  income  at  that  time  as  part  of the  gain  or  loss  on the
termination.  Amounts receivable or payable under the agreements are included in
receivables or accrued  liabilities  in the  accompanying  consolidated  balance
sheets and were not material at December 31, 1999 and 1998.

Cash Equivalents

The Company  considers all of its short-term money market  securities  purchased
with original maturities of three months or less to be cash equivalents.

Inventories

Inventories  of  provisions  and  supplies  are  carried  at the  lower  of cost
(first-in,  first-out)  or  market  value.  Provisions  have been made to reduce
excess or obsolete inventories to their estimated net realizable value.

Property and Equipment

Property and equipment are stated at cost and are depreciated over the estimated
useful lives reported below using the straight-line method.

    Land improvements and utilities           14-40 years
    Hotels and other buildings                15-40 years
    Furniture, machinery and equipment         2-15 years

Interest costs incurred during the construction period are capitalized.


<PAGE>



Deferred Charges and Other Assets

Deferred charges related to the Mohegan Sun Casino are generally  amortized over
the term of the original management agreement. Debt issuance costs are amortized
over the terms of the related indebtedness.

Goodwill

Goodwill  is  amortized  on a straight  line  basis over 40 years.  Amortization
expense included in the accompanying  consolidated  statements of income related
to goodwill was $2.6 million,  $2.7 million and $2.4 million for the years ended
December  31,  1999,  1998  and  1997,  respectively.  Goodwill  related  to the
investment  in  associated  companies  is included  therein in the  accompanying
consolidated balance sheets. Equity in earnings of associated companies for each
of the years  ended  December  31,  1999,  1998 and 1997 is net of  $264,000  of
amortization expense related to such goodwill.

Stock Option Compensation

The Company  has elected to apply  Accounting  Principles  Board  Opinion No. 25
AAccounting for Stock Issued to Employees@ in accounting for compensation  under
its stock option plans in lieu of the alternative fair value accounting provided
for under  Statement of Financial  Accounting  Standards No. 123 "Accounting for
Stock-Based  Compensation" ("SFAS 123"). Certain proforma disclosures related to
SFAS 123 are included in Note 10.

Long Lived Assets

The Company  reviews its long lived assets and certain  related  intangibles for
impairment  whenever changes in circumstances  indicate that the carrying amount
of an asset may not be fully recoverable.  The Company does not believe that any
such changes have occurred.

Income Taxes

The Company is subject to income  taxes in certain  jurisdictions.  Accordingly,
the  accompanying  consolidated  statements  of income  include  provisions  and
benefits for income taxes based on prevailing tax laws of those jurisdictions.

The Company  accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109 "Accounting for Income Taxes". Under this standard,
deferred  tax assets and  liabilities  are  determined  based on the  difference
between  the  financial  reporting  and tax bases of assets and  liabilities  at
enacted tax rates. A valuation  allowance is recognized  based on an estimate of
the  likelihood  that some  portion or all of the deferred tax asset will not be
realized.

Other Comprehensive Income

Other  comprehensive  income items are not reported net of tax as they relate to
translation  reserves  on  investments  owned by foreign  entities  that are not
subject to taxation.


<PAGE>



Per Share Data

The Company  calculates  earnings  per share in  accordance  with  Statement  of
Financial  Accounting  Standards  No. 128  "Earnings  per Share".  The following
reconciliation of the shares used in the per share computations is presented:
<TABLE>
<CAPTION>

                                     For The Year Ended December 31,
                                     -------------------------------
  (In thousands)                      1999        1998        1997
                                     ------      ------      ------
  <S>                                <C>         <C>         <C>
   Weighted average shares
    used in basic computations       33,465      33,270      32,920
   Stock options, warrants and
    restricted shares awarded           540         764       1,031
                                     ------      ------      ------
   Weighted average shares
    used in diluted computations     34,005      34,034      33,951
                                     ======      ======      ======
</TABLE>

The net income  amount used as the  numerator in  calculating  basic and diluted
earnings per share is the net income in the accompanying consolidated statements
of income.

Reclassifications

Certain balances in the accompanying  consolidated financial statements for 1998
and 1997 have been reclassified to conform to the current year presentation.

Note 3-Cash and Cash Equivalents

Cash  equivalents  at December  31, 1999 and 1998  included  reverse  repurchase
agreements (federal government  securities  purchased under agreements to resell
those  securities)  under  which  the  Company  had not  taken  delivery  of the
underlying  securities  and  investments  in a money  market  fund that  invests
exclusively in US Treasury  obligations.  At December 31, 1999, the Company held
reverse  repurchase  agreements of $.5 million,  all of which matured January 3,
2000.

<PAGE>



Note 4-Trade Receivables

<TABLE>
Components of trade receivables were as follows:

                                                     December 31,
                                               ------------------------
   (In thousands of US dollars)                  1999            1998
                                               --------        --------
<S>                                            <C>             <C>
   Gaming                                      $29,673         $18,269
   Less: allowance for doubtful accounts       (9,943)          (6,047)
                                               -------         -------
                                                19,730          12,222
                                               -------         -------
   Non-gaming:
    Hotel and related                           19,792          13,752
    Other                                        8,595          11,510
                                               -------         -------
                                                28,387          25,262
   Less: allowance for doubtful accounts       (3,692)          (1,165)
                                               -------         -------
                                                24,695          24,097
                                               -------         -------
                                               $44,425         $36,319
                                               =======         =======
</TABLE>

Note 5-Property and Equipment

<TABLE>
Components of property and equipment were as follows:

                                                     December 31,
                                             ---------------------------
   (In thousands of US dollars)                 1999             1998
                                             ----------       ----------
<S>                                          <C>              <C>
   Land and land rights                      $  351,495       $  351,826
   Land improvements and utilities              185,268          185,048
   Hotels and other buildings                   704,765          611,958
   Furniture, machinery and equipment           185,824          141,284
   Construction in progress                      73,645           39,812
                                             ----------       ----------
                                              1,500,997        1,329,928
   Less: accumulated depreciation              (122,859)         (72,763)
                                             ----------       ----------
                                             $1,378,138       $1,257,165
                                             ==========       ==========

Interest costs of $4,865,000,  $35,304,000  and $6,778,000  were  capitalized in
1999, 1998 and 1997, respectively.

</TABLE>

<PAGE>



Note 6-Deferred Charges and Other Assets

<TABLE>
Components of deferred charges and other assets were as follows:

                                                       December 31,
                                               ---------------------------
   (In thousands of US dollars)                   1999             1998
                                               ---------         ---------

<S>                                            <C>                <C>
   CRDA bonds and deposits                     $ 16,983           $ 14,831
   Desert Inn acquisition costs                  16,117                  -
   Debt issuance costs                           13,400             13,917
   Mohegan Sun Casino                             2,049              2,429
   Other                                          1,335              5,712
                                               --------           --------
                                               $ 49,884           $ 36,889
                                               ========           ========
</TABLE>

Note 7-Accounts Payable and Accrued Liabilities

<TABLE>
Components of accounts payable and accrued liabilities were as follows:

                                                    December 31,
                                               ---------------------------
   (In thousands of US dollars)                   1999             1998
                                               ---------         ---------
<S>                                           <C>                <C>
   Trade payables                              $ 36,798          $ 41,216
   Accrued payroll and related taxes
    and benefits                                 15,541            17,361
   Customer deposits and unearned
    revenues                                     28,555            17,897
   Accrued interest                               7,853             8,187
   Accrued income taxes                           7,137             4,472
   Other accrued liabilities                     37,450            41,856
                                               --------          --------
                                               $133,334          $130,989
                                               ========          ========
</TABLE>


<PAGE>

Note 8-Long Term Debt

<TABLE>
Long-term debt consisted of the following:

                                                      December 31,
                                               ---------------------------
   (In thousands of US dollars)                   1999             1998
                                               ---------         ---------
<S>                                           <C>                <C>
   9% Senior Notes due 2007                    $200,000          $200,000
   Unamortized discount                            (738)             (807)
                                               --------          --------
                                                199,262           199,193
                                               --------          --------

   8.625% Senior Notes due 2007                 100,000           100,000
                                               --------          --------

   Revolving Credit Facility                    278,000           259,000
                                               --------          --------

   Other                                          1,871             9,941
                                               --------          --------
                                                579,133           568,134
   Less: amounts due within one year             (1,100)           (2,382)
                                               --------          --------
                                               $578,033          $565,752
                                               ========          ========
</TABLE>

9% Senior Notes

The 9% senior subordinated unsecured notes due 2007 (the "9% Senior Notes"), are
unconditionally  guaranteed by certain  subsidiaries of SINA. Interest on the 9%
Senior Notes is payable  semi-annually.  The  indenture  for the 9% Senior Notes
(the "Senior Indenture")  contains certain covenants,  including  limitations on
the ability of the issuers and the guarantors to, among other things:  (i) incur
additional  indebtedness,  (ii) incur  certain  liens,  (iii)  engage in certain
transactions  with  affiliates  and (iv) pay  dividends  and make certain  other
payments.

8.625% Senior Notes

In December 1997, the Company filed a registration  statement with the
Securities and Exchange  Commission pursuant to which the Company may,
from time to time,  issue in one or more series an aggregate of $300.0
million of its debt securities (the "Shelf Registration"). Pursuant to
The Shelf  Registration,  in December  1997 the Company  issued $100.0
million of senior subordinated  unsecured notes due December 2007 (the
"8.625% Senior Notes"). Interest on the 8.625% Senior Notes is payable
semi-annually.  The indenture for the 8.625% Senior Notes contains the
same covenants and restrictions as those in the Senior Indenture.


Revolving Credit Facility

In November  1999,  the Company  amended an existing  facility  (the  "Revolving
Credit  Facility") with a syndicate of banks (the  "Lenders"),  with The Bank of
Nova  Scotia  acting as  administrative  agent,  to allow for an increase in the
amount of borrowings. Without further consent by the Lenders, the maximum amount
of borrowings that may be outstanding on the Revolving Credit Facility is $475.0
million,  and with further consent by the Lenders,  borrowings may be allowed up
to $625.0 million. Loans under the Revolving


<PAGE>



Credit Facility bear interest at (i) the higher of (a) The Bank of Nova Scotia=s
base rate or (b) the  Federal  Funds  rate,  in either  case plus an  additional
0.750% to 1.625% based on a debt to earnings ratio during the period, as defined
(the "Debt Ratio") or (ii) The Bank of Nova Scotia=s reserve-adjusted LIBOR rate
plus 1.50% to 2.25% based on the Debt Ratio.  Loans under the  Revolving  Credit
Facility may be prepaid and reborrowed at any time and are due in full on August
12, 2002.  Commitment fees are calculated at per annum rates ranging from 0.375%
to  0.500%,  based on the Debt  Ratio,  applied  to the  undrawn  amount  of the
Revolving Credit Facility and are due, along with accrued interest, quarterly.

The Revolving Credit Facility contains  restrictive  covenants that include: (a)
restrictions on the payment of dividends,  (b) minimum levels of earnings before
interest expense, income taxes, depreciation and amortization ("EBITDA") and (c)
a minimum relationship between EBITDA and interest expense and debt.

Overdraft Loan Facility

Pursuant to a letter of commitment dated September 30, 1994, as amended, between
the Company and The Bank of Nova Scotia,  the Company has a revolving  overdraft
loan facility (the "Overdraft  Facility") in the amount of Bahamian $5.0 million
which  was equal to US $5.0  million  as of  December  31,  1999 and  1998.  The
Overdraft  Facility  bears  interest at The Bank of Nova  Scotia's base rate for
Bahamian  dollar loans plus 1.5% with repayment  subject to annual  review.  The
Overdraft  Facility is secured by  substantially  all of the Company's  Bahamian
assets and ranks pari passu with the Revolving Credit Facility.  At December 31,
1999 and 1998, no amounts were outstanding under the Overdraft Facility.

Principal Payments

Minimum principal payments of long-term debt outstanding as of December 31, 1999
for each of the next five years and thereafter are as follows:  2000-$1,100,000;
2001-$227,000;     2002-$278,203,000;     2003-     $107,000;     2004-$100,000;
thereafter-$300,134,000.

Note 9-Shareholders' Equity

<TABLE>
The Company's authorized, issued and outstanding shares were as follows:

                                                December 31,
                                           -----------------------
   (In thousands, except per share data)     1999          1998
                                           ---------     ---------
<S>                                        <C>           <C>
   Ordinary Shares
     Par value per share                    $ 0.001       $ 0.001
     Authorized                             250,000       250,000
     Issued and outstanding                  33,682        33,577
   Preference Shares
     Par value per share                    $ 0.001       $ 0.001
     Authorized                             100,000       100,000
     Issued and outstanding                       -             -

</TABLE>



<PAGE>



Note 10-Stock-Based Compensation

Stock Options

In May 1995, the  shareholders of the Company  approved a stock option plan (the
"1995  Plan")  that  provided  for the  issuance  of  options  to  acquire up to
2,000,000  Ordinary  Shares  and in May 1997 the  shareholders  approved a stock
option plan (the "1997 Plan", and together with the 1995 Plan, the "Plans") that
provided for the issuance of options to acquire up to 1,000,000 Ordinary Shares.
In May  1998,  the size of the 1997 Plan was  increased  to  1,500,000  Ordinary
Shares.  Pursuant to the Plans,  the option prices are equal to the market value
per  share of the  Ordinary  Shares  on the  date of the  grant.  The 1995  Plan
provided for the options to become  exercisable,  unless otherwise  specified by
the Board of  Directors  and  subject to certain  acceleration  and  termination
provisions,  after two years  from the date of grant in  respect  of 20% of such
options, and thereafter in installments of 20% per year over a four-year period.
The 1997 Plan provides  that the vesting  period begins one year after the grant
date. The options have a term of 10 years from the date of grant.

The Plans  provide for options with respect to Ordinary  Shares to be granted to
directors, officers and employees of SIHL and its subsidiaries.

A summary of the Company's  stock option  activity for 1999, 1998 and 1997 is as
follows:
<TABLE>
                                                 December 31 ,
                             --------------------------------------------------
(In thousands of US dollars,      1999              1998             1997
 except per share data)      --------------------------------------------------
                                    Weighted         Weighted         Weighted
                                    Average          Average          Average
                                    Exercise         Exercise         Exercise
                                    Price            Price            Price
                             Shares Per Share Shares Per Share Shares Per Share
                             ------ --------- ------ --------- ------ ---------
<S>                         <C>      <C>      <C>    <C>      <C>     <C>
Outstanding at beginning
 of year                     3,017   $31.38   2,795  $ 26.32   1,640  $ 17.41
Granted                      1,140    25.10     701    41.50   1,476    35.61
Exercised                     (112)   23.56    (393)   14.45    (253)   18.20
Terminated and other          (127)   37.69     (86)   36.45     (68)   33.25
                             -----            -----             -----
Outstanding at end of year   3,918    29.60   3,017    31.38   2,795    26.32
                             =====            =====            =====
Exercisable at end of year   1,014              360              342
                             =====            =====            =====
Available for grant              -              125              272
                             =====            =====            =====

Certain of the options granted during 1999 were granted outside of the Plans.

</TABLE>

<PAGE>



For purposes of supplemental disclosures required by SFAS 123, the fair value of
options  granted  during 1999,  1998 and 1997 was estimated as of the respective
dates of grant using a  Black-Scholes  option  pricing  model with the following
weighted average assumptions for the periods presented:

  <TABLE>
                                       For The Year Ended December 31,
                                          -------------------------------
                                            1999       1998      1997
                                          --------- ---------- ---------

<S>                                           <C>        <C>       <C>
Risk-free interest rates                      5.5%       4.9%      5.8%
Volatility factors of the expected market
 price of Ordinary Shares                    39.0%      38.0%     34.0%
Expected life of options in years              6-7        6-7       6-7
Expected dividend yields                         -          -         -
Weighted average grant date fair value       $7.67     $12.71    $11.46

Proforma results based on these
 assumptions were as follows:
Net income (000's)                         $62,001    $50,943   $80,109
Diluted earnings per share                 $  1.82    $  1.50   $  2.36
</TABLE>


Executive Bonus Plan

In 1998, the Company created a bonus plan for certain of its
executives that is payable based upon the attainment of specified
earnings per share. A portion of the bonus is payable in Ordinary
Shares that vest over a three-year period. Any unvested shares at
termination of employment are forfeited. The compensation expense
relating to the bonus plan amounted to $458,000 and $3.1 million
for the years ended December 31, 1999 and 1998, respectively.

Note 11-Related Party Transactions

In the normal course of business, the Company undertakes
transactions with a number of unconsolidated affiliated
companies. Certain of the Company=s subsidiaries provide project
consulting and management services to such affiliates. Due from
affiliates consisted of the following:

                                              December 31,
                                        ----------------------
   (In thousands of US dollars)            1999        1998
                                        ---------   ---------

   Trading Cove Associates                $ 8,301     $ 2,090
   Sun Indian Ocean                         5,251       4,662
   Other                                      660         310
                                         --------    --------
                                          $14,212     $ 7,062
                                         ========     =======





<PAGE>



Note 12-Retirement Plans

Certain of the Company's subsidiaries participate in a defined contribution plan
covering  substantially  all of their  full-time  employees.  The Company  makes
contributions  to  this  plan  based  on  a  percentage  of  eligible   employee
contributions.  Total expense for this plan was $876,000,  $895,000 and $830,000
for the years ended December 31, 1999, 1998 and 1997, respectively.

In addition to the plan described  above,  union and certain other  employees of
the  Company's  subsidiaries  in The  Bahamas and  Atlantic  City are covered by
multi-employer   defined   benefit   pension  plans  to  which   employers  make
contributions.  In connection with these plans,  the Company was billed and paid
$6.4  million,  $4.8 million and $3.0  million for the years ended  December 31,
1999, 1998 and 1997, respectively.

Note 13-Income Taxes

A  significant  portion of the Company=s  operations  are located in The Bahamas
where there are no income taxes.  In 1999,  1998 and 1997, the Company  recorded
income tax provisions (benefits) relating to its US operations as follows:
<TABLE>

                                           For the Year Ended December 31,
                                         -----------------------------------
        (In thousands of US dollars)       1999         1998          1997
                                         ---------    ---------    ---------
        <S>                              <C>          <C>           <C>
        Current:
          Federal                        $ 9,197      $11,477       $  5,754
          State                              157          279            614
                                         -------     --------       --------
                                           9,354       11,756          6,368
        Deferred:
          Federal                            (30)      (3,747)             -
                                         -------     --------       --------
                                         $ 9,324     $  8,009       $  6,368
                                         =======     ========       ========
</TABLE>

In 1997, the Company also recorded  $1,593,000  and $450,000 in current  federal
and state income tax benefits resulting from an extraordinary loss.


<PAGE>



The effective income tax rate on income before  extraordinary  items varies from
the statutory federal income tax rate as a result of the following factors:

                                          For The Year Ended December 31,

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

   Statutory federal income tax rate        35.0%      35.0%      35.0%
   Non US-source income                    (40.3)      (27.1)    (31.6)
   NOL's and temporary differences
    for which no taxes were provided or
    benefits recognized                      8.7        (5.7)        -
   Branch profits taxes and other taxes
    on US services                           6.3         4.4        .8
    Other                                    2.1         5.6       2.7
                                          -------     -------    ------
   Effective tax rate                       11.8%       12.2%      6.9%
                                          =======     =======    ======

The components of the deferred tax assets and liabilities were as follows:

<TABLE>
                                                         December 31,
                                                  --------------------------
   (In thousands of US dollars)                       1999           1998
                                                  -----------     -----------
   <S>                                            <C>             <C>
   Deferred tax liabilities:
    Basis differences on land held for
    investment, development or resale              $ (6,100)       $ (6,200)
    Basis differences on property and equipment     (44,400)        (44,300)
    Other                                            (2,402)         (2,100)
                                                  ---------       ---------
     Total deferred tax liabilitie                  (52,902)        (52,600)
                                                  ---------       ---------
   Deferred tax assets:
    Net operating loss carryforwards                196,700         187,300
    Book reserves not yet deductible for tax
     return purposes                                 14,000          15,800
    Tax credit carryforwards                          2,700           2,800
    Other                                             5,700           6,400
                                                  ---------       ---------
     Total deferred tax assets                      219,100         212,300
    Valuation allowance for deferred tax assets    (208,421)       (201,953)
                                                  ---------       ---------
   Deferred tax assets, net of valuation allowance   10,679          10,347
                                                  ---------       ---------
    Net deferred tax liabilities                  $ (42,223)      $ (42,253)
                                                  =========       ==========
</TABLE>

A valuation  allowance has been recorded  against the portion of those  deferred
tax  assets  that  the  Company  believes  will  more  likely  than  not  remain
unrealized.  Such deferred tax assets primarily relate to the net operating loss
carryforwards  related to SINA at December 16, 1996,  the effective  date of its
merger  transaction  with SIHL. If such deferred tax assets were to be realized,
the corresponding reduction to the valuation allowance would reduce the carrying
value of goodwill.


<PAGE>



For federal income tax purposes,  SINA had net operating loss  carryforwards  of
approximately  $562.0 million at December 31, 1999;  however,  due to the merger
transaction  in  December  1996,  $423.0  million  of these net  operating  loss
carryforwards  (the  "Pre-Change  NOLs") are  limited in their  availability  to
offset future taxable income of the Company.  As a result of these  limitations,
approximately  $11.3  million of Pre-Change NOLs will become  available for use
each year through the year 2008; an additional $8.4 million will be available in
2009. An additional $13.0 million of these Pre-Change NOLs would be available to
offset  gains on sales of assets  owned at the date of the merger  that are sold
within five years of that date.  The remaining  Pre-Change  NOLs are expected to
expire unutilized.

The restricted NOL carryforwards that the Company believes will become available
for utilization expire as follows: $50.0 million in 2005, $23.0 million in 2006,
$28.0  million  in 2007,  $1.0  million in 2009 and $8.0  million  in 2011.  The
unrestricted  NOLs that the Company believes may be used to offset future income
expire as follows: $2.0 million in 2007, $57.0 million in 2008, $57.0 million in
2012 and $23.0 million in 2019.

Note 14-Supplemental Cash Flow Disclosures

Interest paid in 1999,  1998 and 1997, net of amounts  capitalized,  amounted to
$48.7 million, $3.4 million and $21.1 million respectively. Income taxes paid in
1999,  1998 and 1997  amounted  to $6.7  million,  $7.0  million  and  $519,000,
respectively.

Non-cash investing and financing  activities in 1999, 1998 and 1997 included the
following:

(In thousands of US dollars)                         December 31,
                                            -------------------------------
                                               1999       1998       1997
                                            ---------   --------   --------

Refinancing of capital lease obligation       $1,444     $    -     $    -

Property and equipment acquired under
 capital lease obligations                       938      5,098          -

Increase (decrease) for valuation adjustments
  Goodwill                                         -          -      6,950
  Land                                             -          -     (5,000)
  Accounts payable and accrued liabilities         -          -      1,950

Exchange of real estate in Atlantic City
for reduction in CRDA obligation                   -          -      2,200






<PAGE>



Note 15-Commitments and Contingencies

Casino License

The  operations  of casinos in both The Bahamas and Atlantic City are subject to
regulatory  controls.  A casino license must be obtained in each jurisdiction by
the  operator  and the license  must be  periodically  renewed and is subject to
revocation  at any time.  In the event that the  Company is not able to maintain
its  licenses,  management  believes  that the Company  would still  realize the
carrying value of its related assets.

Casino Reinvestment Development Authority ("CRDA") Obligations

The New Jersey Casino Control Act, as amended,  requires the Company to purchase
bonds issued by the CRDA, or to make other  investments  authorized by the CRDA,
in an amount equal to 1.25% of its gross gaming revenues,  as defined.  The CRDA
bonds have interest rates ranging from 3.6% to 7.0% and have repayment  terms of
between 20 and 50 years.

At December 31, 1999, the Company had $8.2 million face value of bonds issued by
the CRDA and had  $18.2  million  on  deposit  with the  CRDA.  These  bonds and
deposits, net of an estimated discount to reflect the below-market interest rate
payable on the bonds,  are included in deferred  charges and other assets in the
accompanying  consolidated  balance  sheets.  The fair  value of the CRDA  bonds
approximates their carrying value.

In February  1999,  the Company and various  Atlantic City casinos  entered into
agreements  with the CRDA to  invest in a  project  the CRDA and the New  Jersey
Sports and Exposition Authority are planning,  to renovate the existing Atlantic
City  Boardwalk  Convention  Center into a 10,000 to 14,000 seat special  events
center (the "Project").

The Project will be funded in phases  through  direct  investments  from various
Atlantic City casinos,  including the Company.  Of the total  budgeted cost, the
Company has agreed to invest $8.7  million in cash which will be paid from funds
the  Company  has or will have  deposited  with the CRDA to meet its  investment
obligations  as described  above.  As of December 31, 1999,  $1.8 million of the
total amount  deposited  with the CRDA by the Company had been  allocated to the
Project.  As the CRDA allocates  funds  deposited by the Company to the Project,
the Company  will  receive an  investment  credit  reducing  its  obligation  to
purchase CRDA bonds in an equal amount.

New Heads of Agreement

In 1997, the Company  amended an agreement with the Bahamian  Government in 1995
that  provided for certain  investment  incentives  to encourage  the Company to
undertake an  expansion  program at Atlantis.  As noted  above,  this  agreement
provides  for certain  fixed gaming taxes as well as a 10% gaming tax to be paid
on gaming win over $20 million.  The  agreement  also  provides for a 50% credit
against  all  variable  gaming  tax  paid  for a period  of 11  years.  This tax
structure became effective January 1, 1998.

In order to secure  the tax  incentives,  the  Company  was  obligated  to begin
construction  of at least 562 rooms on Paradise  Island in place of the Pirate=s
Cove Beach Resort (a 562-room hotel on Paradise Island) which


<PAGE>



the Company  demolished during the fourth quarter of 1998. The Company had plans
for an additional 700-room Phase III hotel project at Atlantis which would have
satisfied  this  condition.   However,  considering  its  available  development
resources  and  alternative  uses of capital,  the Company  has  postponed  this
project.  As a result,  in June 2000,  the Company was  notified by the Bahamian
Government that these additional incentives have been suspended.  Effective July
1, 2000,  the casino win tax will  revert  back to the  previous  structure,  as
follows. There is no change in win tax on gaming win up to $20 million, however,
the Company  will incur 12.5% win tax on gaming win between $20 million and $120
million, and 10% win tax on gaming win in excess of $120 million. The $5 million
annual reduction of fees will still apply, however, in lieu of the 50% credit on
win tax to be paid on gaming win over $20  million,  the Company  will receive a
45%  credit on win tax to be paid on gaming win  between  $20  million  and $120
million.  Under its agreement with the Bahamian  Government,  the additional tax
incentives  will be reinstated in the event the Company begins  construction  of
these additional  rooms.  Although the Company currently has no plans to proceed
with the Phase III development,  it will continue to consider the results at its
Paradise  Island  operations as well as general  business trends and alternative
uses of its capital in determining the timing of proceeding with Phase III.

The  agreement  also  provides for a new five-year  joint  marketing  agreement,
pursuant  to  which  the   Bahamian   Government   shall  match  the   Company's
contribution,  up to $4.0 million  annually,  toward the direct costs related to
staging certain marketing events, public relations activities and the production
and placement of advertisements in all media.

Control of SIHL

Sun International  Investments Limited ("SIIL"),  majority  shareholder of SIHL,
has agreed to control a majority of the SIHL Board of Directors through June 30,
2004.

Litigation, Claims and Assessments

The Company is a defendant in certain  litigation and is aware of certain claims
and  assessments  incurred in the normal  course of business.  In the opinion of
management,  based on the advice of counsel,  the aggregate  liability,  if any,
arising  from  such  matters  will not have a  material  adverse  effect  on the
accompanying consolidated financial statements.

Beginning on or about January 20, 2000,  eight class action  lawsuits were filed
in courts of the  states  of New  York,  New  Jersey  and  Florida,  by  certain
shareholders  of SIHL.  These actions,  purportedly  brought as class actions on
behalf  of all  public  shareholders,  name  SIIL,  SIHL and  directors  of SIHL
(including  Chairman and Chief Executive Officer Solomon Kerzner) as defendants,
alleging  generally that they breached their fiduciary duties to shareholders in
connection  with SIIL's  proposal to acquire all of the ordinary  shares of SIHL
not owned by SIIL or its shareholders  for $24 per share.  Answers were filed to
each of the  complaints on or about March 27, 2000. No further  action is likely
to occur pending efforts to consolidate the lawsuits.  See "Proposed Acquisition
of SIHL Ordinary Shares" described in Note 20.


<PAGE>



Purchase Commitments

At December  31, 1999,  the Company had unfunded  contracts in place for capital
expenditures in The Bahamas of $27.1 million.

Note 16-Segment Information

Statement of Financial  Accounting  Standards No.131 "Disclosures about Segments
of an Enterprise and Related Information" requires the disclosure of information
regarding  the  operations  of the  Company  based  upon  how  management  makes
operating  decisions  and assesses  performance  of such  segments.  The Company
operates  in  four  geographical  segments  in one  industry,  the  development,
operation and  management of premier resort and casino  properties.  The Company
evaluates the  performance of its segments based  primarily on operating  profit
before corporate expenses,  interest expense,  interest income, income taxes and
non-recurring items. The following is an analysis of net revenues,  contribution
to consolidated  income before provision for income taxes and extraordinary item
and  total  assets,  depreciation  and  amortization  of  goodwill  and  capital
additions by geographical location:

<TABLE>
Net Revenues

                                            For The Year Ended December 31,
                                           ---------------------------------
(In thousands of US dollars)                  1999        1998        1997
                                           ----------  ----------  ---------
<S>                                        <C>         <C>         <C>
Casino/hotel:
Atlantic City, New Jersey:
  Gaming                                   $ 221,015   $ 234,736   $ 244,156
  Rooms                                       15,160      16,148      16,514
  Food and beverage                           25,512      26,692      27,085
  Other                                        8,075      11,460      11,344
  Less: promotional allowances               (26,632)    (28,295)    (28,465)
                                           ---------   ---------   ---------
                                             243,130     260,741     270,634
                                           ---------   ---------   ---------
Paradise Island, The Bahamas:
  Gaming                                     130,529      84,606      85,454
  Rooms                                      149,671      78,794      80,332
  Food and beverage                          111,588      59,901      64,244
  Other (a)                                   58,732      34,157      36,886
  Insurance recovery                          14,209           -           -
  Less: promotional allowances               (23,608)    (12,497)    (13,293)
                                           ---------   ---------   ---------
                                             441,121     244,961     253,623
                                           ---------   ---------   ---------

Total casino/hotel                           684,251     505,702     524,257

Management and other fees:
  Connecticut                                 39,282      34,613      17,356
  Indian Ocean                                 6,477       6,032       5,273
  Dubai                                          538           -           -

Other segments                                 8,419       4,531      12,026
                                           ---------   ---------   ---------

  Net revenues                             $ 738,967   $ 550,878   $ 558,912
                                           =========   =========   =========

</TABLE>


<PAGE>




Contribution to Consolidated Income before Provision for Income Taxes and
 Extraordinary Item
<TABLE>
                                            For The Year Ended December 31,
                                           ---------------------------------
(In thousands of US dollars)                  1999        1998        1997
                                           ----------  ----------  ---------
<S>                                        <C>         <C>         <C>
Casino/hotel:
  Atlantic City, New Jersey                $   (253)  $  19,915   $  21,591
  Paradise Island, The Bahamas (a)           93,609      42,132      46,240
                                          ---------   ---------   ---------
                                             93,356      62,047      67,831
                                          ---------   ---------   ---------
Management and other fees, net of
 amortization:
  Connecticut                                38,802      33,376      16,504
  Indian Ocean                                6,477       6,032       5,273
  Dubai                                         538           -           -
General corporate                           (16,899)    (19,505)    (14,682)
Pre-opening expenses                         (5,398)    (25,961)          -
Other segments                                2,348         621       9,698
Corporate marketing, retail and public
 relations                                   (4,792)     (4,404)          -
                                          ---------   ---------   ---------

Income from operations                      114,432      52,206      84,624
                                          ---------   ---------   ---------
Other income (expense):
  Interest income                            12,725      15,651      16,144
  Interest expense, net of capitalization   (50,699)     (4,516)    (24,370)
Equity in earnings of associated companies:
  Indian Ocean                                2,628       2,730       1,691
  France (b)                                      -           -         523
Gain on sale of equity interest
 in associated company (b)                        -           -      13,386
Other, net                                       60        (316)        335
                                          ---------   ---------   ---------
Income before provision for income
 taxes and extraordinary item             $  79,146   $  65,755   $  92,333
                                          ==========  =========   =========
</TABLE>
















<PAGE>




Total Assets, Depreciation and Amortization of Goodwill and Capital Additions
<TABLE>

                           As of December 31, 1999  Year ended December 31, 1999
                            ----------------------  ----------------------------
                                                    Depreciation and
                                                      Amortization     Capital
(In thousands of US dollars)         Total Assets     of Goodwill     Additions
                                     ------------   ----------------  ---------

<S>                                   <C>              <C>           <C>
Casino/hotel:
  Atlantic City, New Jersey           $  429,854       $ 16,156       $ 42,574
  Paradise Island, The Bahamas         1,054,708         39,631         24,200
  Paradise Island Expansion,
   opened December 1998 (c)                    -              -        117,808
                                      ----------       --------       --------
                                       1,484,562         55,787        184,582
                                      ----------       --------       --------
Real estate related:
  Atlantic City, New Jersey               61,307              -          9,433
  Paradise Island, The Bahamas            30,022              -              4
                                      ----------       --------       --------
                                          91,329              -          9,437
                                      ----------       --------       --------

Equity investment in Indian Ocean         24,871              -              -
General Corporate                         68,222          1,120         10,828
Corporate marketing, retail and
 public relations                          1,729            321            199
Other segments                               758              2              -
                                      ----------       --------       --------
                                      $1,671,471       $ 57,230       $205,046
                                      ==========       ========       ========

</TABLE>




<PAGE>



Total Assets, Depreciation and Amortization of Goodwill and Capital Additions,
 Continued

<TABLE>

                           As of December 31, 1998  Year ended December 31, 1998
                            ----------------------  ----------------------------
                                                    Depreciation and
                                                      Amortization     Capital
(In thousands of US dollars)         Total Assets     of Goodwill     Additions
                                     ------------   ----------------  ---------

<S>                                   <C>              <C>           <C>
Casino/hotel:
  Atlantic City, New Jersey           $  407,060        $14,155        $ 16,572
  Paradise Island, The Bahamas           981,014         15,993          13,569
  Paradise Island Expansion,
   opened December 1998 (c)                    -              -         381,321
                                      ----------        -------        --------
                                       1,388,074         30,148         411,462
                                      ----------        -------        --------
Real estate related:
  Atlantic City, New Jersey               56,839              -          11,727
  Paradise Island, The Bahamas            31,726              -          18,371
                                      ----------        -------        --------
                                          88,565              -          30,098
                                      ----------        -------        --------
Equity investment in Indian Ocean         26,894              -               -
General corporate                        119,614          1,835             553
Corporate marketing, retail and
 public relations                          1,891             97           1,870
Other segments                               695              1              13
                                      ----------        -------        --------
                                      $1,625,733        $32,081        $443,996
                                      ==========        =======        ========
</TABLE>


<TABLE>

                           As of December 31, 1997  Year ended December 31, 1997
                            ----------------------  ----------------------------
                                                    Depreciation and
                                                      Amortization     Capital
(In thousands of US dollars)         Total Assets     of Goodwill     Additions
                                     ------------   ----------------  ---------

<S>                                   <C>              <C>           <C>
Casino/hotel:
  Atlantic City, New Jersey          $  418,486       $13,424         $  9,062
  Paradise Island, The Bahamas          327,910        13,874           11,107
  Paradise Island Expansion,
   under construction                   225,514             -          178,328
                                     ----------       -------         --------
                                        971,910        27,298          198,497
                                     ----------       -------         --------
Real estate related:
  Atlantic City, New Jersey             155,368             -           19,726
  Paradise Island, The Bahamas           28,284             -            1,012
                                     ----------       -------         --------
                                        183,652             -           20,738
                                     ----------       -------         --------
Equity investment in Indian Ocean        28,396             -                -
General corporate                       190,782         1,341              465
                                     ----------       -------         --------
                                     $1,374,740       $28,639         $219,700
                                     ==========       =======         ========
<FN>

(a) Includes tour operations.
(b) Equity investment in France was sold in June 1997.
(c) The total assets and depreciation for 1999 and 1998 are included in Paradise
      Island, The Bahamas.
</FN>
</TABLE>


<PAGE>



Note 17-Equity in Earnings of Associated Companies

The accompanying consolidated financial statements include equity in earnings of
associated  companies as a result of the Company's  22.8%  interest in a company
that owns and  operates  beach  resort  hotels in the Indian  Ocean ("Sun Indian
Ocean") and 25% equity  holding in a company that owns and  operates  casinos in
France ("Sun France").  On June 17, 1997, the Company sold its investment in Sun
France  for  cash  proceeds  of $18.8  million.  The  resulting  gain on sale of
investment was $13.4 million.

The  following  summarized  financial  information  of Sun Indian Ocean has been
prepared under United States generally accepted accounting principles at and for
the years ended December 31, 1999,  1998 and 1997;  converted to thousands of US
dollars at the appropriate exchange rate.
<TABLE>

                                       For The Year Ended December 31,
                                     ----------------------------------
                                        1999        1998        1997
                                     ----------  ----------  ----------

<S>                                   <C>         <C>         <C>
  Revenues                            $ 84,007    $ 88,773    $ 87,576
  Income from operations                15,630      17,172      13,942
  Income before income taxes            13,171      14,237       9,114

                                              As of December 31,
                                     ----------------------------------
                                        1999        1998        1997
                                     ----------  ----------  ----------

  Current assets                      $ 21,075    $ 23,123    $ 25,821
  Total assets                         264,345     152,594     160,245
  Current liabilities                   61,595      31,714      36,271
  Shareholders' equity                 140,865      83,394      88,990

</TABLE>

Note 18-Derivative Financial Instruments

The Company is exposed to market risks  arising from changes in interest  rates.
Due to current  governmental  policies in The Bahamas  which equate one Bahamian
dollar to one United  States  dollar and to its limited  foreign  operations  in
other  jurisdictions,  the Company does not have material  market risk exposures
relative to changes in foreign exchange rates.

Credit Exposure

The Company is exposed to credit related losses in the event of  non-performance
by  counterparties  to certain  interest  rate swaps.  The Company  monitors the
credit  worthiness of the counter  parties and presently does not expect default
by any of  the  counterparties.  The  Company  does  not  obtain  collateral  in
connection with its derivative financial instruments.

The credit  exposure that results from interest rate swaps is represented by the
fair value of contracts with a positive fair value as of the reporting date. See
Note 19, Fair Value of Financial Instruments, for the fair value of derivatives.
The Company had no credit  exposure on its  interest  rate swaps at December 31,
1999.


<PAGE>



Interest Rate Risk Management

The Company uses interest rate swap  agreements to manage the impact of interest
rate changes on the Company's  Revolving Credit Facility.  The amounts exchanged
by the counter parties to interest rate swap agreements  normally are based upon
the notional  amounts and other terms,  generally  related to interest rates, of
the derivatives.  While notional amounts of interest rate swaps form part of the
basis for the amounts exchanged by the counterparties,  the notional amounts are
not  themselves  exchanged,  and  therefore  do not  represent  a measure of the
Company=s  exposure  as an end  user of  derivative  financial  instruments.  At
December 31, 1999 and 1998,  notional principal amounts related to interest rate
swaps   (variable  to  fixed  rate)  were  $125.0  million  and  $90.0  million,
respectively. The swap portfolio maturities at December 31, 1999 are as follows:
December  31,  2001-$50.0  million  and  January 2,  2002-$75.0  million.  As of
December 31, 1999,  the weighted  average  fixed rate payment on the variable to
fixed rate swaps was 6.89%. Variable rates received are indexed to LIBOR rate.

Note 19-Fair Value of Financial Instruments

The fair  value of a  financial  instrument  represents  the amount at which the
instrument could be exchanged in a current  transaction between willing parties,
other than in a forced sale or liquidation.

Fair value  estimates  are made at a specific  point in time,  based on relevant
market  information  about  the  financial   instrument.   These  estimates  are
subjective  in nature and  involve  uncertainties  and  matters  of  significant
judgment and therefore cannot be determined with precision. The assumptions used
have a significant effect on the estimated amounts reported.

The  following  methods and  assumptions  were used by the Company in estimating
fair value disclosures for financial instruments: (a) Cash and cash equivalents,
receivables,  other current assets,  accounts payable,  accrued  liabilities and
variable  rate debt:  The  amounts  reported  in the  accompanying  consolidated
balance sheets  approximate  fair value; (b) Fixed-rate debt: Fixed rate debt is
valued based upon  published  market  quotations,  as  applicable.  The carrying
amount of remaining  fixed-rate debt  approximates fair value; (c) Interest rate
swaps:   The  fair  value  of  interest  rate  swaps  was  determined  from  the
representations of financial institutions.  The carrying value and negative fair
value of the  Company=s  interest rate swaps was $0 and $644,000 at December 31,
1999, respectively, and $0 and $5.2 million at December 31, 1998, respectively.

Note 20-Subsequent Events

Proposed Acquisition of SIHL Ordinary Shares

On January 19, 2000, the Company  announced that it had received a proposal from
SIIL to acquire in a merger  transaction  all Ordinary Shares of the Company not
already owned by SIIL or its shareholders for $24 per share in cash. To consider
the proposal, the Company formed a committee of independent members of the Board
of Directors  (the  "Special  Committee")  which  retained its own financial and
legal  advisors.  The proposed  transaction  was subject to various  conditions,
including  approval  by the Special  Committee.  On June 16,  2000,  the Company
announced  that  SIIL  was  not  able  to  negotiate  a  mutually   satisfactory
transaction  with the Special  Committee  and that SIIL advised the Company that
its proposal had been withdrawn.


<PAGE>



In order to allow  shareholders  of the  Company  to sell at least a portion  of
their  Ordinary  Shares at the price  formerly  proposed  by SIIL,  the Board of
Directors  of the  Company  approved  a  self-tender  offer for up to  5,000,000
Ordinary  Shares at a $24 per  share  cash  price.  It is  anticipated  that the
self-tender offer will commence on June 26, 2000 and will be made by an Offer to
Purchase  and  related  materials,  copies  of  which  will be  filed  with  the
Securities and Exchange Commission and mailed to the Company's shareholders. The
self-tender  offer is subject to the terms and conditions set forth in the Offer
to Purchase,  including the condition  that the Ordinary  Shares  continue to be
listed for trading on the New York Stock  Exchange  and that the Company  remain
subject to periodic  reporting  requirements  of the Securities  Exchange Act of
1934. The Company has been advised that the approximately 53% of the outstanding
Ordinary  Shares  held by  SIIL  and its  shareholders  will  not be sold in the
self-tender.

In order to effect the  self-tender,  the Company  amended its Revolving  Credit
Facility to allow the Company to repurchase up to $175 million worth of Ordinary
Shares.  As part of this  amendment,  the Revolving  Credit Facility was reduced
from $625 million to $500 million.

Termination of Desert Inn Acquisition Agreement

In SIHL's Form 20-F Annual  Report for the year ended  December 31, 1998, it was
reported  that SIHL had entered into an Asset and Land Purchase  Agreement  with
Starwood Hotels and Resorts Worldwide Inc.  ("Starwood")  pursuant to which SIHL
had agreed to acquire the Desert Inn Hotel and Casino in Las Vegas (the  "Desert
Inn") for $275 million.

On March 2, 2000, SIHL and Starwood announced that they have agreed to terminate
their  agreement  and that if  Starwood  sold the  Desert  Inn for less that the
purchase price originally  agreed by SIHL, then SIHL will pay to Starwood 50% of
such  deficit,  up to a maximum of $15 million.  In the event that Starwood sold
the property for an amount in excess of the purchase price originally  agreed to
by SIHL, then SIHL will share 50% of such excess. Should SIHL be required to pay
$15  million of any  potential  deficit,  it would be paid from the $15  million
previously  paid to  Starwood.  The deposit is included in deferred  charges and
other assets in the accompanying consolidated balance sheets. On April 28, 2000,
it was  announced  by  Starwood  that it had  agreed to sell the  Desert Inn for
approximately  $270 million and the parties intended to close the transaction by
June 30, 2000.


<PAGE>




                                   SIGNATURES



Pursuant to the  requirements  of Section 12 of the  Securities  Exchange Act of
1934, the registrant  certifies that it meets all the requirements for filing on
Form 20-F and has duly caused  this annual  report to be signed on its behalf by
the undersigned, thereunto duly authorized.



                                     SUN INTERNATIONAL HOTELS LIMITED



Date: June 30, 1999                  By: /s/John R. Allison
                                         -------------------
                                     Name:  John R. Allison
                                     Title:    Executive Vice President
                                               Chief Financial Officer


<PAGE>


                              EXHIBIT INDEX

                                                         Sequentially
 Exhibit No.        Description                          Numbered Page

    3.1    Termination  Agreement among Sheraton    Incorporated by reference
           Desert Inn Corporation,  Starwood,       to Exhibit 2 to
           Sheraton Gaming Corporation, SIHL        SIHL's Form 6-K
           and Sun International                    Current Report dated
           Nevada, Inc. ("Sun Nevada") dated as     March 17, 2000, in
           of February 29, 2000, terminating        File No. 0-22794
           the Asset and Land Purchase Agreement
           among the parties, dated as of May
           17, 1999.

    3.2    Third Amended and Restated Revolving     Incorporated by reference
           Credit Agreement, dated as of November   to Exhibit 99(b)(1)
           1, 1999, among SIHL, Sun                 to SIHL's Tender
           International Bahamas Limited ("SIB"),   Offer Statement
           RIH and Sun Nevada as the Borrowers      dated June 26, 2000, in
           and Guarantors, and The Bank of Nova     File No. 005-48645
           Scotia as the Administrative Agent
           and Various Financial Institutions as
           the Lenders.

    3.3    First Amendment to the Third Amended     Incorporated by reference
           and Restated Credit Agreement, dated     to Exhibit 99(b)(2)
           as of June 13, 2000, among SIHL,         to SIHL's Tender
           SIB, RIH and Sun Nevada as the           Offer Statement
           Borrowers and Guarantors, and            dated June 26, 2000, in
           The Bank of Nova Scotia as the           File No. 005-48645
           Administrative Agent and Various
           Financial Institutions as the Lenders.

    3.4    Sun International Hotel Limited          86
           Audit Committee Charter


<PAGE>