AZTAR CORP, S-3/A, 1994-07-21

AZTAR CORP
S-3/A, 1994-07-21
MISCELLANEOUS AMUSEMENT & RECREATION

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 21, 1994

REGISTRATION NO. 33-54151
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

AMENDMENT NO. 1

TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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

AZTAR CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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

DELAWARE 86-0636534
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

2390 EAST CAMELBACK ROAD, SUITE 400
PHOENIX, ARIZONA 85016
(602) 381-4100
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

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

ROBERT M. HADDOCK
AZTAR CORPORATION
2390 EAST CAMELBACK ROAD, SUITE 400
PHOENIX, ARIZONA 85016
(602) 381-4100
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S AGENT FOR SERVICE OF PROCESS)

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

COPIES TO:
BRIAN G. CARTWRIGHT, ESQ. ALLAN G. SPERLING, ESQ.
LATHAM & WATKINS CLEARY, GOTTLIEB, STEEN & HAMILTON
633 WEST FIFTH STREET, SUITE 4000 ONE LIBERTY PLAZA
LOS ANGELES, CALIFORNIA 90071 NEW YORK, NEW YORK 10006
(213) 485-1234 (212) 225-2000

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after this Registration Statement becomes effective.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]

If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. [_]

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.

================================================================================
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION

JULY 21, 1994
PROSPECTUS

$180,000,000

AZTAR CORPORATION

% SENIOR SUBORDINATED NOTES DUE 2004

The % Senior Subordinated Notes Due 2004 (the "Notes") will be issued by
Aztar Corporation ("Aztar" or the "Company") and will mature on , 2004.
Interest on the Notes will be payable semi-annually on and , beginning
, 1995. The Notes will be redeemable at the election of the Company, in
whole or in part, on or after , 1999, at the redemption prices set forth
herein. Upon a Change of Control (as hereinafter defined), each holder of the
Notes will have the right to require the Company to repurchase such holder's
Notes at par. In addition, upon a Change of Control, the Company will have the
right to redeem the Notes at the redemption prices set forth herein.

The Notes will be general unsecured obligations of the Company and will be
subordinated in right of payment to all present and future Senior Indebtedness
(as hereinafter defined) of the Company, will rank pari passu with the
Company's 11% Senior Subordinated Notes Due 2002 (the "11% Notes") (of which
$200 million aggregate principal amount is outstanding) and will be effectively
subordinated to liabilities of the Company's subsidiaries. As of March 31,
1994, the Company's Senior Indebtedness (as adjusted for the offering of the
Notes and the use of proceeds thereof) was approximately $36 million and the
Company's subsidiaries had aggregate liabilities (including trade payables and
accrued liabilities and excluding amounts guaranteed by the Company) of
approximately $42 million. THERE IS CURRENTLY NO INDEBTEDNESS (AS HEREINAFTER
DEFINED) OF THE COMPANY OUTSTANDING THAT IS SUBORDINATED TO THE NOTES, AND THE
COMPANY HAS NO CURRENT PLANS TO ISSUE ANY INDEBTEDNESS THAT WOULD BE
SUBORDINATED TO THE NOTES.

SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN FACTORS TO BE CONSIDERED BY
PURCHASERS OF THE NOTES.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

NEITHER THE NEVADA GAMING COMMISSION, THE NEVADA STATE GAMING CONTROL BOARD NOR
THE NEW JERSEY CASINO CONTROL COMMISSION HAS PASSED UPON THE ACCURACY, ADEQUACY
OR INVESTMENT MERITS OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL.

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC (1) DISCOUNT COMPANY (1)(2)
<S> <C> <C> <C>
Per Note............................... % % %
Total.................................. $ $ $
</TABLE>

- --------------------------------------------------------------------------------
(1) Plus accrued interest, if any, from the date of original issuance.
(2) Before deducting expenses, estimated to be $ .
The Notes are offered subject to receipt and acceptance by the Underwriter, to
prior sale and to the Underwriter's right to reject any order in whole or in
part and to withdraw, cancel or modify the offer without notice. It is expected
that delivery of the Notes will be made at the office of Salomon Brothers Inc,
Seven World Trade Center, New York, New York, or through the facilities of The
Depository Trust Company, on or about , 1994.

- -----------------------
SALOMON BROTHERS INC
------------------------------------------------------------------------------

The date of this Prospectus is , 1994.
<PAGE>

[LOGO of AZTAR]

[Ramada Express
Logo]

Ramada Express
Hotel and Casino, [Photo of Ramada Express Exterior--night]
Laughlin, Nevada,
"The Gambling Train
of Laughlin," was
expanded in 1993 to
1,500 rooms and
50,000 square feet
of casino space.

[Tropicana Logo]

Tropicana Resort
and Casino, "The [Photo of Tropicana Exterior--Night]
Island of Las
Vegas," is at "The
New Four Corners"
of the Strip.

[TropWorld Logo]

TropWorld Casino
and Entertainment [Photo of TropWorld exterior--Day]
Resort, "The Gaming
World of Atlantic
City," utilizes a
theme celebrating
the heyday of the
Boardwalk.
<PAGE>

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

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

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 (collectively with any
amendments thereto, the "Registration Statement") under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the Notes offered by
this Prospectus. This Prospectus does not contain all the information set forth
in the Registration Statement and the exhibits and schedules thereto, to which
reference is hereby made. Statements made in this Prospectus as to the contents
of any contract, agreement or other document referred to are not necessarily
complete; with respect to each such contract, agreement or other document filed
as an exhibit to the Registration Statement, reference is made to the exhibit
for a more complete description of the matter involved.

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files periodic reports, proxy statements and other information with
the Commission. The Registration Statement and the exhibits thereto filed with
the Commission, as well as periodic reports, proxy statements and other
information filed by the Company with the Commission, may be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional
offices of the Commission located at 7 World Trade Center, Suite 1300, New
York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. The Company's common stock, par
value $.01 per share (the "Common Stock"), is listed on the New York Stock
Exchange. Such reports, proxy statements and other information concerning the
Company may also be inspected at the offices of the New York Stock Exchange at
20 Broad Street, New York, New York 10005.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed by the Company with the Commission are
incorporated by reference in this Prospectus: (a) Current Report on Form 8-K
dated July 9, 1993, (b) Annual Report on Form 10-K for the fiscal year ended
December 30, 1993, (c) Proxy Statement dated March 28, 1994 (except the
information set forth under the captions "Board Compensation Committee Report"
and "Comparative Stock Price Performance Graph") and (d) Quarterly Report on
Form 10-Q for the fiscal quarter ended March 31, 1994.

All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and
prior to the termination of the offering of the Notes (the "Offering") shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of the filing of such documents. Any statement contained
in a document incorporated by reference shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed incorporated document or in
any accompanying prospectus supplement modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.

The Company will provide without charge to each person to whom a copy of this
Prospectus is delivered, upon written or oral request, a copy of any or all of
the documents incorporated by reference as a part of the Prospectus and
Registration Statement, other than exhibits to such documents unless such
exhibits are specifically incorporated by reference therein. Requests should be
directed to Aztar Corporation, 2390 East Camelback Road, Suite 400, Phoenix,
Arizona 85016, Attention: Corporate Communications Office, telephone (602) 381-
4111.

3
<PAGE>

[THIS PAGE INTENTIONALLY LEFT BLANK]

4
<PAGE>

PROSPECTUS SUMMARY

This summary information is qualified in its entirety by the more detailed
information and financial statements (including notes thereto) appearing
elsewhere in this Prospectus.

THE COMPANY

Aztar Corporation ("Aztar" or the "Company") is one of the leading casino
entertainment companies in the United States. The Company operates TropWorld in
Atlantic City, New Jersey, Tropicana in Las Vegas, Nevada and Ramada Express in
Laughlin, Nevada.

The strategy of the Company has been to develop facilities with distinctive
themes that are "must-see" attractions in their respective gaming markets and
provide a full entertainment experience to attract gaming patrons. The Company
targets customers in the high end of the middle market, with particular
emphasis on slot customers.

The Company uses a database marketing system to create a loyal following of
repeat customers in its current markets. This technology will be expanded to
new facilities as they are opened. This marketing approach, which is based on a
combination of computerized card reader technology and a "frequent flier"
marketing concept, allows the Company to control marketing costs and to
optimize the profit contribution of its targeted casino patrons.

The Company believes it is well-positioned to expand its operations as
additional states and local jurisdictions adopt legislation to promote the
development of casino entertainment. Aztar has more than ten years of
experience operating casino entertainment facilities in Las Vegas and Atlantic
City, the two largest gaming markets in the country. Management believes that
its experience in developing and operating a wide range of successful casino
entertainment facilities is a distinct advantage as it enters new markets.

TropWorld

TropWorld Casino and Entertainment Resort ("TropWorld") recalls the heyday of
the Atlantic City Boardwalk piers with their amusement rides, carnival games
and strolling entertainers. The facility encompasses 10 acres and has ocean
beach frontage of 220 yards along the Boardwalk. TropWorld's 92,191-square-foot
casino contains 93 table games and approximately 2,800 slot machines. The
TropWorld complex comprises 1,020 hotel rooms, 80,000 square feet of meeting,
convention and banquet space, a 1,700-seat theatrical showroom, the largest in
Atlantic City, parking facilities for over 2,700 vehicles, gourmet restaurants,
several medium-priced restaurants and a food court, indoor and outdoor swimming
pools, tennis courts, a health and fitness club and a jogging track. The
Company is currently considering the construction of a third hotel tower of
approximately 600 rooms.

Tropicana

Tropicana Resort and Casino ("Tropicana") is located on a 34-acre site on the
southeast corner of Las Vegas Boulevard (the "Strip") and Tropicana Avenue in
Las Vegas, Nevada. Tropicana, which has a tropical island theme and is promoted
as "The Island of Las Vegas," has one of the world's largest swimming pools as
well as a five-acre water park and tropical garden enlivened by a collection of
tropical birds and fish. The casino, which occupies approximately 45,000 square
feet, contains over 1,550 slot machines and over 50 table games. The hotel has
1,907 hotel rooms and suites as well as approximately 100,000 square feet of
convention and exhibit space.

5
<PAGE>

In past years, Tropicana's casino revenue mix was dominated by table games,
particularly premium table games such as baccarat. Management's decision to
emphasize the slot segment and to implement the Company's database marketing
system at Tropicana has resulted in a substantial increase in slot revenue.

The opening of two large casino hotels near Tropicana during the fourth
quarter of 1993 has substantially increased hotel capacity near the
intersection of Tropicana Avenue and the Strip, now known as "The New Four
Corners." The increase in total casino and hotel capacity at this location has
increased the level of activity and visitor traffic around Tropicana.
Pedestrian traffic has been made faster, safer and more convenient as a result
of the recent construction by the State of Nevada of pedestrian skywalks
connecting the four corners of this intersection as well as the construction by
the Company of an additional pedestrian bridge connecting one of the skywalks
directly to the Tropicana casino. Management believes that the increased
activity has stimulated and will continue to stimulate additional walk-in
traffic that provides more opportunities for Tropicana to attract its target
customers and retain them through its database marketing system. There can be
no assurance, however, that the increased competition from these additional
properties will not have an adverse effect on Tropicana.

Ramada Express

Ramada Express Hotel and Casino ("Ramada Express") is located on 28 acres in
Laughlin, Nevada. Laughlin is situated on the Colorado River at Nevada's
southern tip. The facility features a Victorian-era railroad theme, including a
train that carries guests between the parking areas and the casino hotel. In
September 1993, the Company completed a $75 million expansion of Ramada
Express, on schedule and within budget. The expansion of Ramada Express
included a new 1,100-room tower, increasing the total to 1,500 rooms; a casino
expansion of 20,000 square feet, bringing the total to 50,000 square feet; a
1,100-vehicle parking garage, bringing the total parking capacity to 2,300
vehicles; and additional restaurant, special event and retail space. The
expanded casino contains 36 gaming tables and 1,620 slot machines. Since the
expansion, total revenue and operating income have increased significantly. For
the three months ended March 31, 1994, total revenue and operating income were
$21.8 million and $5.5 million, respectively, compared to $12.8 million and
$2.7 million, respectively, for the three months ended April 1, 1993.

New Markets

Aztar's primary efforts in emerging gaming markets are currently taking place
in the riverboat casino markets in Caruthersville, Missouri, and Evansville,
Indiana. The Company executed an agreement in September 1993 with the City of
Caruthersville, Missouri, to operate a casino riverboat, and filed an
application with the Missouri Gaming Commission for a gaming license to operate
the Caruthersville facility. Caruthersville is located on the Mississippi River
approximately 80 miles north of Memphis, Tennessee. Approximately 2.2 million
people live within 100 miles of Caruthersville. In January 1994, the Company
took delivery and began renovation on a vessel intended to be used in
Caruthersville. The Company hopes to begin operations in Caruthersville in
1995. However, commencement of operations is dependent on several factors that
are beyond the Company's control, including the granting of a gaming license by
the Missouri Gaming Commission. On June 9, 1994, the Missouri Gaming Commission
notified the Company that its application will be among the next three
applications to be considered. In addition, a number of other approvals would
also be required, including those of the U.S. Army Corps of Engineers and the
U.S. Coast Guard. "Games of skill" are permitted in Missouri; however, as a
result of a Missouri Supreme Court decision in early 1994, the use of slot
machines and other "games of chance" is currently not permitted in Missouri.
The Company intends to proceed with this project utilizing electronic machines
and gaming tables as approved by the Missouri Gaming Commission.

6
<PAGE>

Aztar has submitted a proposal to the City of Evansville, Indiana, for a
casino riverboat and has filed an application for a riverboat gaming license
with the Indiana Gaming Commission. The Company was named by the City of
Evansville in June 1994 as its choice to develop and operate the only riverboat
gaming facility that will be permitted in the Evansville market. Evansville,
located on the Ohio River in southwestern Indiana, has 2.5 million people
living within 100 miles, which encompasses the metropolitan Louisville,
Kentucky area. The Company and the City of Evansville have signed a development
agreement, and the City of Evansville will endorse the Company's license
request to the Indiana Gaming Commission. In addition, a number of other
approvals would also be required, including those of the U.S. Army Corps of
Engineers and the U.S. Coast Guard. Furthermore, a state trial court has ruled
that portions of the Indiana riverboat gaming law conflict with the state
constitution. Under this ruling, the Indiana Gaming Commission is precluded
from awarding licenses. The trial court decision is being appealed directly to
the Indiana Supreme Court, which is handling the case on an expedited basis.
Oral arguments in the case are currently scheduled for August 30, 1994.

The Company's principal executive offices are located at 2390 East Camelback
Road, Suite 400, Phoenix, Arizona 85016 and its telephone number is (602) 381-
4100.

RISK FACTORS

Prospective purchasers of the Notes should carefully read the specific
factors set forth under "RISK FACTORS" as well as the other information set
forth in this Prospectus.

7
<PAGE>

THE OFFERING

Issuer.......................... Aztar Corporation.

Securities Offered..............
$180 million principal amount of % Senior
Subordinated Notes Due 2004 (the "Notes"). The
Notes will be general unsecured obligations of
the Company issued pursuant to an Indenture
dated as of , 1994 (the "Indenture") by
and between the Company and American Bank
National Association, as trustee.

Interest........................ Interest will accrue and be paid in cash on
each and , commencing , 1995, until
maturity, at a rate of % per annum.

Subordination................... The Notes will be subordinated in right of
payment to all present and future Senior
Indebtedness (as hereinafter defined) of the
Company and will be effectively subordinated
to liabilities of the Company's subsidiaries.
As of March 31, 1994, the Company's Senior
Indebtedness was approximately $36 million (as
adjusted for the Offering and the use of
proceeds thereof) and the Company's
subsidiaries had aggregate liabilities
(including trade payables and accrued
liabilities and excluding amounts guaranteed
by the Company) of approximately $42 million.
In addition, the Notes will rank pari passu in
right of payment to the 11% Notes. As of March
31, 1994, $200 million principal amount of the
11% Notes was outstanding. There is currently
no Indebtedness (as hereinafter defined) of
the Company outstanding that is subordinated
to the Notes.

Optional Redemption............. The Notes will be redeemable at the option of
the Company, in whole or part, at any time on
or after , 1999 at the redemption prices
set forth herein, plus accrued and unpaid
interest, if any, to the date of redemption.

Special Redemption.............. The Notes will be subject to the redemption
requirements imposed by gaming laws and
regulations in the States of New Jersey and
Nevada, which are included in the Company's
Restated Certificate of Incorporation, and to
any redemption requirements of any other
jurisdictions in which the Company may have
future gaming operations.

Repurchase or Redemption Upon a
Change of Control..............
If a Change of Control (as hereinafter
defined) occurs, each holder of the Notes will
have the right to require the Company to
repurchase such holder's Notes at par, plus
accrued and unpaid interest, if any, to the
date of repurchase, subject to certain
conditions described herein. In addition, upon
a Change of Control, the Company will have the
right to redeem the Notes at the redemption
prices set forth herein, plus accrued and
unpaid interest, if

8
<PAGE>

any, to the date of redemption. See
"DESCRIPTION OF THE NOTES--Certain
Definitions--Change of Control." Under the
terms of certain Indebtedness of the Company
and its subsidiaries, the holders thereof may
have the right to require repayment of such
Indebtedness or its acceleration upon a Change
of Control. The Company's ability to
repurchase the Notes upon a Change of Control
will depend upon the Company having sufficient
funds available to satisfy its other
obligations, including Senior Indebtedness, as
well as the Company's obligations under the
Notes.

Principal Covenants............. The Indenture will contain certain covenants
that, among other things, will restrict the
ability of the Company and its subsidiaries to
incur additional Indebtedness or to grant
liens on their assets, restrict the ability of
the Company to pay dividends or to engage in
mergers, consolidations or sales of assets,
prohibit the Company from incurring any
Indebtedness that is senior to the Notes and
subordinate to Senior Indebtedness and
prohibit certain subsidiaries from restricting
their ability to make certain payments to the
Company and to other subsidiaries of the
Company.

Use of Proceeds.................
The net proceeds from the sale of the Notes
will be approximately $174 million. These
funds will be used to redeem the $170 million
principal amount of outstanding 13 1/2% First
Mortgage Notes Due 1996 (the "First Mortgage
Notes") of Aztar Mortgage Funding, Inc., a
wholly owned, special purpose subsidiary of
the Company ("Mortgage Funding").

9
<PAGE>

SUMMARY CONSOLIDATED FINANCIAL INFORMATION

The following table summarizes selected consolidated financial information of
the Company and its subsidiaries for the five fiscal years ended December 30,
1993 and the three months ended March 31, 1994 and April 1, 1993. The statement
of operations data and the balance sheet data are derived from the consolidated
financial statements of the Company. The unaudited data for the three-month
periods reflect all adjustments, such adjustments being normal recurring
accruals, which are necessary, in the opinion of management, for the fair
presentation of the results of such periods; such interim results, however, may
not be indicative of the results for the full year.

The Company was incorporated in 1989 to operate the gaming business (the
"Gaming Business") of Ramada Inc. ("Ramada"), which was transferred to the
Company, along with certain other assets and liabilities of Ramada, in the
restructuring of Ramada (the "Restructuring"). For accounting purposes the
Company is treated as the continuing accounting entity which is the successor
to the historical Ramada and which has discontinued the hotel business (the
"Hotel Business") and the restaurant business (the "Restaurant Business"). This
treatment differs from the treatment of the Restructuring for federal income
tax purposes.

The consolidated financial information is not necessarily indicative of the
Company's future results of operations or financial condition. The information
set forth below should be read in conjunction with "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION" and the Company's
consolidated financial statements and notes thereto appearing elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
------------------- ------------------------------------------------
MARCH 31, APRIL 1,
1994 1993 1993 1992 1991 1990 1989
--------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS)
STATEMENT OF OPERATIONS
DATA:
Revenues................ $130,566 $122,322 $518,762 $512,045 $481,285 $515,060 $522,255
Operating income (loss). 16,844 3,517 37,419 32,609 13,654 (3,574) (33,812)
Interest income......... 556 11,719 24,172 28,655 26,245 28,927 22,766
Interest expense........ (11,822) (11,727) (45,363) (31,132) (32,101) (33,407) (43,716)
Income (loss) from
continuing operations
before extraordinary
items and cumulative
effect of accounting
change................. 4,553 1,584 11,382 16,378 2,708 (15,922) (47,689)
Net income (loss)....... 4,553 1,584 11,382 19,805 6,498 (14,959) 79,441
BALANCE SHEET DATA:
Cash and cash
equivalents............ $ 35,020 $ 79,893 $ 39,551 $100,403 $ 77,117 $ 74,132 $ 98,966
Total assets............ 875,356 835,686 877,171 849,565 638,474 641,905 678,476
Long-term debt.......... 404,033 377,528 404,086 378,058 176,693 180,391 181,102
Shareholders' equity.... 351,403 337,479 346,988 333,749 318,900 312,771 338,528
OTHER DATA:
EBITDR*................. $ 28,475 $ 23,025 $ 97,818 $106,941 $ 89,038 $ 67,443 $ 57,656
Net cash provided by
(used in) operating
activities............. 11,005 (3,071) 50,325 31,783 39,172 15,682 34,468
Net cash provided by
(used in) investing
activities............. (14,993) (18,059) (145,251) (198,720) (27,141) (24,709) (128,279)
Net cash provided by
(used in) financing
activities............. (543) 620 34,074 190,223 (9,046) (15,807) 33,027
Capital expenditures.... 14,140 16,974 77,804 20,607 18,400 21,078 116,382
</TABLE>
- --------
* EBITDR means operating income before net rent plus depreciation and
amortization. EBITDR should not be construed as an alternative to operating
income (as determined in accordance with generally accepted accounting
principles) as an indicator of the Company's operating performance, or to
cash flows from operating activities (as determined in accordance with
generally accepted accounting principles) as a measure of liquidity. EBITDR
information has been included to facilitate comprehension of financial
covenants in the Indenture which are based, in part, on EBITDR.

10
<PAGE>

RISK FACTORS

Before making a decision to purchase any of the Notes, prospective purchasers
should carefully consider the following factors.

LEVERAGE

The Company has substantial fixed charges arising from debt service and
rental payment obligations. As of March 31, 1994, the Company had approximately
$407 million of total Indebtedness. After giving effect to the offering and the
use of net proceeds therefrom, the Company's total outstanding Indebtedness
will increase to approximately $417 million. All of the currently outstanding
debt obligations are required to be retired prior to the maturity of the Notes.
Those debt obligations include $200 million aggregate principal amount of the
11% Notes and $170 million principal amount of the First Mortgage Notes. The
Company plans to use the net proceeds from the sale of the Notes to redeem the
First Mortgage Notes. In addition, the Company has a $50 million credit
facility (of which $35 million was outstanding on March 31, 1994) arranged in
connection with the expansion of Ramada Express that was completed in September
1993, which will mature prior to the maturity of the Notes. The Company is
currently negotiating with a group of banks to enter into an approximately $212
million reducing revolving Proposed Credit Facility (as hereinafter defined).
The Company expects to use funds provided by the Proposed Credit Facility to
repay the $35 million outstanding under the $50 million credit facility, which
will then be terminated. The remaining funds under the Proposed Credit Facility
would be available for general corporate purposes, including to fund the
expansion of the Company's existing businesses and to fund the Company's
development of businesses in new gaming jurisdictions, including the properties
at Evansville and Caruthersville. Substantially all the Company's properties
are currently or will be pledged as collateral under long-term debt agreements,
including the Proposed Credit Facility.

As of March 31, 1994, there was approximately $73 million of bank financing
outstanding of Tropicana Enterprises (as hereinafter defined), the partnership
that owns the land and improvements constituting Tropicana, which, among other
things, requires quarterly payments of $170,000 and a final payment of $71
million upon maturity in 1996. Hotel Ramada of Nevada ("HRN"), a wholly-owned
subsidiary of the Company, leases Tropicana pursuant to the Tropicana Lease (as
hereinafter defined). HRN's lease payments under the Tropicana Lease finance
the payments required under the Tropicana Loan, and certain property of HRN,
including furniture, fixtures and equipment, is pledged as collateral for the
Tropicana Loan pursuant to the Tropicana Lease. The Company has guaranteed the
performance of HRN's obligations under the Tropicana Lease, including the
payment of rent. The rent the Company pays under the Tropicana Lease services
the principal and interest on the Tropicana Loan. See "CERTAIN CONTRACTUAL
ARRANGEMENTS." Concurrently with entering into the Proposed Credit Facility,
the same group of banks is expected to enter into an approximately $73 million
term loan with Tropicana Enterprises maturing on December 31, 1999, which will
refinance the Tropicana Loan (as hereinafter defined).

The Company's ability to service its debt and rental obligations, including
the Notes, or to refinance its obligations, will be dependent upon the future
performance of the Company's operations, in particular those of TropWorld. This
performance will be influenced by prevailing economic conditions and
competitive and other factors, many of which are beyond the Company's control.

SUBORDINATION

The Notes will be subordinated in right of payment to all present and future
Senior Indebtedness of the Company (approximately $36 million at March 31, 1994
as adjusted for the Offering and the use of proceeds thereof). There is
currently no Indebtedness of the Company outstanding that is

11
<PAGE>

subordinated to the Notes. Therefore, in the event of bankruptcy, liquidation
or reorganization of the Company, the assets of the Company will be available
to pay obligations on the Notes and the 11% Notes only after all Senior
Indebtedness has been paid in full, and there may not be sufficient assets
remaining to pay any or all amounts due on the Notes then outstanding. In
addition, substantially all of the remaining Indebtedness of the Company, as
well as Indebtedness of Tropicana Enterprises, is secured by assets of the
Company's subsidiaries. The Notes will be general unsecured obligations of the
Company. In the event of any payment or distribution of assets of the Company
in any foreclosure, dissolution, winding up, liquidation or reorganization, the
holders of secured Indebtedness will also have a secured prior claim with
respect to substantially all of the assets of the Company and its subsidiaries.

The operations of the Company are conducted through its subsidiaries and,
therefore, the Company is dependent on the earnings and cash flow of its
subsidiaries to meet its debt obligations, including its obligations with
respect to the Notes. Because the assets of the Company's subsidiaries
constitute a substantial portion of the assets of the Company, and because
these subsidiaries do not guaranty the payment of principal and interest on the
Notes, the Notes will be effectively subordinated in right of payment to
liabilities of the Company's subsidiaries. As of March 31, 1994, the Company's
subsidiaries had aggregate liabilities (including trade payables and accrued
liabilities and excluding amounts guaranteed by the Company) of approximately
$42 million.

In the event of a Change of Control, each holder of Notes will have the right
to require the Company to repurchase such holder's Notes at par, plus accrued
interest. Under the terms of certain Indebtedness of the Company, the holders
thereof may require repayment or its acceleration upon a Change of Control. The
subordination of the Notes may limit the ability of the Company to repurchase
the Notes, depending upon the funds available to the Company at such time. See
"DESCRIPTION OF THE NOTES--Repurchase or Redemption Upon a Change of Control."

DEPENDENCE ON RESULTS OF TROPWORLD

Approximately 63% and 55%, respectively, of the Company's consolidated
revenues for the year ended December 30, 1993 and for the three months ended
March 31, 1994 were derived from the operations of TropWorld in Atlantic City,
New Jersey. Because of TropWorld's importance to the Company's consolidated
operating results, poor performance at TropWorld could have a material adverse
effect on the Company. TropWorld experiences seasonal fluctuations in casino
play that management believes are typical of casino hotel operations in
Atlantic City. Operating results indicate that casino play is seasonally higher
from May through October; consequently, the Company's revenues during the first
and fourth quarters have generally been lower than for the second and third
quarters, and from time to time the Company has experienced losses in the first
and fourth quarters. Because TropWorld's operating results are especially
dependent upon operations in the summer months, any event that adversely
affects the operating results of TropWorld during such period could have a
material adverse effect on the Company's operations and financial condition.
See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION--Operating Results."

COMPETITION

Although the Company has been able to compete successfully in its gaming
markets in the past, there can be no assurance that the Company will be able to
continue to compete successfully in these markets.

12
<PAGE>

geographic area and, to a lesser extent, with casinos in other locations,
including Native American lands, and on cruise ships and riverboats, and with
other forms of legalized gaming in the United States, including state sponsored
lotteries, off-track wagering and card parlors. Certain states have recently
legalized, and several other states are currently considering legalizing,
casino gaming in specific geographic areas within those states. Legalization of
large-scale, unlimited casino gaming in or near any major metropolitan area or
increased gaming in other areas could have an adverse economic impact on the
business of any or all of the Company's gaming facilities. In particular, the
Atlantic City market faces competition from the legalization of gaming on
Native American lands in Connecticut and the possibility of competition from
the potential legalization of casino gaming in Delaware, Maryland, New York and
Pennsylvania.

Three major casino hotels recently have been constructed on the Strip. Two of
the new casinos, the 5,000-room MGM Grand and Circus Circus' 2,500-room Luxor,
are located adjacent to Tropicana near the intersection of Tropicana Avenue and
the Strip. The third casino, Mirage's 3,000-room Treasure Island, is located in
the middle of the Strip. These additional casinos have added a total of
approximately 10,500 rooms to an existing Las Vegas market base of
approximately 77,000 rooms, representing an increase of 14%. In addition, there
has been a significant increase in room supply and casino space in recent
years, including the opening of the 3,000-room Mirage in November 1989 and the
4,000-room Excalibur in June 1990. While the management of the Company believes
that MGM Grand and Luxor have stimulated and will continue to stimulate
additional walk-in traffic, there can be no assurance that the increased
competition from the new casinos will not have an adverse effect on Tropicana.
In 1994, plans were announced for several new projects in Las Vegas, including
two new casino resorts on the Strip that are expected to add approximately
235,000 square feet of casino space and 6,500 hotel rooms. Additional projects
have been announced in the Laughlin, Nevada market and expansion plans have
been announced in Atlantic City, New Jersey. See "BUSINESS--Competition and
Seasonality--Competition."

NEW GAMING JURISDICTIONS

The Company intends to continue to evaluate and pursue new gaming
opportunities in current and emerging markets, potentially including land-
based, dockside, riverboat and Indian gaming. The realization of such
opportunities is dependent in part on the legalization of casino gaming in
various states and the establishment of gaming on Native American lands. The
recent trend toward legalization of casino gaming may not continue. Legislation
relating to gaming has failed to pass in the legislatures of a number of
states. The Supreme Court of Missouri recently held that certain provisions of
the Missouri Gaming Law are invalid under the Missouri State Constitution, and
an Indiana state trial court has ruled that portions of the Indiana riverboat
gaming law conflict with the state constitution. See "BUSINESS--New Markets"
and "REGULATION--Regulation and Licensing--Missouri" and "--Regulation and
Licensing--Indiana."

The Company is pursuing potential gaming opportunities in certain
jurisdictions where gaming has recently been legalized, as well as
jurisdictions where gaming is not yet legalized. There can be no assurance that
legislation to legalize gaming will be enacted in any additional jurisdictions,
that any properties in which the Company may have invested will be compatible
with any gaming legislation so enacted, that legalized gaming will continue to
be authorized in any jurisdiction or that the Company will be able to obtain
the required licenses in any jurisdiction. Furthermore, competition for the
development of new gaming opportunities has intensified as established and
newly organized gaming companies compete for a limited number of sites and
licenses. There can be no assurance that attractive opportunities to develop
new gaming operations will be available to the Company or that the Company will
be able to recover its investment in any such opportunity. See "BUSINESS--New
Markets."

13
<PAGE>

CONSTRUCTION AND OPERATIONAL RISKS

Any new facilities opened by the Company will be subject to the many risks
inherent in the establishment of a new business enterprise, including
unanticipated design, construction, regulatory and operating problems, and the
significant risks commonly associated with implementing a marketing strategy in
new markets.

The Company has taken delivery and begun renovation of a boat intended to be
used for its proposed facility in Caruthersville, and construction of a boat
intended to be used for its proposed facility in Evansville has commenced. At
this time, the anticipated costs and completion dates of these projects are
based on the Company's estimates, and such cost estimates and projected
completion dates may change significantly as the projects progress. In
addition, each of these projects entails significant construction risks,
including shortages of materials or skilled labor, unforeseen environmental or
engineering problems, work stoppages, weather interference, floods,
unanticipated cost increases and other problems, any of which could have a
material adverse effect on the projects. While the Company expects that the
funds available under the Proposed Credit Facility will be sufficient to fund
the Company's currently planned expansion projects, there can be no assurance
that the Company will be able to obtain additional financing if the cost of
these projects increases substantially beyond the Company's current estimates.

The operation of such facilities may also be subject to additional risks.
Notable differences may exist between the operation of the Company's existing
land-based facilities and the operation of the Company's proposed riverboat
facilities. For example, riverboat gaming in Missouri and Indiana may be
subject to different gaming regulations and legislation from that which exists
in Nevada and New Jersey. In addition, riverboat facilities are subject to
operational disruptions, including casualty, mechanical failure, extended or
extraordinary maintenance, periodic U.S. Coast Guard inspection and flood or
other severe weather conditions.

LACK OF PUBLIC MARKET FOR THE NOTES

Prior to this offering, there has not been any market for the Notes, and
there can be no assurance as to the liquidity of any markets that may develop
for the Notes, the ability of holders of the Notes to sell their Notes, or the
prices at which holders of the Notes may be able to sell their Notes. Future
trading prices of the Notes will depend upon many factors, including, among
other things, prevailing interest rates, the Company's consolidated operating
results, and the market for similar securities, which market is subject to
various pressures, including, but not limited to, fluctuating interest rates.
The Company does not presently intend to list the Notes on a national
securities exchange, although it may apply to list the Notes in the future. The
Company has been advised by Salomon Brothers Inc ("Salomon" or the
"Underwriter") that Salomon intends to make a market in the Notes; however,
Salomon is not obligated to do so, and any market making activities may be
discontinued at any time without notice.

USE OF PROCEEDS

The net proceeds from the sale of the Notes will be approximately $174
million. The Company will loan the net proceeds from the sale of the Notes plus
additional funds to Mortgage Funding. Such funds will be used by Mortgage
Funding to redeem the $170 million principal amount of outstanding First
Mortgage Notes at a redemption price of 100% of principal amount plus accrued
interest to the redemption date. The First Mortgage Notes bear interest at a
rate of 13 1/2% and have a maturity date of September 15, 1996.

14
<PAGE>

SELECTED CONSOLIDATED FINANCIAL INFORMATION

The following table summarizes selected consolidated financial information of
the Company and its subsidiaries for the five fiscal years ended December 30,
1993 and the three months ended March 31, 1994 and April 1, 1993. The statement
of operations data and the balance sheet data are derived from the consolidated
financial statements of the Company. The unaudited data for the three month
periods reflect all adjustments, such adjustments being normal recurring
accruals, which are necessary, in the opinion of management, for the fair
presentation of the results of such periods; such interim results, however, may
not be indicative of the results for the full year.

The Company was incorporated in 1989 to operate the Gaming Business of
Ramada, which was transferred to the Company, along with certain other assets
and liabilities of Ramada, in the Restructuring. For accounting purposes the
Company is treated as the continuing accounting entity which is the successor
to the historical Ramada and which has discontinued the Hotel Business and the
Restaurant Business. This treatment differs from the treatment of the
Restructuring for federal income tax purposes.

<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
------------------- ------------------------------------------------
MARCH 31, APRIL 1,
1994 1993 1993 1992 1991 1990 1989
--------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT FOR RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS
DATA:
Revenues(a)............ $130,566 $122,322 $518,762 $512,045 $481,285 $515,060 $522,255
======== ======== ======== ======== ======== ======== ========
Operating income
(loss)(b)(c).......... $ 16,844 $ 3,517 $ 37,419 $ 32,609 $ 13,654 $ (3,574) $(33,812)
Interest income(c)..... 556 11,719 24,172 28,655 26,245 28,927 22,766
Interest expense....... (11,822) (11,727) (45,363) (31,132) (32,101) (33,407) (43,716)
-------- -------- -------- -------- -------- -------- --------
Income (loss) from
continuing operations
before other items,
income taxes,
extraordinary items
and cumulative effect
of accounting change.. 5,578 3,509 16,228 30,132 7,798 (8,054) (54,762)
Equity in
unconsolidated
partnerships' losses.. (940) (967) (3,822) (4,125) (5,030) (5,911) (6,436)
Minority interests(d).. -- -- -- -- -- (994) (986)
-------- -------- -------- -------- -------- -------- --------
Income (loss) from
continuing operations
before income taxes,
extraordinary items
and cumulative effect
of accounting change.. 4,638 2,542 12,406 26,007 2,768 (14,959) (62,184)
Income taxes........... (85) (958) (1,024) (9,629) (60) (963) 14,495
-------- -------- -------- -------- -------- -------- --------
Income (loss) from
continuing operations
before extraordinary
items and cumulative
effect of accounting
change................ 4,553 1,584 11,382 16,378 2,708 (15,922) (47,689)
Discontinued
operations(e)......... -- -- -- 1,262 2,553 -- 127,130
Extraordinary items(f). -- -- -- (5,335) 1,237 963 --
Cumulative effect of
accounting change(g).. -- -- -- 7,500 -- -- --
-------- -------- -------- -------- -------- -------- --------
Net income (loss)...... $ 4,553 $ 1,584 $ 11,382 $ 19,805 $ 6,498 $(14,959) $ 79,441
======== ======== ======== ======== ======== ======== ========
Ratio of earnings to
fixed charges(h)...... 1.32 1.11 1.15 1.45 1.06 -- --
======== ======== ======== ======== ======== ======== ========
BALANCE SHEET DATA:
Cash and cash
equivalents........... $ 35,020 $ 79,893 $ 39,551 $100,403 $ 77,117 $ 74,132 $ 98,966
Total assets........... 875,356 835,686 877,171 849,565 638,474 641,905 678,476
Long-term debt......... 404,033 377,528 404,086 378,058 176,693 180,391 181,102
Preferred stock........ 4,129 3,239 3,905 2,998 2,059 1,056 --
Shareholders' equity... 351,403 337,479 346,988 333,749 318,900 312,771 338,528
</TABLE>

15
<PAGE>

<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
------------------ ----------------------------------------------
MARCH 31, APRIL 1,
1994 1993 1993 1992 1991 1990 1989
--------- -------- -------- -------- ------- ------- --------
(IN THOUSANDS, EXCEPT FOR RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA:
EBITDR(i).............. $28,475 $23,025 $ 97,818 $106,941 $89,038 $67,443 $ 57,656
Net cash provided by
(used in) operating
activities............ 11,005 (3,071) 50,325 31,783 39,172 15,682 34,468
Net cash provided by
(used in) investing
activities............ (14,993) (18,059) (145,251) (198,720) (27,141) (24,709) (128,279)
Net cash provided by
(used in) financing
activities............ (543) 620 34,074 190,223 (9,046) (15,807) 33,027
Capital expenditures... 14,140 16,974 77,804 20,607 18,400 21,078 116,382
</TABLE>

NOTES TO SELECTED CONSOLIDATED FINANCIAL INFORMATION

(a) In 1990, the Company realized a $6,828,000 pretax gain on the sale of a
leasehold interest in the Tropicana golf course.

(b) In 1990, operating income reflects a $34,338,000 pretax expense resulting
from the conclusion of litigation commenced against Ramada in connection
with the 1979 acquisition of Tropicana.

(c) In July 1993, the Company acquired the partnership interests in Ambassador
Real Estate Investors, L.P. ("AREI") and Ambassador General Partnership
("AGP"). AREI owned a 99.9% general partnership interest in AGP, which
acquired a substantial interest in TropWorld in a sale-leaseback
transaction in 1984. Cash paid by Aztar and notes receivable from AGP were
replaced on Aztar's balance sheet by the assets acquired, which consisted
primarily of building and equipment. Most of the reduction in Aztar
interest income from the replacement of the AGP notes receivable is offset
by a reduction in rent expense. Aztar's net income is affected negatively
primarily by an increase in depreciation expense.

(d) Minority interests were eliminated in 1991 when the Company redeemed the
outstanding shares of Convertible Class A Preferred Stock of Ramada New
Jersey Holdings Corporation, a subsidiary of the Company.

(e) In 1989, the Company disposed of its hotel and restaurant businesses and
the following items are related to those discontinued operations. In 1992,
the Company reached a settlement with Canadian tax authorities in relation
to the 1988 and 1989 income tax returns of Ramada and received a refund of
$1,262,000. The amount in 1991 represents income tax benefits resulting
from the settlement of certain income tax issues related to the
discontinued operations. The amount in 1989 is the combined net gain on
disposal of the Restaurant Business and the Hotel Business and is
presented net of an income tax provision of $31,528,000.

(f) In connection with the AGP debt redemption in 1992, the Company paid a
prepayment premium and expensed its remaining deferred financing costs
(see Notes 5 and 15 to the Consolidated Financial Statements of the
Company for the year ended December 30, 1993). These items were reflected
as an extraordinary loss of $5,335,000, net of an income tax benefit of
$2,749,000. The Company has a net operating loss carryforward from 1989. A
portion of the tax benefit of the 1989 loss was offset against the 1991
and 1990 provisions for income taxes as an extraordinary item because the
tax benefit of the 1989 loss could not have been recorded previously.

(g) In February 1992, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 109, Accounting for Income
Taxes ("SFAS 109"), which superseded Statement of Financial Accounting
Standards No. 96 with the same title ("SFAS 96"). SFAS 96 was never
adopted by the Company. The Company adopted the provisions of SFAS 109 in
the first quarter of 1992 and elected not to restate prior year financial
statements. The effect from prior years of adopting SFAS 109 as of the
beginning of 1992 was a net deferred income tax benefit of $7,500,000.

(h) For purposes of determining the ratio of earnings to fixed charges, the
term "earnings" represents income (loss) from continuing operations before
income taxes, extraordinary items and cumulative effect of accounting
changes, plus fixed charges excluding capitalized interest. The term
"fixed charges" represents interest expense (including amortization of
debt issuance expense), capitalized interest and the portion of operating
lease rental expense considered to be representative of an interest
factor. Earnings were $14,059,000 and $61,172,000 less than fixed charges
in the years ended 1990 and 1989, respectively.

(i) EBITDR means operating income before net rent plus depreciation and
amortization. EBITDR should not be construed as an alternative to
operating income (as determined in accordance with generally accepted
accounting principles) as an indicator of the Company's operating
performance, or to cash flows from operating activities (as determined in
accordance with generally accepted accounting principles) as a measure of
liquidity. EBITDR information has been included to facilitate
comprehension of financial covenants in the Indenture which are based, in
part, on EBITDR.

16
<PAGE>

CAPITALIZATION

The following table sets forth the consolidated capitalization of the Company
as of March 31, 1994, and as adjusted to give effect to the sale of the Notes
and the application of the net proceeds therefrom as set forth in "USE OF
PROCEEDS." See the consolidated financial statements of the Company included
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
MARCH 31, 1994
------------------
ACTUAL AS ADJUSTED
------ -----------
(IN MILLIONS)
<S> <C> <C>
Cash and cash equivalents................................... $ 35.0 $ 38.7
====== ======
Current maturities of long-term debt........................ $ 2.5 $ 0.5
------ ------
Long-term debt (excluding current portion)
13 1/2% First Mortgage Notes Due 1996(a).................. 167.2 --
11% Senior Subordinated Notes Due 2002.................... 200.0 200.0
% Senior Subordinated Notes Due 2004.................... -- 180.0
Revolving credit facility (floating rate); matures June
30, 1996................................................. 35.0 35.0
Other mortgage loans; 7%; maturities to 1999.............. 0.7 0.7
Notes payable, other; 7%; maturities to 1999.............. 0.1 0.1
Obligations under capital leases.......................... 1.0 1.0
------ ------
Total long-term debt...................................... 404.0 416.8
------ ------
Total debt.............................................. 406.5 417.3
Preferred stock............................................. 4.1 4.1
Shareholders' equity(b)..................................... 351.4 348.5
------ ------
Total capitalization.................................... $762.0 $769.9
====== ======
</TABLE>
- --------
(a) Represents $170 million principal amount outstanding less current maturity
of $2.0 million and unamortized discount of $0.8 million.

(b) The reduction reflects unamortized debt issuance costs and unamortized
discount of the 13 1/2% First Mortgage Notes Due 1996 net of income tax
benefit.

17
<PAGE>

RECENT RESULTS OF OPERATIONS

The Company announced on July 19, 1994 that net income for the quarter ended
June 30, 1994 was $6.6 million, compared with $3.9 million for the quarter
ended July 1, 1993. Revenues for the quarter were $135.7 million compared with
$130.8 million for the comparable quarter of 1993. Operating income was $18.8
million in the 1994 second quarter, compared with $6.9 million in the second
quarter of 1993.

The results by property for the second quarter were as follows:

TropWorld had second-quarter revenues of $79.6 million compared with
$85.8 million for the second quarter of 1993, and operating income of $13.8
million compared with $6.2 million in the second quarter of 1993.

Tropicana had revenues for the second quarter of $35.6 million, up 8%
from $33.0 million in the comparable 1993 quarter, and operating income of
$2.7 million, up 199% from the $904,000 reported in the comparable period
last year.

Ramada Express had revenues for the second quarter of $20.5 million
compared with $12.0 million in the second quarter of 1993, up more than
70%, and operating income of $4.8 million compared with $1.9 million in the
second quarter of 1993, up more than 153 %.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION

OPERATING RESULTS

The following table sets forth the Company's revenues, operating expenses and
operating income on a consolidated basis and portions thereof generated by each
of the Company's three casino properties.

<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED
------------------ ----------------------
MARCH 31, APRIL 1,
1994 1993 1993 1992 1991
--------- -------- ------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
REVENUES:
TropWorld.......................... $72.1 $76.5 $327.7 $334.3 $310.3
Tropicana.......................... 36.7 33.0 134.9 130.9 129.4
Ramada Express..................... 21.8 12.8 56.2 46.8 41.6
----- ----- ------ ------ ------
Consolidated..................... 130.6 122.3 518.8 512.0 481.3
OPERATING EXPENSES:
TropWorld.......................... $62.6 $75.7 $294.2 $306.6 $298.1
Tropicana.......................... 32.6 30.8 127.7 126.6 126.2
Ramada Express..................... 16.3 10.1 50.7 38.1 35.6
Corporate.......................... 2.3 2.2 8.8 8.1 7.7
----- ----- ------ ------ ------
Consolidated..................... 113.8 118.8 481.4 479.4 467.6
OPERATING INCOME:
TropWorld.......................... $ 9.5 $ 0.8 $ 33.5 $ 27.7 $ 12.2
Tropicana.......................... 4.1 2.2 7.2 4.3 3.2
Ramada Express..................... 5.5 2.7 5.5 8.7 6.0
Corporate.......................... (2.3) (2.2) (8.8) (8.1) (7.7)
----- ----- ------ ------ ------
Consolidated..................... 16.8 3.5 37.4 32.6 13.7
</TABLE>

18
<PAGE>

Three Months 1994 Versus Three Months 1993

The Company's consolidated revenues were $130.6 million for the 1994 first
quarter, a 7% increase over $122.3 million for the 1993 first quarter, as
increases in total revenues at Ramada Express and Tropicana more than offset a
decrease in total revenues at TropWorld. The primary reason for the increase in
consolidated revenues was due to the major expansion completed in September
1993 of the Ramada Express facility. Consolidated operating income was $16.8
million in the 1994 first quarter compared with $3.5 million in the 1993 first
quarter. The primary reason for the increase in consolidated operating income
was a reduction in net rent at TropWorld. This reduction was principally caused
by the purchase in July 1993 of the partnership interests in AREI and AGP. AREI
owned a 99.9% general partnership interest in AGP, which acquired a substantial
interest in TropWorld in a sale-leaseback transaction in 1984. The reduction in
consolidated net rent was partially offset by an increase in consolidated
depreciation and amortization that was caused in large part by this purchase,
combined with higher depreciation and amortization at Ramada Express due to the
major expansion of that facility completed in September 1993. The Ramada
Express expansion was the primary cause for an increase in the consolidated
utilities expense in the 1994 first quarter. Consolidated casino costs were
lower in the 1994 first quarter compared to last year's first quarter largely
as a result of a reduction in complimentaries and coin redemptions at
TropWorld.

Consolidated interest income was $11.2 million lower in the 1994 first
quarter compared to last year's first quarter principally as a result of the
replacement on Aztar's balance sheet of the AGP notes receivable with the
assets acquired in the AREI/AGP acquisition.

For a discussion of income taxes, refer to Note 4 to the Consolidated
Financial Statements of the Company for the three months ended March 31, 1994.

Ramada Express. At Ramada Express, revenues and operating income for the 1994
first quarter increased substantially over last year's first quarter due to the
major expansion of that facility completed in September 1993. Total revenues
were $21.8 million in the 1994 first quarter, a 70% increase over $12.8 million
in the 1993 first quarter, reflecting increases in all revenue components.
Hotel occupancy was 92% on a 1,500-room base for the 1994 first quarter
compared to 94% on a 400-room base for the 1993 first quarter.

Operating income was $5.5 million in the first quarter of 1994 compared to
$2.7 million in last year's first quarter, a 106% increase. Operating income is
after net rent and depreciation and amortization expenses. Net rent was
insignificant in both quarters. As a result of the expanded facility,
depreciation and amortization was $1.9 million in the 1994 first quarter
compared to $1.1 million in last year's first quarter.

Tropicana. Total revenues at Tropicana were $36.7 million in the 1994 first
quarter, up 11% from $33.0 million in last year's first quarter. The increase
in revenues reflects significant pedestrian walk-in business being generated by
the new properties recently opened at the intersection of Las Vegas Boulevard
and Tropicana Avenue, commonly referred to as The New Four Corners of Las
Vegas. Management believes that walk-in business will be further enhanced as a
result of the recent construction by the State of Nevada of pedestrian skywalks
connecting the four corners at this intersection as well as the construction by
the Company of an additional pedestrian bridge connecting one of the skywalks
directly to the Tropicana casino.

Casino revenues were up 10% primarily as a result of a 16% increase in table
games revenue due to a higher hold percentage (19.8% in the 1994 first quarter
versus 17.3% in the 1993 first quarter). In addition, slot revenue improved 6%
in the 1994 first quarter versus the 1993 first quarter. Rooms revenue was 16%
higher principally because of higher room rates combined with higher
occupancies during the first quarter of 1994 compared to last year's first
quarter. The higher hotel occupancies, combined with the additional pedestrian
walk-in business mentioned previously, caused a 15% increase in food and
beverage revenue.

19
<PAGE>

Tropicana's operating income improved 90% to $4.1 million for the first
quarter of 1994 from $2.2 million for the first quarter of 1993. Operating
income is after net rent and depreciation and amortization expenses. Net rent
was $1.9 million in the 1994 first quarter versus $1.7 million in the 1993
first quarter. Depreciation and amortization was $1.6 million in both quarterly
periods. Total costs and expenses increased by a modest 6% in comparison to the
11% increase in total revenues. Since there is more credit business associated
with table games revenue than with slot revenue, the increase in table games
revenue caused an increase in the provision for doubtful accounts.

TropWorld. Total revenues at TropWorld were $72.1 million in the 1994 first
quarter compared to $76.5 million in the 1993 first quarter, a 6% decrease
primarily as a result of lower casino revenue. The decline in casino revenue
was caused by a reduction in the use of complimentary rooms and food and
beverage service as a means of promoting casino activity. In addition, there
was a decrease in coin redemptions in this year's first quarter compared to
last year's first quarter. Severe weather conditions in the East were, in large
part, the cause of declines in the market's growth rate for casino revenue
during January and February.

TropWorld had operating income of $9.5 million in the 1994 first quarter
compared to $0.8 million in last year's first quarter. The increase in
TropWorld's operating income was largely due to the effects of the AREI/AGP
acquisition which resulted in a reduction in net rent expense, partially offset
by higher depreciation and amortization expense. Net rent declined from $10.7
million in the 1993 first quarter to $0.3 million in the 1994 first quarter.
Depreciation and amortization increased from $4.2 million in the 1993 first
quarter to $5.7 million in the 1994 first quarter. In addition to the effects
of the AREI/AGP acquisition, operating costs decreased at TropWorld as a result
of a $5.0 million or 14% reduction in casino costs attributable to the decrease
in complimentaries and coin redemptions.

1993 Versus 1992

The Company's consolidated revenues were $518.8 million for 1993, an increase
of 1% from $512.0 million in 1992. The increase came primarily from an increase
in casino revenue resulting from the expansion at Ramada Express and improved
market share in the slot segment at Tropicana. Casino revenue at TropWorld was
lower in 1993 than in 1992, partially resulting from a $5.3 million year-over-
year decrease in the reversal of progressive jackpot accruals. The trend in the
mix of consolidated casino revenue that existed in 1992 continued into 1993
whereby the table games revenue was decreasing and the slot revenue was
increasing. Rooms revenue and food and beverage revenue continued to decline in
1993 as a result of a strategy of using rooms and food and beverage service as
a means of promoting casino activity. However, the expansion at Ramada Express
caused consolidated rooms revenue for 1993 to finish approximately even with
1992.

Consolidated operating income was $37.4 million in 1993 compared with $32.6
million in 1992. The primary reason for the increase in consolidated operating
income is the reduction in net rent. This reduction was principally caused by
the purchase of the AREI/AGP partnership interests in July 1993, which
eliminated the rent the Company incurred for the portion of TropWorld that was
owned by AREI/AGP. The net rent reduction was partially offset by the increase
in depreciation and amortization that was caused primarily by this purchase.
Consolidated casino costs were higher because of the increased use of rooms and
food and beverage service as a means of promoting casino activity and increased
coin redemptions at TropWorld. Since there was more credit business associated
with table games revenue than with slot revenue, the decrease in table games
revenue allowed for a decrease of $1.1 million or 40% in the provision for
doubtful accounts. Additional analysis of the performance of each of the
Company's three properties follows.

Tropicana. Tropicana continued to improve in 1993. Once again, an increase in
revenue contributed to improved operating income as Tropicana held the increase
in total operating costs to 1% or less. Total revenues for Tropicana were up 3%
to $134.9 million in 1993 compared to

20
<PAGE>

$130.9 million in 1992 and operating income improved 68% to $7.2 million from
$4.3 million. Operating income is after net rent of $6.8 million in 1993
compared to $7.1 million in 1992 and depreciation and amortization of $6.5
million in 1993 compared to $7.1 million in 1992.

Casino revenue was up 7% in 1993 as Tropicana continued its shift in the mix
of table games revenue and slot revenue. Table games revenue was down 8% in
1993 on top of a 7% decrease in 1992. Table games revenue declined over a
period of years as a result of lower baccarat revenue as the Company shifted
from a historical dependence on premium table games to the slot segment of the
business. Baccarat revenue amounted to only 3% of casino revenue in 1993
compared to 7% in 1992 and 10% in 1991. Slot revenue, on the other hand,
increased 19% in 1993 on top of a 25% increase in 1992. The mix of slot
revenue to total casino revenue was 63% in 1993 compared to 56% in 1992 and
49% in 1991. This shift in the revenue mix allowed Tropicana to be a steady
producer of operating income and less subject to the volatility associated
with baccarat revenue.

The number of rooms occupied in 1993 increased 6% over 1992 but the revenues
from rooms and food and beverage decreased in 1993 from 1992. This situation
was a result of increased complimentaries as the Company made greater use of
its database targeted marketing strategy and as its database increased. The
increased complimentaries resulted in higher casino costs since the Company
charged the cost of complimentaries to the casino department.

Major cost savings in 1993 compared to 1992 occurred in two categories. One
reduction was $1.1 million in marketing costs due to less television
advertising. The other reduction was also $1.1 million and it occurred in the
provision for doubtful accounts. This reduction was a benefit associated with
the mix in revenue toward more slot revenue and less table games revenue. With
regard to staffing, the Company operated in 1993 at about the same level as in
1992. However, its payroll and related taxes and benefits went up about 4% in
1993 compared to 1992 primarily from a 9% increase in taxes and benefits.

TropWorld. TropWorld had a difficult year in 1993 with poor economic
conditions in the Northeast, a very competitive local market and increased
competition from other gaming jurisdictions. The rate of growth for casino
revenue in the Atlantic City market was anemic for the year. As participants
in the market tried to maintain or increase market share in this environment,
the costs associated with attracting revenue went up, which caused pressure on
margins and profits.

TropWorld's revenues decreased 2% to $327.7 million in 1993 from $334.3
million in 1992, while operating income increased 21% to $33.5 million from
$27.7 million. Casino revenue was down $5.1 million or 2% in 1993 compared to
1992. Continuing the trend from prior years, table games revenue in 1993 was
down $10.4 million from 1992 while slot revenue was up $5.3 million in spite
of a year-over-year $5.3 million decrease in the reversal of slot machine
progressive jackpot accruals. The slot revenue percentage of total casino
revenue increased again in 1993 to 76% from 73% in 1992 and 69% in 1991. While
the slot segment of the casino business has a higher gross operating margin
than the table games segment, the Company believes the customers' desired
casino experience includes a certain level of tables games activity. The
Company therefore anticipates that the slot revenue percentage of total casino
revenue will be maintained rather than continue to increase.

The increase in slot revenue came at a high cost. The Company increased
promotional programs in anticipation of a greater market growth rate than what
actually occurred. Specifically, the Company increased the number of rooms
occupied on a complimentary basis by 11%. There was also an increase in coin
redemptions of $4.7 million in 1993 compared to 1992. These two items were the
primary causes of a $4.8 million or 3% increase in casino costs for 1993
compared to 1992.

Since payroll and related taxes and benefits are the Company's largest cost
item, the Company monitors the level of full-time equivalent headcounts. These
costs in 1993 were $0.3 million less than in 1992.

21
<PAGE>

Net rent in 1993 was $20.4 million compared to $38.2 million in 1992 and
depreciation and amortization in 1993 was $20.4 million compared to $17.3
million in 1992. The primary cause of both the decrease in net rent and the
increase in depreciation and amortization was the purchase of the AREI/AGP
partnership interests.

Ramada Express. Ramada Express started 1993 with approximately 400 hotel
rooms, 30,000 square feet of casino space and surface parking for 1,500
vehicles. The facility ended 1993 with approximately 1,500 hotel rooms, 50,000
square feet of casino space, parking for 2,300 vehicles with about one-half in
a garage, additional food and beverage facilities, and additional special event
and retail space.

The expansion began in September 1992 and was completed in September 1993.
Because of this expansion, the operating results for 1993 are not comparable to
1992. Ramada Express revenues were $56.2 million in 1993 compared to $46.8
million in 1992. Operating income was $5.5 million in 1993 compared to $8.7
million in 1992. Operating income is after depreciation and amortization of
$5.4 million in 1993 compared to $3.9 million in 1992. Net rent was not
significant in either year.

All significant revenue components were higher in 1993 than in 1992 and all
significant cost components were higher in 1993 than in 1992. Ramada Express
operating income was lower in 1993 than in 1992 as a result of the disruption
to its operations associated with the construction activities and additional
costs incurred to minimize that disruption. In the third quarter 1993, the
Company expensed $1.4 million of costs associated with the opening of the
expanded facilities.

During December 1993, the Company lowered the Ramada Express room rates in
order to increase occupancy and to build its customer database. This approach
was successful as the Ramada Express occupied room nights more than tripled in
December 1993 compared to December 1992.

New Gaming Jurisdictions. In mid-1993, the Company began pursuing the
development of its business in various gaming jurisdictions. In addition to
those jurisdictions mentioned in the analysis of financial condition, the
Company was one of four finalists but unsuccessful in its proposal to develop
and operate a casino complex in Windsor, Ontario. The Company also investigated
several other locations in Missouri and Indiana. In connection with these
efforts, it expensed approximately $1.3 million in development costs in 1993.

Interest Income and Expense. Interest income declined by $4.5 million in 1993
compared to 1992. The replacement of the AGP notes receivable on Aztar's
balance sheet with the assets acquired in the acquisition of the AREI/AGP
partnership interests in July 1993 caused a net decrease of $2.9 million in
1993. Included in this $2.9 million net decrease was an increase of $7.4
million as a result of a $171 million 12 1/4% First Mortgage note receivable
from AGP. The Company loaned AGP the $171 million in November 1992 so that AGP
could redeem its outstanding 12% First Mortgage Notes Due 1996. This note was
one of the notes receivable that were replaced in the AREI/AGP acquisition.

Interest expense increased by $14.2 million in 1993 compared to 1992.
Interest incurred on the $200 million principal amount of 11% Notes that were
issued in October 1992 was $17.2 million higher in 1993 than in 1992. This
increase in interest expense was offset by $2.4 million of increased interest
being capitalized in 1993 in association with construction projects.

Discontinued Operations. The Company received a refund of $1.2 million in a
settlement in 1992 with Canadian tax authorities related to the 1988 and 1989
income tax returns of Ramada involving the discontinued hotel business.

Extraordinary Items. The Company had an extraordinary loss in 1992 of $5.3
million, net of an income tax benefit of $2.8 million, related to the payment
of a redemption premium and the writeoff of deferred financing costs associated
with the redemption of the $171 million of outstanding 12% First Mortgage Notes
Due 1996 of AGP.

22
<PAGE>

Accounting Change. In 1992, the Company adopted SFAS 109 related to the
reporting of income taxes. The effect of this action and the Company's election
not to restate prior-year financial statements resulted in a net deferred
income tax benefit of $7.5 million.

1992 Versus 1991

The Company's consolidated revenues were $512.0 million for 1992, an increase
of 6% from $481.3 million in 1991, reflecting higher revenues from all three
properties. The increase in revenues was primarily a result of increases in
casino revenue at all three properties resulting from market growth in the slot
segment, added slot machine capacity, improved market shares and the reversal
of $6.0 million of progressive jackpot accruals at TropWorld. Rooms and food
and beverage revenue declined at all three properties, reflecting a continuing
strategy of using rooms and food and beverage service as a means of promoting
casino activity.

The Company's consolidated operating costs and expenses were $479.4 million
in 1992, a 3% increase from $467.6 million in 1991. The increase primarily
reflects a larger volume of business. Consolidated marketing expenses were
higher, reflecting increased marketing expenses at all three properties, as a
result of increased staffing, higher levels of expenses for entertainers, and
special promotions to stimulate incremental revenue.

Consolidated operating income was $32.6 million in 1992, a 138% improvement
over $13.7 million in 1991, reflecting improved operating results at all three
properties. Increased revenues from the more profitable slot segment combined
with relatively lower increases in costs and expenses resulted in operating
efficiencies that led to higher operating margins at all three properties.
Operating income is after net rent of $45.7 million in 1992, down $1.5 million
from 1991 principally as a result of a $0.9 million decline in the interest
factor at Tropicana due to an overall decline in interest rates in 1992.

TropWorld. TropWorld had a successful year in 1992 despite continuing poor
economic conditions in the Northeast and a very competitive market. TropWorld
revenues rose 8% to $334.3 million in 1992 from $310.3 million in 1991, while
the increase in costs and expenses was proportionally less, 3% to $306.6
million from $298.1 million. The most important source of the resulting
excellent operating flow-throughs was in the casino, where total revenues
increased 9% while associated casino and marketing expenses increased 7%.
TropWorld's use of rooms and food and beverage services as a way to promote
casino activity resulted in a 10% decrease in revenue in those categories, with
a corresponding 9% decrease in rooms and food and beverage costs.

The Atlantic City market recorded strong growth in 1992 with $3.2 billion of
casino win*, an increase of 7.5% from 1991. TropWorld's growth exceeded the
market's with casino revenue up 8% to $310 million, its highest ever, from $287
million in 1991. Slot operations were the driving force at TropWorld in 1992.
Slot win for 1992 was $227.5 million, a 15% increase over $198.4 million in
1991 due to a targeted marketing and product strategy and growth in the market.
The Atlantic City slot market grew 14% during 1992, reaching $2.114 billion in
slot win, up from $1.851 billion in 1991. TropWorld captured 10.8% of the slot
market in 1992, compared with a 10.7% share in 1991 and 10.3% in 1990. Atlantic
City market-wide table games revenue declined approximately 3% in 1992, to
$1.102 billion from $1.140 billion in 1991. TropWorld's table games revenue
dropped to $83 million in 1992, a 7% decrease. The decline in table games
revenue in 1992 was the fourth consecutive year of decline in the Atlantic City
market and the third consecutive year of decline at TropWorld, in both cases
somewhat by design. With the easing of restrictions on the allocation of casino
floor space, operators dedicated more floor space to the more profitable slot
segment, thereby reducing the number of table games units.

TropWorld's improvements in operating efficiencies, partially a result of the
change in the mix of revenue toward higher-margin slots from table games, were
reflected in a 127% improvement in operating income, to $27.7 million from
$12.2 million. The decrease in table games revenue together

- --------
*Market comparisons are stated on a calendar basis for the market and property.

23
<PAGE>

with the issuance of less credit allowed for a decrease in the provision for
doubtful accounts of 75% to $0.5 million in 1992 from $2.0 million in 1991.
Operating income after net rent was $38.2 million in 1992, down from $38.6
million in 1991. Depreciation and amortization was $17.3 million in both
years. To some extent the year-over-year comparison favors 1992 because of the
negative effects the Persian Gulf War had on operations at TropWorld in the
first quarter of 1991.

Tropicana. Tropicana reported improved results for 1992 despite external
factors including a highly competitive market due to unabsorbed capacity and
to negative economic conditions, particularly in southern California. The Las
Vegas market in 1992 experienced visitor growth that was weak by Las Vegas
standards early in the year, countered in part by a boost due to deep air fare
discounting during the summer.

Tropicana revenues for 1992 were $130.9 million, a gain of 1% from $129.4
million in 1991. Casino revenue was 8% higher in 1992 than in 1991. Tropicana
made significant progress in 1992 in the continuing shift from its historical
dependence on premium table games to the slot segment, which has higher growth
rates and better profit margins. Slot revenue growth at Tropicana was
significantly higher than growth in the market as a result of increased slot
machine capacity and improved slot machine product in the casino, coupled with
increased slot marketing efforts. Slot revenue at Tropicana rose 27%* in 1992
while Las Vegas market slot revenues rose 9%. Tropicana win from games
excluding baccarat was down 3% in 1992. Total games revenue, including
baccarat, was down 7%. The games hold percentage was basically unchanged in
1992 from 1991 (19.1% for 1992 versus 19.4% for 1991). The decrease in games
revenue allowed for a decrease in the provision for doubtful accounts of 25%,
to $2.1 million in 1992 from $2.8 million in 1991.

Occupancy at Tropicana was higher in 1992 than in 1991 by more than two
occupancy points. But continuing pressure on room rates in Las Vegas and
greater utilization of Tropicana's rooms to promote its casino games resulted
in an 8% reduction in rooms revenue. Food and beverage revenue was also lower,
by 13%, because of lower demand for banquets and the closing of Tropicana's
buffet. Food and beverage costs were correspondingly 14% lower in 1992 than in
1991.

Cost and expenses were $126.6 million in 1992, less than 1% higher than the
level of $126.2 million in 1991. Costs and expenses in 1992 included $7.1
million of net rent, compared with $8.0 million in 1991, and depreciation and
amortization of $7.1 million in 1992, compared with $6.9 million in 1991.
Operating income was $4.3 million in 1992, an increase of 34% from $3.2
million in 1991.

Ramada Express. Ramada Express revenues for 1992 were $46.8 million, a 13%
increase from $41.6 million in 1991. Costs and expenses rose less than half of
the revenue increase, creating good flow-through to profit and higher overall
operating margins. Costs and expenses included $3.9 million of depreciation
and amortization in 1992, compared with $3.7 million in 1991. Net rent was not
significant in either year. Operating income was $8.7 million in 1992, an
increase of 45% from $6.0 million in 1991.

Ramada Express turned in a strong operating performance in 1992, improving
its market position in a highly competitive atmosphere even as the Company
commenced in September a $75 million expansion of the property. Despite some
negative impact from the woes of the southern California economy, the Laughlin
market grew strongly in 1992. Casino revenues* for the market were $506.9
million for 1992, a 9% increase from $463.4 million in 1991. Slot revenue
growth for the Laughlin market was particularly strong, with slot revenues
growing 12% during 1992, while Ramada Express slot revenue grew 22% in the
same period. Rooms occupancy for the Laughlin market was 91% for 1992 compared
with 90% in 1991. Occupancy at Ramada Express was 90% in 1992, 2.5 occupancy
points higher than the previous year.

- --------
*Market comparisons are stated on a calendar basis for the market and
property.

24
<PAGE>

Interest Income and Expense. Interest income increased $2.5 million in 1992
from 1991, due principally to the $171 million note receivable from AGP.
Consolidated interest expense in 1992 was $31.1 million, down $1.0 million
from the prior year. The Company incurred $5.2 million of interest expense in
1992 in connection with the $200 million principal amount of 11% Notes issued
in October 1992. That increase was offset by decreases in interest expense
that occurred principally as a result of three factors, the primary factor
being the expiration on December 31, 1991 of an interest rate swap agreement.
The other factors were the payment in January 1992 of a settlement with the
Internal Revenue Service on which interest had been accrued in 1991 and the
capitalization of interest on the Ramada Express expansion.

Unconsolidated Partnership. The Company's loss on its equity share in
Tropicana Enterprises, the partnership that owns the Tropicana land and
improvements, declined as a result of lower interest expense due to an overall
decline in interest rates in 1992 on the floating rate bank financing of
Tropicana Enterprises. Aztar is a noncontrolling 50% partner in Tropicana
Enterprises.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flow. The following table sets forth the Company's EBITDR*, as measured
by operating income before net rent plus depreciation and amortization, on a
consolidated basis and portions thereof generated by each of the Company's
three casino properties.

<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED
------------------ --------------------
MARCH 31, APRIL 1,
1994 1993 1993 1992 1991
--------- -------- ----- ------ -----
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
EBITDR:*
TropWorld............................ $15.5 $15.7 $74.3 $ 83.2 $68.1
Tropicana............................ 7.6 5.5 20.5 18.5 18.1
Ramada Express....................... 7.4 3.8 11.1 12.7 9.7
Corporate............................ (2.1) (2.0) (8.1) (7.5) (6.8)
----- ----- ----- ------ -----
Consolidated....................... 28.4 23.0 97.8 106.9 89.1
</TABLE>
- --------

* EBITDR means operating income before net rent plus depreciation and
amortization. EBITDR should not be construed as an alternative to operating
income (as determined in accordance with generally accepted accounting
principles) as an indicator of the Company's operating performance, or to
cash flows from operating activities (as determined in accordance with
generally accepted accounting principles) as a measure of liquidity. EBITDR
information has been included to facilitate comprehension of financial
covenants in the Indenture which are based, in part, on EBITDR.

Net cash provided by (used in) operating activities was $11.0 million,
$(3.1) million, $50.3 million, $31.8 million and $39.2 million for the three
months ended March 31, 1994 and April 1, 1993 and the years ended 1993, 1992
and 1991, respectively. These amounts, when adjusted by (i) deducting interest
income and adding back interest expense and net rent from the Consolidated
Statements of Operations and (ii) deducting cash income taxes refunded and
adding back cash income taxes paid from the Consolidated Statements of Cash
Flows, were $24.6 million, $9.6 million, $101.3 million, $88.1 million and
$91.8 million for the three months ended March 31, 1994 and April 1, 1993 and
the years ended 1993, 1992 and 1991, respectively. The $9.6 million for the
three months ended April 1, 1993 is after an interest payment of $11.0 million
that was due April 1, 1993 on the 11% Notes. The $88.1 million for 1992 is
after an $8.4 million payment to the Internal Revenue Service for interest on
tax deficiencies arising from the 1984 and 1985 income tax returns of Ramada.

Ramada Express Expansion and Financing. One of the Company's three major
capital expenditures in 1993 was the expansion of Ramada Express, which was
completed in September, on

25
<PAGE>

schedule and within budget. The expansion included a new 1,100-room tower;
20,000 square feet of casino space, bringing the total to 50,000 square feet;
a 1,100-vehicle parking garage; additional restaurant, special event and
retail space; and other amenities. The Company spent $60.0 million on this
project in 1993 for a total cost of $74.7 million. Financing was provided
primarily out of cash and cash flow. In the fourth quarter of 1993, the
Company borrowed $25 million under its $50 million construction and term loan
credit facility that is collateralized by Ramada Express. In December 1993,
the Company entered into the First Amended and Restated Credit Agreement,
which converted the construction and term loan into a $50 million revolving
credit facility that matures in June 1996 (the "Ramada Express Credit
Facility"). This new credit agreement can be used for general corporate
purposes and may be converted into a three-year reducing revolving line of
credit.

Purchase of Third Party Partial Interest in TropWorld. A second major
capital expenditure in 1993 was the purchase in July of the partnership
interests in AREI and AGP. AREI owned a 99.9% general partnership interest in
AGP, which acquired a substantial interest in TropWorld in a sale-leaseback
transaction in 1984. The aggregate consideration, including costs incurred to
complete the transaction, was approximately $62 million. The Company funded
the AREI/AGP acquisition using cash and a $10 million revolving credit loan
obtained in July 1993. This acquisition did not significantly change Aztar's
total assets. The cash paid by Aztar and notes receivable from AGP were
replaced on Aztar's balance sheet by the assets acquired. The additional $10
million of indebtedness incurred by Aztar was more than offset by a reduction
of indebtedness to AGP.

Tropicana Project. At December 30, 1993, the Company was in the process of
constructing a new main entrance, adding a new building facade that will
create a colorful Caribbean Village motif facing The New Four Corners of Las
Vegas and funding a portion of the construction by the State of Nevada of a
four-way pedestrian skywalk system at the intersection of Las Vegas Boulevard
and Tropicana Avenue. Expenditures in 1993 were approximately $5 million on
this project and will be approximately $6 million in 1994. Funding for this
project was and will be from available cash balances and cash flow. This
project was substantially completed in May 1994.

Stock Options. An additional source of funds in 1993 was $2.1 million from
the exercise of stock options for approximately 339,000 shares of common
stock.

Proposed Credit Facility and Refinancings. The Company's maturities of long-
term debt were $2.2 million in 1993 and are $2.5 million and $12.5 million for
1994 and 1995, respectively. The 1994 and 1995 maturities of long-term debt
include $2 million each year for mandatory sinking fund payments on the First
Mortgage Notes. These notes are redeemable at par at the option of the
Company, in whole or in part, on or after September 15, 1994 and are expected
to be redeemed with proceeds from this Offering. When the First Mortgage Notes
are redeemed, the Company will expense the remaining unamortized deferred
financing costs and unamortized discount. This expense would be presented as
an extraordinary charge and shown net of an income tax benefit. These
unamortized items totaled $4.8 million at December 30, 1993. Also included in
the 1995 maturities is $10 million borrowed under the revolving credit
facility obtained in connection with the AREI/AGP acquisition (the "AREI/AGP
Facility"), which expires on December 31, 1994. The $10 million was repaid in
full by drawing on the Ramada Express Credit Facility during the first quarter
of 1994.

The Company is currently negotiating with a group of banks to enter into an
approximately $212 million reducing revolving credit facility maturing on
December 31, 1999 (the "Proposed Credit Facility"). The availability of funds
under this facility will reduce from $212 million quarterly beginning on March
31, 1996 in the annual amounts of $25 million in 1996 and $35 million in each
year thereafter until maturity. The Proposed Credit Facility will be secured
by all the property of TropWorld and Ramada Express and, with certain
exceptions, the stock of the Company's subsidiaries. The Company expects to
use funds provided by the Proposed Credit Facility to repay the outstanding
amount due under the Ramada Express Credit Facility, which will then be
terminated. Concurrently with or prior to the closing

26
<PAGE>

of the Proposed Credit Facility, the AREI/AGP Facility will also be terminated.
The remaining funds under the Proposed Credit Facility would be available for
general corporate purposes, including to fund the expansion of the Company's
existing businesses and to fund the Company's development of businesses in new
gaming jurisdictions, including the properties at Caruthersville and
Evansville. See "BUSINESS--New Markets."

Concurrently with entering into the Proposed Credit Facility, the same group
of banks would enter into an approximately $73 million term loan with Tropicana
Enterprises maturing on December 31, 1999, which would refinance the existing
Tropicana Loan. The term loan is expected to call for principal payments of
between $1.2 million and $3.3 million each year with a final payment of
approximately $57 million due at maturity.The term loan would be secured by the
Tropicana property. The Tropicana Loan is serviced through rent payments made
by the Tropicana operation. The Company is a noncontrolling 50% partner in
Tropicana Enterprises.

Commitments and On-Going Capital Expenditures. At March 31, 1994 and December
30, 1993, the Company had commitments of approximately $20 million and $13
million, respectively, for the purchase of fixed assets. In 1994, including the
remaining expenditures on the Tropicana project, the Company plans to spend
approximately $33 million on routine capital expenditures at its three land-
based properties and the purchase and renovation of the vessel acquired in
January. In addition to this, expenditures will be required for the
Caruthersville facility; however, the timing of these expenditures is
uncertain. The Company believes that the proceeds of this Offering, the funds
available under the Proposed Credit Facility, continuing cash flow and cash
balances will be sufficient to meet any anticipated obligations as well as any
working capital and liquidity requirements.

CERTAIN CONTRACTUAL ARRANGEMENTS

Tropicana Enterprises ("Tropicana Enterprises"), which owns Tropicana, is a
general partnership in which an unaffiliated group of persons (the "Jaffe
Family") and Adamar of Nevada ("Adamar of Nevada"), a wholly-owned subsidiary
of the Company, each owns a 50% general partnership interest. Tropicana
Enterprises leases Tropicana to HRN pursuant to the Tropicana Lease, and the
Company guarantees HRN's obligation under the Tropicana Lease.

TROPICANA ENTERPRISES PARTNERSHIP AGREEMENT

Adamar of Nevada and the predecessors in interest of certain members of the
Jaffe Family are partners of Tropicana Enterprises pursuant to an Amended and
Restated Partnership Agreement, dated as of November 1, 1984 (the "Partnership
Agreement"), which expires in 2014. Tropicana Enterprises owns Tropicana.
Tropicana Enterprises leases the real estate and improvements comprising
Tropicana to HRN under the Tropicana Lease, which expires in 2011. Certain
decisions relating to the financing of Tropicana are delegated to Adamar of
Nevada subject to Jaffe Family approval. The Jaffe Family has the right to make
all decisions on behalf of Tropicana Enterprises regarding the enforcement of
the Tropicana Lease. All other material decisions require mutual consent of
Adamar of Nevada and of more than 50% of the individuals and entities
comprising the Jaffe Family. The Partnership Agreement also provides that upon
a default by HRN under the Tropicana Lease or by Adamar of Nevada under the
Partnership Agreement, certain other partnership decisions now made jointly or
solely by Adamar of Nevada, including with respect to refinancing the Tropicana
Loan, will be made solely by the Jaffe Family.

The Partnership Agreement provides that the monthly rent payments will be
paid and distributed 50% to the Jaffe Family and 50% to Adamar of Nevada. In
the event of the sale of all or any part of the Tropicana Enterprises property
or the liquidation of Tropicana Enterprises the proceeds of all such sales or
liquidations shall be first distributed 50% to the Jaffe Family and 50% to
Adamar of Nevada until the

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aggregate of all such distributions equals two times the amount of Adamar of
Nevada's initial capital contribution. The remainder of the proceeds shall be
distributed as follows: (a) to the Jaffe Family to the extent of the Jaffe
Family's initial capital contribution (after taking into account amounts
distributed to it by virtue of the preceding sentence) less $1.0 million, (b)
$3.0 million to Adamar of Nevada, (c) $1.0 million to the Jaffe Family, (d) to
Adamar of Nevada for any special capital contributions and (e) the balance 50%
to the Jaffe Family and 50% to Adamar of Nevada.

GUARANTY

The Company has guaranteed (i) HRN's obligations under the Tropicana Lease,
including HRN's obligation to pay base rent and additional rent, (ii) Adamar of
Nevada's obligations under the Partnership Agreement and (iii) the obligations
of certain affiliates of the Company under an agreement with the Jaffe Family
for the use of the "Tropicana" name. The Company has pledged its shares of
Adamar of Nevada to Tropicana Enterprises and the Jaffe Family to secure the
Company's obligations under those guarantees.

TROPICANA LEASE

HRN leases the real estate and improvements comprising Tropicana from
Tropicana Enterprises pursuant to a lease (the "Tropicana Lease"), which
expires in 2011. HRN currently pays Tropicana Enterprises a base rent of
$777,803 per month, to be adjusted periodically for future changes in the
Consumer Price Index. HRN also pays as additional rent the financing costs
associated with the Tropicana Loan, including payments of principal and
interest when due.

The Tropicana Lease requires, under certain circumstances, that HRN deliver
an additional security deposit to Tropicana Enterprises in a minimum amount of
$21 million, which additional security deposit may consist of cash, certain
marketable securities or letters of credit. The additional security deposit
may, however, be reduced or eliminated during any period that the Company
exceeds certain net worth targets and if HRN exceeds a certain cash flow
target. The additional security deposit may be used for the benefit of
Tropicana Enterprises in the event that there is a default in HRN's obligations
under the Tropicana Lease beyond applicable cure periods. HRN has not yet been
required to provide the additional security deposit.

TROPICANA LOAN

Tropicana Enterprises, the entity that owns Tropicana, is a party to a loan
agreement (the "Tropicana Loan") pursuant to which approximately $73 million is
currently outstanding. The Tropicana Loan matures in 1996 at which time a final
payment of approximately $71 million will be due. Such indebtedness is
evidenced by a non-recourse promissory note secured by a first mortgage on
Tropicana. Tropicana Enterprises leases Tropicana to HRN pursuant to the
Tropicana Lease. HRN's lease payments under the Tropicana Lease include
payments with respect to the principal of and interest on the Tropicana Loan.
The Company has guaranteed HRN's obligations under the Tropicana Lease. If not
previously refinanced or repaid, the Tropicana Loan would have to be refinanced
upon its maturity in 1996. Certain property of HRN, including furniture,
fixtures and equipment, is pledged as collateral for the Tropicana Loan
pursuant to the Tropicana Lease.

Pursuant to the Tropicana Lease and the Partnership Agreement, Tropicana
Enterprises has agreed to refinance the Tropicana Loan upon maturity. Adamar of
Nevada has authority under the Partnership Agreement to make decisions related
to such refinancing, subject to approval by the Jaffe Family. In order to
protect the Company's interests in Tropicana and by virtue of the Company's
guarantees of the obligations of HRN under the Tropicana Lease and of Adamar of
Nevada under the Partnership Agreement, the Company may arrange for such
refinancing by Tropicana Enterprises, cause HRN to pay the final payment or
make a loan to Tropicana Enterprises to pay the final payment.

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The Indenture permits the Company to incur indebtedness in connection with
such refinancing, payments or loans. See "DESCRIPTION OF THE NOTES--
Covenants--Limitation on Indebtedness." Failure to pay or refinance the final
payment could result in the lender's foreclosure on Tropicana and in the
exercise by the parties of available rights and remedies under the Partnership
Agreement, the Tropicana Lease and related guarantees.

BUSINESS

The Company is one of the leading casino entertainment companies in the
United States. The Company operates TropWorld in Atlantic City, New Jersey,
Tropicana in Las Vegas and Ramada Express in Laughlin, Nevada.

The Company was incorporated in Delaware in June 1989 to operate the Gaming
Business of Ramada after the Restructuring of Ramada. The Restructuring, which
was approved by Ramada's board of directors in October 1988 and substantially
completed December 20, 1989, involved the disposition of Ramada's Hotel and
Restaurant Businesses with Ramada's shareholders retaining their interest in
the Gaming Business. As part of the Restructuring, the Gaming Business and
certain other assets and liabilities of Ramada were transferred to the
Company, and a wholly-owned subsidiary of New World Hotels (U.S.A.), Inc. was
merged with Ramada (the "Merger"). In the Merger, each share of Ramada common
stock was converted into the right to receive $1.00 and one share of the
Company's common stock. For accounting purposes the Company is treated as the
continuing accounting entity that is the successor to the historical Ramada
and that has discontinued the Hotel and Restaurant Businesses.

The Company uses a database marketing system to create a loyal following of
repeat customers in its current markets. This technology will be expanded to
new facilities as they are opened. This marketing approach, which is based on
a combination of computerized card reader technology and a "frequent flier"
marketing concept, allows the Company to control marketing costs and to
optimize the profit contribution of its targeted casino patrons.

TROPWORLD

The theme of TropWorld recalls the heyday of the Atlantic City Boardwalk
piers with their amusement rides, carnival games and strolling entertainers.
TropWorld offers daily live musical entertainment in its atrium, which
contains a spectacular four-story-high operating Ferris wheel. TropWorld
boasts an indoor roller coaster, bumper cars and other attractions reminiscent
of the old Boardwalk in Atlantic City.

The TropWorld complex encompasses 10 acres and has 220 yards of ocean beach
frontage along the Boardwalk in Atlantic City. TropWorld's 92,191-square-foot
casino contains approximately 2,800 slot machines, including a wide variety of
progressive jackpot machines and video poker machines, and contains 93 table
games, including blackjack, craps, roulette, baccarat, pai gow poker, big six,
sic bo

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and red dog. The TropWorld complex contains 1,020 hotel rooms, 80,000 square
feet of meeting, convention and banquet space, a 1,700-seat theatrical
showroom (the largest in Atlantic City) and parking facilities for over 2,700
vehicles. There is a wide variety of food and beverage facilities at
TropWorld, including gourmet restaurants, several medium-priced restaurants
and a food court offering a large choice of convenient and moderately priced
items. Recreational facilities at TropWorld include indoor and outdoor
swimming pools, tennis courts, a health and fitness club and a jogging track.
The Company is currently considering the construction of a third hotel tower
of approximately 600 rooms.

In July 1993, the TropWorld building became wholly-owned by the Company upon
the acquisition by the Company of the partnership interests in AREI and AGP.
AREI owned a 99.9 percent general partnership interest in AGP, which acquired
a substantial interest in TropWorld in a sale-leaseback transaction in 1984.

TROPICANA

Tropicana is located on a 34-acre site on the southeast corner of the Strip
and Tropicana Avenue in Las Vegas, Nevada. The Tropicana casino occupies
45,000 square feet and contains over 1,550 slot machines and over 50 table
games. Tropicana has a tropical island theme and is promoted as The Island of
Las Vegas. It has one of the world's largest swimming pools and a five-acre
water park and tropical garden area. Tropicana has 1,907 hotel rooms and
suites and approximately 100,000 square feet of convention and exhibit space.
The tropical theme is apparent in the decor of the property, which includes a
large collection of tropical birds and fish. Tropicana offers its guests a
variety of entertainment including laser light shows, a comedy club, lounge
shows and the Folies Bergere revue, which is the longest-running production
show in Las Vegas. The Company has substantially completed a new main entrance
and a new building facade at Tropicana that will create a colorful Caribbean
Village motif.

Throughout most of its history, Tropicana, with its upscale decor and
location as the sole major casino hotel on the southern end of the Strip,
catered to high end table games customers with particular emphasis on
baccarat. This strategy allowed for significant gaming revenues without
substantial walk-in traffic. However, beginning in late 1989 with the opening
of the Mirage, competition for this small group of premium table games
customers, dominated by players from the Far East, increased significantly.
The center portion of the Strip, highlighted by Caesars Palace and the Mirage,
became the focal point of the high end table games market. As heavy promotion
and complimentary expenditures ensued, profit margins in this segment
declined. As a result, management decided to curtail its emphasis on premium
table games and focus on slot revenue from the high end of the middle market.

Tropicana is located at an intersection which is now referred to as The New
Four Corners of Las Vegas. There are three other major casino hotel properties
located at this intersection, two of which, Luxor and MGM Grand, opened during
the fourth quarter of 1993, and the other, Excalibur, opened June 1990. The
increase in total casino and hotel capacity with the opening of Luxor and MGM
Grand has increased the level of activity and visitor traffic around
Tropicana. Pedestrian traffic has been made faster, safer and more convenient
as a result of the recent construction by the State of Nevada of pedestrian
skywalks. The skywalks connect the four corners of the intersection and have
elevators and escalators set back from all four corners. The Company funded a
portion of the construction costs for this project, which was recently
completed. The Company has recently completed construction of an additional
pedestrian bridge connecting one of the skywalks directly to the Tropicana
casino.

Management believes that the new properties located at The New Four Corners
have stimulated and will continue to stimulate additional walk-in traffic that
provides increased opportunities for Tropicana to attract its target customers
and retain them through the Company's database marketing system. There can be
no assurance, however, that the increased competition from these new
properties will not have an adverse effect on Tropicana.

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RAMADA EXPRESS

Ramada Express is located on 28 acres in Laughlin, Nevada. Laughlin is
situated on the Colorado River at Nevada's southern tip. The facility features
a Victorian-era railroad theme, including a train that carries guests between
the parking areas and the casino hotel. In September 1993, the Company
completed a $75 million expansion of Ramada Express, on schedule and within
budget. The expansion of Ramada Express included a new 1,100-room tower,
increasing the property to a total of 1,500 rooms; a casino expansion of 20,000
square feet, bringing the total to 50,000 square feet; a 1,100-vehicle parking
garage, bringing the total parking capacity to 2,300 vehicles; and additional
restaurant, special event and retail space. The expanded casino contains 36
gaming tables and 1,620 slot machines.

NEW MARKETS

The Company has been pursuing the development of its business in various
gaming jurisdictions. The Company executed an agreement in September 1993 with
the City of Caruthersville, Missouri, to operate a casino riverboat, and filed
an application with the Missouri Gaming Commission for a gaming license to
operate the Caruthersville facility. Caruthersville is located on the
Mississippi River approximately 80 miles north of Memphis, Tennessee.
Approximately 2.2 million people live within 100 miles of Caruthersville. In
January 1994, the Company took delivery and began renovation on a vessel
intended to be used in Caruthersville. The boat is expected to have an
approximately 14,000-square-foot casino with an estimated capacity of 600
passengers and crew. The project would also include, among other things, pre-
boarding facilities such as a restaurant and live entertainment lounges. The
estimated cost of the project is more than $40 million. The Company hopes to
begin operations in Caruthersville in 1995. However, commencement of operations
is dependent on several factors that are beyond the Company's control,
including the granting of a gaming license by the Missouri Gaming Commission.
On June 9, 1994, the Missouri Gaming Commission notified the Company that its
application will be among the next three applications to be considered. In
addition, certain other approvals are required, including those of the U.S.
Army Corps of Engineers and the U.S. Coast Guard. "Games of skill" are
permitted in Missouri; however, as a result of a Missouri Supreme Court
decision in early 1994, the use of slot machines and other "games of chance" is
currently not permitted in Missouri. On April 5, 1994, a Missouri statewide
election defeated a proposed constitutional amendment that would have allowed
such "games of chance" on riverboats. A petition has been filed with the
Secretary of State of the State of Missouri to place a referendum on the issue
on the ballot for the November 1994 election. The signatures on the petition
have yet to be verified by the Secretary of State of the State of Missouri. The
Company intends to proceed with this project utilizing electronic machines and
gaming tables as approved by the Missouri Gaming Commission.

Aztar has submitted a proposal to the City of Evansville, Indiana, for a
casino riverboat and has filed an application for a riverboat gaming license
with the Indiana Gaming Commission, which has indicated that it anticipates
granting a license for the Evansville market area this fall. On June 30, 1994,
the Company was named by the City of Evansville as its choice to develop and
operate the only riverboat gaming facility planned to be licensed in the
Evansville market. The Company and the City of Evansville have signed a
development agreement, and the City of Evansville will endorse the Company's
license request to the Indiana Gaming Commission. If the Company is granted a
riverboat gaming license, the development agreement will bind the Company to
make a series of payments in the nature of civic inducements to the City of
Evansville and community organizations that are necessary to the success of the
Company's efforts in Indiana. See "REGULATION--Regulation and Licensing--
Indiana." Evansville, located on the Ohio River in southwestern Indiana, has
2.5 million people living within 100 miles, which encompasses the metropolitan
Louisville, Kentucky area. Aztar's proposed project, at an estimated cost of
$110 million, would include a replica of the historic "Robert E. Lee" racing
sidewheel steamboat. The boat will have a 37,000-square-foot casino with 1,250
slot machines and 70 table games and will have a capacity of 2,500 passenger
guests and a crew of 300.

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The project would also include, among other things, a 250-room hotel and a
44,000-square-foot entertainment complex for pre-boarding facilities,
restaurants, lounge and retail shops. With the boat due for delivery by April
1995, operations could commence in the summer of 1995 utilizing permanent
docking facilities and interim boarding facilities, with all permanent
facilities in place by December 1995. However, a number of legal and regulatory
matters could delay or prevent the opening of the Evansville facility. A state
trial court has ruled that portions of the Indiana riverboat gaming law
conflict with the state constitution. Under this ruling, the Indiana Gaming
Commission is precluded from awarding licenses. The trial court decision is
being appealed directly to the Indiana Supreme Court, which is handling the
case on an expedited basis. Oral arguments in the case are currently scheduled
for August 30, 1994. Furthermore, a number of approvals are required, including
those of the U.S. Army Corps of Engineers and the U.S. Coast Guard. There can
be no assurance that the necessary licenses and approvals will be granted or
that the Company will proceed with this project.

In the event that the Company is granted approval by the applicable
jurisdictions to proceed with one or both of these riverboat projects,
financing may be required to fund the related capital expenditures. See
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION--Liquidity and Capital Resources--Proposed Credit Facility and
Refinancings."

The Company is continuing its efforts to explore opportunities in new
jurisdictions in which the likelihood of legalization of gaming in the near
term is high and where the potential markets meet its standards for sound,
meaningful long-term opportunities.

MARKETING APPROACH

The Company's strategy is to target gaming customers in the high end of the
middle market segment. The Company's marketing approach is to develop a loyal
following of repeat customers with a demonstrated interest in gaming. The key
element of this approach is the tailoring of promotional offers to the specific
requirements and circumstances of the Company's targeted customers, with
optimization of profit contribution being the objective. This is achieved
through the use of a database marketing system based on a combination of
computerized card reader technology and the "frequent flier" marketing concept.

Each slot and table games player at one of the Company's casinos is
encouraged to join a players' club. A player's incentive to join the club is to
earn various complimentary services and cash bonuses dependent upon his level
of gaming play. Club members are issued club cards that they may insert in card
readers attached to most slot machines or give to table games personnel for use
in computerized rating systems. The computer systems record valuable
information, which is tracked over time, about the Company's customers: playing
preferences, frequency of play and the gaming revenue they provide.

On the basis of customer-tracked play, the Company's clientele is segmented
by gaming value to the Company. Promotional offers are then made to customers
based on their level of gaming revenue to induce them to frequent the Company's
casinos. The Company's objective is to maximize profit by designing promotional
offers so that the cost bears a favorable economic relationship to the level of
revenues the player is expected to provide given the player's historical gaming
pattern. The promotional offers are conveyed to the players by direct mail and
by telemarketing.

Management believes that the advantages of the database marketing system
permit the Company to compete effectively with the other properties in the
gaming segments in which it competes.

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PROPERTIES

The Company owns or leases its three gaming facilities.

TropWorld. TropWorld is located on a 10-acre site in Atlantic City, New
Jersey. In July 1993, TropWorld became wholly-owned by the Company.

Tropicana. Tropicana is located on a 34-acre site in Las Vegas, Nevada.
Tropicana is owned by Tropicana Enterprises and is leased to HRN, which
operates the casino and hotel under the Tropicana Lease, which expires in 2011.
The Company, through its wholly-owned subsidiary, Adamar of Nevada, owns a
noncontrolling 50% general partnership interest in Tropicana Enterprises. The
remaining 50% general partnership interest in Tropicana Enterprises is held by
various individuals and trusts associated with the Jaffe Family subject to
certain preferences on liquidation. The Company does not have the right to
purchase Tropicana from Tropicana Enterprises and does not have the right to
purchase the remaining partnership interest in Tropicana Enterprises that is
not owned by Adamar of Nevada.

Ramada Express. Ramada Express is located on a 28-acre site in Laughlin,
Nevada. Ramada Express is wholly-owned by the Company. The Company completed in
September 1993 a $75 million expansion of Ramada Express.

New Markets. In connection with the Company's development of its business in
new markets, the Company has options to purchase various parcels of land in
Caruthersville, Missouri and Evansville, Indiana.

General. The Company leases its corporate headquarters located in Phoenix,
Arizona and owns or leases certain other facilities which are not material to
the Company's operations.

Substantially all land, casino hotel buildings, furnishings and equipment
owned by the Company are pledged as collateral under long-term debt agreements.

COMPETITION AND SEASONALITY

Competition

The Company faces intense competition in each of the markets in which its
gaming facilities are located from other companies in the gaming industry, some
of which have significantly greater financial resources than the Company. Such
competition results, in part, from the geographic concentration of competitors.
All of the Company's casinos primarily compete with other casinos in their
immediate geographic area and, to a lesser extent, with casinos in other
locations, including Native American lands, and on cruise ships and riverboats,
and with other forms of legalized gaming in the United States, including state-
sponsored lotteries, off-track wagering and card parlors. Certain states have
recently legalized, and several other states are currently considering
legalizing, casino gaming in specific geographic areas within those states.
Legalization of large-scale, unlimited casino gaming in or near any major
metropolitan area or increased gaming in other areas could have an adverse
economic impact on the business of any or all of the Company's gaming
facilities.

As of December 30, 1993, there were 11 casino hotel facilities operating in
Atlantic City in competition with TropWorld. Although no new casinos have been
opened in Atlantic City since April 1990 and there have been no public
announcements concerning new casino openings, the addition of new casino hotels
in the Atlantic City market would increase competition. A number of the
Company's competitors have announced definitive plans for expansion, including
Bally's Grand, Bally's Park Place and Trump Plaza. The Sands Hotel and Casino,
Showboat and the Claridge Hotel and

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Casino recently opened expansions of their gaming space. In addition, recently
enacted legislation requires the Casino Reinvestment Development Authority to
allocate $100 million of funds and credits to subsidize the construction of new
hotel rooms by casinos in Atlantic City. In 1992, the Mashantucket Pequot
Indian tribe began operating the Foxwoods High Stakes Casino and Bingo Hall,
one of the largest casinos in the United States, in Ledyard, Connecticut. The
adoption of legislation approving casino gaming in any jurisdiction near New
Jersey, particularly Delaware, Maryland, New York or Pennsylvania, could have a
material adverse effect on the Atlantic City market, depending on the form and
scope of such gaming.

During 1993, three major casino hotels opened in the Las Vegas market, two of
which, Luxor and MGM Grand, are located adjacent to Tropicana near the
intersection of Tropicana Avenue and the Strip, which is now referred to as The
New Four Corners. Circus Circus opened its 2,500-room Luxor in October 1993.
The 5,000-room MGM Grand opened in December 1993. The third casino, Mirage's
3,000-room Treasure Island, also opened in October 1993 and is located in the
middle of the Strip. These newly opened casinos added a total of approximately
10,500 rooms to an existing Las Vegas market base of approximately 77,000
rooms, representing an increase of 14%. In addition, there has been a
significant increase in room supply and casino space in recent years, including
the opening of the 3,000-room Mirage in November 1989 and the 4,000-room
Excalibur in June 1990. Management believes that MGM Grand and Luxor have
stimulated and will continue to stimulate additional walk-in traffic that
provides increased opportunities for Tropicana to attract its target customers
and retain them through the Company's database marketing system. There can be
no assurance, however, that the increased competition from the new casinos will
not have an adverse effect on Tropicana. In 1994, several construction plans
were announced in Las Vegas. The largest of these are two new casino resorts on
the Strip. ITT Sheraton plans to build a 3,500-room resort hotel with 135,000
square feet of casino space on 34 acres next to the Sheraton Desert Inn casino
on the Strip. This project is scheduled to open in the first quarter of 1997.
Mirage Resorts Inc. and Gold Strike Resorts have announced plans to build a
3,000-room resort hotel with 100,000 square feet of casino space on 43 acres on
the Strip. This joint project is scheduled to open in mid-1996.

In the Laughlin market, in addition to the Company's expansion completed in
September 1993, the Riverside has begun construction of an approximately 800-
room tower expansion which it expects to open in December 1994, and has
announced a management agreement with the Mojave Indian Tribe to build and
operate a small facility (approximately 250 gaming positions) in Arizona
roughly twenty-five miles south of Laughlin to open in the fall of 1994. The
Mojave Indian Tribe is also constructing a 300-room hotel with approximately
25,000 square feet of casino space in Nevada approximately 8 miles south of
Laughlin that is expected to open in December 1994. Separately, the Golden
Nugget is reportedly planning to add several hundred additional hotel rooms.
Another entity is reportedly planning two projects in Laughlin consisting of
1,800 rooms and 70,000 square feet of casino space north of Ramada Express and
1,000 rooms and 50,000 square feet of casino space south of Ramada Express.
Sewer permits are available for new sewer capacity that was recently completed
and is currently in operation.

Competition involves not only the quality of casino, room, restaurant,
entertainment and convention facilities, but also room, food and beverage
prices. The level of gaming activity also varies significantly from time to
time depending on general economic conditions, marketing efforts, hotel
occupancies and the offering of special events and promotions. The extent and
quality of complimentary services to attract high-stakes players and, in
Atlantic City, casino customers arriving under bus programs, the personal
attention offered to guests and casino customers, advertising, entertainment,
slot machine pay-out rates and credit policies with respect to high-stakes
players are also important competitive factors. As a result, operating results
can be adversely affected by significant cash outlays for advertising and
promotion and complimentary services to patrons, the amount and timing of which
are partially dictated by the policies of competitors. If operating revenues
are insufficient to allow management the flexibility to match the promotions of
competitors, the number of the Company's casino patrons may decline, with an
adverse effect on its financial performance.

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Seasonality

TropWorld experiences seasonal fluctuations in casino play that management
believes are typical of casino hotel operations in Atlantic City. Operating
results indicate that casino play is seasonally higher during the months of May
through October; consequently the Company's revenues during the first and
fourth quarters have generally been lower than for the second and third
quarters and from time to time the Company has experienced losses in the first
and fourth quarters. Because TropWorld's operating results are especially
dependent upon operations in the summer months, any event that adversely
affects the operating results of TropWorld during such period could have a
material adverse effect on the Company's operations and financial condition.
Given Atlantic City's location, it is also subject to occasional adverse
weather conditions such as storms and hurricanes that would impede access to
Atlantic City, thus adversely impacting operations. The gaming markets in Las
Vegas and Laughlin experience a slight decrease in gaming activity in the hot
summer months and during the holiday period between Thanksgiving and Christmas.

CREDIT POLICY AND CONTROL PROCEDURES

As is customary in the gaming industry and necessitated by competitive
factors, the Company's gaming activities are conducted on a credit as well as a
cash basis. Credit policies vary widely from one operator to another and are
largely dependent on the profile of the targeted customers. Table games
players, for example, are typically extended more credit than slot players, and
high-stakes players are typically extended more credit than patrons who tend to
wager lower amounts. The Company currently markets to customers in all gaming
segments; however, its credit policy will vary from facility to facility based
upon the various types of customers at each facility. Gaming debts are legally
enforceable under the current laws of both New Jersey and Nevada; it is not
clear, however, that all other states will honor these policies. The
uncollectibility of gaming receivables could have a material adverse effect on
results of operations. Provisions for estimated uncollectible gaming
receivables have been made in order to reduce gaming receivables to amounts
deemed to be collectible.

Gaming operations at the casinos are subject to risk of substantial loss as a
result of employee or patron dishonesty, credit fraud or illegal slot machine
manipulation. The Company has in place stringent control procedures to minimize
such risks; however, there can be no assurance that losses will not occur.
Current controls include supervision of employees, monitoring by electronic
surveillance equipment and use of two-way mirrors and overhead catwalks. In New
Jersey, the Company's activities are observed and monitored on an ongoing basis
by agents of both the New Jersey Casino Control Commission (the "New Jersey
Commission") and the New Jersey Division of Gaming Enforcement (the "New Jersey
Division"), each of which maintains a staff on the premises of TropWorld.
Similarly, in Nevada the Company's gaming subsidiaries must comply with certain
regulatory requirements concerning casino and game security and surveillance,
and the gaming operations of Tropicana and Ramada Express are subject to
routine audit and supervision by agents of the Nevada State Gaming Control
Board (the "Nevada Board").

REGULATION

GENERAL

Regulatory aspects of the gaming business in both Nevada and New Jersey are
pervasive in nature and the following description should not be construed as a
complete summary of all the regulatory requirements faced by the Company. In
both states, gaming authorizations, once obtained, can be suspended or revoked
for a variety of reasons. If the Company were ever precluded from operating one
of its gaming facilities, it would, to the extent permitted by law, seek to
recover its investment by

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sale of the property affected, but there can be no assurance that the Company
would recover its full investment. In addition, the Nevada Gaming Commission
(the "Nevada Commission") and the New Jersey Commission have the authority to
require a holder or beneficial owner of the Company's securities to be found to
be suitable or to qualify under applicable laws or regulations.

From time to time, legislative and regulatory changes are proposed that could
be adverse to the Company. In addition, from time to time, investigations are
conducted relating to the gaming industry. TropWorld is required to report
certain cash transactions to the U.S. Department of the Treasury pursuant to
the Bank Secrecy Act. Violation of the reporting requirements of the Bank
Secrecy Act could result in civil as well as criminal penalties including fines
and/or imprisonment. The State of Nevada has adopted a regulation similar to
the Bank Secrecy Act which requires the Nevada facilities to document and/or
report certain currency transactions to the Nevada Board. Violation of this
regulation could result in action by the Nevada authorities to fine or revoke,
suspend, condition or fail to renew the Nevada facilities' licenses and/or the
Company's licensing approval. These reporting requirements are not expected to
have any adverse effects on the Company's casino operations.

REGULATION AND LICENSING--NEVADA

The ownership and operation of casino gaming facilities in Nevada are subject
to: (i) the Nevada Gaming Control Act and the regulations promulgated
thereunder (collectively, "Nevada Act"); and(ii) various local regulation. The
gaming operations of Tropicana and Ramada Express are subject to the licensing
and regulatory control of the Nevada Commission, the Nevada Board and the Clark
County Liquor and Gaming Licensing Board (the "Clark County Board")
(collectively, the "Nevada Gaming Authorities").

The laws, regulations and supervisory procedures of the Nevada Gaming
Authorities are based upon declarations of public policy which are concerned
with, among other things; (i) the prevention of unsavory or unsuitable persons
from having a direct or indirect involvement with gaming at any time or in any
capacity; (ii) the establishment and maintenance of responsible accounting
practices and procedures; (iii) the maintenance of effective controls over the
financial practices of licensees, including the establishment of minimum
procedures for internal fiscal affairs and the safeguarding of assets and
revenues, providing reliable record keeping and requiring the filing of
periodic reports with the Nevada Gaming Authorities; (iv) the prevention of
cheating and fraudulent practices; and (v) the provision of a source of state
and local revenues though taxation and licensing fees. Change in such laws,
regulations and procedures could have an adverse effect on the Company.

HRN is the Company's wholly-owned subsidiary which operates the casino at
Tropicana and Ramada Express, Inc. ("Express") is the Company's wholly-owned
subsidiary which operates the casino at Ramada Express. HRN and Express are
both required to be licensed by the Nevada Gaming Authorities. The gaming
licenses require the periodic payment of fees and taxes and are not
transferable. The Company is registered by the Nevada Commission as a publicly
traded corporation ("Registered Corporation") and as such, it is required
periodically to submit detailed financial and operating reports to the Nevada
Commission and furnish any other information which the Nevada Commission may
require. No person may become a stockholder of, or receive any percentage of
profits from HRN or Express without first obtaining licenses and approvals from
the Nevada Gaming Authorities. The Company, HRN and Express have obtained from
the Nevada Gaming Authorities the various registrations, approvals, permits and
licenses required in order to engage in gaming activities in Nevada.

The Nevada Gaming Authorities may investigate any individual who has a
material relationship to, or material involvement with, the Company, HRN or
Express in order to determine whether such individual is suitable or should be
licensed as a business associate of a gaming licensee. Officers, directors and
certain key employees of HRN and Express must file applications with the Nevada

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Gaming Authorities and may be required to be licensed or found suitable by the
Nevada Gaming Authorities. Officers, directors and key employees of the Company
who are actively and directly involved in gaming activities of HRN and Express
may be required to be licensed or found suitable by the Nevada Gaming
Authorities. The Nevada Gaming Authorities may deny an application for
licensing for any cause which they deem reasonable. A finding of suitability is
comparable to licensing, and both require submission of detailed personal and
financial information followed by a thorough investigation. The applicant for
licensing or a finding of suitability must pay all the costs of the
investigation. Changes in licensed positions must be reported to the Nevada
Gaming Authorities and in addition to their authority to deny an application
for a finding of suitability or licensure, the Nevada Gaming Authorities have
jurisdiction to disapprove a change in a corporate position.

If the Nevada Gaming Authorities were to find an officer, director or key
employee unsuitable for licensing or unsuitable to continue having a
relationship with the Company, HRN or Express, the companies involved would
have to sever all relationships with such person. In addition, the Nevada
Commission may require the Company, HRN or Express to terminate the employment
of any person who refuses to file appropriate applications. Determinations of
suitability or of questions pertaining to licensing are not subject to judicial
review in Nevada.

The Company, HRN and Express are required to submit detailed financial and
operating reports to the Nevada Commission. Substantially all material loans,
leases, sales of securities and similar financing transactions by HRN and
Express must be reported to, or approved by, the Nevada Commission.

If it were determined that the Nevada Act was violated by HRN or Express, the
gaming licenses held by HRN or Express could be limited, conditioned, suspended
or revoked, subject to compliance with certain statutory and regulatory
procedures. In addition, HRN, Express, the Company and the persons involved
could be subject to substantial fines for each separate violation of the Nevada
Act at the discretion of the Nevada Commission. Further, a supervisor could be
appointed by the Nevada Commission to operate the Company's Nevada gaming
properties and, under certain circumstances, earnings generated during the
supervisor's appointment (except for the reasonable rental value of the
Company's Nevada gaming properties) could be forfeited to the State of Nevada.
Limitation, conditioning or suspension of any gaming license or the appointment
of a supervisor could (and revocation of any gaming license would) materially
adversely affect the Company.

Any beneficial holder of the Company's voting securities, regardless of the
number of shares owned, may be required to file an application, be
investigated, and have his suitability as a beneficial holder of the Company's
voting securities determined if the Nevada Commission has reason to believe
that such ownership would otherwise be inconsistent with the declared policies
of the State of Nevada. The applicant must pay all costs of investigation
incurred by the Nevada Gaming Authorities in conducting any such investigation.

The Nevada Act requires any person who acquires more than 5% of the Company's
voting securities to report the acquisition to the Nevada Commission. The
Nevada Act requires that beneficial owners of more than 10% of the Company's
voting securities apply to the Nevada Commission for a finding of suitability
within thirty days after the Chairman of the Nevada Board mails the written
notice requiring such filing. Under certain circumstances, an "institutional
investor," as defined in the Nevada Act, which acquires more than 10%, but not
more than 15%, of the Company's voting securities may apply to the Nevada
Commission for a waiver of such finding of suitability if such institutional
investor holds the voting securities for investment purposes only. An
institutional investor shall not be deemed to hold voting securities for
investment purposes unless the voting securities were acquired and are held in
the ordinary course of business as an institutional investor and not for the
purpose of causing, directly or indirectly, the election of a majority of the
members of the board of directors of the Company, any change in the Company's
corporate charter, bylaws, management, policies or operations of the

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Company, or any of its gaming affiliates, or any other action which the Nevada
Commission finds to be inconsistent with holding the Company's voting
securities for investment purposes only. Activities which are not deemed to be
inconsistent with holding voting securities for investment purposes only
include: (i) voting on all matters voted on by stockholders; (ii) making
financial and other inquiries of management of the type normally made by
securities analysts for informational purposes and not to cause a change in its
management, policies or operations; and (iii) such other activities as the
Nevada Commission may determine to be consistent with such investment intent.
If the beneficial holder of voting securities who must be found suitable is a
corporation, partnership or trust, it must submit detailed business and
financial information including a list of beneficial owners. The applicant is
required to pay all costs of investigation.

Any person who fails or refuses to apply for a finding of suitability or a
license within thirty days after being ordered to do so by the Nevada
Commission or the Chairman of the Nevada Board, may be found unsuitable. The
same restrictions apply to a record owner if the record owner, after request,
fails to identify the beneficial owner. Any stockholder found unsuitable and
who holds, directly or indirectly, any beneficial ownership of the common stock
of a Registered Corporation beyond such period of time as may be prescribed by
the Nevada Commission may be guilty of a criminal offense. The Company is
subject to disciplinary action if, after it receives notice that a person is
unsuitable to be a stockholder or to have any other relationship with the
Company, HRN or Express, the Company (i) pays that person any dividend or
interest upon voting securities of the Company, (ii) allows that person to
exercise, directly or indirectly, any voting right conferred through securities
held by that person, (iii) pays remuneration in any form to that person for
services rendered or otherwise, or (iv) fails to pursue all lawful efforts to
require such unsuitable person to relinquish his voting securities for cash at
fair market value. Additionally, the Clark County Board has taken the position
that it has the authority to approve all persons owning or controlling the
stock of any corporation controlling a gaming license.

The Company may be required to disclose to the Nevada Commission upon request
the identities of the holders of the Notes. The Nevada Commission may, in its
discretion, require the holder of any debt security, including the Notes, of a
Registered Corporation such as the Company to file applications, be
investigated and be found suitable to own the debt security of a Registered
Corporation. If the Nevada Commission determines that a person is unsuitable to
own such security, then pursuant to the Nevada Act, the Registered Corporation
can be sanctioned, including the loss of its approvals, if without the prior
approval of the Nevada Commission, it: (i) pays to the unsuitable person any
dividend, interest, or any distribution whatsoever; (ii) recognizes any voting
right by such unsuitable person in connection with such securities; (iii) pays
the unsuitable person remuneration in any form; or (iv) makes any payment to
the unsuitable person by way of principal, redemption, conversion, exchange,
liquidation, or similar transaction.

The Company is required to maintain a current stock ledger in Nevada which
may be examined by the Nevada Gaming Authorities at any time. If any securities
are held in trust by an agent or by a nominee, the record holder may be
required to disclose the identity of the beneficial owner to the Nevada Gaming
Authorities. A failure to make such disclosure may be grounds for finding the
record holder unsuitable. The Company is also required to render maximum
assistance in determining the identity of the beneficial owner. The Nevada
Commission has the power to require the Company's stock certificates to bear a
legend indicating that the securities are subject to the Nevada Act. However,
to date, the Nevada Commission has not imposed such a requirement on the
Company.

The Company may not make a public offering of its securities without the
prior approval of the Nevada Commission if the securities or the proceeds
therefrom are intended to be used to construct, acquire or finance gaming
facilities in Nevada, or to retire or extend obligations incurred for such
purposes. On June 23, 1994, the Nevada Commission granted the Company prior
approval to make public offerings for a period of one year, subject to certain
conditions ("Shelf Approval"). However, the Shelf Approval may be rescinded for
good cause without prior notice upon the issuance of an

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<PAGE>

interlocutory stop order by the Chairman of the Nevada Board. The Shelf
Approval does not constitute a finding, recommendation or approval by the
Nevada Commission or the Nevada Board as to the accuracy or adequacy of the
prospectus or the investment merits of the securities offered. Any
representation to the contrary is unlawful. Because the proceeds of this
Offering will be used to retire the First Mortgage Notes and not in connection
with gaming facilities in Nevada, approval of the Offering by the Nevada
Commission or the Nevada Board is not required.

Changes in control of the Company through merger, consolidation, stock or
asset acquisitions, management or consulting agreements, or any act or conduct
by a person whereby he obtains control, may not occur without the prior
approval of the Nevada Commission. Entities seeking to acquire control of a
Registered Corporation must satisfy the Nevada Board and Nevada Commission in a
variety of stringent standards prior to assuming control of such Registered
Corporation. The Nevada Commission may also require controlling stockholders,
officers, directors and other persons having a material relationship or
involvement with the entity proposing to acquire control, to be investigated
and licensed as part of the approval process relating to the transaction.

The Nevada legislature has declared that some corporate acquisitions opposed
by management, repurchases of voting securities and corporate defense tactics
affecting Nevada gaming licensees and Registered Corporations that are
affiliated with those operations, may be injurious to stable and productive
corporate gaming. The Nevada Commission has established a regulatory scheme to
ameliorate the potentially adverse effects of these business practices upon
Nevada's gaming industry and to further Nevada's policy to: (i) assure the
financial stability of corporate gaming operators and their affiliates; (ii)
preserve the beneficial aspects of conducting business in the corporate form;
and(iii) promote a neutral environmental for the orderly governance of
corporate affairs. Approvals are, in certain circumstances, required from the
Nevada Commission before the Company can make exceptional repurchases of voting
securities above the current market price thereof and before a corporate
acquisition opposed by management can be consummated. The Nevada Act also
requires prior approval of a plan of recapitalization proposed by the Company's
Board of Directors in response to a tender offer made directly to the
Registered Corporation's stockholders for the purposes of acquiring control of
the Registered Corporation.

License fees and taxes, computed in various ways depending on the type of
gaming or activity involved, are payable to the State of Nevada and to the
counties and cities in which the Nevada licensee's respective operations are
conducted. Depending upon the particular fee or tax involved, these fees and
taxes are payable either monthly, quarterly or annually and are based upon
either: (i) a percentage of the gross revenues received; (ii) the number of
gaming devices operated; or (iii) the number of table games operated. A casino
entertainment tax is also paid by casino operations where entertainment is
furnished in connection with the selling of food or refreshments.

Any person who is licensed, required to be licensed, registered, required to
be registered, or is under common control with such persons (a "Licensee," or
collectively, "Licensees"), and who proposes to become involved in a gaming
venture outside of Nevada is required to deposit with the Nevada Board, and
thereafter maintain, a revolving fund in the amount of $10,000 to pay the
expenses of investigation of the Nevada Board of their participation in such
foreign gaming. The revolving fund is subject to increase or decrease in the
discretion of the Nevada Commission. Thereafter, Licensees are required to
comply with certain reporting requirements imposed by the Nevada Act. A
Licensee is also subject to disciplinary action by the Nevada Commission if it
knowingly violates any laws of the foreign jurisdiction pertaining to the
foreign gaming operation, fails to conduct the foreign gaming operation in
accordance with the standards of honesty and integrity required of Nevada
gaming operations, engages in activities that are harmful to the State of
Nevada or its ability to collect gaming taxes and fees, or employs a person in
the foreign operation who has been denied a license or finding of suitability
in Nevada on the ground of personal unsuitability.

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The sale of alcoholic beverages is also subject to licensing, control and
regulation by the Clark County Board. All licenses are revokable and are not
transferable. The Clark County Board has full power to limit, condition,
suspend or revoke any such license and any such disciplinary action could (and
revocation would) have a material adverse effect upon the operations of the
Company.

REGULATION AND LICENSING--NEW JERSEY

The ownership and operation of casino hotel facilities and gaming activities
in Atlantic City, New Jersey, are subject to extensive state regulation under
the New Jersey Casino Control Act (the "New Jersey Act") and the regulations of
the New Jersey Commission. In general, the New Jersey Act and regulations
provide for more extensive controls over a broader scope of gaming-related
activities than does the Nevada regulatory system.

The New Jersey Act and regulations concern primarily the financial stability
and character of casino licensees, their intermediary and holding companies,
their employees, their security holders and others financially interested in
casino operations, the nature of hotel and casino facilities and a wide range
of gaming and non-gaming related operations. The New Jersey Act and regulations
include detailed provisions concerning, among other things, financial and
accounting practices used in connection with casino operations, residence and
equal employment opportunities for employees of casino operators, contractors
for casino facilities and others; rules of games, levels of supervision of
games and methods of selling and redeeming chips; manner of granting credit,
duration of credit and enforceability of gaming debts; manufacture,
distribution and sale of gaming equipment; security standards, management
control procedures, accounting and cash control methods and reports to gaming
authorities; advertising of casinos and standards for entertainment and
distribution of alcoholic beverages in casinos. A number of these provisions
require practices which are different from those in Nevada and some of them
result in casino operating costs being higher than those in comparable
facilities in Nevada.

The New Jersey Act also established the New Jersey Division to investigate
all license applications, enforce the provisions of the New Jersey Act and
attendant regulations and prosecute all proceedings for violations of the New
Jersey Act and regulations before the New Jersey Commission. The New Jersey
Division also conducts audits and continuing reviews of all casino operations.

Adamar of New Jersey, Inc. ("Adamar"), a wholly-owned subsidiary of the
Company, has been licensed (subject to biennial renewal) by the New Jersey
Commission to operate TropWorld. In November 1982, the New Jersey Commission
granted a plenary license to Adamar. In November 1993, the license was renewed
for a period of two years. The Company and Ramada New Jersey Holdings
Corporation ("Holdings"), another of the Company's New Jersey gaming
subsidiaries, have been approved as qualified holding companies for Adamar's
casino license. Officers and directors of the Company and Adamar and employees
who work at casino hotel facilities operated by Adamar also have been or must
be approved or licensed. In addition, all contracts affecting the facilities
have been or must be approved, and all enterprises that conduct business with
Adamar must register with the New Jersey Commission and those enterprises that
conduct gaming related businesses or that conduct business on a regular and
continuing basis, as defined by the regulations under the New Jersey Act, must
be licensed by the New Jersey Commission.

The New Jersey Commission has broad discretion regarding the issuance,
renewal, revocation and suspension of casino licenses. Casino licenses are not
transferable. A casino hotel facility must also continually satisfy certain
requirements concerning, among other things, the number of qualifying sleeping
units and the relationship between the number of qualifying sleeping units and
the square footage of casino space. The Company believes that TropWorld
continues to meet such requirements.

The New Jersey Act further provides that each person who directly or
indirectly holds any beneficial interest or ownership of the securities issued
by a casino licensee or any of its intermediary or holding

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companies, those persons who, in the opinion of the New Jersey Commission,
have the ability to control the casino licensee or its intermediary or holding
companies or elect a majority of the board of directors of said companies,
other than a banking or other licensed lending institution which makes a loan
or holds a mortgage or other lien acquired in the ordinary course of business,
lenders and underwriters of said companies may be required to seek
qualification from the New Jersey Commission. However, because the Company is
a publicly traded holding company, in accordance with the provisions of the
New Jersey Act, a waiver of qualification may be granted by the New Jersey
Commission, with the concurrence of the Director of the Division, if it is
determined that said persons or entities are not significantly involved in the
activities of Adamar and, in the case of security holders, do not have the
ability to control the Company or elect one or more of its directors. There
exists a rebuttable presumption that any person holding 5% or more of the
equity securities of a casino licensee's intermediary or holding company or a
person having the ability to elect one or more of the directors of such a
company has the ability to control the company and thus must obtain
qualification from the New Jersey Commission.

Notwithstanding this presumption of control, the New Jersey Act provides for
a waiver of qualification for passive "institutional investors," as defined by
the New Jersey Act, if the institutional investor purchased the securities for
investment purposes only and where such securities constitute (i) less than
10% of the equity securities of a casino licensee's holding or intermediary
company or(ii) debt securities of a casino licensee's holding or intermediary
company representing a percentage of the outstanding debt of such company not
exceeding 20% or a percentage of any issue of the outstanding debt of such
company not exceeding 50%. The waiver of qualification is subject to certain
conditions including, upon request of the New Jersey Commission, filing a
certified statement that the institutional investor has no intention of
influencing or affecting the affairs of the issuer. Additionally, a waiver of
qualification may also be granted to institutional investors holding a higher
percentage of securities of a casino licensee's holding or intermediary
company upon a showing of good cause.

If the institutional investor is granted such a waiver and subsequently
determines to influence or affect the affairs of the issuer, it must provide
not less than 30 days notice of such intent and file with the New Jersey
Commission an application for qualification before taking any action which may
influence or affect the affairs of the issuer, except that an institutional
investor holding voting securities shall be permitted to vote on matters put
to the vote of the holders of outstanding voting securities. If an
institutional investor that has been granted a waiver subsequently changes its
investment intent, or if the New Jersey Commission finds reasonable cause to
believe that the institutional investor may be found unqualified, no action
other than divestiture shall be taken by the investor with respect to the
security holdings until there has been compliance with the provisions of the
New Jersey Act concerning Interim Casino Authorization. The provisions of the
New Jersey Act concerning Interim Casino Authorization provide that whenever a
security holder of either equity or debt is required to qualify pursuant to
the New Jersey Act, the security holder shall, within 30 days after the New
Jersey Commission determines that qualification is required or declines to
waive qualification, (i) file a completed application for qualification, along
with an executed and approved Trust Agreement, wherein all securities of the
holding or intermediary company held by that security holder are placed in
trust pending qualification, or (ii) file a notice of intent to divest itself
of such securities as the New Jersey Commission may require so as to remove
the need for qualification, which securities must be divested within 120 days
from the date such determination was made.

The New Jersey Act further requires that corporate licensees and their
subsidiaries, intermediaries and holding companies adopt certain provisions in
their certificates of incorporation that require certain remedial action in
the event that an individual owner of any security of such company is found
disqualified under the New Jersey Act. The required certificate of
incorporation provisions vary depending on whether the stock of the company
subject to the requirements of the New Jersey Act is publicly or privately
traded. Pursuant to the New Jersey Act, the certificate of incorporation of a
publicly held company must

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provide that any securities of such corporation are held subject to the
condition that if a holder is found to be disqualified by the New Jersey
Commission pursuant to the New Jersey Act such holder shall dispose of his
interest in such company. The certificate of incorporation of a privately held
company must create the absolute right of the company to repurchase at the
market price or purchase price, whichever is the lesser, any security, share
or other interest in the company in the event the New Jersey Commission
disapproves a transfer in accordance with the provisions of the New Jersey
Act.

The Company is a publicly held company and, accordingly, a provision has
been placed in the Company's Restated Certificate of Incorporation which
provides that a holder of the Company's securities must dispose of such
securities if the holder is found disqualified under the New Jersey Act. In
addition, the Restated Certificate of Incorporation for the Company provides
that the Company may redeem the stock of any holder found to be disqualified.

If, at any time, it is determined that Adamar has violated the New Jersey
Act or regulations, or if any security holder of the Company, Adamar or
Holdings who is required to be qualified under the New Jersey Act is found
disqualified but does not dispose of the securities, Adamar could be subject
to fines or its license could be suspended or revoked. If Adamar's license is
revoked, the New Jersey Commission could appoint a conservator to operate and
to dispose of any casino hotel facilities of Adamar. Net proceeds of a sale by
a conservator and net profits of operations by a conservator (at least up to
an amount equal to a fair return on Adamar's investment which is reasonable
for casinos or hotels) would be paid to Adamar.

The subsidiaries which conduct the Company's gaming operations in Las Vegas
and Laughlin are not required to apply for licensure or qualification under
the New Jersey Act, but their certificates of incorporation are required under
the New Jersey Act to contain a provision granting them an absolute right to
repurchase at the market price or purchase price, whichever is less, any of
their respective securities in the event that the New Jersey Commission
disapproves a transfer of any such securities.

In addition to compliance with the New Jersey Act and regulations relating
to gaming, any facility built in Atlantic City by Adamar or any other
subsidiary of the Company must comply with the New Jersey and Atlantic City
laws and regulations relating to, among other things, the Coastal Area
Facilities Review Act, construction of buildings, environmental
considerations, operation of hotels and the sale of alcoholic beverages.

The New Jersey Commission is authorized to establish fees for the issuance
or renewal of casino licenses. Yearly casino hotel alcoholic beverage license
fees are payable for each facility in any of five specified categories in any
licensed casino hotel. There is also an annual license fee on each slot
machine. The New Jersey Commission is also authorized by regulation to
establish annual fees for the issuance and renewal of licenses other than
casino licenses.

The New Jersey Act imposes an annual tax of eight percent on gross revenues
(as defined in the New Jersey Act). In addition, casino licensees are required
to invest one and one-quarter percent of gross revenues for the purchase of
bonds to be issued by the Casino Reinvestment Development Authority or make
other approved investments equal to that amount; in the event the investment
requirement is not met, the casino licensee is subject to a tax in the amount
of two and one-half percent on gross revenues.

REGULATION AND LICENSING--MISSOURI

On November 3, 1992, a statewide referendum authorized gaming in the state
of Missouri on the Missouri and the Mississippi Rivers. Local approval from
the home dock municipality, as required by the legislation, was also obtained
from the City of Caruthersville in the November 3, 1992 election. On April 29,
1993, Missouri enacted revised legislation (the "Missouri Gaming Law") which
amended the

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existing legislation. The Missouri Gaming Law established the Missouri Gaming
Commission, which is responsible for the licensing and regulation of riverboat
gaming in Missouri and has the discretion to approve license applications for
riverboat gaming facilities. The Company was chosen by the City of
Caruthersville among other companies as the preferred applicant to develop a
gaming facility, and on September 20, 1993, the Company, through its subsidiary
Aztar Missouri Gaming Corporation ("Aztar Missouri"), filed its initial
application with the Missouri Gaming Commission. On May 27, 1994, the first two
excursion gaming boat licenses were issued in the State of Missouri, and two
additional facilities were licensed on June 22, 1994.

On June 9, 1994, Aztar Missouri was named by the Missouri Gaming Commission
as one of three applicants which the commission will begin to investigate
immediately. If Aztar Missouri is granted a license, it expects to begin
operations in Caruthersville, Missouri in 1995.

Gaming in the state of Missouri is currently limited to games of skill due to
a decision of the Missouri Supreme Court on January 25, 1994 that held that
games of chance, including certain games authorized under the Missouri Gaming
Law, such as bingo and keno, constitute "lotteries" and are therefore
prohibited under the Missouri constitution. The court held that games involving
an element of skill, such as poker and blackjack, are permissible under the
Missouri constitution, but remanded the case to the trial court to determine
whether other games contemplated by the Missouri Gaming Law are permissible
under the Missouri constitution. In so doing, however, the court noted that
traditional slot machines involve no element of skill and have been held in
other states to constitute "lotteries".

In a statewide election held on April 5, 1994, Missouri voters narrowly
defeated the adoption of a constitutional amendment that would have excepted
excursion boats and floating facilities from the constitutional prohibition on
lotteries. Local voters did re-approve gaming in the City of Caruthersville in
the April 5, 1994 election. Following the April 5, 1994 election, the Missouri
legislature amended the existing Missouri Gaming Law to clarify certain
definitions and to resolve some constitutional questions raised in the Missouri
Supreme Court decision. Based upon this revised statute, the Missouri Gaming
Law now permits "games of skill" including poker, blackjack, craps, caribbean
stud, pai gow poker, Texas hold'em, double down stud and any video
representation of such games. Pursuant to the Missouri Gaming Law, as revised,
the Missouri Gaming Commission issued two licenses on May 27, 1994 and two
licenses on June 22, 1994.

Poker, blackjack, craps, and video poker currently are licensed and played in
the two casinos operating in Missouri. The status of certain other games, such
as baccarat and roulette, depends upon a factual determination by the trial
court in Missouri, pursuant to the January 25, 1994 decision of the Missouri
Supreme Court. Games of chance, specifically traditional reel slot machines,
will not be permitted in the state of Missouri unless a constitutional
amendment is approved by the voters. In order for another vote on a
constitutional amendment to permit full-scale gaming to occur in the 1994
calendar year, the amendment would have to be placed on the ballot via
initiative petition. Such a petition was submitted to the Secretary of State of
Missouri by the July 8, 1994 deadline, and the Secretary of State has to make a
determination on the sufficiency of the signatures. There can be no assurance
that a constitutional amendment will be placed on the ballot, either through
general assembly action or the petition process, in any future election or that
full-scale gaming will ever be approved in Missouri.

Opponents to gaming in Missouri have brought several legal challenges to
gaming in the past and are likely to bring legal challenges in the future to
any proposed legislation or constitutional amendment. There can be no
assurances that any future challenges, if brought, would not further delay or
prohibit the commencement of full-scale gaming operations in Missouri,
including the operations of Aztar Missouri.

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Under the Missouri Gaming Law, the ownership and operation of riverboat
gaming facilities in Missouri are subject to extensive state and local
regulation. Aztar Missouri, any subsidiaries, and certain of its officers and
employees are and will be subject to certain regulations. As part of the
application and licensing process for a gaming license, the applicant must
submit detailed financial, operating and other reports to the Missouri Gaming
Commission. Each applicant has an ongoing duty to update the information
provided to the Missouri Gaming Commission in the application. In addition to
the information required of the applicant, each director, officer and other key
persons must submit a Personal Disclosure Form which includes detailed personal
financial information and is subject to thorough investigation. All gaming
employees must obtain an occupational license issued by the Missouri Gaming
Commission.

The operators licenses are issued through application to the Missouri Gaming
Commission, which requires, among other things, (a) investigations into an
applicant's character, financial responsibility and experience qualifications
and (b) that applicants furnish (i) an affirmative action plan for the hiring
and training of minorities and women and (ii) an economic development or impact
report. License fees are a minimum of $50,000 for the initial application, and
$25,000 annually thereafter. Licenses are to last for a term of two years,
except that the first license and subsequent renewal granted to each gaming
operator are to be for terms of one year. Aztar Missouri and its officers and
certain employees have submitted all the requisite licensing applications with
respect to the Caruthersville operation, and Aztar Missouri has no reason to
believe that these applications will not be approved. The Missouri Gaming
Commission has commenced its formal investigation of Aztar Missouri's
application. However, there can be no assurance that Aztar Missouri's
application will be approved in a timely manner or at all.

The Missouri Gaming Commission may revoke or suspend gaming licenses and
impose other penalties for violation of the Missouri Gaming Law and the rules
and regulations promulgated thereunder. Penalties include forfeiture of all
gaming equipment used for improper gaming and fines of up to three times an
operator's highest daily gross adjusted receipts during the preceding twelve
months. The gaming licenses are not transferable, and the Missouri rules bar a
licensee from taking any of the following actions without prior approval by the
Missouri Gaming Commission: (a) a pledge of the license as collateral to other
than a regulated bank or savings and loan association; (b) any individual
transfer of an interest of 5% or greater, either directly or indirectly, in a
publicly traded company which holds a license; or (c) distribution of assets in
excess of 5% of accumulated earnings of a licensee to anyone with an ownership
interest in the licensee. The Company believes that it is the intent of the
Missouri regulators that the restriction on transfer of ownership apply to the
Company as well as the direct licensee, Aztar Missouri. However, the regulation
is not explicit and this provision has not yet been tested in Missouri.

The bulk of the Missouri administrative rules contains detailed requirements
concerning the operation of a licensed excursion gaming boat facility. These
include a charge of two dollars per gaming customer that licensees must pay to
the Missouri Gaming Commission, minimum payout requirements, a 20% tax on
adjusted gross receipts, prohibitions against providing credit to gaming
customers (except for the use of credit cards and cashing checks) and a
requirement that each licensee reimburse the Missouri Gaming Commission for all
costs of any Missouri Gaming Commission staff necessary to protect the public
on the licensee's riverboat. Licensees also must submit audited quarterly
financial reports to the Commission and pay the associated auditing fees. The
Missouri Gaming Law also provides for a loss limit of $500 per person, per
excursion. Other areas of operation which are subject to regulation under the
Missouri rules are the size, denomination and handling of chips and tokens; the
surveillance methods and computer monitoring of electronic games; accounting
and audit methods and procedures; and approval of an extensive internal control
system. The Missouri rules also require that all of an operator's purchases
must be from suppliers licensed by the Missouri Gaming Commission.

Although the Missouri Gaming Law provides no limit on the amount of riverboat
space that may be used for gaming, the Missouri Gaming Commission is empowered
to impose such space limitations

44
<PAGE>

through the adoption of rules and regulations. Additionally, United States
Coast Guard safety regulations could affect the amount of riverboat space that
may be devoted to gaming.

With respect to the availability of dockside gaming, which may be more
profitable than cruise gaming, the Missouri Gaming Commission is empowered to
determine on a city and county-specific basis where such gaming is appropriate
and shall be permitted. Dockside gaming in Missouri may differ from dockside
gaming in other states, because the Missouri Gaming Commission has the ability
to require "simulated cruising". This requirement would permit customers to
board dockside riverboats only at specified times and would prohibit boarding
during the period of a simulated cruise, which is expected to last for two to
three hours. However, customers are permitted to leave the facility at any
time. Currently, one floating facility is operating as continuously docked with
a "simulated cruise" schedule.

REGULATION AND LICENSING INDIANA

The ownership and operation of riverboat casinos in designated waters
adjacent to the State of Indiana are subject to extensive state regulation
under the Indiana Riverboat Gambling Act (the "Indiana Act") and regulations
which the Indiana Gaming Commission is authorized to adopt under the Indiana
Act. The Indiana Act and the regulations the Indiana Gaming Commission has
adopted to date and is expected to adopt in the future are significant to the
Company's prospects for successfully securing a license to operate a riverboat
casino in the Evansville, Indiana market and operating if a license is secured.

The Indiana Act extends broad and pervasive regulatory powers and authority
to the Indiana Gaming Commission. The Indiana Gaming Commission took office in
September 1993, and, thus far, its activities have been predominantly directed
toward establishing a regulatory and administrative infrastructure for
licensing of prospective applicants for the limited number of riverboat owner's
licenses authorized by the Indiana Act: five for operations docking in Lake
Michigan, one on a landlocked lake in Southwestern Indiana and five on the Ohio
River (the Company is seeking one of the five licenses allocated to Ohio River
counties). The Indiana Gaming Commission has proposed a set of regulations
under the Indiana Act which cover numerous operational matters concerning
riverboat casinos licensed by the Commission. Those regulations have been
formally proposed and are now part of the promulgation process which applies to
all regulations issued by administrative agencies. The process includes
publication and a final comment period before the regulations become final by
approval by the Attorney General and the Governor and filing with the Secretary
of State. Although these initial regulatory proposals have not yet been
finalized and promulgated as operative regulations, the regulatory climate in
Indiana may well end up to be more costly than exists in other states.

Among the regulations proposed is one dealing with riverboat excursions,
routes and public safety. The Indiana Act requires licensed riverboat casinos
to be cruising vessels, and the regulations carry out the legislative intent
with appropriate recognition of public safety needs. The regulations explicitly
preclude "dockside gambling". For purposes of the regulations, dockside
gambling is defined to mean gambling on a vessel which is permanently moored
and not self-propelled and allows unlimited passenger ingress and egress.
Instead, the regulations define the type of excursions riverboats must conduct
based upon location (Lake Michigan or the Ohio River), weather conditions and
other safety factors.

Excursions must have a two- to four-hour duration. An excursion begins at the
time embarkation begins and concludes at the end of disembarkation if gambling
continues during disembarkation. Embarkation and disembarkation may not exceed
thirty minutes each. When the embarkation period ends, a gangway or its
equivalent must be closed so that no further embarkation is possible.

For Ohio River excursions, such as those the Company intends to operate
through its proposed Evansville operation, "full excursions" must be conducted
at all times during a year unless, for safety

45
<PAGE>

reasons, a "limited excursion" is authorized by the master of the riverboat
under the regulations. A "full excursion" is a cruise on the Ohio River; a
"limited excursion" is not a cruise but a simulation where the gangway of a
boat is closed with no further ingress until the end of the designated
excursion period. Passengers may disembark during a limited excursion.

The conditions under which a limited excursion may be conducted include
unsafe water levels, unsafe weather (fog, winds, rain), ice, mechanical or
structural difficulties, unsafe traffic conditions, conditions which would
cause the vessel to travel into waters in which it would violate federal law or
the law of any state, or any other condition which would jeopardize the safety
of the passengers, the vessel or other vessels. The condition relative to
violations of the laws of other states is designed to address the controversy
between the Commonwealth of Kentucky and the State of Indiana with respect to
exercise of the police power over the waters of the Ohio River.

Casino wagering is illegal in Kentucky. Most of the waters of the Ohio River
are, according to a decision of the United States Supreme Court, part of
Kentucky and therefore subject to its police power. Kentucky officials have
threatened to exercise police power and make arrests if Indiana-based
riverboats venture into Kentucky waters to conduct casino wagering operations.
The "limited excursion" regulation would seem to provide a clear basis for an
Indiana riverboat operator to conduct operations without any risk of legal
action from Kentucky. Although it has been reported that Indiana and Kentucky
officials have discussed some kind of compact that would protect Indiana-based
riverboats from action by Kentucky, no agreements have been publicly reported.

The Company, through an Indiana subsidiary, has applied to the Indiana Gaming
Commission for a riverboat owner's license for the Evansville, Indiana market.
Five other enterprises have filed applications for a license to conduct
riverboat casino operations in the Evansville market. It is expected that only
one license will be allocated to the Evansville market area. Initial license
hearings were expected to take place in the early fall of 1994. Litigation
commenced in a Northern Indiana county has resulted in the likelihood that
those hearings will take place on a later timetable.

A riverboat owner's license has an initial effective period of five years but
is subject to an annual renewal requirement. The Indiana Gaming Commission has
broad discretion with respect to the initial issuance of licenses and also with
respect to the renewal, revocation, suspension and control of riverboat owner's
licenses. Officers, directors and principal owners of the actual license holder
and employees who are to work on the riverboat are subject to substantial
disclosure requirements as a part of securing necessary licenses. Significant
contracts are subject to disclosure and approval processes. Suppliers of gaming
equipment and materials must also be licensed under the Indiana Act.

The Indiana Act requires an applicant for a license to disclose to the
Indiana Gaming Commission the identity of all 1% or greater owners of public
companies. The forms the Indiana Gaming Commission has developed for
application for riverboat owners' licenses require a broad and comprehensive
disclosure of financial and operating information on applicants and their
principal officers. There is a continuing disclosure obligation and an updating
requirement. The Company has provided full information and documentation to the
Indiana Gaming Commission in connection with its application for an owner's
license for its proposed Evansville operations.

The Company and the City of Evansville have signed a development agreement,
and the City of Evansville will endorse the Company's license request to the
Indiana Gaming Commission. The endorsement of "host communities" is one of many
factors the Indiana Gaming Commission may consider in awarding licenses.

In addition to securing a license to conduct riverboat casino operations from
the Indiana Gaming Commission, the Company will be required to secure permits
and approvals from the United States Army Corps of Engineers to develop the
facility it proposes to use to conduct operations. Owners of

46
<PAGE>

riverboat casinos are entitled to receive specialized alcoholic beverage
permits for riverboat operations. These permits extend serving privileges far
beyond those which otherwise exist under Indiana law. Landside operations at
the Company's proposed development must secure other alcoholic beverage permits
to conduct operations.

The Indiana Act prescribes a tax on adjusted gross receipts from gambling
games authorized under the Indiana Act at the rate of 20% on adjusted gross
receipts. For this purpose, adjusted gross receipts, means the total of all
cash and property received from gaming operations less cash paid out as
winnings and uncollectible gaming receivables. Indiana corporations are also
subject to the Indiana gross income tax, the Indiana adjusted gross income tax
and the Indiana supplemental corporate net income tax.

If the Company is granted a riverboat gaming license, the development
agreement with the City of Evansville will bind the Company to make a series of
payments to the city and community organizations. These payments are in the
nature of civic inducements that are necessary for the success of the Company's
efforts in Indiana.

EMPLOYEES

The Company employs approximately 8,200 people of which approximately 2,600
employees are represented by unions. Of the approximately 4,200 employees at
TropWorld, approximately 1,200 are covered by collective bargaining contracts.
Substantially all of such employees are covered by a contract that expires on
September 14, 1994 and the remainder are covered by contracts that expire in
1996. The Company is a member of a multi-employer bargaining unit that includes
most of the major Atlantic City casinos. Negotiations have commenced with
regard to a successor contract and a series of meetings have been scheduled to
take place prior to expiration. At Tropicana, approximately 1,400 of the 2,400
employees are covered by collective bargaining contracts. A substantial number
of such employees are covered by a contract that expired on May 31, 1994 and
those employees are currently working without a contract while negotiations
continue. A small number of such employees are covered by a separate contract
that expired on June 1, 1994, but the Company and union have reached a
tentative agreement for a new contract that will incorporate certain aspects of
the contract still being negotiated, and therefore will not be finalized until
after such negotiations have been concluded. The remainder of such employees
are covered by contracts that expire in 1995. At Ramada Express there are
approximately 1,500 employees, none of which are covered by collective
bargaining agreements.

TRADEMARKS

The Company uses a variety of trade names, service marks and trademarks and
believes it has all the licenses necessary to conduct its business. The Company
has registered several service marks and trademarks with the United States
Patent and Trademark Office or otherwise acquired the licenses to use those
which are material to the conduct of the Company's business as a whole.

The Company and Adamar of Nevada are the beneficiaries of an agreement with
Tropicana Enterprises, the owner of certain properties related to Tropicana,
and the Jaffe Family regarding the use of the name "Tropicana" for the
operation of a casino hotel in Atlantic City and in connection with the
operation of a casino hotel in New York State (if gaming were to be authorized
in New York State). Pursuant to such agreement, the Company has registered the
name under the Lanham Act. Upon the occurrence of certain events, the right to
use the name reverts to Tropicana Enterprises.

Ramada has licensed the Company to use the name "Ramada" in conjunction with
the operation of Ramada Express, and will not use or permit the use of the name
"Ramada" in Laughlin, Nevada by any other person or entity.

47
<PAGE>

The Company has registered the following important service marks: Aztar,
Trop, TropWorld, Trop Park, Tivoli Pier, TropWorld Casino and Entertainment
Resort and The Island of Las Vegas. The Company believes there are no other
trademarks or service marks the use of which is material to the conduct of the
Company's business as a whole.

LEGAL PROCEEDINGS

Aztar and more than 30 other major casino operators, as well as various
suppliers and distributors of video poker and electronic slot machines, have
been named as defendants in actions entitled William H. Poulos v. Caesar's
World, Inc., et al., (filed on April 26, 1994) and William Ahern v. Caesar's
World, Inc., et al., (filed on May 10, 1994) in the United States District
Court for the Middle District of Florida, Orlando Division. Both actions were
brought under RICO and state common law and seek compensatory and punitive
damages in excess of $1 billion from the defendants. The complaints allege that
the defendants took part in a scheme intended to induce people to play video
poker and electronic slot machines based on false beliefs concerning how those
machines actually operate as well as the extent to which there is actually an
opportunity to win on any given play.

The Company intends to file motions to dismiss the complaints and to file
motions to transfer the actions to the United States District Court for the
District of Nevada. As the cases are at their inception, no discovery has been
conducted. The Company intends vigorously to defend these actions.

The Company is a party to various other claims, legal actions and complaints
arising in the ordinary course of business or asserted by way of defense or
counterclaim in actions filed by the Company. Management believes that its
defenses are substantial in each of these matters and that the legal posture of
the Company can be successfully defended or satisfactorily settled without
material adverse effect on its consolidated financial statements.

48
<PAGE>

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

Set forth below is certain information concerning the individuals who are
directors or executive owners of the Company.

<TABLE>
<CAPTION>
YEARS WITH
THE COMPANY AND
NAME AGE POSITIONS RAMADA
---- --- --------- ---------------
<S> <C> <S> <C>
Paul E. Rubeli................. 50 Chairman of the Board, 15
President and Chief
Executive Officer, and
Director (Term as
Director expires 1996)
Robert M. Haddock.............. 49 Executive Vice President 13
and Chief Financial
Officer, and Director
(Term as Director
expires 1997)
Nelson W. Armstrong, Jr. ...... 53 Vice President, 21
Administration and
Secretary
Joe C. Cole.................... 55 Vice President, 6
Corporate
Communications
Meridith P. Sipek.............. 47 Controller 16
Craig F. Sullivan.............. 47 Treasurer 16
John B. Bohle.................. 50 Director (Term expires 2
1996)
Edward M. Carson............... 64 Director (Term expires 19
1995)
A. Sam Gittlin................. 79 Director (Term expires 31
1997)
John R. Norton, III............ 65 Director (Term expires 16
1995)
Robert S. Rosow................ 75 Director (Term expires 25
1995)
Richard Snell.................. 63 Director (Term expires 13
1995)
Vesta Valentine Temen.......... 61 Director (Term expires 11
1996)
Terence W. Thomas.............. 63 Director (Term expires 16
1997)
Carroll V. Willoughby.......... 80 Director (Term expires 24
1996)
</TABLE>

Set forth below is a description of the business occupation, position, office
or employment of each director and executive officer of the Company for the
past five years.

Paul E. Rubeli. Mr. Rubeli joined Ramada in 1979 as Group Vice President,
Industrial Operations. He served as Executive Vice President, Gaming, of Ramada
from 1982 to December 1989, when he was appointed President and Chief Operating
Officer of the Company in the Restructuring. He was appointed Chief Executive
Officer in February 1990 and Chairman of the Board in addition to his other
positions in February 1992.

Robert M. Haddock. Mr. Haddock joined Ramada in 1980 and held various
positions before becoming Executive Vice President and Chief Financial Officer
in March 1987, serving in that capacity until the Restructuring, when he
assumed the same position with the Company.

Nelson W. Armstrong, Jr. Mr. Armstrong joined Ramada in 1973 as an
accounting supervisor and held various positions on the corporate accounting
staff, serving as Vice President and Controller of Ramada and then of the
Company after the Restructuring until he was appointed Vice President,
Administration, and Secretary of the Company in March 1990.

Joe C. Cole. Mr. Cole joined Ramada in March 1988 as Vice President,
Corporate Communications, after having been affiliated with Phoenix Newspapers
Inc. for 26 years as a reporter, columnist and editor. He became Vice
President, Corporate Communications, of the Company in the Restructuring.

49
<PAGE>

Meridith P. Sipek. Mr. Sipek joined Ramada's corporate accounting staff in
1977 as a manager and held various positions in corporate and hotel accounting,
serving as Hotel Group Controller before being named Assistant Corporate
Controller of Ramada and then of the Company after the Restructuring until he
was appointed Controller of the Company in March 1990.

Craig F. Sullivan. Mr. Sullivan joined Ramada in 1978 as a treasury analyst
and held various Treasury Department positions before being named Assistant
Treasurer in May 1982, serving in that capacity in Ramada and in the Company
after the Restructuring until he was appointed Treasurer of the Company in
March 1990.

John B. Bohle. Mr. Bohle is Senior Vice President and Director of Paul R. Ray
and Company, Inc. (executive recruiting services) since 1981.

Edward M. Carson. Mr. Carson has been Chairman of First Interstate Bancorp
since 1990 and was President of First Interstate Bancorp from 1985 to 1990. He
also is a director of Terra Industries, Inc. (agribusiness products).

A. Sam Gittlin. Mr. Gittlin has been Chairman and Chief Executive Officer of
Gittlin Companies, Inc. (manufacturing, distributing and financial services)
since 1946.

John R. Norton, III. Mr. Norton is Chairman and Chief Executive Officer of
J.R. Norton Company (diversified agricultural production). He is also a
director of America West Airlines, Inc., Arizona Public Service Company
(electric utility), Pinnacle West Capital Corporation (holding company) and
Terra Industries, Inc. (agribusiness products).

Robert S. Rosow. Mr. Rosow has been an independent Certified Public
Accountant since 1953.

Richard Snell. Mr. Snell is Chairman, President and Chief Executive Officer
of Pinnacle West Capital Corporation (holding company) and Chairman of Arizona
Public Service Company (electric utility) since February 1990. He is also a
director of Pinnacle West, Arizona Public Service and Banc One Arizona
Corporation (bank holding company). Mr. Snell was previously Chairman,
President and Chief Executive Officer of Ramada from 1981 to December 1989,
Chairman of the Company from December 1989 to February 1992 and Chairman and
Chief Executive Officer of the Company from December 1989 to February 1990.

Vesta Valentine Temen. Mrs. Temen retired in March 1994 from her position as
Vice President of Administration at TropWorld, where she had served in various
capacities since 1982.

Terence W. Thomas. Mr. Thomas has been Chairman of the Board of Arizona
Wholesale Supply Company and National Brands, Inc. (wholesale distributors of
consumer products) since 1984.

Carroll V. Willoughby. Mr. Willoughby is retired. He was a Senior Group Vice
President of Ramada from 1970 to 1981.

50
<PAGE>

SECURITY OWNERSHIP

5% BENEFICIAL OWNERS

The table below sets forth certain information regarding beneficial owners of
more than 5% of the Common Stock as of July 14, 1994, as indicated by documents
on file with the Securities and Exchange Commission. The Company knows of no
other beneficial owner of more than 5 percent of its outstanding Common Stock.

<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED PERCENT OF CLASS
------------------------ ---------------------- ----------------
<S> <C> <C>
Gabelli Funds, Inc. .............. 3,609,325 9.7%
One Corporate Center
Rye, NY 10580

State of Wisconsin Investment
Board............................ 3,435,700 9.2%
P.O. Box 7842
Madison, WI 53707
</TABLE>

DIRECTORS AND EXECUTIVE OFFICERS

The table below sets forth certain information regarding Directors' and
executive officers' beneficial ownership of Common Stock as of July 14, 1994.

<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
DIRECTORS BENEFICIALLY OWNED* PERCENT OF CLASS
--------- ----------------------- ----------------
<S> <C> <C>
John B. Bohle.................... 8,000 **
Edward M. Carson................. 9,400 **
A. Sam Gittlin................... 13,100 **
Robert M. Haddock................ 721,405 1.9%
John R. Norton, III.............. 22,500 **
Robert S. Rosow.................. 29,596 **
Paul E. Rubeli................... 844,033 2.3%
Richard Snell.................... 49,000 **
Vesta Valentine Temen............ 39,572 **
Terence W. Thomas................ 11,000 **
Carroll V. Willoughby............ 44,000 **
<CAPTION>
NAMED EXECUTIVE OFFICERS
------------------------
<S> <C> <C>
Nelson W. Armstrong, Jr.......... 93,427 **
Meridith P. Sipek................ 55,851 **
Craig F. Sullivan................ 54,535 **
All Directors and Executive Offi-
cers
as a group (15 persons)......... 2,041,436 5.4%
</TABLE>

- --------

* Including, for Mr. Gittlin, 1,100 shares held by a partnership in which he
is a general partner and as to which he has effective voting and investment
power and 3,000 shares owned by Mrs. Gittlin and as to which Mr. Gittlin
disclaims any beneficial interest; for Mr. Norton, 13,500 shares held by a
self directed 401(k) profit sharing plan; for Mr. Rosow, 400 shares held in
an estate of which Mr. Rosow is the independent executor and in which he
disclaims any beneficial interest; for Messrs. Carson, Gittlin, Norton,
Rosow, Snell, Thomas and Willoughby 9,000 shares each; for Mr. Bohle 8,000
shares; and for Mrs. Temen 37,413 shares, which they may acquire by the
exercise of stock options within 60 days; for Messrs. Haddock, Rubeli,
Armstrong, Sipek, and Sullivan 659,883, 760,416, 86,030, 52,591, and 49,257
shares, respectively, which they may acquire by the exercise of stock
options within 60 days; and for the Directors and executive officers as a
group (15 persons), 1,758,329 shares, which they may acquire by the exercise
of options within 60 days.

** Less than 1% of the outstanding shares of Common Stock.

51
<PAGE>

DESCRIPTION OF THE NOTES

The Notes will be issued under an indenture to be dated as of , 1994 (the
"Indenture"), between the Company and American Bank National Association as
trustee (the "Trustee"). Capitalized terms used herein not otherwise defined
have the respective meanings assigned to them in the Indenture.

The terms of the Notes include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 as in
effect on the date of the Indenture (the "Trust Indenture Act"). The Notes are
subject to all such terms, and Holders of the Notes are referred to the
Indenture and the Trust Indenture Act for a statement of those terms. The
statements under this caption relating to the Notes and the Indenture are
summaries and do not purport to be complete. Such summaries make use of certain
terms defined in the Indenture and are qualified in their entirety by express
reference to the Indenture. A copy of the Indenture substantially in the form
in which it is to be executed has been filed with the Commission as an exhibit
to the Registration Statement of which this Prospectus is a part.

The Notes are general unsecured senior subordinated obligations of the
Company. They will be issued in fully registered form only, in denominations of
$1,000 and integral multiples thereof.

PAYMENT TERMS

The Notes will mature , 2004 and will bear interest at a rate of % per
annum until maturity, payable semi-annually on and , of each year,
commencing , 1995 to the persons who are registered holders thereof at the
close of business on the or , immediately preceding such interest
payment date.

The Indenture provides that interest on the Notes will be computed on the
basis of a 360-day year of twelve 30-day months. Principal and interest will be
payable at the office of the Trustee but, at the option of the Company,
interest may be paid by check mailed to the registered holders at their
registered addresses. Initially, the Trustee will act as Paying Agent and
Registrar. The Notes may be presented for registration of transfer and exchange
at the offices of the Registrar, which initially will be the Trustee's office.

OPTIONAL REDEMPTION

The Notes will not be redeemable at the option of the Company prior to ,
1999. On or after , 1999, the Notes will be redeemable at the option of the
Company, in whole at any time or in part from time to time, on not less than 30
nor more than 60 days' prior notice, mailed by first-class mail to the Holders'
last addresses as they shall appear in the Register, at the redemption prices
(expressed as a percentage of principal amount) specified below plus accrued
and unpaid interest, if any, to the redemption date, if redeemed during the 12-
month period beginning of the years indicated below:

<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
1999........................................................... %
2000...........................................................
2001...........................................................
2002 and thereafter............................................ 100.00
</TABLE>

If less than all the Notes are to be redeemed, selection of Notes for
redemption will be made by the Trustee, pro rata or by lot or by any other
means the Trustee determines to be fair and appropriate. The Indenture provides
that if any Note is to be redeemed in part only, the notice of redemption
relating to such Note shall state the portion of the principal amount (in
integral multiples of $1,000) to be

52
<PAGE>

redeemed and that on and after the date fixed for redemption, upon surrender of
such Note, a new Note or Notes in principal amount equal to the unredeemed
portion thereof will be issued in the name of the Holder thereof.

SUBORDINATION OF THE NOTES

The payment of the principal of and interest on the Notes is subordinated in
right of payment, as set forth in the Indenture, to the prior payment in full
of Senior Indebtedness, whether outstanding on the date of the Indenture or
thereafter created, incurred, issued, assumed or guaranteed. Upon any
distribution of the assets of the Company upon any liquidation, dissolution,
bankruptcy, reorganization or similar proceeding, the holders of Senior
Indebtedness will be entitled to receive payment in full before the Holders of
the Notes are entitled to receive any payment. See "RISK FACTORS--
Subordination."

In the event of any default in the payment of principal of or interest on
Designated Senior Indebtedness pursuant to which the maturity of such
Designated Senior Indebtedness may be accelerated, no payment may be made on or
in respect of the Notes until such default has been cured or waived. During the
continuance of any other event of default with respect to Designated Senior
Indebtedness that permits acceleration of the maturity thereof, no payment may
be made on or in respect of the Notes for a period of 180 days (the "Payment
Blockage Period") commencing on the earlier of (i) the date the Trustee
receives notice of such default from the Representative with respect to, or
from the holders of a majority in aggregate principal amount of, such
Designated Senior Indebtedness then outstanding or (ii) if such event of
default results from the acceleration of the Notes, the date of such
acceleration. Not more than one Payment Blockage Period may be commenced with
respect to the Notes during any period of 360 consecutive days. In no event
will a Payment Blockage Period extend beyond 179 days from the date the payment
on the Notes was due, and there must be 180 days in any 360-day period in which
no Payment Blockage Period is in effect. For all purposes of this paragraph, no
default or event of default which existed or was continuing on the date of the
commencement of any Payment Blockage Period with respect to the Designated
Senior Indebtedness initiating such Payment Blockage Period shall be, or be
made, the basis for the commencement of a subsequent Payment Blockage Period by
the Representative or requisite holders of such Designated Senior Indebtedness
whether or not within a period of 360 consecutive days unless such default or
event of default shall have been cured or waived for a period of not less than
90 consecutive days. The failure to make a payment of the principal of or
interest on the Notes because of such restrictions shall not be construed as
preventing the occurrence of an Event of Default and the right to accelerate
the maturity of the Notes upon the occurrence thereof.

REPURCHASE OR REDEMPTION UPON A CHANGE OF CONTROL

Upon a Change of Control of the Company, unless the Company has exercised its
right of redemption as described below, each Holder of the Notes shall have the
right to require that the Company repurchase each such Holder's Notes at a
purchase price in cash equal to the principal amount thereof plus accrued and
unpaid interest thereon, if any, to the date of repurchase, as provided in, and
subject to the terms of, the Indenture. Within 30 days following any Change of
Control, the Company shall mail a notice to each Holder stating, among other
things, (1) that such Holder has the right to require the Company to repurchase
such Holder's Notes at a purchase price in cash equal to the principal amount
thereof plus accrued and unpaid interest, if any, to the date of repurchase and
that all Notes so tendered to the Company by such Holder will be accepted for
payment; (2) the repurchase date (which shall be no earlier than 30 days and no
later than 60 days from the date such notice is mailed); and (3) the
instructions determined by the Company consistent with this covenant that a
Holder must follow in order to have its Notes repurchased.

53
<PAGE>

Notwithstanding the foregoing, at the option of the Company, upon a Change of
Control, the Company will have the right to redeem all but not part of the
Notes at a purchase price in cash equal to the prices (expressed as a
percentage of principal amount) specified below plus accrued and unpaid
interest, if any, to the date of redemption, if redeemed during the 12-month
period beginning of the years indicated below:

<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
1994.............................. %
1995..............................
1996..............................
1997..............................
1998..............................
1999..............................
2000..............................
2001..............................
2002 and thereafter............... 100.00
</TABLE>

The Company must notify the Trustee of its intent to exercise this right
within 20 Business Days, and must complete the redemption of the Notes within
60 days, after such Change of Control.

In the event of a Change of Control, each holder of the Notes will have the
right to require the Company to repurchase such holder's Notes at par, plus
accrued interest. Under the terms of certain Indebtedness of the Company, the
holders thereof may require repayment or its acceleration upon a Change of
Control. The Proposed Credit Facility is expected to constitute senior debt and
to contain similar provisions regarding a Change of Control. In the event that
holders of the Notes exercised the right to require repurchase of the Notes
upon a Change of Control, such right would be subordinated to the right of the
banks that are party to the Proposed Credit Facility to receive payment, if
such banks exercise their right to require repayment upon a Change of Control.
The subordination of the Notes may limit the ability of the Company to
repurchase the Notes, depending upon the funds available to the Company at such
time. The Change of Control provision may also have the effect of deterring or
delaying certain unsolicited acquisition attempts.

The conveyance, transfer or lease of all or substantially all of the
Company's assets, among other things, would constitute a Change of Control.
Although the amount of assets that will constitute "all or substantially all"
of the Company's assets is not readily quantifiable, a determination as to
whether a Change of Control has occurred will depend on the percentage of
operating assets and total assets transferred, among other measurements, and
the other facts and circumstances of the transaction. In any particular
transfer, the determination of whether a Change of Control has occurred will be
made by the Company, and the Company shall give notice to the Holders of the
Notes of the occurrence of a Change of Control.

The Company will comply with all applicable rules governing tender offers for
the Notes, including but not limited to, Section 14(e) of the Exchange Act and
the rules promulgated thereunder.

MANDATORY DISPOSITION OR REDEMPTION PURSUANT TO GAMING LAWS

The New Jersey and Nevada gaming authorities currently have the authority to
require a Holder or beneficial owner of the Notes to qualify or be found
suitable under applicable laws and regulations, and it is possible that gaming
authorities in other jurisdictions in which the Company may operate in the
future could be granted similar authority. If, at any time, a Holder or
beneficial owner of Notes is required to qualify or be found suitable under any
gaming laws or regulations applicable to the Company and such Holder or such
beneficial owner does not so qualify or is found unsuitable, the Company, at
its option, (i) shall require such Holder or such beneficial owner to dispose
of the Holder's or beneficial owner's Notes within 120 days after such Holder
or beneficial owner receives notice that the applicable

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gaming authorities have found that such Holder or beneficial owner does not so
qualify or such different time period as may be prescribed by such authorities
or (ii) shall redeem the Notes of such Holder upon not less than 30 nor more
than 60 days prior notice by the Company or such different period as may be
prescribed by such applicable gaming authorities. Any such redemption by the
Company shall be without premium and at the lower of (i) the Holder's or
beneficial owner's original purchase price for the Notes and, if permitted,
accrued interest to the redemption date, and (ii) the lowest closing sale price
of the Notes between the date of the notice given by the applicable gaming
authorities and the date ten days after such date unless some other price or
terms are required by such gaming authorities. See "REGULATION--Regulation and
Licensing--Nevada" and "--Regulation and Licensing--New Jersey."

CERTAIN DEFINITIONS

Set forth is a summary of certain of the defined terms used in the Indenture.
Reference is made to the Indenture for the full definition of all such terms,
as well as any other terms used herein for which no definition is provided.

"Affiliate" means, with respect to any Person, a Person (i) which directly or
indirectly through one or more intermediaries controls, or is controlled by, or
is under common control with, such Person, (ii) which beneficially owns or
holds 10% or more of any class of the Voting Stock of such Person (or a 10% or
greater equity interest in a Person which is not a corporation) or (iii) of
which 10% or more of any class of the Voting Stock (or in the case of a Person
which is not a corporation, 10% or more of the equity interest) is beneficially
owned or held by such Person or any Subsidiary of such Person. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.

"Asset Sale" means the sale or other disposition (including, without
limitation, dispositions pursuant to Sale and Leaseback Transactions) by the
Company or one of its Subsidiaries to any Person other than the Company or one
of its Subsidiaries of (i) any of the Capital Stock of any of the Subsidiaries
of the Company or (ii) any other assets of the Company or any assets of its
Subsidiaries outside the ordinary course of business of the Company or such
Subsidiary.

"Average Life" means, as of the date of determination, with respect to any
debt security, the quotient obtained by dividing (i) the sum of the products of
(x) the numbers of years from the date of determination to the dates of each
successive scheduled principal payment of such debt security multiplied by (y)
the amount of such principal payment by (ii) the sum of all such principal
payments.

"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of capital
stock of such Person and any rights (other than debt securities convertible
into capital stock), warrants or options to acquire such capital stock.

"Capitalized Lease Obligation" means, with respect to any Person, the
obligation of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) real or personal Property, which
obligation is required to be classified and accounted for as a capital lease
obligation on a balance sheet of such Person under generally accepted
accounting principles. For purposes of the Indenture, the amount of such
obligation at any date shall be the outstanding amount thereof at such date,
determined in accordance with generally accepted accounting principles.

"Change of Control" means any one or more of the following:

(A) the Company shall consolidate with or merge into any other
corporation or any other corporation shall consolidate with or merge into
the Company (in either case, other than a consolidation or merger with a
Wholly Owned Subsidiary in which all of the Voting Stock of the

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Company outstanding immediately prior to the effectiveness thereof is
changed into or exchanged for substantially the same consideration), in
either case pursuant to a transaction in which substantially all of the
Voting Stock of the Company outstanding immediately prior to the
effectiveness thereof is changed into or exchanged for cash, securities
(other than Voting Stock of the Company) or other property; provided,
however, that the term "Change of Control" shall not include any such
consolidation or merger if, with respect to such consolidation or merger,
(x) substantially all of the Voting Stock of the Company outstanding
immediately prior to the effectiveness thereof is changed into or exchanged
for Voting Stock of the surviving corporation or the ultimate parent of the
surviving corporation (the "Merger Common Stock"), (y) the Merger Common
Stock, immediately following the effectiveness thereof, is listed for
trading on the New York Stock Exchange or the American Stock Exchange or is
quoted on the National Association of Securities Dealers Automated
Quotation System and is designated as a "national market system security"
and (z) immediately after the effectiveness thereof, the Persons who were
holders of Voting Stock of the Company immediately prior to the
effectiveness thereof (excluding Persons who immediately prior to the
effectiveness thereof were Affiliates of the corporation consolidated or
merged with the Company in such consolidation or merger (other than Persons
who were Affiliates solely as a result of the ownership by the Company of
Capital Stock in such consolidated or merged corporation)) hold in the
aggregate more than 50% of the then outstanding Voting Stock of the
surviving corporation (or the ultimate parent of the surviving
corporation);

(B) the Company shall convey, transfer or lease all or substantially all
its assets to any Person or Persons (other than to a Wholly Owned
Subsidiary); provided, however, that the term "Change of Control" shall not
include any such conveyance, transfer or lease of assets (1) pursuant to a
Sale and Leaseback Transaction or (2) if immediately after the
effectiveness thereof, the Persons who were holders of Voting Stock of the
Company immediately prior to the effectiveness thereof (excluding Persons
who immediately prior to the effectiveness thereof were Affiliates of the
transferee of such assets (other than Persons who were such Affiliates
solely as a result of the ownership by the Company of Capital Stock in such
transferee)) hold in the aggregate more than 50% of the then outstanding
common stock of such transferee; or

(C) any Person (other than the Company) or group shall acquire, directly
or indirectly, beneficial ownership, in the aggregate, of 50% or more of
the outstanding shares of Voting Stock of the Company or securities
representing 50% or more of the combined Voting Power of the Company's
Voting Stock (the "Controlling Securities"), in either case outstanding on
the date immediately prior to the date of the last such acquisition by such
Person or group; provided, however, that the term "Change of Control" shall
not include any such acquisition that results in the Company ESOP and
members of management of the Company who have been employed in a management
capacity with the Company for at least eighteen months owning 50% or more
of the Voting Stock of the Company or 50% or more of the Controlling
Securities.

"Consolidated Amortization Expense" means, for any period, amortization
expense of the Company and its Restricted Subsidiaries, on a consolidated
basis, for such period (including, without limitation, any amortization or
write-offs of deferred financing costs by the Company and its Restricted
Subsidiaries during such period).

"Consolidated Depreciation Expense" means, for any period, depreciation
expense of the Company and its Restricted Subsidiaries, on a consolidated
basis, for such period.

"Consolidated Fixed Charge Coverage Ratio" means, as of any Transaction Date,
the ratio of (i) Consolidated Operating Cash Flow for the four consecutive
fiscal quarters for which financial information in respect thereof is available
immediately prior to such Transaction Date to (ii) Consolidated Fixed Charges
which will accrue during the then current fiscal quarter in which such
Transaction Date occurs (beginning on the first day of such quarter) and the
three fiscal quarters immediately subsequent to the end of such current fiscal
quarter, provided that, for the purpose of

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calculating Consolidated Fixed Charges for the period described in clause (ii)
above, (A) the interest rate on any Indebtedness bearing interest at a rate
that is adjustable based on market rate levels shall be calculated based on the
assumption that the applicable market rate level in effect on the Transaction
Date shall remain constant throughout such period at the market rate level in
effect on the Transaction Date, (B) adjustments that are reasonably anticipated
to occur during such period to Consolidated Fixed Charges shall be included in
such calculation (including such adjustments that result from the scheduled
maturity of Indebtedness of the Company and its Restricted Subsidiaries) and
(C) Indebtedness shall be included in such calculation that is reasonably
anticipated to be created, incurred, assumed or guaranteed by, or to otherwise
become the obligation of, the Company or any Restricted Subsidiary; provided,
however, that, for purposes of calculating the Consolidated Fixed Charge
Coverage Ratio, Consolidated Operating Cash Flow and Consolidated Fixed Charges
shall (x) include the consolidated operating cash flow and consolidated fixed
charges of any Person to be acquired by the Company or any of its Restricted
Subsidiaries as a Restricted Subsidiary in connection with the transaction
giving rise to the need to calculate the Consolidated Fixed Charge Coverage
Ratio, (y) include the consolidated operating cash flow and consolidated fixed
charges of any other Person acquired during the period described in clause (i)
above by the Company or by any of its Restricted Subsidiaries as a Restricted
Subsidiary and (z) exclude the consolidated operating cash flow of any Person
directly attributable to the Property of such Person that was the subject of an
Asset Sale, on a pro forma basis for the four consecutive fiscal quarters for
which financial information in respect thereof is available immediately prior
to such Transaction Date, in the case of calculating Consolidated Operating
Cash Flow, and for the then current fiscal quarter in which such Transaction
Date occurs and the three fiscal quarters immediately subsequent to the end of
such fiscal quarter (on the same basis as described in clause (ii) above), in
the case of calculating Consolidated Fixed Charges. For purposes of the
foregoing proviso, the consolidated operating cash flow and consolidated fixed
charges of any such Person shall be determined on the same basis as such items
are determined for the Company. For purposes of each pro forma determination of
the Consolidated Fixed Charge Coverage Ratio in connection with the
"Limitations on Indebtedness" covenant, the proposed new Indebtedness shall be
deemed to be incurred on the first day of the fiscal quarter in which the
relevant Transaction Date occurs.

"Consolidated Fixed Charges" means, for any period, the sum of Consolidated
Interest Expense plus the Tropicana Payments.

"Consolidated Income Tax Expense" means, for any period, the income tax
expense of the Company and its Restricted Subsidiaries, on a consolidated
basis, for such period (other than income tax expense attributable to Asset
Sales).

"Consolidated Interest Expense" means, for any period, without duplication,
(A) the sum of (i) the aggregate amount of interest recognized by the Company
and its Restricted Subsidiaries during such period in respect of Indebtedness
of the Company and its Restricted Subsidiaries (including, without limitation,
all interest capitalized by the Company and its Restricted Subsidiaries during
such period and all commissions, discounts and other fees and charges owed by
the Company and its Restricted Subsidiaries with respect to letters of credit
and bankers' acceptance financing and the net costs associated with Interest
Swap Obligations of the Company and its Restricted Subsidiaries), (ii) the
aggregate amount of the interest component of rentals in respect of Capitalized
Lease Obligations recognized by the Company and its Restricted Subsidiaries
during such period, (iii) to the extent any Indebtedness of any Person is
guaranteed by the Company or any of its Restricted Subsidiaries, the aggregate
amount of interest paid or accrued by such Person during such period
attributable to any such Indebtedness, (iv) one-third of the rent expense
incurred under noncancelable operating leases (excluding the Tropicana Lease)
during such period and (v) the aggregate amount of Redeemable Dividends
recognized by the Company and its Restricted Subsidiaries, whether or not
declared during such period, less (B) any amortization or write-off of deferred
financing costs by the Company and its

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Restricted Subsidiaries during such period; in each case after elimination of
intercompany accounts among the Company and its Restricted Subsidiaries and as
determined in accordance with generally accepted accounting principles.

"Consolidated Interest Income" means, for any period, interest income from
all sources of the Company and its Restricted Subsidiaries, on a consolidated
basis, for such period.

"Consolidated Net Income" means, for any period, the aggregate net income of
the Company and its Subsidiaries for such period on a consolidated basis,
determined in accordance with generally accepted accounting principles,
provided that there shall be excluded therefrom (i) gains and losses from Asset
Sales or reserves relating thereto, (ii) items classified as extraordinary or
nonrecurring, (iii) the income (or loss) of any Unrestricted Subsidiary or
Joint Venture, except to the extent that the aggregate amount of cash dividends
or other distributions actually paid during such period to the Company or any
Restricted Subsidiary by such Unrestricted Subsidiary or Joint Venture in
respect of its Capital Stock out of funds legally available therefor exceeds
the aggregate amount of new Investments in such Unrestricted Subsidiary or
Joint Venture by the Company or any Restricted Subsidiary during such period,
(iv) except to the extent includable pursuant to clause (iii), the income (or
loss) of any Person accrued or attributable to any period prior to the date it
becomes a Restricted Subsidiary or is merged into or consolidated with the
Company or any of its Restricted Subsidiaries or that Person's assets (or a
portion thereof) are acquired by the Company or any of its Restricted
Subsidiaries and (v) the income of any Restricted Subsidiary to the extent that
such Restricted Subsidiary is prevented by any Legal Requirement from paying
such income to the Company or another Restricted Subsidiary. Notwithstanding
the foregoing, Consolidated Net Income as used in the "Limitation on Restricted
Payments" covenant shall include gains (or losses) on the sale by the Company
or a Restricted Subsidiary of an Unrestricted Subsidiary.

"Consolidated Net Rent" means, for any period, without duplication, an amount
equal to the total of: (A) the rent expense, net of intercompany rent, incurred
by HRN pursuant to the Tropicana Lease plus (B) two-thirds of the rent expense
incurred under other noncancelable operating leases.

"Consolidated Net Worth" means, as of any date, with respect to any Person,
the sum of the Capital Stock and additional paid-in capital plus retained
earnings (or minus accumulated deficit) of such Person and its Subsidiaries on
a consolidated basis at such date, each item determined in accordance with
generally accepted accounting principles, less amounts attributable to
Redeemable Stock of such Person and its Subsidiaries.

"Consolidated Operating Cash Flow" means, for any period, without
duplication, Consolidated Net Income, plus (i) Consolidated Interest Expense,
plus (ii) Consolidated Income Tax Expense, plus (iii) Consolidated Depreciation
Expense, plus (iv) Consolidated Amortization Expense, plus (v) Consolidated Net
Rent, plus (vi) equity in unconsolidated partnerships' losses, minus (vii)
Consolidated Interest Income, plus (viii) other non-cash items reducing such
Consolidated Net Income, minus (ix) other non-cash items increasing such
Consolidated Net Income, for such period, all as determined in accordance with
generally accepted accounting principles.

"Credit Facility" means any agreement between the Company and/or any of its
Restricted Subsidiaries and one or more banks or other financial institutions
providing for the making of term loans or loans on a revolving basis
(including, in either case, construction loans and lines of credit), the
issuance of letters of credit and the creation of bankers' acceptances, as any
such agreement may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified, including any agreement extending
the maturity, refinancing or restructuring of all or any portion of the
Indebtedness and other obligations under such agreement or any successor
agreement.

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"Currency Agreement" means, with respect to any Person, any foreign exchange
contract, currency swap agreement, option or futures contract or other similar
agreement or arrangement designed to protect such Person or any of its
Subsidiaries against fluctuations in currency values.

"Designated Senior Indebtedness" means each issue of Senior Indebtedness that
(i) has an outstanding principal amount of not less than $25,000,000 and (ii)
has been designated as Designated Senior Indebtedness pursuant to an Officers'
Certificate of the Company received by the Trustee.

"Effective Date" means , 1994.

"Gaming Jurisdiction Law" means any law, statute, ordinance, code,
regulation, constitutional provision, rule, order, directive or other
enforceable requirement now or hereafter in existence of the United States
federal government or any state, county, municipality or other political
subdivision or any agency or other governmental authority thereof that now or
hereafter has jurisdiction over all or any portion of the gaming activities of
the Company or any of its Subsidiaries.

"Indebtedness" means, with respect to any Person, without duplication, (i)
any obligation, contingent or otherwise, for borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such Person or only to
a portion thereof), (ii) any obligation evidenced by bonds, debentures, notes
or other similar instruments, (iii) any obligation owed for all or any part of
the purchase price of Property, other assets or services or for the cost of
Property or other assets constructed or of improvements thereto (including any
obligation under or in connection with any letter of credit related thereto),
other than accounts payable included in current liabilities and incurred in
respect of Property or services purchased in the ordinary course of business,
(iv) any obligation of such Person under or in connection with any letter of
credit issued for the account of such Person and all drafts drawn or demands
for payment honored thereunder, (v) any obligation under conditional sale or
other title retention agreements relating to purchased Property, (vi) any
obligation issued or assumed as the deferred purchase price of Property (other
than accounts payable incurred in the ordinary course of business), (vii) any
obligation, contingent or otherwise, as set forth in subclauses (i), (ii) and
(iii) of this definition of any other Person secured by any Lien in respect of
Property of such Person even though such Person has not assumed or become
liable for payment of such obligation, (viii) any Capitalized Lease Obligation
or any other obligation pursuant to any Sale and Leaseback Transaction, (ix)
any note payable or draft accepted representing an extension of credit (other
than extensions of credit for Property and services purchased in the ordinary
course of business) whether or not representing an obligation for borrowed
money, (x) the maximum fixed repurchase price of any Redeemable Stock, (xi)
obligations in respect of Interest Swap Obligations and Currency Agreements and
(xii) any obligation which is a guarantee with respect to Indebtedness (of a
kind otherwise described in this definition) of another Person. For purposes of
the preceding sentence, the maximum fixed repurchase price of any Redeemable
Stock which does not have a fixed repurchase price shall be calculated in
accordance with the terms of such Redeemable Stock as if such Redeemable Stock
were repurchased on any date on which Indebtedness shall be required to be
determined pursuant to the Indenture; provided, however, that if such
Redeemable Stock is not then permitted to be repurchased, the repurchase price
shall be the book value of such Redeemable Stock. The amount of Indebtedness of
any Person at any date shall be the outstanding balance at such date of all
unconditional obligations as described above, the maximum liability of such
contingent obligations at such date and, in the case of clause (vii), the
lesser of the fair market value at such date of any asset subject to a Lien
securing the Indebtedness of others and the amount of the Indebtedness secured.

"Investment" means, with respect to any Person (such Person being referred to
in this definition as the "Investor"), any amount paid by the Investor,
directly or indirectly, or any transfer of Property, directly or indirectly
(such amount to be the fair market value of such Property at the time of
transfer as determined in good faith by the Board of Directors of the Investor,
whose determination shall be

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conclusive) by the Investor to any other Person (i) for Capital Stock of, or
other equity interest in, or as a capital contribution to, such other Person or
(ii) as a direct or indirect loan or advance to such other Person (other than
accounts receivable of the Investor arising in the ordinary course of
business).

"Jaffe Partnership Interest" means the general partnership interest in
Tropicana Enterprises held by members of the Jaffe Family pursuant to the
Amended and Restated Partnership Agreement dated as of November 19, 1984
between the Jaffe Family and Adamar of Nevada, as amended.

"Joint Venture" means any Person (other than a Subsidiary of the Company) in
which any Person other than the Company or any of its Subsidiaries has a joint
or shared equity interest with the Company or any of its Subsidiaries.

"Permitted Liens" means, with respect to any Person, (i) Liens for taxes,
assessments, governmental charges or claims which are not yet due and payable
or are being contested in good faith by such Person by appropriate proceedings
promptly instituted and diligently conducted and for which a reserve or other
appropriate provision, if any, as shall be required in accordance with
generally accepted accounting principles shall have been made by such Person;
(ii) statutory Liens of landlords and carriers, warehousemen, mechanics,
suppliers, materialmen, repairmen, or other like Liens arising in the ordinary
course of business and with respect to amounts not yet delinquent or being
contested in good faith by appropriate proceedings promptly instituted and
diligently conducted and for which a reserve or other appropriate provision, if
any, as shall be required in accordance with generally accepted accounting
principles shall have been made by such Person; (iii) Liens incurred or
deposits made by such Person in the ordinary course of business in connection
with worker's compensation, unemployment insurance, medical insurance and other
types of social security and deposits made by such Person in the ordinary
course of business in connection with other kinds of insurance; (iv) Liens
incurred or deposits made by such Person to secure the performance of tenders,
bids, leases, statutory obligations, surety and appeal bonds, government
contracts, performance and return-of-money bonds and other obligations of a
like nature incurred in the ordinary course of business (exclusive of
obligations for the payment of borrowed money); (v) easements, rights-of-way,
restrictions, minor defects or irregularities in title and other similar
charges or encumbrances not interfering in any material respect with the
business of such Person or any of its Subsidiaries incurred in the ordinary
course of business; (vi) Liens (including extensions and renewals thereof) upon
real or tangible personal property acquired by such Person after the date of
the Indenture; provided that (a) any such Lien is created solely for the
purpose of securing Indebtedness representing, or incurred to finance,
refinance or refund, all costs (including the cost of construction) of the item
of Property subject thereto, (b) the principal amount of the Indebtedness
secured by such Lien does not exceed 100% of such cost, (c) such Lien does not
extend to or cover any other Property other than such item of Property and any
improvements on such item and (d) the incurrence of such Indebtedness is
permitted by Section 705; (vii) Liens upon specific items of inventory or other
goods and proceeds of such Person securing such Person's obligations in respect
of bankers' acceptances issued or created for the account of such Person in the
ordinary course of business to facilitate the purchase, shipment or storage of
such inventory or other goods; (viii) Liens securing reimbursement obligations
with respect to commercial letters of credit issued for the account of such
Person which encumber documents and other Property relating to such commercial
letters of credit and the products and proceeds thereof; (ix) Liens in favor of
customs and revenue authorities arising as a matter of law to secure payment of
customs duties in connection with the importation of goods by such Person; (x)
licenses, leases or subleases granted to others not interfering in any material
adverse respect with the business of such Person or any of its Subsidiaries;
(xi) Liens encumbering Property or assets of such Person under construction
arising from progress or partial payments by a customer of such Person or one
of its Subsidiaries relating to such Property or assets; (xii) Liens
encumbering customary initial deposits and margin accounts, and other Liens
incurred in the ordinary course of business and which are within the general
parameters customary in the gaming industry, in each case securing Interest
Swap Obligations or Currency Agreements; (xiii) Liens encumbering deposits made
to secure obligations arising from statutory or regulatory requirements of

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such Person or its Subsidiaries; (xiv) any interest or title of a lessor in the
Property subject to any Capitalized Lease Obligation or operating lease which,
in each case, is permitted under the Indenture; (xv) Liens securing obligations
to the Trustee pursuant to the compensation and indemnity provisions of the
Indenture; (xvi) purchase money liens securing payables arising from the
purchase by such Person or any of its Subsidiaries of any equipment or goods in
the ordinary course of business, provided that such payables do not constitute
Indebtedness; (xvii) Liens arising out of consignment or similar arrangements
for the sale of goods entered into by such Person or any of its Subsidiaries in
the ordinary course of business; (xviii) Liens for judgments or orders not
giving rise to a Default or Event of Default; and (xix) Liens not specified in
the foregoing and not otherwise permitted by the covenant on "Limitation on
Liens," provided that the aggregate Indebtedness secured by the Liens under
this clause (xix) shall not exceed $5,000,000 at any time.

"Property" means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.

"Qualified Capital Stock" means Capital Stock not constituting Redeemable
Stock.

"Redeemable Dividend" means, for any dividend payable with respect to
Redeemable Stock, the quotient of the dividend divided by the difference
between one and the maximum statutory federal income tax rate (expressed as a
decimal number between 1 and 0) then applicable to the issuer of such
Redeemable Stock.

"Redeemable Stock" means, with respect to any Person, any equity security
issued by such Person that by its terms or otherwise is required to be redeemed
(other than a security that is required to be redeemed only in the event that a
holder of such security fails to qualify or to be found suitable or otherwise
eligible under a Gaming Jurisdiction Law to remain as a holder of such
security) or is redeemable at the option of the holder of such security at any
time prior to the maturity of the Notes.

"Restricted Subsidiary" means any Subsidiary of the Company that (i) has not
been designated by the Board of Directors of the Company as an Unrestricted
Subsidiary or (ii) was an Unrestricted Subsidiary but has been redesignated by
the Board of Directors of the Company as a Restricted Subsidiary, in each case
as provided under the definition of Unrestricted Subsidiary.

"Sale and Leaseback Transaction" means any direct or indirect arrangement
with any Person or to which any such Person is a party, providing for the
leasing to the Company or a Subsidiary of the Company of any Property, whether
owned at the date of the Indenture or thereafter acquired, which has been or is
to be sold or transferred by the Company or such Subsidiary to such Person or
to any other Person to whom funds have been or are to be advanced by such
Person on the security of such Property if, after giving effect to such
arrangement, the Company or a Subsidiary of the Company operates the business,
if any, located on such Property.

"Senior Indebtedness" means the principal of, interest (including without
limitation, interest at the contract rate subsequent to the commencement of any
bankruptcy, insolvency or similar proceeding with respect to the Company) on
and other amounts due on or in connection with any Indebtedness of the Company
for money borrowed from others, whether outstanding on the date of the
Indenture or thereafter created, incurred, assumed or guaranteed, which, at the
date of the Indenture or at the time of any such creation, incurrence,
assumption or guarantee, (i) is by its terms expressly senior to and not
subordinate or subject in right of payment to any other Indebtedness of the
Company, or (ii) is secured by a lien on any Property of the Company or any of
its Subsidiaries; provided, however, that Senior Indebtedness shall not include
any such Indebtedness if (A) the value of the collateral securing such
Indebtedness at time of incurrence is less than the amount of such Indebtedness
or (B) the value of any Property substituted for the collateral securing such
Indebtedness is less than the value of the collateral so released, in either
case as determined by the Company and set forth in an Officer's

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Certificate of the Company received by the Trustee, which certificate shall be
conclusive evidence of the correctness of the matters set forth herein, or
(iii) has been designated Senior Indebtedness pursuant to an Officer's
Certificate of the Company received by the Trustee. Notwithstanding anything
herein to the contrary, Senior Indebtedness shall not mean (a) Indebtedness of
the Company to a Subsidiary of the Company for money borrowed or advances from
such Subsidiary, (b) Indebtedness representing the maximum fixed repurchase
price of any Capital Stock of the Company which by its terms or otherwise is or
may be required to be redeemed or repurchased prior to the Stated Maturity of
the Notes or at the option of the holder thereof, (c) Indebtedness of the
Company to any officer or director thereof, (d) obligations owing under
judgments arising out of obligations that are not Indebtedness for borrowed
money, (e) accounts payable or any other Indebtedness to trade creditors created
or assumed by the Company in the ordinary course of business in connection with
the obtaining of materials or services and (f) any liability for federal, state,
local or other taxes owed or owing by the Company.

"Significant Subsidiary" means any Subsidiary of the Company (i) the revenues
attributable to which for the then most recently completed four fiscal quarters
constituted 5% or more of the consolidated revenues of the Company and its
Subsidiaries for such period, (ii) the assets of which as of the end of such
period constituted 5% or more of the consolidated assets of the Company and its
Subsidiaries as of the end of such period or (iii) that operates, owns or
leases any Property that is material to the business operations of the Company
or any Restricted Subsidiary.

"Stated Maturity" means, with respect to any Note or any installment of
interest thereon, the date specified in such Note as the fixed day on which the
principal on such Note or such installment of interest is due.

"Subsidiary" means, with respect to any Person, (i) a corporation a majority
of whose Capital Stock with voting power, under ordinary circumstances, to
elect directors is at the time, directly or indirectly, owned by such Person,
by one or more Subsidiaries of such Person or by such Person and one or more
Subsidiaries thereof or (ii) any other Person (other than a corporation) in
which such Person, one or more Subsidiaries thereof, or such Person and one or
more Subsidiaries thereof, directly or indirectly, at the date of determination
thereof has at least majority ownership interest and the power to direct the
policies, management and affairs thereof. For purposes of this definition, any
directors' qualifying shares mandated by applicable law shall be disregarded in
determining the ownership of a Subsidiary.

"Transaction Date" means the date of the transaction giving rise to the need
to calculate Consolidated Fixed Charge Coverage Ratio or to make any other
determination for purposes of complying with the provisions of the Indenture,
provided that if such transaction is related to or in connection with any
acquisition of any Person, the Transaction Date shall be the date on which the
Company or any of its Subsidiaries enters into an agreement with such Person to
effect such acquisition; provided, however, that if subsequent to the entering
of such agreement the Company or any of its Subsidiaries shall amend the terms
of such acquisition with respect to the consideration payable by the Company or
any of its Subsidiaries in connection with such acquisition, the Transaction
Date shall be the date on which the Company or any of its Subsidiaries enters
into an agreement with such Person to effect such amendment. The second proviso
above shall not be applicable if, as of the Transaction Date with respect to
any acquisition, the Company could incur at least $1.00 of additional
Indebtedness pursuant to the first paragraph of the "Limitation on
Indebtedness" covenant when the Consolidated Fixed Charge Coverage Ratio of the
Company is calculated on the basis of the amended terms of such acquisition and
the Indebtedness to be incurred by the Company and its Restricted Subsidiaries
in connection therewith.

"Tropicana Loan Refinancings" means any refinancings or financings of, or
related to, the Tropicana Loan or any refinancings thereof (including, but not
limited to, any Indebtedness owed to the Company or any Restricted Subsidiary
in connection with the Tropicana Loan or any refinancings

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thereof), to the extent that the aggregate amount of such Indebtedness incurred
pursuant to such refinancings or financings or does not exceed the outstanding
principal amount under the Tropicana Loan at the Effective Date.

"Tropicana Payments" means, for any period, that portion of the lease
payments made by HRN to Tropicana Enterprises pursuant to the Tropicana Lease
that represents the sum of interest expense on Indebtedness of Tropicana
Enterprises payable to Persons other than the Company plus amounts distributed
in respect of the Jaffe Partnership Interest.

"Tropicana Security Deposit" means the additional security deposit that HRN
may be required to provide from time to time pursuant to the Tropicana Lease
(as defined under "CERTAIN CONTRACTUAL ARRANGEMENTS--Tropicana Lease") as in
effect on the Effective Date.

"Unrestricted Subsidiary" means (1) any Subsidiary of the Company which at
the time of determination shall be an Unrestricted Subsidiary (as designated by
the Board of Directors of the Company, as provided below) and (2) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors of the Company
may designate any Subsidiary of the Company (including any newly acquired or
newly formed Subsidiary) to be an Unrestricted Subsidiary (unless such
Subsidiary owns any Capital Stock of or owns or holds any Lien on any Property
of the Company or any other Subsidiary of the Company which is not a Subsidiary
of the Subsidiary to be so designated), provided that either (x) the Subsidiary
to be so designated has total assets of $1,000 or less or (y) immediately after
giving pro forma effect to such designation the Company could incur $1.00 of
additional Indebtedness pursuant to the first paragraph of the "Limitation on
Indebtedness" covenant; and provided, further, that a Subsidiary shall not be
designated as an Unrestricted Subsidiary if the Company or a Restricted
Subsidiary creates, incurs, issues, assumes, guarantees or in any other manner
becomes liable with respect to any obligation of such Subsidiary. The Board of
Directors of the Company may redesignate any Unrestricted Subsidiary to be a
Restricted Subsidiary, provided that immediately after giving pro forma effect
to such redesignation, the Company could incur $1.00 of additional Indebtedness
pursuant to the first paragraph of the "Limitation on Indebtedness" covenant.
Any such designation or elimination thereof by the Board of Directors of the
Company shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the resolution of the Board of Directors of the Company
giving effect to such designation and an Officers' Certificate certifying that
such designation complies with the foregoing conditions.

"U.S. Government Obligations" are direct noncallable obligations of the
United States of America or guaranteed by the United States of America for the
payment of which the full faith and credit of the United States is pledged.

"Wholly Owned Subsidiary" means any Restricted Subsidiary of the Company of
which 100% of the Capital Stock of, or other ownership interest in, such
Restricted Subsidiary is at the time owned by the Company or a Wholly Owned
Subsidiary.

COVENANTS

The Indenture contains covenants including, among others, the following:

Limitation on Indebtedness. The Indenture provides that the Company will not,
and will not permit any Restricted Subsidiary to, create, incur, assume,
guarantee or otherwise become liable with respect to, or become responsible for
the payment of, any Indebtedness unless, after giving effect thereto, the
Consolidated Fixed Charge Coverage Ratio of the Company is greater than 1.9 to
1. (As of March 31, 1994, calculated on a pro forma basis after giving effect
to the offering of the Notes and the use of proceeds therefrom but without
giving effect to the proposed entry by the Company into the Credit Facility and
any refinancings with the proceeds therefrom, the Consolidated Fixed Charge
Coverage Ratio would have been 2.0 to 1.)

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Notwithstanding the foregoing, the Company and its Restricted Subsidiaries
may incur, create, assume, guarantee, or otherwise become liable with respect
to, any or all of the following: (i) Indebtedness not otherwise permitted
pursuant to clauses (ii) through (xi) below in an aggregate amount at any time
outstanding of up to $20,000,000, (ii) Indebtedness evidenced by the Notes or
the 11% Notes, (iii) Indebtedness of the Company and its Restricted
Subsidiaries remaining outstanding immediately after the issuance of the Notes
and application of the proceeds thereof, (iv) Indebtedness to the Company or to
a Restricted Subsidiary, (v) Indebtedness incurred by the Company or any
Restricted Subsidiary in connection with (a) the construction of any new
facility or facilities related to the gaming business or any related business
of the Company or any Restricted Subsidiary or in connection with the expansion
by the Company or any Restricted Subsidiary of any of its existing facilities,
provided, however, that the aggregate principal amount of all such Indebtedness
incurred on and subsequent to the Effective Date shall not exceed $100,000,000,
(b) the maintenance, refurbishment or replacement by the Company or any
Restricted Subsidiary in the ordinary course of business of assets related to
the gaming business or any related business of the Company or any Restricted
Subsidiary or (c) the acquisition of slot machines, gaming tables or other
similar gaming equipment, (vi) Indebtedness under any Credit Facilities in an
aggregate amount of up to $212,300,000 (vii) Indebtedness incurred to purchase
Tropicana or the Jaffe Partnership Interest or in connection with any Tropicana
Loan Refinancings, (viii) Indebtedness incurred in respect of the Tropicana
Security Deposit, (ix) Indebtedness under Currency Agreements or Interest Swap
Obligations (including any Interest Swap Obligation, the purpose of which is to
alter or replace, or lengthen or shorten the maturity of, any Interest Swap
Obligation previously incurred pursuant to this clause (ix)), provided that
such Currency Agreements or Interest Swap Obligations are related to payment
obligations on Indebtedness otherwise permitted under the Indenture, (x)
Indebtedness incurred in respect of performance bonds, bankers' acceptances,
letters of credit and surety bonds provided by the Company or any Restricted
Subsidiary in the ordinary course of business and (xi) Indebtedness
("Replacement Indebtedness") the proceeds of which are used to refinance (a)
all or a portion of the Notes, (b) any other permitted Indebtedness of the
Company and its Restricted Subsidiaries or (c) permitted successor or
replacement Indebtedness, in each case in a principal amount (or, if such
Replacement Indebtedness does not require cash payments prior to maturity, with
an original issue price) not to exceed an amount equal to the aggregate of the
principal amount plus any prepayment penalties, premiums and accrued and unpaid
interest on the Indebtedness so refinanced and customary fees, expenses and
costs related to the incurrence of such Replacement Indebtedness, provided
that, in the case of this clause (xi), (1) if the Notes are refinanced in part,
such Replacement Indebtedness is expressly made pari passu or subordinate in
right of payment to the remaining Notes, (2) if the Indebtedness to be
refinanced is subordinate in right of payment to the Notes, such Replacement
Indebtedness is subordinate in right of payment to the Notes at least to the
extent that the Indebtedness to be refinanced is subordinate to the Notes, (3)
if the Indebtedness to be refinanced is pari passu in right of payment to the
Notes, such Replacement Indebtedness is pari passu or subordinate in right of
payment to the Notes at least to the extent that the Indebtedness to be
refinanced is pari passu to the Notes and (4) if the Notes are refinanced in
part or if the Indebtedness to be refinanced is subordinate in right of payment
to the Notes and scheduled to mature after the maturity date of the Notes, such
Replacement Indebtedness determined as of the date of incurrence does not
mature prior to the final scheduled maturity date of the Notes and the Average
Life of such Replacement Indebtedness is equal to or greater than the Average
Life of the remaining Notes.

Limitation on Restricted Payments. The Indenture provides that the Company
will not, and will not permit any Restricted Subsidiary to, directly or
indirectly, (i) declare or pay any dividend on or make any distribution or
payment on its Capital Stock or to its stockholders (in their capacity as
stockholders) (other than dividends or distributions payable solely in its
Qualified Capital Stock and, in the case of a Restricted Subsidiary, dividends
or distributions payable to the Company or a Wholly Owned Subsidiary), (ii)
purchase, redeem or otherwise acquire or retire for value any shares of Capital
Stock of the Company or any Subsidiary of the Company (other than a Wholly
Owned Subsidiary and, in the

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case of a Restricted Subsidiary, from the Company), (iii) acquire, retire or
redeem any Indebtedness of or otherwise make any Investment in any Affiliate of
the Company (other than Investments in a Restricted Subsidiary) or (iv)
purchase, redeem or otherwise acquire or retire for value, prior to any
scheduled maturity, scheduled repayment or scheduled sinking fund or mandatory
redemption payment, Indebtedness of the Company or of any Affiliate of the
Company that is pari passu or subordinated (whether pursuant to its terms or by
operation of law) in right of payment to the Notes and which is scheduled to
mature (after giving effect to any and all unconditional (other than as to the
giving of notice) options to extend the maturity thereof) on or after the
maturity date of the Notes, if at the time of any such declaration,
distribution, payment, purchase, redemption, acquisition or retirement
(collectively, the "Restricted Payments") and after giving effect thereto
(including, without limitation, in calculating on a pro forma basis, as if such
proposed Restricted Payment had been made, the Consolidated Fixed Charge
Coverage Ratio of the Company for purposes of clause (y) below): (x) any Event
of Default shall have occurred and be continuing; or (y) the Company could not
incur at least $1.00 of additional Indebtedness pursuant to the first paragraph
of the "Limitation on Indebtedness" covenant; or (z) the aggregate amount of
Restricted Payments for all such purposes made subsequent to the Effective Date
would exceed an amount equal to the sum of (i) 50% of aggregate Consolidated
Net Income (or if such aggregate Consolidated Net Income shall be a deficit,
minus 100% of such deficit) accrued on a cumulative basis in the period
commencing on the Effective Date and ending on the last day of the fiscal
quarter immediately preceding the relevant Transaction Date, (ii) the aggregate
net proceeds, including cash and the fair market value of Property other than
cash (as determined in good faith by the Board of Directors of the Company,
whose determination shall be conclusive, and evidenced by a resolution of such
Board of Directors filed with the Trustee) received by the Company from the
issuance or sale to any Person (other than a Subsidiary of the Company) during
the period commencing on the Effective Date and ending on such Transaction Date
of Qualified Capital Stock of the Company (other than Capital Stock of the
Company issued upon conversion of or in exchange for securities of the Company,
except to the extent of any payment to the Company in addition to the
securities of the Company surrendered) and (iii) to the extent not included in
(ii) above, the aggregate net proceeds, including cash and the fair market
value of Property other than cash (as determined in good faith by the Board of
Directors of the Company, whose determination shall be conclusive, and
evidenced by a resolution of such Board of Directors filed with the Trustee)
received by the Company from the issuance or sale to any Person (other than a
Subsidiary of the Company) during the period commencing on the Effective Date
and ending on such Transaction Date, of any debt securities evidencing
Indebtedness of the Company or of any Redeemable Stock of the Company, if, and
to the extent that, as of such Transaction Date such debt securities or
Redeemable Stock, as the case may be, have been converted into, exchanged for
or satisfied by the issuance of Qualified Capital Stock of the Company;
provided, however, that if the Company and its Restricted Subsidiaries have
made any Investments during the period commencing on the Effective Date and
ending on such Transaction Date, the proceeds of which Investments were used,
directly or indirectly, by the recipients thereof to purchase Qualified Capital
Stock of the Company or other securities that have been converted into,
exchanged for or satisfied by the issuance of Qualified Capital Stock of the
Company, the aggregate amount determined under clauses (ii) and (iii) shall be
net of the aggregate amount of such Investments.

The Indenture does not prohibit (a) the Company or any Restricted Subsidiary
from paying a dividend on its own Capital Stock within 60 days after the
declaration thereof if, on the date when the dividend was declared, the Company
or such Restricted Subsidiary, as the case may be, could have paid such
dividend in compliance with the other provisions of this covenant, (b) the
Company or any Restricted Subsidiary from redeeming or repurchasing its
securities in the event that the holder of such securities has failed to
qualify or to be found suitable or otherwise eligible under a Gaming
Jurisdiction Law to remain as a holder of such securities, (c) Ramada New
Jersey Holdings Corporation ("Holdings") from redeeming, or the Company or any
Restricted Subsidiary from purchasing, for an amount not exceeding $750,000 in
the aggregate, all or a portion of the shares of preferred stock, Series A, of
Holdings outstanding on the Effective Date, or (d) the Company and its
Restricted

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Subsidiaries from acquiring shares of Capital Stock of the Company solely in
exchange for other shares of Capital Stock of the Company that is not
Redeemable Stock and that is not exchangeable for Redeemable Stock whether upon
conversion or otherwise; provided, however, that the aggregate amount of any
payment, dividend, acquisition, redemption or distribution made by the Company
or any Restricted Subsidiary pursuant to clauses (a) or (b) is included in any
computation of the aggregate amount of Restricted Payments made by the Company
and its Restricted Subsidiaries, and the aggregate amount of any payment,
dividend, acquisition, redemption or distribution made by the Company or any
Restricted Subsidiary pursuant to clauses (c) or (d) is not included in any
such computation.

So long as no Event of Default has occurred and is continuing, the Indenture
does not prohibit the Company and its Restricted Subsidiaries from (a)
acquiring shares of its Capital Stock of the Company, (1) to eliminate
fractional shares, (2) from an employee who has purchased or otherwise acquired
shares of Capital Stock of the Company under an employee stock option or stock
purchase agreement or other plan or agreement reserving to the Company the
option to repurchase the shares but in no event for a price greater than the
higher of fair market value or the price at which such securities were sold by
the Company and (3) pursuant to a court order, provided that the aggregate
consideration paid by the Company and its Restricted Subsidiaries pursuant to
subclauses (1) and (2) above shall not exceed $250,000 in any fiscal year of
the Company, (b) declaring or paying any dividend on, or redeeming or
repurchasing, shares of the Series B Preferred Stock, provided that the
aggregate amount paid by the Company and its Restricted Subsidiaries in all
such redemptions and repurchases from and after the Effective Date does not
exceed $10,000,000, (c) redeeming or purchasing the Preferred Share Purchase
Rights at a price not exceeding $0.01 per right and $2,000,000 in the
aggregate, (d) acquiring, retiring or redeeming any Indebtedness of, or
otherwise making any investment in, Tropicana Enterprises in connection with
the Tropicana Security Deposit or the Tropicana Loan, except to the extent that
the aggregate amount of any such Investment in Tropicana Enterprises in
connection with the Tropicana Loan exceeds the outstanding principal amount
owed to third parties under the Tropicana Loan at the Effective Date, (e)
purchasing Tropicana or the Jaffe Partnership Interest or (f) making any
Restricted Payment not otherwise permitted by the foregoing limitations in an
aggregate amount not to exceed $30,000,000 from and after the Effective Date;
provided, however, that the aggregate amount of any payment, dividend,
acquisition, redemption or distribution made by the Company or any Restricted
Subsidiary pursuant to clauses (a), (b), (c) and (f) is included in any
computation pursuant to the first paragraph of this covenant of the aggregate
amount of Restricted Payments made by the Company and its Restricted
Subsidiaries, and the aggregate amount of any payment, dividend, acquisition,
redemption or distribution made by the Company or any Restricted Subsidiary
pursuant to clauses (d) and (e) is not included in any such computation.

Limitation on Liens. The Company will not, directly or indirectly, create,
incur, assume or suffer to exist, or permit any Restricted Subsidiary to
create, incur, assume or suffer to exist, any Lien on or with respect to any of
its Property or Capital Stock, whether now owned or hereafter acquired, or
assign, or permit any Restricted Subsidiary to assign, any right to receive
income, other than: (i) Liens existing as of the date of the Indenture or
incurred hereafter pursuant to the Credit Facility, (ii) Liens securing Senior
Indebtedness, (iii) Liens in favor of the Company, (iv) Liens securing
Indebtedness (including, without limitation, any obligation, contingent or
otherwise, for borrowed money of any Person secured by any Lien in respect of
Property of the Company or any Restricted Subsidiary, even though the Company
or such Restricted Subsidiary has not assumed or become liable for the payment
of such obligation) of the Company (other than Senior Indebtedness) or any
Restricted Subsidiary, provided that, with respect to any Indebtedness that is
pari passu with the Notes, the Notes are secured by Liens equal and ratable to
such Liens and, with respect to Indebtedness that is subordinated to the Notes,
the Notes are secured by Liens that are senior to such Liens and (v) Permitted
Liens. Notwithstanding the foregoing, this provision shall not be applicable to
any Lien on Capital Stock issued by any Restricted Subsidiary that holds,
directly or indirectly, a license, or is a holding company, under the Nevada
Act. HRN and Express each hold a license under the Nevada Act.

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Limitation on Payment Restrictions Affecting Restricted Subsidiaries. The
Indenture provides that the Company will not, and will not permit any
Restricted Subsidiary to, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction which by its terms
expressly restricts the ability of any Restricted Subsidiary to (i) pay
dividends or make any other distributions on such Restricted Subsidiary's
Capital Stock or pay any Indebtedness owed to the Company or any Restricted
Subsidiary except that payment of dividends by Adamar of Nevada may be
suspended if required in connection with the Tropicana Lease, (ii) make any
loans or advances to the Company or any Restricted Subsidiary or (iii) transfer
any of its Property to the Company or any Restricted Subsidiary, except that
(A) clauses (ii) and (iii) shall be deemed not to apply to any such
encumbrances or restrictions contained in any agreement or instrument (a)
relating to any Indebtedness of the Company or any Restricted Subsidiary
existing on the Effective Date or to the Credit Facility, (b) relating to any
Property acquired by the Company or any Restricted Subsidiary after the
Effective Date, provided that such encumbrance or restriction relates only to
the Property which is acquired, (c) relating to (x) any industrial revenue or
development bonds, (y) any obligation of the Company or any Restricted
Subsidiary incurred in the ordinary course of business to pay the purchase
price of Property acquired by the Company or such Restricted Subsidiary and (z)
any lease of Property by the Company or any Restricted Subsidiary in the
ordinary course of business, provided that such encumbrance or restriction
relates only to the Property which is the subject of such industrial revenue or
development bond, such Property purchased or such Property leased and any such
lease, as the case may be, (d) relating to any Indebtedness of any Restricted
Subsidiary at the date of acquisition of such Restricted Subsidiary by the
Company or any Restricted Subsidiary, provided that such Indebtedness was not
incurred in connection with or in anticipation of such acquisition and (e)
replacing or refinancing agreements or instruments referred to in clauses (a),
(b) and (c), provided that the provisions relating to such encumbrance or
restriction contained in such replacing or refinancing agreement or instrument
are no more restrictive than the provisions relating to such encumbrance or
restriction contained in the original agreement or instrument, (B) clauses (i),
(ii) and (iii) shall be deemed not to apply to any such encumbrances or
restrictions imposed by the New Jersey Commission, the New Jersey Division, the
Nevada Commission, the Nevada Control Board or any other Governmental Authority
that may from time to time regulate the Company's gaming operations and (C)
clause (iii) shall be deemed not to apply to the transfer of Property that is
used to secure Indebtedness, provided that such Indebtedness is permitted to be
incurred under the Indenture.

Restriction on Incurrence of Certain Indebtedness. The Indenture provides
that the Company will not incur, create, issue, assume, guarantee or otherwise
become liable for any Indebtedness that is subordinate or junior in right of
payment to Senior Indebtedness and senior in any respect in right of payment to
the Notes. The Indenture also provides that the Notes will not be subordinate
in right of payment to any other Indebtedness of the Company, other than Senior
Indebtedness.

Investment Company Act. The Indenture provides that the Company will not, and
the Company will not permit any of its Subsidiaries to, become an investment
company within the meaning of the Investment Company Act of 1940, unless the
Company or such Subsidiary is exempt under such Act from any requirement to
register as an "investment company."

Mergers and Consolidations. The Indenture provides that the Company may not
consolidate or merge with or into any Person or transfer, sell, lease or
otherwise dispose of all or substantially all of its assets as an entirety to
any Person unless (i) the entity formed by or surviving any such consolidation
or merger (if other than the Company), or to which such sale or conveyance
shall have been made, is a corporation organized and existing under the laws of
the United States, any state thereof or the District of Columbia and
unconditionally assumes by a supplemental indenture all of the obligations of
the Company under the Notes and the Indenture and has all Gaming Licenses
required to operate the casino hotels to be owned by the surviving entity; (ii)
immediately before and immediately after giving effect to such transaction, no
Default or Event of Default (as defined below) exists; (iii) immediately after

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giving effect to such transaction on a pro forma basis, the Consolidated Net
Worth of the surviving entity (including the Company) is at least equal to the
Consolidated Net Worth of the Company immediately prior to such transaction;
and (iv) immediately after giving effect to any such transaction involving the
incurrence by the Company or any Subsidiary, directly or indirectly, of
additional Indebtedness (and treating any Indebtedness not previously an
obligation of the Company or any of its Subsidiaries incurred in connection
with or as a result of such transaction as having been incurred at the time of
such transaction), the Company (if it is the continuing corporation) or such
other entity could incur at least $1.00 of additional Indebtedness pursuant to
the first paragraph of the "Limitation on Indebtedness" covenant.

In connection with any consolidation, merger, transfer or lease contemplated
by this provision, the Company shall deliver, or cause to be delivered, to the
Trustee, in form and substance reasonably satisfactory to the Trustee, an
Officers' Certificate and an Opinion of Counsel stating that such
consolidation, merger, transfer or lease and the supplemental indenture in
respect thereto comply with this provision and that all conditions precedent
herein provided for relating to such transaction have been complied with and an
Accountant's Certificate with respect to the calculation of Consolidated Net
Worth and the Company's ability to incur at least $1.00 of additional
Indebtedness as described in the preceding paragraph.

Upon any consolidation or merger or any transfer of all or substantially all
of the assets of the Company, the successor corporation formed by such
consolidation or into which the Company is merged or to which such transfer is
made, shall succeed to, and be substituted for, and may exercise every right
and power of the Company under the Indenture with the same effect as if such
successor corporation had been named as the Company in the Indenture. When a
successor corporation assumes all of the obligations of the Company under the
Notes and the Indenture, the applicable predecessor corporation shall be
released from the obligations so assumed.

Limitation on Capital Stock of Restricted Subsidiaries. The Indenture
provides that the Company will not (i) permit any of its Restricted
Subsidiaries to issue any Capital Stock to any Person (other than the Company
or any Wholly Owned Subsidiary) that shall entitle the holder of such Capital
Stock to a preference in right of payment in the event of liquidation,
dissolution or winding-up of such Restricted Subsidiary or with respect to
dividends of such Restricted Subsidiary or (ii) permit any Person (other than
the Company or any Wholly Owned Subsidiary) to hold any such Capital Stock.

Transactions with Affiliates. The Indenture provides that the Company will
not, and will not permit any of its Restricted Subsidiaries to, enter into any
transaction (including, without limitation, the purchase, sale or exchange of
Property, the making of any Investment, the giving of any guarantee or the
rendering of any service) with any Affiliate of the Company or any Subsidiary
of the Company (other than a Restricted Subsidiary) unless (i) the Board of
Directors of the Company believes, in its reasonable good faith judgment, based
on full disclosure of all relevant facts and circumstances, that such
transaction is in the best interests of the Company or such Restricted
Subsidiary and (ii) such transaction is on terms no less favorable to the
Company or such Restricted Subsidiary than those that could be obtained in a
comparable arm's length transaction with an entity that is not an Affiliate of
the Company or such Restricted Subsidiary; provided, however, that the
foregoing limitation shall not apply for so long as the Company's common stock
is listed for trading on the New York Stock Exchange or the American Stock
Exchange or is quoted on the National Association of Securities Dealers
Automated Quotation System and designated as a "national market system
security."

EVENTS OF DEFAULT

The following events are defined in the Indenture as "Events of Default": (i)
the failure to pay interest on any Note for a period of 30 days after such
interest becomes due and payable, (ii) the failure to pay the principal of any
Note when such principal becomes due and payable, at maturity or otherwise,
(iii) a default in the observance of any other covenant contained in the
Indenture that continues for

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60 days after the Company has received notice of the default from the Trustee
or the Holders of 25% in principal amount of the then Outstanding Notes, (iv) a
default on Indebtedness of the Company or any of its Restricted Subsidiaries
having an outstanding principal amount of more than $5,000,000 individually or
in the aggregate if such Indebtedness has been accelerated (or has matured),
(v) judgments in an aggregate amount in excess of $5,000,000 shall have been
rendered against the Company or a Restricted Subsidiary and shall have not been
discharged and either an enforcement proceeding shall have been commenced by
any creditor upon any such judgment or there shall be a period of 90
consecutive days during which a stay of enforcement of any such judgment shall
not be in effect, (vi) certain events of bankruptcy, insolvency or
reorganization affecting the Company or any Significant Subsidiary and (vii)
any Gaming License of the Company or any of its Subsidiaries is revoked,
terminated or suspended or otherwise ceases to be effective, resulting in the
cessation or suspension of operation for a period of more than 90 days of the
casino business of any casino-hotel owned, leased or operated directly or
indirectly by the Company or any of its Subsidiaries (other than any voluntary
relinquishment of a Gaming License if such relinquishment is, in the
reasonable, good faith judgment of the Board of Directors of the Company,
evidenced by a resolution of such Board, both desirable in the conduct of the
business of the Company and its Subsidiaries, taken as a whole, and not
disadvantageous in any material respect to the holders).

The Indenture provides that the Trustee, within 90 days after the occurrence
of any continuing Default or Event of Default that is known to the Trustee,
will give notice thereof to the Holders of the Notes; provided, however, that,
except in the case of a default in payment of principal of or interest on the
Notes, the Trustee may withhold such notice as long as it in good faith
determines that such withholding is in the interest of the Holders of the
Notes.

In case an Event of Default (other than an Event of Default resulting from
bankruptcy, insolvency or reorganization) shall have occurred and be
continuing, the Trustee or the Holders of at least 25% in principal amount of
the Notes, by notice in writing to the Company, may declare the principal
amount of the Notes, plus accrued but unpaid interest, to be due and payable
immediately. In case an Event of Default resulting from bankruptcy, insolvency
or reorganization shall occur, such amount shall be due and payable without any
declaration or any act on the part of the Trustee or the Holders of the Notes.
Such declaration or acceleration may be rescinded and certain past defaults may
be waived (except, unless theretofore cured or waived, a default in payment of
principal of or interest on the Notes) by the Holders of a majority in
principal amount of the Notes upon conditions provided in the Indenture. In the
event of a declaration of acceleration because an Event of Default set forth in
clause (iv) above has occurred, and is continuing, such declaration and its
consequences shall be automatically rescinded and annulled if (1) within 10
days of such declaration or maturity, the holders of such Indebtedness shall
have rescinded such declaration and its consequences or such matured
Indebtedness shall have been discharged in full, (2) the Company shall have
delivered a notice of such rescission or discharge to the Trustee and (3) no
other Event of Default shall have occurred and be continuing. Except to enforce
the right to receive payment of principal or interest when due, no Holder of a
Note may institute any proceeding with respect to the Indenture or for any
remedy thereunder unless such Holder has previously given to the Trustee
written notice of a continuing Event of Default and unless the Holders of at
least 25% in principal amount of the Notes have requested the Trustee to pursue
remedies in respect of such Event of Default and have offered the Trustee
reasonable indemnity against loss, liability or expense to be thereby incurred
and the Trustee has failed so to act for 60 days after receipt of the same.
Subject to certain restrictions, the Holders of a majority in principal amount
of the Notes are given the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee. The Trustee, however, may refuse
to follow any direction that conflicts with law or the Indenture, that is
unduly prejudicial to the rights of any Holder of a Note or that would subject
the Trustee to personal liability.

69
<PAGE>

The Company is required to deliver to the Trustee, within 90 days after the
end of each fiscal quarter and within 120 days after the end of each fiscal
year, a certificate indicating whether the Company has complied with the terms
of the Indenture and whether an Event of Default exists. In addition, the
Company shall promptly deliver to the Trustee notice of any Default or Event of
Default.

SATISFACTION AND DISCHARGE OF INDENTURE; DEFEASANCE

The Company may terminate its obligations under the Indenture at any time by
delivering all Outstanding Notes to the Trustee for cancellation and paying all
other sums payable by the Company under the Indenture. The Company, at its
option, (i) will be discharged, from any and all obligations with respect to
the Notes (except for certain obligations of the Company to register the
transfer or exchange of the Notes, replace stolen, lost or mutilated Notes,
maintain paying agencies, and hold moneys for payment in trust) on the 123rd
day after the satisfaction of the conditions set forth below or (ii) need not
comply with certain restrictive covenants and will not be subject to certain
nonpayment defaults in the Indenture (including those described under
"Covenants" and "Events of Default"), in each case if the Company transfers to
the Trustee, in trust, money or U.S. Government Obligations which, through the
payment of interest thereon and principal thereof in accordance with their
terms, will provide money, or a combination of money and U.S. Government
Obligations, in an amount sufficient to pay all the principal of, premium, if
any, and interest on the Notes not later than one day before the dates such
payments are due in accordance with the terms of the Notes. To exercise any
such option, the Company is required to deliver to the Trustee (a) irrevocable
instructions to apply such money or the proceeds of such U.S. Government
Obligations to the payment of principal of, premium, if any, and interest on
the Notes, (b) an Officers' Certificate and an Opinion of Counsel to the effect
that all conditions precedent to the discharge or defeasance have been complied
with, (c) an Opinion of Counsel to the effect that, among other things, the
transfer and related defeasance would not cause the Holders of the Notes to
recognize income, gain or loss for federal income tax purposes and, in the case
of a discharge pursuant to clause (i) above, accompanied by a revenue or
private ruling to such effect received from or published by the Internal
Revenue Service and (d) an Opinion of Counsel regarding certain matters,
including a bankruptcy of the Company and, in the case of a discharge pursuant
to clause (i), the irrevocability of the trust.

REPORTS TO HOLDERS OF THE NOTES

The Company will file with the Trustee copies of the annual reports and of
the information, documents and other reports that the Company is required to
file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act
within five days after such annual reports, information, documents and other
reports are required to be filed with the Commission. Upon the request of any
Holder, the Company shall promptly mail such annual reports, information,
documents and other reports to the requesting Holder. In the event the Company
is not required to file any annual reports, information or documents with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act, the Company
shall nonetheless file such annual reports, information or documents, with the
Commission and the Trustee on a timely basis, and upon the request of any
Holder shall promptly mail such annual reports, information or documents to the
requesting Holder.

MODIFICATION OF THE INDENTURE

From time to time, the Company and the Trustee, without the consent of the
Holders of the Notes, may amend the Indenture or the Notes for certain
specified purposes, including curing ambiguities, defects or inconsistencies
and making any change that does not adversely affect the rights of any Holder.
Other modifications and amendments of the Indenture or the Notes may be made
with the consent of the Holders of a majority in principal amount of the Notes,
except that, without the consent of each Holder of Notes affected thereby, no
amendment may reduce the remaining principal amount

70
<PAGE>

of or rate of interest on any Note, change the date on which payment of
principal or interest is due or the currency in which it is payable, change the
date on which any Note may be subject to redemption, reduce the redemption
price or reduce the amount of Notes whose Holders must consent to modify, alter
or waive any provision of the Indenture or the Notes.

THE TRUSTEE

The Indenture provides that, except during the continuance of an Event of
Default, the Trustee will perform only such duties as are specifically set
forth in the Indenture. During the existence of an Event of Default, the
Trustee will exercise such of the rights and powers vested in it under the
Indenture and use the same degree of care and skill in its exercise as a
prudent Person would exercise under the circumstances in the conduct of such
Person's own affairs.

The Indenture and provisions of the Trust Indenture Act incorporated by
reference therein contain limitations on the rights of the Trustee, should it
become a creditor of the Company to obtain payment of claims in certain cases
or to realize on certain property received by it in respect of any such claim
as security or otherwise. The Trustee is permitted to engage in other
transactions; provided, however, that if it acquires any conflicting interest
(as defined in the Indenture or in the Trust Indenture Act) it must eliminate
such conflict or resign.

71
<PAGE>

UNDERWRITING

Subject to the terms and conditions set forth in an underwriting agreement
between the Company and the Underwriter (the "Underwriting Agreement"), the
Company has agreed to sell to the Underwriter, and the Underwriter has agreed
to purchase, $ principal amount of the Notes.

In the Underwriting Agreement, the Underwriter has agreed, subject to the
terms and conditions set forth therein, to purchase the entire principal amount
of the Notes if any Notes are purchased.

The Company has been advised by the Underwriter that the Underwriter
initially proposes to offer the Notes to the public at the public offering
price set forth on the cover page of this Prospectus and to certain dealers at
such price less a concession not in excess of % of the principal amount with
respect to the Notes. After the initial public offering, the public offering
prices and such concessions may be changed from time to time by the
Underwriter.

The Notes are a new issue of securities with no established trading market.
The Company has been advised by the Underwriter that the Underwriter currently
intends to make a market in the Notes; however, the Underwriter is not
obligated to do so and may discontinue any such market making at any time
without notice. No assurance can be given as to the development or liquidity of
any trading markets for the Notes.

The Underwriting Agreement provides that the Company will indemnify the
Underwriter against certain liabilities, including liabilities under the
Securities Act, or contribute to payments the Underwriter may be required to
make in respect thereof.

The Underwriter has performed various investment banking services for the
Company and its affiliates from time to time (in addition to the services
specifically described above), for which it has received customary fees.

EXPERTS

The consolidated balance sheets as of December 30, 1993 and December 31,
1992, and the consolidated statements of operations, cash flows and
shareholders' equity for each of the three years in the period ended December
30, 1993 of the Company and its subsidiaries included in this Prospectus have
been audited by Coopers & Lybrand, independent accountants, as indicated in
their report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing.

The combined balance sheets of Ambassador Real Estate Investors, L.P. as of
December 31, 1992 and 1991, and the related combined statements of operations,
cash flows and partners' deficit for each of the three years in the period
ended December 31, 1992 incorporated by reference in this Prospectus from the
Company's Current Report on Form 8-K dated July 9, 1993 have been audited by
Ernst & Young, independent auditors, as set forth in their report thereon
included herein and incorporated herein by reference. Such financial statements
are incorporated herein by reference in reliance upon such report given upon
the authority of such firm as experts in accounting and auditing.

LEGAL MATTERS

The validity of the Notes offered hereby will be passed upon by Latham &
Watkins, Los Angeles, California, for the Company, and by Cleary, Gottlieb,
Steen & Hamilton, New York, New York, for the Underwriter. Certain legal
matters with respect to Nevada, New Jersey, Indiana and Missouri will be passed
upon by Lionel Sawyer & Collins; Hankin, Sandson & Sandman; McHale, Cook &
Welch; and Thompson & Mitchell, respectively.

72
<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants......................................... F-2
Consolidated Balance Sheets at December 30, 1993 and December 31, 1992.... F-3
Consolidated Statements of Operations for the years ended December 30,
1993, December 31, 1992 and January 2, 1992.............................. F-4
Consolidated Statements of Cash Flows for the years ended December 30,
1993, December 31, 1992 and January 2, 1992.............................. F-5
Consolidated Statements of Shareholders' Equity for the years ended
December 30, 1993, December 31, 1992 and January 2, 1992................. F-6
Notes to Consolidated Financial Statements................................ F-7
Consolidated Balance Sheets at March 31, 1994 and December 30, 1993
(unaudited).............................................................. F-22
Consolidated Statements of Operations for the three months ended March 31,
1994 and April 1, 1993 (unaudited)....................................... F-23
Consolidated Statements of Cash Flows for the three months ended March 31,
1994 and April 1, 1993 (unaudited)....................................... F-24
Consolidated Statements of Shareholders' Equity for the three months ended
March 31, 1994 and April 1, 1993 (unaudited)............................. F-25
Notes to Consolidated Financial Statements (unaudited).................... F-26
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders and Board of Directors
Aztar Corporation

We have audited the consolidated balance sheets of Aztar Corporation and
Subsidiaries as of December 30, 1993 and December 31, 1992, and the related
consolidated statements of operations, cash flows and shareholders' equity for
each of the three years in the period ended December 30, 1993. 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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Aztar Corporation and Subsidiaries as of December 30, 1993 and December 31,
1992, and the consolidated results of their operations and their cash flows for
each of the three years in the period ended December 30, 1993 in conformity
with generally accepted accounting principles.

As discussed in Note 16 to the consolidated financial statements, the Company
changed its method of accounting for income taxes in 1992.

Coopers & Lybrand

Phoenix, Arizona
February 11, 1994

F-2
<PAGE>

AZTAR CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 30, 1993 AND DECEMBER 31, 1992

(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
1993 1992
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................ $ 39,551 $100,403
Accounts and notes receivable, net....................... 19,170 28,601
Refundable income taxes.................................. 2,062 2,062
Inventories.............................................. 5,564 5,144
Prepaid expenses......................................... 9,206 8,208
Deferred income taxes.................................... 6,566 13,353
-------- --------
Total current assets................................... 82,119 157,771
Investments in and advances to unconsolidated partnership.. 13,776 15,225
Other investments.......................................... 22,131 19,250
Notes receivables.......................................... -- 246,310
Property and equipment:
Buildings and equipment, net............................. 648,139 287,228
Land..................................................... 81,795 78,853
Construction in progress................................. 6,701 15,718
Leased under capital leases, net......................... 1,043 9,262
-------- --------
737,678 391,061
Other assets............................................... 21,467 19,948
-------- --------
$877,171 $849,565
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accruals............................ $ 39,515 $ 39,749
Accrued payroll and employee benefits.................... 15,823 17,854
Accrued interest payable................................. 13,714 13,365
Income taxes payable..................................... 2,633 2,757
Current portion of long-term debt........................ 2,499 3,508
-------- --------
Total current liabilities.............................. 74,184 77,233
Long-term debt............................................. 404,086 378,058
Other long-term liabilities................................ 21,882 23,334
Deferred income taxes...................................... 26,126 34,193
Contingencies and commitments..............................
Series B ESOP convertible preferred stock
(redemption value $4,295 and $3,118)...................... 3,905 2,998
Shareholders' equity:
Common stock, $.01 par value (37,359,011 and 36,977,662
shares outstanding)..................................... 414 410
Paid-in capital.......................................... 346,965 344,574
Retained earnings........................................ 16,559 5,787
Less:Treasury stock...................................... (16,885) (16,885)
Unearned compensation.................................... (65) (137)
-------- --------
Total shareholders' equity............................. 346,988 333,749
-------- --------
$877,171 $849,565
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.

F-3
<PAGE>

AZTAR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 30, 1993, DECEMBER 31, 1992 AND JANUARY 2, 1992

(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
REVENUES
Casino........................................ $439,294 $431,831 $392,917
Rooms......................................... 32,248 32,651 36,577
Food and beverage............................. 36,357 37,519 42,040
Other......................................... 10,863 10,044 9,751
-------- -------- --------
518,762 512,045 481,285
COSTS AND EXPENSES
Casino........................................ 217,087 202,747 187,189
Rooms......................................... 19,495 19,527 21,598
Food and beverage............................. 34,773 35,008 39,229
Other......................................... 6,737 6,827 7,211
Marketing..................................... 45,427 45,705 41,385
General and administrative.................... 46,849 46,399 46,190
Utilities..................................... 12,328 11,617 11,227
Repairs and maintenance....................... 19,953 18,544 18,064
Provision for doubtful accounts............... 1,566 2,622 4,763
Property taxes and insurance.................. 16,729 16,108 15,391
Net rent...................................... 27,747 45,653 47,193
Depreciation and amortization................. 32,652 28,679 28,191
-------- -------- --------
481,343 479,436 467,631
-------- -------- --------
Operating income................................ 37,419 32,609 13,654
Interest income............................... 24,172 28,655 26,245
Interest expense.............................. (45,363) (31,132) (32,101)
-------- -------- --------
Income from continuing operations before other
items, income taxes, extraordinary items and
cumulative effect of accounting change......... 16,228 30,132 7,798
Equity in unconsolidated partnership's loss... (3,822) (4,125) (5,030)
-------- -------- --------
Income from continuing operations before income
taxes, extraordinary items and cumulative ef-
fect of accounting change...................... 12,406 26,007 2,768
Income taxes.................................. (1,024) (9,629) (60)
-------- -------- --------
Income from continuing operations before ex-
traordinary items and cumulative effect of
accounting change.............................. 11,382 16,378 2,708
Discontinued operations....................... -- 1,262 2,553
Extraordinary items........................... -- (5,335) 1,237
Cumulative effect of accounting change........ -- 7,500 --
-------- -------- --------
Net income...................................... $ 11,382 $ 19,805 $ 6,498
======== ======== ========
Earnings per common and common equivalent share:
Income from continuing operations before ex-
traordinary items and cumulative effect of
accounting change............................ $ .28 $ .41 $ .05
Discontinued operations....................... -- .03 .07
Extraordinary items........................... -- (.14) .03
Cumulative effect of accounting change........ -- .20 --
-------- -------- --------
Net income.................................... $ .28 $ .50 $ .15
======== ======== ========
Earnings per common share assuming full
dilution:
Income from continuing operations before ex-
traordinary items and cumulative effect of
accounting change............................ $ .27 $ .40 $ .05
Discontinued operations....................... -- .03 .06
Extraordinary items........................... -- (.13) .03
Cumulative effect of accounting change........ -- .19 --
-------- -------- --------
Net income.................................... $ .27 $ .49 $ .14
======== ======== ========
Weighted average common shares applicable to:
Earnings per common and common equivalent
share........................................ 38,367 38,212 38,782
Earnings per common share assuming full dilu-
tion......................................... 39,429 39,311 39,939
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-4
<PAGE>

AZTAR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 30, 1993, DECEMBER 31, 1992 AND JANUARY 2, 1992
(IN THOUSANDS)

<TABLE>
<CAPTION>
1993 1992 1991
-------- -------- -------
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net income........................................ $ 11,382 $ 19,805 $ 6,498
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization.................... 34,577 30,639 31,048
Provision for losses on accounts receivable...... 1,566 2,622 4,763
Loss on reinvestment obligation.................. 991 1,103 1,060
Interest income.................................. 1,889 (4,389) (2,144)
Rent expense..................................... (880) (2,537) (2,527)
Distribution in excess of equity in income of
partnership..................................... 1,449 1,355 1,393
Deferred income taxes............................ (1,280) (1,556) (41)
Change in assets and liabilities:
(Increase) decrease in accounts receivable..... (1,442) (1,372) (15)
(Increase) decrease in refundable income taxes. -- (2,062) --
(Increase) decrease in inventories and prepaid
expenses...................................... (1,969) (1,582) (1,332)
Increase (decrease) in accounts payable,
accrued expenses and income taxes payable..... 1,955 (12,745) (2,776)
Other items, net............................... 2,087 2,502 3,245
-------- -------- -------
Net cash provided by (used in) operating
activities.................................. 50,325 31,783 39,172
-------- -------- -------
Cash Flows from Investing Activities
Reduction (increase) in invested funds........... -- 5,075 (5,075)
Payments received on TropWorld second mortgage... 24,400 51,450 45,900
Payments received on other notes receivable...... 2,191 2,383 3,075
Increase in TropWorld second mortgage............ (24,400) (51,450) (45,900)
Increase in other notes receivable............... (419) (174,678) (3,252)
Purchases of property and equipment.............. (77,804) (20,607) (18,400)
Acquisition of AREI/AGP partnership interests,
net of cash acquired............................ (61,859) -- --
Additions to other long-term assets.............. (7,360) (10,893) (3,489)
-------- -------- -------
Net cash provided by (used in) investing
activities.................................. (145,251) (198,720) (27,141)
-------- -------- -------
Cash Flows from Financing Activities
Proceeds from issuance of long-term debt......... 35,000 200,000 --
Proceeds from issuance of common stock........... 2,149 261 35
Principal payments on long-term debt............. (2,157) (3,787) (3,902)
Repurchase of common stock....................... -- (5,364) (224)
Preferred stock dividend......................... (787) (797) (800)
Redemption of preferred stock.................... (131) (90) (24)
Redemption of Holdings preferred stock........... -- -- (4,131)
-------- -------- -------
Net cash provided by (used in) financing
activities.................................. 34,074 190,223 (9,046)
-------- -------- -------
Net increase (decrease) in cash and cash
equivalents...................................... (60,852) 23,286 2,985
Cash and cash equivalents at beginning of year.... 100,403 77,117 74,132
-------- -------- -------
Cash and cash equivalents at end of year......... $ 39,551 $100,403 $77,117
======== ======== =======
Supplemental Cash Flow Disclosures
Acquisition of AREI/AGP partnership interests:
Working capital, other than cash................. $ 3,370 $ -- $ --
Notes receivable................................. 242,605 -- --
Building and equipment........................... (307,582) -- --
Capital lease assets, net........................ 6,703 -- --
Long-term debt................................... (5,682) -- --
Other long-term liabilities...................... (1,273) -- --
-------- -------- -------
Net cash used in acquisition................. (61,859) -- --
Summary of non-cash investing and financing
activities:
Capital lease obligations incurred for property
and equipment................................... $ 385 $ 3,687 $ 3,282
Note received in sale of property and equipment.. -- 225 --
Tax benefit from stock options and preferred
stock dividend.................................. 431 290 --
Issuance of restricted stock..................... -- -- 210
Forfeiture of restricted stock................... -- 30 --
Cash paid (refunded) during the year for the
following for continuing and discontinued
operations:
Interest, net of amount capitalized.............. $ 43,160 $ 31,905 $28,883
Income taxes..................................... 1,997 8,165 (408)
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-5
<PAGE>

AZTAR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

FOR THE YEARS ENDED DECEMBER 30, 1993, DECEMBER 31, 1992 AND JANUARY 2, 1992
(IN THOUSANDS)

<TABLE>
<CAPTION>
RETAINED
COMMON PAID-IN EARNINGS TREASURY UNEARNED
STOCK CAPITAL (DEFICIT) STOCK COMPENSATION TOTAL
------ -------- --------- -------- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 3,
1991................... $409 $343,990 $(19,130) $(11,267) $(1,231) $312,771
Stock options
exercised............ 35 35
Issuance of restricted
stock................ 210 (210) --
Repurchase of common
stock................ (224) (224)
Preferred stock
dividend............. (800) (800)
Amortization of
unearned
compensation......... 620 620
Net income............ 6,498 6,498
---- -------- -------- -------- ------- --------
Balance, January 2,
1992................... 409 344,235 (13,432) (11,491) (821) 318,900
Stock options
exercised............ 1 260 261
Tax benefit from stock
options exercised.... 79 79
Repurchase of common
stock................ (5,364) (5,364)
Preferred stock
dividend, net of
income tax benefit... (586) (586)
Forfeitures of
restricted stock..... (30) 30 --
Amortization of
unearned
compensation......... 654 654
Net income............ 19,805 19,805
---- -------- -------- -------- ------- --------
Balance, December 31,
1992................... 410 344,574 5,787 (16,885) (137) 333,749
Stock options
exercised............ 4 2,145 2,149
Tax benefit from stock
options exercised.... 246 246
Preferred stock
dividend, net of
income tax benefit... (610) (610)
Amortization of
unearned
compensation......... 72 72
Net income............ 11,382 11,382
---- -------- -------- -------- ------- --------
Balance, December 30,
1993................... $414 $346,965 $ 16,559 $(16,885) $ (65) $346,988
==== ======== ======== ======== ======= ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-6
<PAGE>

AZTAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SIGNIFICANT ACCOUNTING POLICIES

BASIS OF CONSOLIDATED STATEMENTS

Aztar Corporation ("Aztar" or the "Company") was incorporated in Delaware in
June 1989 to operate the gaming business of Ramada Inc. ("Ramada") after the
restructuring of Ramada (the "Restructuring"). The Restructuring involved the
disposition of Ramada's hotel and restaurant businesses with Ramada's
shareholders retaining their interest in the gaming business. As part of the
Restructuring, the gaming business and certain other assets and liabilities of
Ramada were transferred to Aztar, and a wholly-owned subsidiary of New World
Hotels (U.S.A.), Inc. was merged with Ramada (the "Merger"). In the Merger,
each share of Ramada common stock was converted into the right to receive $1.00
and one share of Aztar common stock. For accounting purposes Aztar is treated
as the continuing accounting entity that is the successor to the historical
Ramada and that has discontinued the hotel and restaurant businesses.

The consolidated financial statements include the accounts of Aztar and all
of its controlled subsidiaries and partnerships. All subsidiary companies are
wholly owned. Ramada New Jersey Holdings Corporation ("Holdings") was majority
owned until January 4, 1991, when it redeemed its outstanding shares of
Convertible Class A Preferred Stock and became wholly owned. In consolidating,
all material intercompany transactions are eliminated. The Company uses a 52/53
week fiscal year ending on the Thursday nearest December 31, which includes 52
weeks in 1993, 1992 and 1991.

CASH AND CASH EQUIVALENTS

Highly liquid investments purchased with an original maturity of three months
or less are classified as cash equivalents. These instruments are stated at
cost, which approximates fair value because of their short maturity.

INVENTORIES

Inventories, which consist primarily of food, beverage and operating
supplies, are stated at the lower of cost or market value. Costs are determined
using the first-in, first-out method.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. During construction, the Company
capitalizes interest and other direct and indirect development costs. Interest
is capitalized monthly by applying the effective interest rate on certain
borrowings to the average balance of expenditures. Capitalized interest was
$3,491,000 in 1993, $1,061,000 in 1992 and $253,000 in 1991.

Depreciation and amortization are computed by the straight-line method based
upon the following useful lives: buildings and improvements, 3-40 years;
furniture and equipment, 3-15 years; and leasehold improvements, shorter of
lease term or asset useful life. Accumulated depreciation and amortization on
buildings and equipment was $139,690,000 at December 30, 1993 and $112,442,000
at December 31, 1992.

Improvements, renewals and extraordinary repairs that extend the life of the
asset are capitalized; other repairs and maintenance are expensed. The cost and
accumulated depreciation applicable to assets retired are removed from the
accounts and the gain or loss, if any, on disposition is recognized in income
as realized.

F-7
<PAGE>

AZTAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

DEFERRED CHARGES

Note and loan issuance costs are amortized using the interest method.

Costs incurred to obtain initial gaming licenses to operate a casino are
capitalized and amortized over ten years; subsequent renewal costs are
amortized over the renewal period.

Preopening costs directly related to the opening of a gaming operation or
major addition to a gaming operation are capitalized as incurred and expensed
in the period the related facility commences operations.

REVENUE RECOGNITION

Casino revenue consists of gaming win net of losses. Revenues exclude the
retail value of complimentary food and beverage, accommodations and other goods
and services provided to customers. The estimated costs of providing such
complimentaries have been classified as casino expenses through
interdepartmental allocations as follows (in thousands):

<TABLE>
<CAPTION>
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Rooms............................................... $18,992 $14,930 $12,130
Food and beverage................................... 33,287 30,568 26,795
Other............................................... 6,666 6,509 6,033
------- ------- -------
$58,945 $52,007 $44,958
======= ======= =======
</TABLE>

INTEREST RATE SWAP AGREEMENT

The differential to be paid or received is recognized in interest expense as
incurred.

INCOME TAXES

Deferred tax assets and liabilities are recognized for the expected future
tax consequences of events that have been included in the financial statements
or income tax returns. Deferred tax assets and liabilities are determined based
on the difference between the financial statement and tax bases of assets and
liabilities using enacted rates expected to apply to taxable income in the
years in which those differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.

EARNINGS PER SHARE

Earnings per common and common equivalent share are computed based on the
weighted average number of common shares outstanding after consideration of the
dilutive effect of stock options. Earnings per common share, assuming full
dilution, are computed based on the weighted average number of common shares
outstanding after consideration of the dilutive effect of stock options and the
assumed conversion of the preferred stock at the stated rate.

In calculating the 1993, 1992 and 1991 earnings per share for both
computations, dividends of $610,000, $586,000 and $800,000, respectively, on
the Series B ESOP Convertible Preferred Stock are deducted in arriving at
income applicable to the common stock. The 1993 and 1992 dividends are net of
income tax benefits of $185,000 and $211,000, respectively.

F-8
<PAGE>

AZTAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

RECLASSIFICATIONS

Certain reclassifications have been made in the 1992 Consolidated Balance
Sheet in order to be comparable with the 1993 presentation.

NOTE 2. ACCOUNTS RECEIVABLE

The Company's principal operations are conducted in Atlantic City, New
Jersey, at TropWorld and in Las Vegas and Laughlin, Nevada, at Tropicana and
Ramada Express. TropWorld has a concentration of credit risk in the northeast
region of the U.S. Approximately 50% of the receivables at the Nevada
operations are concentrated in Asian and Latin American customers and the
remainder of their receivables are concentrated in California and the southwest
region of the U.S. As a general policy, the Company does not require collateral
for these receivables. At December 30, 1993 and December 31, 1992, the net
receivables at TropWorld were $8,948,000 and $10,372,000, respectively, and the
net receivables at Tropicana and Ramada Express combined were $10,175,000 and
$10,575,000, respectively.

An allowance for doubtful accounts is maintained at a level considered
adequate to provide for possible future losses. At December 30, 1993 and
December 31, 1992, the allowance for doubtful accounts was $9,908,000 and
$13,124,000, respectively.

NOTE 3. INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED PARTNERSHIP

The Company's investment in unconsolidated partnership is a noncontrolling
partnership interest of 50% in Tropicana Enterprises, a Nevada general
partnership that owns the real property and certain personal property that the
Company leases in the operation of Tropicana. The Company uses the equity
method of accounting for this investment and in connection with the lease
expensed rents of $12,684,000 in 1993, $12,815,000 in 1992 and $14,545,000 in
1991, of which 50% was eliminated in consolidation.

Summarized balance sheet information and operating results for the
unconsolidated partnership are as follows (in thousands):

<TABLE>
<CAPTION>
1993 1992
------- -------
<S> <C> <C> <C>
Current assets................................... $ 270 $ 272
Noncurrent assets................................ 81,220 83,504
Current liabilities.............................. 1,516 1,320
Noncurrent liabilities........................... 73,033 73,713
</TABLE>

<TABLE>
<CAPTION>
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Revenues......................................... $12,815 $12,980 $14,717
Operating expenses............................... (2,755) (2,836) (2,837)
------- ------- -------
Operating income................................. 10,060 10,144 11,880
Interest expense................................. (3,793) (4,318) (6,129)
------- ------- -------
Net income....................................... $ 6,267 $ 5,826 $ 5,751
======= ======= =======
</TABLE>

The Company's share of the above operating results, after intercompany
eliminations, is as follows (in thousands):

<TABLE>
<CAPTION>
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Equity in unconsolidated partnership's loss...... $(3,822) $(4,125) $(5,030)
</TABLE>

F-9
<PAGE>

AZTAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE 4. OTHER INVESTMENTS

The Company satisfies a New Jersey assessment based upon its casino revenues
by purchasing bonds issued by the Casino Reinvestment Development Authority
("CRDA"). Deposits with the CRDA bear interest at two-thirds of market rates
resulting in a fair value lower than cost. At December 30, 1993 and December
31, 1992, other investments consisted of the Company's deposit with the CRDA of
$31,726,000 and $27,853,000, respectively, net of a valuation allowance of
$9,595,000 and $8,603,000, respectively.

NOTE 5. NOTES RECEIVABLE

At December 30, 1993 and December 31, 1992, notes receivable consisted of (in
thousands):

<TABLE>
<CAPTION>
1993 1992
------- --------
<S> <C> <C>
First Mortgage......................................... $ -- $171,000
Second Mortgage........................................ -- 69,859
FF&E Mortgage.......................................... -- 24,855
------- --------
-- 265,714
Less:
Deferred gain........................................ -- (12,966)
Current portion...................................... -- (6,438)
------- --------
$ -- $246,310
======= ========
</TABLE>

In July 1993, the Company acquired the partnership interests in Ambassador
Real Estate Investors, L.P. ("AREI") and Ambassador General Partnership
("AGP"). AREI owned a 99.9% general partnership interest in AGP, which acquired
a substantial interest in TropWorld in a sale-leaseback transaction in 1984.
The above notes receivable from AGP together with the cash paid by Aztar were
replaced on Aztar's balance sheet by the assets acquired.

In November 1992, the Company loaned $171,000,000 principal amount (the
"First Mortgage") to AGP. AGP used the funds to redeem $171,000,000 of its
outstanding 12% First Mortgage Notes Due 1996. As modified by another
agreement, the First Mortgage bore interest at a rate of 16% and was payable
quarterly. The Second Mortgage bore interest at 16 1/2% payable annually. Under
the terms of the Second Mortgage, the Company advanced funds to AGP and AREI
for cash flow shortfalls, including any unpaid interest on the Second Mortgage.
The Company funded AGP's purchase of replacement furniture, fixtures and
equipment by 5-year loans collateralized by the FF&E Mortgage from AGP. Each
loan accrued interest at the rate of 16 1/2% compounded annually. No principal
or interest payments were made on such loans until maturity. The furniture,
fixtures and equipment were leased back to the Company by AGP under 5-year
leases. At December 31, 1992, the estimated cost for AGP to raise debt in the
public bond markets was approximately 13%. Based on a 13% interest rate, the
approximate fair values as of December 31, 1992 were $179,326,000 for the First
Mortgage, $81,129,000 for the Second Mortgage and $26,274,000 for the FF&E
Mortgage.

F-10
<PAGE>

AZTAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE 6. LONG-TERM DEBT

At December 30, 1993 and December 31, 1992, long-term debt included (in
thousands):

<TABLE>
<CAPTION>
1993 1992
-------- --------
<S> <C> <C>
13 1/2% First Mortgage Notes Due 1996 ($170,000
principal amount, 13.7% effective interest rate);
redeemable beginning September 15, 1994 at 100.00%;
net of unamortized discount........................... $169,133 $168,882
11% Senior Subordinated Notes Due 2002; redeemable
beginning October 1, 1997 at 103.143%................. 200,000 200,000
$50 million revolving credit note; floating rate, 6.44%
at December 30, 1993; matures June 30, 1996........... 25,000 --
$10 million revolving credit note; floating rate, 6
1/4% at December 30, 1993; matures December 31, 1994.. 10,000 --
Other mortgage loans; 7%; maturities to 1999........... 907 1,037
Notes payable, other; 7%; maturities to 1999........... 168 196
Obligations under capital leases....................... 1,377 11,451
-------- --------
406,585 381,566
Less current portion................................... (2,499) (3,508)
-------- --------
$404,086 $378,058
======== ========
</TABLE>

Maturities of long-term debt for the five years subsequent to December 30,
1993 are as follows (in thousands):

On December 20, 1989, the Company, through a wholly-owned, special-purpose
subsidiary, issued $170,000,000 principal amount of 13 1/2% First Mortgage
Notes Due September 15, 1996 (the "First Mortgage Notes"). Interest on the
First Mortgage Notes is payable semiannually on March 15 and September 15. The
First Mortgage Notes are redeemable at par at the option of the Company, in
whole or in part, on or after September 15, 1994. Mandatory annual sinking
fund payments of $2,000,000, commencing September 15, 1994, are calculated to
retire $4,000,000 principal amount of the First Mortgage Notes prior to
maturity. Upon change of control of the Company, the holders of the First
Mortgage Notes would have the right to require the First Mortgage Notes to be
repurchased at par plus accrued interest. Payment of principal and interest on
the First Mortgage Notes is unconditionally guaranteed by the Company and is
collateralized by TropWorld.

On October 8, 1992, the Company issued $200,000,000 principal amount of the
11% Senior Subordinated Notes Due October 1, 2002 (the "Subordinated Notes").
Interest on the Subordinated Notes is payable semiannually on April 1 and
October 1. The Subordinated Notes are redeemable at the option of the Company,
in whole or in part, on or after October 1, 1997, at prices from 103.143% of
the principal amount plus interest declining to 100% plus interest beginning
October 1, 1999. The Subordinated Notes are general unsecured obligations of
the Company and are subordinated in right of payment to all present and future
Senior indebtedness (as defined) of the Company. Upon change

F-11
<PAGE>

AZTAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

of control of the Company, the holders of the Subordinated Notes would have the
right to require repurchase of the Subordinated Notes at par plus accrued
interest but their rights would be subordinated to the right of the holders of
the First Mortgage Notes to receive payment if the holders of the First
Mortgage Notes exercise their right to require repurchase.

In connection with an expansion of Ramada Express that was completed in
September 1993, the Company converted its construction and term loan credit
facility into a $50 Million Revolving Credit Note pursuant to the terms of the
First Amended and Restated Credit Agreement, dated December 28, 1993 (the "$50
Million Credit Facility"). The maximum principal amount that can be outstanding
may not exceed $50,000,000 at any one time. Interest is payable monthly on the
outstanding principal balance at a rate of prime plus 1/2%. The Company may
elect to pay interest based on a one, two or three month LIBOR rate plus 2
1/4%. The Company incurs a commitment fee of 0.5% per annum on the unused
portion of this credit facility. The $50 Million Credit Facility matures on
June 30, 1996 and is collateralized by Ramada Express. The Company may request
that the maturity date be extended for one-year periods at the lenders'
discretion. At the Company's option, the credit facility can be converted to a
three-year reducing revolving credit facility whereby the maximum principal
amount that can be outstanding will be reduced by 1/12 each quarter.

In connection with the AREI/AGP acquisition, the Company borrowed $10,000,000
under a $10 million Revolving Credit Note pursuant to the Revolving Credit Loan
Agreement, dated July 29, 1993 (the "$10 Million Credit Facility"). Borrowings
under the $10 Million Credit Facility may not exceed $10,000,000 principal
amount at any one time. Interest is payable monthly on the unpaid principal
balance at a rate of prime plus 1/4%. The $10 Million Credit Facility matures
on December 31, 1994.

Certain covenants in the First Mortgage Notes and the Subordinated Notes
limit the ability of the Company to incur indebtedness, sell or encumber any of
the applicable collateral or engage in mergers, consolidations or sales of
assets. A covenant related to the First Mortgage Notes limits the amount of
cash dividends that the Company may pay to $3,814,000 as of December 30, 1993.

At December 30, 1993 and December 31, 1992, based on the bid prices in the
public bond markets, the fair value of the First Mortgage Notes was 105.125%
and 107.25%, respectively, of the principal amount and the fair value of the
Subordinated Notes was 101.75% and 100%, respectively, of the principal amount.
The estimated fair value of both revolving credit notes approximates the
carrying amount due to the short maturity of these notes.

Substantially all of the Company's properties are pledged as collateral under
long-term debt agreements.

NOTE 7. INTEREST RATE SWAP AGREEMENT

The Company had outstanding an interest rate swap agreement with a commercial
bank. This agreement had a notional principal amount of $50,000,000 and matured
on December 31, 1991. Under the terms of the agreement, the Company made annual
interest payments to the bank based on a fixed rate of 12.41%, and the bank
made quarterly interest payments to the Company based on the LIBOR rate.

F-12
<PAGE>

AZTAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE 8. LEASE OBLIGATIONS

The Company is a lessee under a number of noncancelable lease agreements
involving land, buildings, leasehold improvements and equipment, some of which
provide for contingent rentals based on the consumer price index and/or
interest rate fluctuations. The leases extend for various periods up to 18
years and generally provide for the payment of executory costs (taxes,
insurance and maintenance) by the Company. Certain of these leases have
provisions for renewal options ranging from 3 to 10 years, primarily under
similar terms, and/or options to purchase at various dates.

Properties leased under capital leases are as follows (in thousands):

<TABLE>
<CAPTION>
1993 1992
------ -------
<S> <C> <C>
Furniture and equipment..................................... $9,410 $54,751
Less accumulated amortization............................... (8,367) (45,489)
------ -------
$1,043 $ 9,262
====== =======
</TABLE>

Amortization of furniture and equipment leased under capital leases, computed
on a straight-line basis, was $1,899,000 in 1993, $3,533,000 in 1992 and
$3,667,000 in 1991.

Minimum future lease obligations on long-term, noncancelable leases in effect
at December 30, 1993 are as follows (in thousands):

<TABLE>
<CAPTION>
YEAR CAPITAL OPERATING
---- ------- ---------
<S> <C> <C>
1994..................................................... $ 425 $ 8,147
1995..................................................... 417 8,000
1996..................................................... 214 7,856
1997..................................................... 146 7,469
1998..................................................... 146 7,347
Thereafter............................................... 330 87,086
------ --------
1,678 $125,905
========
Amount representing interest............................. (301)
------
Net present value........................................ 1,377
Less current portion..................................... (331)
------
Long-term portion........................................ $1,046
======
</TABLE>
The above net present value is computed based on specific interest rates
determined at the inception of the leases.

Net rent expense is detailed as follows (in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Minimum rentals.................................. $30,565 $51,647 $51,133
Contingent rentals............................... 7,512 12,377 14,118
Less: Minimum lease income....................... (2,773) (5,544) (5,544)
Maintenance reimbursement........................ (7,557) (12,827) (12,514)
------- ------- -------
$27,747 $45,653 $47,193
======= ======= =======
</TABLE>

F-13
<PAGE>

AZTAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE 9. OTHER LONG-TERM LIABILITIES

At December 30, 1993 and December 31, 1992, other long-term liabilities
consisted of (in thousands):

<TABLE>
<CAPTION>
1993 1992
------- -------
<S> <C> <C>
Accrued rent expense....................................... $13,684 $15,837
Deferred compensation and retirement plans................. 8,044 7,343
Deferred income............................................ 154 154
------- -------
$21,882 $23,334
======= =======
</TABLE>

NOTE 10. REDEEMABLE PREFERRED STOCK

A series of preferred stock consisting of 100,000 shares has been designated
Series B ESOP Convertible Preferred Stock (the "ESOP Stock") and those shares
were issued on December 20, 1989, to the Company's Employee Stock Ownership
Plan (the "ESOP"). The ESOP purchased the shares for $10,000,000 with funds
borrowed from a subsidiary of the Company. These funds are repayable in even
semiannual payments of principal and interest at 13 1/2% per year over a 10-
year term. During 1993, 1992 and 1991, respectively, 1,203 shares, 878 shares
and 239 shares were redeemed primarily in connection with employee
terminations. The ESOP Stock has an annual dividend rate of $8.00 per share
per annum payable semiannually in arrears. These shares have no voting rights
except under certain limited, specified conditions. Shares not allocated to
participant accounts and those shares not vested may be redeemed at $100 per
share. Shares may be converted into common stock at $9.46 and have a
liquidation preference of $100 per share.

The shares that have been allocated to the ESOP participant accounts and
have vested are redeemable at the higher of appraised value, conversion value
or $100 per share, by the participant upon termination. The excess of the
redemption value of the ESOP Stock over the carrying value is charged to
retained earnings upon redemption. In the event of default in the payment of
dividends on the ESOP Stock for six consecutive semiannual periods, each
outstanding share would have one vote per share of common stock into which the
preferred stock is convertible.

NOTE 11. CAPITAL STOCK

The Company is authorized to issue 10,000,000 shares of preferred stock, par
value $.01 per share, issuable in series as the Board of Directors may
designate. Approximately 40,000 shares of preferred stock have been designated
Series A Junior Participating Preferred Stock but none have been issued.

The Company is authorized to issue 100,000,000 shares of common stock with a
par value of $.01 per share. Shares issued were 41,351,153 at December 30,
1993 and 41,012,323 at December 31, 1992. Common stock outstanding was net of
3,992,142 and 4,034,661 treasury shares at December 30, 1993 and December 31,
1992, respectively. One preferred stock purchase right (a "Right") is attached
to each share of the Company's common stock. Each Right will entitle the
holder, subject to the occurrence of certain events, to purchase a unit with
no par value (a "Unit") consisting of one one-thousandth of a share of Series
A Junior Participating Preferred Stock at a purchase price of $40.00 per Unit
subject to adjustment. The Rights will expire in December 1999 if not earlier
redeemed by the Company at $.01 per Right.

F-14
<PAGE>

AZTAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The Company issued 42,000 shares of restricted stock in 1991, on which the
restrictions will lapse over a three-year period, commencing on the date of
issuance, to certain executive officers and key employees. Compensation expense
in connection with these and prior issuances, recognized in 1993, 1992 and
1991, respectively, was $72,000, $654,000 and $620,000.

In accordance with the Merger agreement, 666,572 shares of common stock that
had not been claimed by the shareholders of Ramada were returned to the Company
in December 1990 to be held as treasury shares until claimed. During 1993, 1992
and 1991, respectively, 42,519, 60,179 and 117,117 shares were claimed; the
balance of unclaimed shares was 446,757 as of December 30, 1993.

During 1990, the Board of Directors authorized the Company to make
discretionary repurchases of up to 4,000,000 shares of its common stock from
time to time in the open market or otherwise and at December 30, 1993, there
remains 591,900 shares that could be repurchased under this authority. During
1992 the Company repurchased 1,025,100 shares of common stock. None were
repurchased under this program in 1993 or 1991. During 1991, under a separate
odd-lot buyback program, the Company repurchased 49,857 shares of common stock.
During 1992, 3,779 shares of restricted stock that were issued in 1989 were
forfeited. Repurchased and forfeited shares are stated at cost and held as
treasury shares to be used for general corporate purposes.

Effective July 18, 1990, the Company adopted a stock option plan for
directors who are not employees of the Company ("Nonemployee Director Stock
Option Plan"). As of December 30, 1993, 71,000 common shares were reserved
under the Nonemployee Director Stock Option Plan. During 1993, options were
granted for 9,000 shares at $6.75 per share; during 1992, options were granted
for 5,000 shares at $6.75 per share and 9,000 shares at $5.50 per share; during
1991, options were granted for 8,000 shares at $6.50 per share. All options
granted under the Nonemployee Director Stock Option Plan are immediately
exercisable on the date of grant and expire ten years from the date of grant.
At December 30, 1993, December 31, 1992 and January 2, 1992, common shares
reserved for future grants of options under this plan were 179,000, 188,000 and
202,000, respectively.

Changes in the number of common shares reserved under the Company's employee
stock option plans are as follows (in thousands of shares):

<TABLE>
<CAPTION>
NUMBER OF PRICE RANGE
SHARES OF OPTIONS
--------- -----------
<S> <C> <C>
Balance, January 3, 1991............................. 2,992 $3.19-$8.15
Granted............................................ 900 $5.00
Exercised.......................................... (11) $3.19
Cancelled, expired or surrendered.................. (14) $5.83
-----
Balance, January 2, 1992............................. 3,867 $3.19-$8.15
Granted............................................ 135 $6.88
Exercised.......................................... (82) $3.19
Cancelled, expired or surrendered.................. (87) $3.19-$8.15
-----
Balance, December 31, 1992........................... 3,833 $3.19-$8.15
Granted............................................ 50 $7.63
Exercised.......................................... (339) $3.19-$8.15
Cancelled, expired or surrendered.................. (42) $6.49-$8.15
-----
Balance, December 30, 1993........................... 3,502 $3.19-$8.15
=====
</TABLE>

F-15
<PAGE>

AZTAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

At December 30, 1993, December 31, 1992 and January 2, 1992, options
exercisable under the Company's employee stock option plans were 3,077,000,
3,118,000 and 2,238,000, respectively; shares reserved for future grants were
1,797,000, 1,805,000 and 1,849,000, respectively.

In addition to the common shares reserved under stock option plans at
December 30, 1993, the Company has 1,033,000 common shares reserved for the
conversion of the ESOP Stock. The Company also has 40,563 shares of preferred
stock reserved for exercise of the Rights.

NOTE 12. BENEFIT PLANS

The Company has a defined benefit pension plan, which is not currently
funded, for certain former executive employees. The Company has a nonqualified
defined benefit retirement plan, which is not required to be funded by the
Company, for certain senior executives. The Company has a defined contribution
savings plan that covers substantially all employees who are not covered by a
collective bargaining unit. Contributions to the savings plan are
discretionary. Total pension and savings plan expense was $689,000 for 1993,
$662,000 for 1992 and $900,000 for 1991. The Company also contributed
$1,990,000, $1,834,000 and $1,881,000 in 1993, 1992 and 1991, respectively, to
trusteed pension plans under various collective bargaining agreements.

The Company has a deferred compensation plan for designated executives and a
similar plan for outside directors. The plans provide for the payment of
benefits commencing at retirement. The Company is substantially funding the
plans through the purchase of life insurance. Net expense recognized in 1993,
1992 and 1991 was $180,000, $184,000 and $103,000, respectively.

In connection with Restructuring, the Company adopted the ESOP that covers
substantially all non-union employees. The Company will make contributions to
the ESOP so that, after the dividends are paid on the Company's ESOP Stock, the
ESOP can make its debt service payments to the Company. Cash dividends and
contributions, respectively, paid to the ESOP were $787,000 and $1,088,000 in
1993, $797,000 and $1,078,000 in 1992, and $800,000 and $1,076,000 in 1991.
Compensation expense recognized in 1993, 1992 and 1991, respectively, was
$1,311,000, $1,400,000 and $1,482,000.

NOTE 13. INCOME TAXES

The (provision) benefit for income taxes for continuing operations before
extraordinary items and cumulative effect of accounting change is comprised of
(in thousands):

<TABLE>
<CAPTION>
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Current:
Federal.......................................... $(2,231) $(3,685) $ 1,136
State............................................ (73) -- --
------- ------- -------
(2,304) (3,685) 1,136
------- ------- -------
Deferred:
Federal.......................................... 378 (5,303) 41
State............................................ 902 (641) --
------- ------- -------
1,280 (5,944) 41
------- ------- -------
Charge in lieu of income taxes.................... -- -- (1,237)
------- ------- -------
$(1,024) $(9,629) $ (60)
======= ======= =======
</TABLE>

F-16
<PAGE>

AZTAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The Company is responsible, with certain exceptions, for the taxes of Ramada
through December 20, 1989. In 1991, the Company settled the Internal Revenue
Service's examination of Ramada's income tax returns for the years 1984 and
1985 and paid taxes and interest of $17,495,000 in January 1992. The tax
liability was less than that provided and the Company recorded a continuing
operations benefit of $1,264,000 in 1991. The Internal Revenue Service is
examining the income tax returns for the years 1986 through 1991. The New
Jersey Division of Taxation is examining the income tax returns for the years
1983 through 1988. Management believes that adequate provision for income
taxes and interest has been made in the financial statements.

General business credits are taken as a reduction of the provision for
federal income taxes during the year such credits become available. The
following table provides a reconciliation between the federal statutory rates
and the (provision) benefit for income taxes when both are expressed as a
percentage of pretax income.

<TABLE>
<CAPTION>
1993 1992 1991
----- ----- -----
<S> <C> <C> <C>
Tax (provision) benefit at statutory rate.......... (35.0)% (34.0)% (34.0)%
(Increase) decrease in tax resulting from:
State income taxes............................... 4.3 (6.1) --
Contributions and gifts.......................... (.6) (.5) (6.1)
Disallowance of business meals................... (4.1) (2.2) (11.1)
Capitalized restructuring costs.................. .8 2.3 13.5
Restricted stock and non-qualified stock options. .7 -- (3.1)
Casino license amortization...................... -- -- (3.1)
IRS examination.................................. (7.9) 3.6 42.2
Targeted jobs tax credit......................... 4.2 1.5 --
Change in valuation allowance.................... 30.3 -- --
Other, net....................................... (1.0) (1.6) (.5)
----- ----- -----
(8.3)% (37.0)% (2.2)%
===== ===== =====
</TABLE>

The income tax effects of loss carryforwards, tax credit carryforwards and
temporary differences between financial and income tax reporting that give
rise to the deferred income tax assets and liabilities at December 30, 1993
and December 31, 1992, are as follows (in thousands):

<TABLE>
<CAPTION>
1993 1992
-------- --------
<S> <C> <C>
Net operating loss carryforward........................ $ 21,902 $ 26,505
Accrued rent expense................................... 4,818 11,856
Accrued bad debt expense............................... 3,972 6,081
Accrued compensation................................... 5,030 4,737
Accrued liabilities.................................... 2,396 1,205
General business credit carryforward................... 2,887 2,066
-------- --------
Gross deferred tax assets.............................. 41,005 52,450
-------- --------
Deferred tax asset valuation allowance................. (20,974) (24,732)
-------- --------
Other.................................................. (1,528) (1,195)
Partnership investment................................. (5,328) (4,704)
Depreciation and amortization.......................... (12,199) (20,544)
Ramada tax sharing agreement........................... (20,536) (22,115)
-------- --------
Gross deferred tax liabilities......................... (39,591) (48,558)
-------- --------
Net deferred tax liabilities........................... $(19,560) $(20,840)
======== ========
</TABLE>

F-17
<PAGE>

AZTAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Included in the valuation allowance is $520,000 that will be allocated to
shareholders' equity when recognized.

The deferred tax amounts were adjusted in 1993 for the effect of legislation
that increased the federal income tax rate from 34% to 35%. The net effect of
this change was not significant. The December 31, 1992 valuation allowance was
reduced during 1993 due to the generation of taxable income that resulted in
the utilization of a portion of the net operating loss carryforward. The effect
of this reduction was to decrease the 1993 income tax expense by $3,878,000.

At December 30, 1993, tax benefits are available for federal income tax
purposes as follows (in thousands):

<TABLE>
<S> <C>
Net operating losses............................................. $40,466
General business credits......................................... 2,121
</TABLE>

These tax benefits will expire in the years 2003 through 2008 if not used.
The Company also has alternative minimum tax credit carryforwards of $766,000
that can be carried forward indefinitely and offset against the regular federal
income tax liability. In addition, the Company has net operating loss
carryforwards for state income tax purposes that will expire in the following
years if not used (in thousands):

A valuation allowance has been established for those federal and state tax
benefits which are not expected to be realized.

NOTE 14. DISCONTINUED OPERATIONS

In 1989, the Company disposed of its hotel business and the following items
are related to this discontinued operation. In 1992, the Company reached a
settlement with Canadian tax authorities in relation to the 1988 and 1989
income tax returns of Ramada Inc. and received a refund of $1,262,000. In 1991,
the Company recorded a tax benefit of $1,861,000 in connection with the
settlement discussed in "Note 13. Income Taxes". In another matter, but also in
1991, the Company reached a settlement with Canadian tax authorities and
received a refund of $692,000.

NOTE 15. EXTRAORDINARY ITEMS

A substantial portion of the proceeds from the issuance of the Subordinated
Notes were loaned to AGP to redeem its 12% First Mortgage Notes Due 1996. In
connection with the debt redemption, the Company paid a prepayment premium and
expensed its remaining deferred financing costs. These items were reflected in
the 1992 Consolidated Statement of Operations as an extraordinary loss of
$5,335,000, net of an income tax benefit of $2,749,000.

The Company has a net operating loss carryforward from 1989. A portion of the
tax benefit of the 1989 loss was offset against the 1991 provision for income
taxes as an extraordinary item because the tax benefit of the 1989 loss could
not have been recorded previously.

F-18
<PAGE>

AZTAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE 16. CUMULATIVE EFFECT OF ACCOUNTING CHANGE

In February 1992, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 109, Accounting for Income
Taxes ("SFAS 109"), which superseded Statement of Financial Accounting
Standards No. 96 with the same title ("SFAS 96"). SFAS 96 was never adopted by
the Company. The Company adopted the provisions of SFAS 109 in the first
quarter of 1992 and elected not to restate prior year financial statements.
The effect from prior years of adopting SFAS 109 as of the beginning of fiscal
1992 was a net deferred income tax benefit of $7,500,000 and it was reflected
in the 1992 Consolidated Statement of Operations as the Cumulative effect of
accounting change.

The income tax effects of loss carryforwards, tax credit carryforwards and
temporary differences between financial and income tax reporting that give
rise to the deferred income tax assets and liabilities at January 2, 1992,
under the provisions of SFAS 109, are as follows (in thousands):

<TABLE>
<CAPTION>
DEFERRED INCOME TAX
--------------------
ASSETS LIABILITIES
------- -----------
<S> <C> <C>
Net operating loss carryforward........................ $26,058
Accrued rent expense................................... 12,914
Accrued bad debt expense............................... 5,770
Accrued compensation................................... 3,572
Accrued liabilities.................................... 2,199
General business credit carryforward................... 1,407
Other.................................................. 618
Partnership investment................................. $ 4,963
Depreciation and amortization.......................... 14,472
Ramada tax sharing agreement........................... 22,437
------- -------
52,538 $41,872
=======
Valuation allowance.................................... (25,562)
-------
$26,976
=======
</TABLE>

Included in the valuation allowance is $505,000 that will be allocated to
shareholders' equity when recognized.

NOTE 17. CONTINGENCIES AND COMMITMENTS

The Company agreed to indemnify Ramada against all monetary judgments in
lawsuits pending against Ramada and its subsidiaries as of the conclusion of
the Restructuring on December 20, 1989, as well as all related attorneys' fees
and expenses not paid at that time, except for any judgments, fees or expenses
accrued on the hotel business balance sheet and except for any unaccrued and
unreserved aggregate amount up to $5,000,000 of judgments, fees or expenses
related exclusively to the hotel business. Aztar is entitled to the benefit of
any crossclaims or counterclaims related to such lawsuits and of any insurance
proceeds received. In addition, the Company agreed to indemnify Ramada for
various lease guarantees made by Ramada relating to the restaurant business
conducted through its Marie Callender Pie Shops, Inc. ("MCPSI") subsidiary. In
connection with these matters the Company has an accrued liability of
$3,980,000 and $4,256,000 at December 30, 1993 and December 31, 1992,
respectively.

F-19
<PAGE>

AZTAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The Company is a party to various other claims, legal actions and complaints
arising in the ordinary course of business or asserted by way of defense or
counterclaim in actions filed by the Company. Management believes that its
defenses are substantial in each of these matters and that the Company's legal
posture can be successfully defended without material adverse effect on its
consolidated financial statements.

The Company had commitments for capital expenditures of approximately
$13,000,000 at December 30, 1993.

NOTE 18. ACQUISITION

In July 1993, the Company acquired the partnership interests in AREI and AGP.
AREI owned a 99.9% general partnership interest in AGP, which acquired a
substantial interest in TropWorld in a sale-leaseback transaction in 1984.

The acquisition has been accounted for as a purchase by the Company. The
aggregate consideration, including costs incurred to complete the transaction,
was approximately $62,000,000 in cash. The Company obtained the $10 Million
Credit Facility to fund a portion of the purchase price. This acquisition did
not significantly change Aztar's total assets. The cash paid by Aztar and notes
receivable from AGP were replaced on Aztar's balance sheet by the assets
acquired, which consisted primarily of building and equipment. The additional
$10,000,000 of indebtedness incurred by Aztar was more than offset by a
reduction of indebtedness to AGP.

The Company's consolidated statement of operations for the year ended
December 30, 1993 includes the results of AGP since its acquisition. After
intercompany eliminations, the acquisition has the following effects on
consolidated results: Most of the reduction in Aztar interest income from the
replacement of the AGP notes receivable is offset by a reduction in rent
expense. Aztar's net income is affected negatively primarily by an increase in
depreciation expense.

If the acquisition had occurred at the beginning of each of the years ended
December 30, 1993 and December 31, 1992, the Company's results of operations
would have been as follows (in thousands, except per share data):

<TABLE>
<CAPTION>
1993 1992
-------- --------
(UNAUDITED)
<S> <C> <C>
Revenues................................................. $518,762 $512,045
Income from continuing operations before extraordinary
item and cumulative effect of accounting change......... 7,846 8,332
Net income............................................... 7,846 11,759
Earnings per common and common equivalent share:
Income from continuing operations before extraordinary
item and cumulative effect of accounting change....... $ .19 $ .20
Net income............................................. .19 .29
Earnings per common share assuming full dilution:
Income from continuing operations before extraordinary
item and cumulative effect of accounting change....... $ .18 $ .20
Net income............................................. .18 .28
</TABLE>

F-20
<PAGE>

AZTAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE 19. UNAUDITED QUARTERLY RESULTS/COMMON STOCK PRICES

The following unaudited information shows selected items in thousands, except
per share data, for each quarter in the years ended December 30, 1993 and
December 31, 1992. The Company's common stock is listed on the New York Stock
Exchange.

<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
-------- -------- -------- --------
<S> <C> <C> <C> <C>
1993
- ----
Revenues............................... $122,322 $130,781 $144,038 $121,621
Operating income....................... 3,517 6,869 19,576 7,457
Income (loss) before income taxes...... 2,542 6,078 8,859 (5,073)
Income taxes........................... (958) (2,172) (3,526) 5,632
Net income............................. 1,584 3,906 5,333 559
Earnings per common and common equiva-
lent share:
Net income........................... .04 .10 .13 .01
Earnings per common share assuming full
dilution:
Net income........................... .04 .09 .13 .01

1992
- ----
Revenues............................... $117,669 $131,646 $141,225 $121,505
Operating income....................... 2,995 10,400 15,147 4,067
Income from continuing operations be-
fore income taxes, extraordinary item
and cumulative effect of accounting
change................................ 1,549 9,210 13,888 1,360
Income taxes........................... (629) (3,158) (5,382) (460)
Discontinued operations................ -- -- -- 1,262
Extraordinary item..................... -- -- -- (5,335)
Cumulative effect of accounting change. 7,500 -- -- --
Net income (loss)...................... 8,420 6,052 8,506 (3,173)
Earnings per common and common equiva-
lent share:
Income from continuing operations be-
fore extraordinary item and cumula-
tive effect of accounting change.... .02 .16 .22 .02
Net income (loss).................... .21 .16 .22 (.09)
Earnings per common share assuming full
dilution:
Income from continuing operations be-
fore extraordinary item and cumula-
tive effect of accounting change.... .02 .15 .22 .02
Net income (loss).................... .21 .15 .22 (.09)

Common Stock Prices

1993--High............................. $ 8.88 $ 10.13 $ 9.63 $ 7.88
--Low.............................. 6.63 6.25 7.00 6.00
1992--High............................. 7.50 6.50 7.13 7.63
--Low.............................. 5.00 4.63 5.00 6.13
</TABLE>

F-21
<PAGE>

AZTAR CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 30,
1994 1993
--------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................. $ 35,020 $ 39,551
Accounts receivable, net.............................. 19,673 19,170
Refundable income taxes............................... 1,009 2,062
Inventories........................................... 5,466 5,564
Prepaid expenses...................................... 7,803 9,206
Deferred income taxes................................. 6,498 6,566
-------- --------
Total current assets................................ 75,469 82,119
Investments in and advances to unconsolidated partner-
ship................................................... 13,460 13,776
Other investments....................................... 22,820 22,131
Property and equipment:
Buildings and equipment, net.......................... 640,639 648,139
Land.................................................. 81,795 81,795
Construction in progress.............................. 19,674 6,701
Leased under capital leases, net...................... 972 1,043
-------- --------
743,080 737,678
Other assets............................................ 20,527 21,467
-------- --------
$875,356 $877,171
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accruals......................... $ 32,531 $ 39,515
Accrued payroll and employee benefits................. 17,209 15,823
Accrued interest payable.............................. 13,489 13,714
Income taxes payable.................................. 2,644 2,633
Current portion of long-term debt..................... 2,503 2,499
-------- --------
Total current liabilities........................... 68,376 74,184
Long-term debt.......................................... 404,033 404,086
Other long-term liabilities............................. 22,368 21,882
Deferred income taxes................................... 25,047 26,126
Contingencies and commitments
Series B ESOP convertible preferred stock (redemption
value $4,335 and $4,295)............................... 4,129 3,905
Shareholders' equity:
Common stock, $.01 par value (37,368,426 and
37,359,011 shares outstanding)....................... 414 414
Paid-in capital....................................... 346,965 346,965
Retained earnings..................................... 20,956 16,559
Less:Treasury stock................................... (16,885) (16,885)
Unearned compensation................................. (47) (65)
-------- --------
Total shareholders' equity.......................... 351,403 346,988
-------- --------
$875,356 $877,171
======== ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-22
<PAGE>

AZTAR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND APRIL 1, 1993

(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
FIRST QUARTER
------------------
1994 1993
-------- --------
<S> <C> <C>
REVENUES
Casino.................................................... $106,972 $104,359
Rooms..................................................... 10,056 7,343
Food and beverage......................................... 10,577 8,487
Other..................................................... 2,961 2,133
-------- --------
130,566 122,322
COSTS AND EXPENSES
Casino.................................................... 48,610 51,299
Rooms..................................................... 5,892 4,186
Food and beverage......................................... 9,421 7,942
Other..................................................... 1,842 1,485
Marketing................................................. 11,442 11,550
General and administrative................................ 11,694 11,060
Utilities................................................. 3,156 2,677
Repairs and maintenance................................... 4,567 4,463
Provision for doubtful accounts........................... 1,051 452
Property taxes and insurance.............................. 4,416 4,183
Net rent.................................................. 2,345 12,547
Depreciation and amortization............................. 9,286 6,961
-------- --------
113,722 118,805
-------- --------
Operating income............................................ 16,844 3,517
Interest income........................................... 556 11,719
Interest expense.......................................... (11,822) (11,727)
-------- --------
Income before other items and income taxes.................. 5,578 3,509
Equity in unconsolidated partnership's loss............... (940) (967)
-------- --------
Income before income taxes.................................. 4,638 2,542
Income taxes.............................................. (85) (958)
-------- --------
Net income.................................................. $ 4,553 $ 1,584
======== ========
Net income per common and common equivalent share........... $ .11 $ .04
Net income per common share assuming full dilution.......... $ .11 $ .04
Weighted average common shares applicable to:
Net income per common and common equivalent share......... 38,261 38,291
Net income per common share assuming full dilution........ 39,292 39,341
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-23
<PAGE>

AZTAR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND APRIL 1, 1993

(IN THOUSANDS)

<TABLE>
<CAPTION>
FIRST QUARTER
----------------
1994 1993
------- -------
<S> <C> <C>
Cash Flows from Operating Activities
Net income.................................................... $ 4,553 $ 1,584
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization............................... 9,810 7,416
Provision for losses on accounts receivable................. 1,051 452
Loss on reinvestment obligation............................. 131 243
Interest income............................................. -- 1,460
Rent expense................................................ 237 (782)
Distribution in excess of equity in income of partnership... 316 323
Deferred income taxes....................................... (1,011) 585
Change in assets and liabilities:
(Increase) decrease in accounts receivable................ (1,754) 1,253
(Increase) decrease in refundable income taxes............ 1,053 90
(Increase) decrease in inventories and prepaid expenses... 1,417 984
Increase (decrease) in accounts payable, accrued expenses
and income taxes payable................................. (5,010) (17,047)
Other items, net.......................................... 212 368
------- -------
Net cash provided by (used in) operating activities..... 11,005 (3,071)
------- -------
Cash Flows from Investing Activities
Payments received on TropWorld second mortgage.............. -- 21,300
Payments received on other notes receivable................. 454 873
Increase in TropWorld second mortgage....................... -- (21,300)
Increase in other notes receivable.......................... -- (239)
Purchases of property and equipment......................... (14,140) (16,974)
Additions to other long-term assets......................... (1,307) (1,719)
------- -------
Net cash provided by (used in) investing activities..... (14,993) (18,059)
------- -------
Cash Flows from Financing Activities
Proceeds from issuance of long-term debt.................... 10,000 --
Proceeds from issuance of common stock...................... -- 2,048
Principal payments on long-term debt........................ (10,117) (1,016)
Preferred stock dividend.................................... (389) (395)
Redemption of preferred stock............................... (37) (17)
------- -------
Net cash provided by (used in) financing activities..... (543) 620
------- -------
Net increase (decrease) in cash and cash equivalents........ (4,531) (20,510)
Cash and cash equivalents at beginning of period............ 39,551 100,403
------- -------
Cash and cash equivalents at end of period.............. $35,020 $79,893
======= =======
Supplemental Cash Flow Disclosures
Summary of non-cash investing and financing activities:
Capital lease obligations incurred for property and
equipment.................................................. $ -- $ 247
Tax benefit from stock options and preferred stock dividend. 43 277
Cash paid (refunded) during the period for the following:
Interest, net of amount capitalized......................... $11,542 $22,097
Income taxes................................................ (11) 122
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-24
<PAGE>

AZTAR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND APRIL 1, 1993

(IN THOUSANDS, EXCEPT NUMBER OF SHARES)

<TABLE>
<CAPTION>
FIRST QUARTER
------------------
1994 1993
-------- --------
<S> <C> <C>
Common stock:
Beginning balance........................................ $ 414 $ 410
Stock options exercised for 321,808 shares in 1993....... -- 3
-------- --------
Ending balance......................................... 414 413
-------- --------
Paid-in capital:
Beginning balance........................................ 346,965 344,574
Stock options exercised.................................. -- 2,045
Tax benefit from stock options exercised................. -- 233
-------- --------
Ending balance......................................... 346,965 346,852
-------- --------
Retained earnings:
Beginning balance........................................ 16,559 5,787
Preferred stock dividend, net of income tax benefit of
$43 and $44............................................. (156) (154)
Net income............................................... 4,553 1,584
-------- --------
Ending balance......................................... 20,956 7,217
-------- --------
Treasury stock:
Beginning and ending balance............................. (16,885) (16,885)
-------- --------
Unearned compensation:
Beginning balance........................................ (65) (137)
Amortization............................................. 18 19
-------- --------
Ending balance......................................... (47) (118)
-------- --------
$351,403 $337,479
======== ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-25
<PAGE>

AZTAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1: GENERAL

The consolidated financial statements reflect all adjustments, such
adjustments being normal recurring accruals, which are necessary, in the
opinion of management, for the fair presentation of the results of the interim
periods; interim results, however, may not be indicative of the results for the
full year.

The notes to the interim consolidated financial statements are presented to
enhance the understanding of the financial statements and do not necessarily
represent complete disclosures required by generally accepted accounting
principles. Capitalized interest was $495,000 and $712,000 for the quarters
ended 1994 and 1993, respectively. For additional information regarding
significant accounting policies, long-term debt, lease obligations, and other
matters applicable to the Company, reference should be made to the Company's
Annual Report to Shareholders for the year ended December 30, 1993.

NOTE 2: INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED PARTNERSHIP

Following are summarized operating results for the Company's unconsolidated
partnership, accounted for using the equity method for the three months ended
March 31, 1994 and April 1, 1993 (in thousands):

<TABLE>
<CAPTION>
FIRST QUARTER
--------------
1994 1993
------ ------
<S> <C> <C>
Revenues........................................................ $3,582 $3,152
Operating expenses.............................................. (683) (694)
------ ------
Operating income................................................ 2,899 2,458
Interest expense................................................ (923) (967)
------ ------
Net income.................................................... $1,976 $1,491
====== ======
</TABLE>

NOTE 3: OTHER LONG-TERM LIABILITIES

At March 31, 1994 and December 30, 1993, other long-term liabilities
consisted of (in thousands):

<TABLE>
<CAPTION>
1994 1993
------- -------
<S> <C> <C>
Accrued rent expense........................................... $13,921 $13,684
Deferred compensation and retirement plans..................... 8,293 8,044
Deferred income................................................ 154 154
------- -------
$22,368 $21,882
======= =======
</TABLE>

NOTE 4: INCOME TAXES

The Company is responsible, with certain exceptions, for the taxes of Ramada
through December 20, 1989. The Internal Revenue Service has completed its
examination of the years 1986 and 1987. Ramada has signed a partial agreement
for those two years and has filed a petition with the U.S. Tax Court for two
remaining issues. The Internal Revenue Service is examining the income tax
returns for the years 1988 through 1991. The New Jersey Division of Taxation is
examining the income tax returns for the years 1983 through 1988. Management
believes that adequate provision for income taxes and interest has been made in
the financial statements.

F-26
<PAGE>

AZTAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(UNAUDITED)

The December 30, 1993 valuation allowance was reduced during the 1994 first
quarter due to the generation of taxable income that resulted in the
utilization of a portion of the net operating loss carryforward. The effect of
this reduction was to decrease the 1994 first quarter income tax expense by
$1,604,000.

NOTE 5: NET INCOME PER SHARE

Net income per common and common equivalent share is computed based on the
weighted average number of common shares outstanding after consideration of the
dilutive effect of stock options. Net income per common share, assuming full
dilution, is computed based on the weighted average number of common shares
outstanding after consideration of the dilutive effect of stock options and the
assumed conversion of the preferred stock at the stated rate. Net income for
both computations is adjusted for dividends on the preferred stock.

NOTE 6: CONTINGENCIES AND COMMITMENTS

The Company agreed to indemnify Ramada against all monetary judgments in
lawsuits pending against Ramada and its subsidiaries as of the conclusion of
the Restructuring of Ramada on December 20, 1989, as well as all related
attorneys' fees and expenses not paid at that time, except for any judgments,
fees or expenses accrued on the hotel business balance sheet and except for any
unaccrued and unreserved aggregate amount up to $5 million of judgments, fees
or expenses related exclusively to the hotel business. Aztar is entitled to the
benefit of any crossclaims or counterclaims related to such lawsuits and of any
insurance proceeds received. In addition, the Company agreed to indemnify
Ramada for various lease guarantees made by Ramada relating to the restaurant
business conducted through its MCPSI subsidiary. In connection with these
matters, the Company has an accrued liability of $3,978,000 and $3,980,000 at
March 31, 1994 and December 30, 1993, respectively.

The Company is a party to various other claims, legal actions and complaints
arising in the ordinary course of business or asserted by way of defense or
counterclaim in actions filed by the Company. Management believes that its
defenses are substantial in each of these matters and that the Company's legal
posture can be successfully defended without material adverse effect on its
consolidated financial statements.

The Company had commitments for capital expenditures of approximately
$20,000,000 at March 31, 1994.

F-27
<PAGE>

[LOGO OF AZTAR]

[Ramada Express
Logo]

Ramada Express'
Victorian-era
[Photo of Ramada Express -- train in station] railroad theme
includes a train
that guests can
ride from parking
to Casino Station,
where they can
enter the casino
directly.

[Tropicana Logo]

The new facades at
Tropicana utilize a
[Photo of Tropicana -- new facade] colorful Caribbean
decor, with
elements that
elaborate on
Tropicana's
tropical island
theme.

[TropWorld Logo]

A four-story high
Ferris wheel is a
[Photo of TropWorld -- Ferris signature feature
wheel] of Tivoli Pier,
TropWorld's two-
acre indoor
entertainment
attraction.
<PAGE>

NO DEALER, SALESMAN, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR BY THE UNDERWRITER. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 3
Incorporation of Certain Documents by Reference........................... 3
Prospectus Summary........................................................ 5
Risk Factors.............................................................. 11
Use of Proceeds........................................................... 14
Selected Consolidated Financial Information............................... 15
Capitalization............................................................ 17
Recent Results of Operations.............................................. 18
Management's Discussion and Analysis of Results of Operations and
Financial Condition...................................................... 18
Certain Contractual Arrangements.......................................... 27
Business.................................................................. 29
Credit Policy and Control Procedures...................................... 35
Regulation................................................................ 35
Employees................................................................. 47
Trademarks................................................................ 47
Legal Proceedings......................................................... 48
Management................................................................ 49
Security Ownership........................................................ 51
Description of the Notes.................................................. 52
Underwriting.............................................................. 72
Experts................................................................... 72
Legal Matters............................................................. 72
Index to Financial Statements............................................. F-1
</TABLE>

$180,000,000

AZTAR CORPORATION

% SENIOR SUBORDINATED
NOTES DUE 2004

- -----------------------------------
SALOMON BROTHERS INC
-----------------------------------------------

PROSPECTUS

DATED , 1994
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee..................... $62,069
NASD filing fee......................................................... 18,500
Printing and engraving.................................................. **
Accounting fees and expenses............................................ **
Legal fees and expenses (other than Blue Sky)........................... **
Blue Sky fees and expenses, including legal fees........................ **
Trustee fees and expenses............................................... **
Miscellaneous........................................................... **
-------
Total .................................................................. **
=======
</TABLE>
- --------
*Expenses other than filing fees are estimated

**To be filed by amendment.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Article Eighth of the Company's Restated Certificate of Incorporation, which
is incorporated by reference in this Registration Statement, provides that the
Company shall indemnify to the full extent authorized or permitted by law any
person made, or threatened to be made a party or witness to any action, suit or
proceeding by reason of the fact that he, his testator or intestate, is or was
a director or an officer of the Company or by reason of the fact that such
person, at the request of the Company, is or was serving any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,
in any capacity.

Pursuant to Section 145 of the General Corporation Law of Delaware (the
"Delaware Corporation Law"), Article VIII of the By-laws of the Company, which
are incorporated by reference in this Registration Statement, provides that the
Company shall indemnify any person in connection with the defense or settlement
of any threatened, pending or completed legal proceeding (other than a legal
proceeding by or in the right of the Company) by reason of the fact that he,
his testator or intestate, is or was a director or officer of the Company or is
or was a director or officer of the Company serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred in connection with the defense
or settlement of such legal proceedings if he acted in good faith and in a
manner that he reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal action or
proceeding, if he had no reasonable cause to believe that his conduct was
unlawful. If the legal proceeding, however, is by or in the right of the
Company, the director or officer may be indemnified by the Company against
expenses (including attorneys' fees) actually and reasonably incurred in
connection with the defense or settlement of such legal proceedings if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Company; except that he may not be indemnified in
respect of any claim, issue or matter as to which he shall have been adjudged
to be liable to the Company unless a Court determines otherwise.

Article VIII of the Company's By-laws allows the Company to maintain director
and officer liability insurance on behalf of any person who is or was a
director or officer of the Company or such person who serves or served as a
director, officer, agent or employee, at another corporation, partnership or
other enterprise at the request of the Company.

II-1
<PAGE>

Pursuant to Section 102(b)(7) of the Delaware Corporation Law, Article Eighth
of the Restated Certificate of Incorporation of the Company provides that no
director of the Company shall be personally liable to the Company or its
stockholders for monetary damages for any breach of his fiduciary duty as a
director, provided, however, that such clause shall not apply to any liability
of a director (i) for any breach of the director's duty of loyalty to the
Company or its stockholders, (ii) for acts or omissions that are not in good
faith or which involve intentional misconduct or a knowing violation of the
law, (iii) pursuant to Section 174 of the Delaware Corporation Law or (iv) for
any transaction from which the director derived an improper personal benefit.

ITEM 16. EXHIBITS

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>

+1. Form of Underwriting Agreement relating to the Notes.

4.1 Rights Agreement between Aztar Corporation and First Interstate Bank of
Arizona, N.A. as Rights Agent, filed as Exhibit 4.1 to Aztar
Corporation's Registration Statement No. 33-51008 and incorporated
herein by reference.

4.2 Indenture, dated as of December 15, 1989, among Aztar Mortgage Funding,
Inc., Ramada Inc., as guarantor, and First Interstate Bank of Arizona,
N.A., as Trustee, relating to the First Mortgage Notes Due 1996, filed
as Exhibit 4.2 to Aztar Corporation's Registration Statement No. 33-
51008 and incorporated herein by reference.

4.3 Instrument of Appointment and Acceptance of Successor Trustee dated as
of January 26, 1993, among Aztar Mortgage Funding, Inc., as Issuer,
Aztar Corporation, as Guarantor, First Interstate Bank of Arizona,
N.A., as resigning Trustee, and First Bank National Association, as
successor Trustee, filed as Exhibit 4.2(b) to Aztar Corporation's 1993
Form 10-K and incorporated herein by reference.

4.4 Indenture dated as of October 8, 1992, between Aztar Corporation and
Bank of America National Trust and Savings Association, as Trustee,
relating to the Senior Subordinated Notes Due 2002 of Aztar
Corporation, filed as Exhibit 4.1 to Aztar Corporation's form 10-Q for
the quarter ended October 1, 1992 and incorporated herein by reference.

+4.5 Form of Indenture to be entered into between Aztar Corporation and
American Bank National Association, as Trustee, relating to the Senior
Subordinated Notes Due 2004 of Aztar Corporation.

***5. Opinion of Latham & Watkins as to the validity of the securities being
registered hereby.

+12. Computation of Ratio of Earnings to Fixed Charges.

***23.1 Consent of Latham & Watkins. Reference is hereby made to Exhibit 5
hereto.

**23.2 Consent of Coopers & Lybrand with respect to financial statements of
the Company.

**23.3 Consent of Ernst & Young with respect to financial statements of
Ambassador Real Estate Investors, L.P.

+24.1 Powers of Attorney for John B. Bohle, Edward M. Carson, A. Sam Gittlin,
John R. Norton, III, Robert S. Rosow, Richard Snell, Carroll V.
Willoughby and Meridith P. Sipek (included in the signature page on
page II-4 of this Registration Statement).
</TABLE>

II-2
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
**24.2 Power of Attorney for Terence W. Thomas.
**25. Statement of Eligibility and Qualification Under the Trust Indenture
Act of 1939.
</TABLE>

- --------

+ Previously filed

** Filed herewith

*** To be filed by amendment

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the Registration Statement shall
be deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-3
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Phoenix, State of Arizona on the 20th day of July,
1994.
AZTAR CORPORATION

By PAUL E. RUBELI
-----------------------------------
Paul E. Rubeli
Chairman of the Board
President and Chief
Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated:

SIGNATURE TITLE DATE
--------- ----- ----

PAUL E. RUBELI Director, Chairman
- ------------------------------------- of the Board, July 20, 1994
Paul E. Rubeli President and Chief
Executive Officer

ROBERT M. HADDOCK Director, Executive
- ------------------------------------- Vice President and July 20, 1994
Robert M. Haddock Chief Financial
Officer

* Director July 20, 1994
- -------------------------------------
John B. Bohle

* Director July 20, 1994
- -------------------------------------
Edward M. Carson

* Director July 20, 1994
- -------------------------------------
A. Sam Gittlin

* Director July 20, 1994
- -------------------------------------
John R. Norton, III

II-4
<PAGE>

SIGNATURE TITLE DATE
--------- ----- ----

* Director July 20, 1994
- -------------------------------------
Robert S. Rosow

* Director July 20, 1994
- -------------------------------------
Richard Snell

Director
- -------------------------------------
Vesta Valentine Temen

* Director July 20, 1994
- -------------------------------------
Terence W. Thomas

* Director July 20, 1994
- -------------------------------------
Carroll V. Willoughby

MERIDITH P. SIPEK Controller July 20, 1994
- -------------------------------------
Meridith P. Sipek

ROBERT M. HADDOCK
*By: --------------------------------
Robert M. Haddock

II-5
<PAGE>

GRAPHICS APPENDIX LIST

PAGE WHERE GRAPHIC
APPEARS DESCRIPTION OF GRAPHIC OR CROSS-REFERENCE
- ------------------ ---------------------------------------------------------

INSIDE FRONT COVER Ramada Express Hotel and Casino logo

Photograph of exterior of Ramada Express Hotel and Casino
at night

Tropicana Resort and Casino logo

Photograph of exterior of Tropicana Resort and Casino at
night

TropWorld Casino and Entertainment Resort logo

Photograph of TropWorld exterior in daylight

INSIDE BACK COVER Ramada Express Hotel and Casino logo

Photograph of Ramada Express train in station

Tropicana Resort and Casino logo

Photograph of new facade of Tropicana Resort and Casino

TropWorld Casino and Entertainment Resort logo

Photograph of indoor Ferris wheel at TropWorld Casino
and Entertainment Resort

<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------

<C> <S>

+1. Form of Underwriting Agreement relating to the Notes.

+4.5 Form of Indenture to be entered into between Aztar Corporation and
American Bank National Association, as Trustee, relating to the Senior
Subordinated Notes Due 2004 of Aztar Corporation.

***5. Opinion of Latham & Watkins as to the validity of the securities being
registered hereby.

+12. Computation of Ratio of Earnings to Fixed Charges.

***23.1 Consent of Latham & Watkins. Reference is hereby made to Exhibit 5
hereto.

**23.2 Consent of Coopers & Lybrand with respect to financial statements of
the Company.

**23.3 Consent of Ernst & Young with respect to financial statements of
Ambassador Real Estate Investors, L.P.

**24.2 Power of Attorney for Terence W. Thomas.

**25. Statement of Eligibility and Qualification Under the Trust Indenture
Act of 1939.
</TABLE>

- --------

+ Previously filed

** Filed herewith

*** To be filed by amendment

<PAGE>

EXHIBIT 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this registration statement on Form S-3 of our
report, dated February 11, 1994 on our audit of the consolidated financial
statements of Aztar Corporation. We also consent to the reference to our firm
under the caption "Experts".

COOPERS & LYBRAND

Phoenix, Arizona

July 21, 1994

<PAGE>

EXHIBIT 23.3

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Amendment No. 1 to Form S-3 No. 33-54151) and related
Prospectus of Aztar Corporation for the registration of $180,000,000 Senior
Subordinated Notes Due 2004 and to the incorporation by reference therein to
our report dated February 12, 1993, except for Note 12, as to which the date is
March 29, 1993, with respect to the combined financial statements of Ambassador
Real Estate Investors, L.P. included in the Current Report on Form 8-K, dated
July 9, 1993, of Aztar Corporation filed with the Securities and Exchange
Commission.

ERNST & YOUNG

Philadelphia, Pennsylvania

July 21, 1994

<PAGE>

EXHIBIT 24.2

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, THAT EACH INDIVIDUAL WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS PAUL E. RUBELI AND ROBERT M. HADDOCK OR ANY OF
THEM, HIS TRUE AND LAWFUL ATTORNEY-IN-FACT AND AGENT WITH FULL POWER OF
SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN
ANY AND ALL CAPACITIES, TO SIGN ANY AND ALL AMENDMENTS (INCLUDING POST-
EFFECTIVE AMENDMENTS) TO THIS REGISTRATION STATEMENT, AND TO FILE THE SAME WITH
ALL EXHIBITS THERETO, AND ALL DOCUMENTS IN CONNECTION THEREWITH, WITH THE
SECURITIES AND EXCHANGE COMMISSION, GRANTING SAID ATTORNEY-IN-FACT AND AGENT,
AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND EVERY ACT
AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE PREMISES, AS
FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN PERSON, HEREBY
RATIFYING AND CONFIRMING ALL THAT SAID ATTORNEY-IN-FACT AND AGENT OR ANY OF
THEM, OR THEIR OR HIS SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO OR CAUSE TO BE
DONE BY VIRTUE HEREOF.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
TERENCE W. THOMAS Director June 17, 1994
____________________________________
Terence W. Thomas
</TABLE>

<PAGE>

EXHIBIT 25

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

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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

FORM T-1

STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE

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

AMERICAN BANK NATIONAL ASSOCIATION
(Exact name of Trustee as specified in its charter)

A NATIONAL BANKING ASSOCIATION 41-0122055
(State of incorporation if not a (IRS Employer
national bank) Identification No.)

101 EAST FIFTH STREET
CORPORATE TRUST DEPARTMENT
ST. PAUL, MINNESOTA 55101
(Address of principal executive offices)(Zip Code)

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

AMERICAN BANK NATIONAL ASSOCIATION
101 EAST FIFTH STREET
ST. PAUL, MINNESOTA 55101
(612) 298-6280
(Exact name, address, and telephone number of agent for service)

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

AZTAR CORPORATION
(Exact name of obligor as specified in its charter)

DELAWARE 86-0636534
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)

2390 EAST CAMELBACK ROAD, SUITE 400
PHOENIX, ARIZONA 85016
(Address of principal executive offices)(Zip Code)

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

% SENIOR SUBORDINATED NOTES DUE 2004
(Title of indenture securities)

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

ITEM 1. GENERAL INFORMATION. Furnish the following information as to the
trustee:

(a) Name and address of each examining or supervising authority to which it
is subject.

--Comptroller of the Currency
Treasury Department
Washington, DC

--Federal Deposit Insurance Corporation
Washington, DC

--The Board of Governors of the Federal Reserve System
Washington, DC

GENERAL

2. AFFILIATIONS WITH OBLIGOR AND UNDERWRITERS. If the obligor or any
underwriter for the obligor is an affiliate of the Trustee, describe each such
affiliation.

None

See Note following Item 16.

Items 3-15 are not applicable because to the best of the Trustee's
knowledge the obligor is not in default under any Indenture for which the
Trustee acts as Trustee.

ITEM 16. LIST OF EXHIBITS. List below all exhibits filed as a part of this
statement of eligibility and qualification.

Exhibits listed below are incorporated by reference from previous filing #33-
79088. American Bank National Association was formerly known as American
National Bank and Trust Company. The entity has remained the same, only the
name has changed as noted by the attached letter from O.C.C.

Exhibit 1. Copy of Articles of Association of the trustee now in
effect.

Exhibit 2. a. A copy of the certificate of the Comptroller of Currency
dated June 1,1965, authorizing American Bank National
Association to act as fiduciary.

b. A copy of the certificate of authority of the trustee to
commence business issued June 9, 1903, by the Comptroller of
the Currency to American Bank National Association of St.
Paul.

Exhibit 3. A copy of the authorization of the trustee to exercise
corporate trust powers issued by the Federal Reserve Board.

Exhibit 4. Copy of By-laws of the trustee as now in effect.

Exhibit 5. Copy of each Indenture referred to in Item 4. Not applicable.

Exhibit 6. The consent of the trustee required by Section 321(b) of the
Act.

Exhibit 7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority.

NOTE

The answers to this statement insofar as such answers relate to what persons
have been underwriters for any securities of the obligor within three years
prior to the date of filing this statement, or what persons are owners of 10%
or more of the voting securities of the obligor, or affiliates, are based upon
information furnished to the Trustee by the obligor. While the Trustee has no
reason to doubt the accuracy of any such information, it cannot accept any
responsibility therefor.

2
<PAGE>

SIGNATURE

Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee,
a national banking association organized and existing under the laws of the
United States, has duly caused this statement of eligibility and qualification
to be signed on its behalf by the undersigned, thereunto duly authorized, and
its seal to be hereunto affixed and attested, all in the City of Saint Paul and
State of Minnesota on the 18th day of July, 1994.

AMERICAN BANK NATIONAL ASSOCIATION

[SEAL]

THOMAS M. KORSMAN
-------------------------------------
Thomas M. Korsman
Vice President

3
<PAGE>

EXHIBIT 6

CONSENT

In accordance with Section 321(b) of the Trust Indenture Act of 1939, the
undersigned, American Bank National Association, hereby consents that reports
of examination of the undersigned by Federal, State, Territorial or District
authorities may be furnished by such authorities to the Securities and Exchange
Commission upon its request therefor.

Dated: July 18, 1994

AMERICAN BANK NATIONAL ASSOCIATION

THOMAS M. KORSMAN
-------------------------------------
Thomas M. Korsman
Vice President

4
<PAGE>

[LOGO]

- --------------------------------------------------------------------------------
COMPTROLLER OF THE CURRENCY
ADMINISTRATOR OF NATIONAL BANKS
- --------------------------------------------------------------------------------
Midwestern District Office
2345 Grand Avenue, Suite 700
Kansas City, Missouri 64108

July 7, 1994

Mr. Robert T. Lund
Senior Vice President and General Counsel
American Bank National Association
101 East Fifth Street
St. Paul, Minnesota 55101-1860

Dear Mr. Lund:

The Office of the Comptroller of the Currency (OCC) has received your letter
concerning the title change and the appropriate amendment to the Articles of
Association. The OCC has recorded that as of July 1, 1994, the title of
American National Bank and Trust Company, St. Paul, Minnesota, Charter No.
6828, was changed to "American Bank National Association".

As a result of Garn-St Germain Depository Institutions Act of 1982, the OCC is
no longer responsible for the approval of national bank name changes nor does
it maintain official records on the use of alternate titles. The use of other
titles or the retention of the rights to any previously used title is the
responsibility of the bank's board of directors. Legal counsel should be
consulted to determine whether or not the new title, or any previously used
title, could be challenged by competing institutions under the provisions of
federal or state law.

Sincerely,

/s/ Judith A. Bollig

Judith A. Bollig
Analysis Specialist