<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 10-Q

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

For the quarterly period ended:         JUNE 30, 2001
                               ---------------------------------------------

[_]  TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934    For the transition period from ___________
     to ___________


Commission File Number:                            1-9481
                       ---------------------------------------------------------

                              ARCHON CORPORATION
                    ---------------------------------------
            (Exact name of registrant as specified in its charter)

                 Nevada                                    88-0304348
---------------------------------------------   --------------------------------
(State or other jurisdiction of incorporation    (I.R.S. Employer Identification
             or organization)                                Number)


        3993 Howard Hughes Parkway, Suite 630, Las Vegas, Nevada 89109
----------------------------------------------------------------------------
             (Address of principal executive office and zip code)

                                (702) 732-9120
        --------------------------------------------------------------
             (Registrant's telephone number, including area code)

--------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
                                    report)

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

               APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                 PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

     Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. YES_____ NO_____

                     APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

                6,206,856                          as of August 14, 2001
---------------------------------------------------      -----------------------
<PAGE>

                              ARCHON CORPORATION


                                     INDEX

<TABLE>
<CAPTION>
                                                                                          Page
                                                                                          ----
<S>                                                                                       <C>
PART I.   FINANCIAL INFORMATION

ITEM 1     Consolidated Condensed Financial Statements


          CONSOLIDATED CONDENSED BALANCE SHEETS
                 June 30, 2001 (UNAUDITED) and
                 September 30, 2000......................................................   2

          CONSOLIDATED CONDENSED STATEMENTS OF
                 OPERATIONS (UNAUDITED) for the three and nine
                 months ended June 30, 2001 and 2000.....................................   3

          CONSOLIDATED CONDENSED STATEMENT OF
                 STOCKHOLDERS' EQUITY (DEFICIENCY)
                 (UNAUDITED) for the nine months ended
                 June 30, 2001...........................................................   4

          CONSOLIDATED CONDENSED STATEMENTS OF CASH
                 FLOWS (UNAUDITED) for the nine months ended
                 June 30, 2001 and 2000..................................................   5

          NOTES TO CONSOLIDATED CONDENSED FINANCIAL
                 STATEMENTS (UNAUDITED)..................................................   6

ITEM 2  Management's Discussion and Analysis of Financial Condition
                 and Results of Operations  .............................................  16

ITEM 3  Market Risk Disclosure ..........................................................  26

PART II.  OTHER INFORMATION..............................................................  27
</TABLE>

                                       1
<PAGE>

                      Archon Corporation and Subsidiaries
                     Consolidated Condensed Balance Sheets

<TABLE>
<CAPTION>
                                                                                    June 30,             September 30,
ASSETS                                                                                2001                   2000
-------------------------------------------------                              ------------------      -----------------
                                                                                   (Unaudited)
<S>                                                                            <C>                     <C>
Current assets:
  Cash and cash equivalents                                                    $      20,113,392       $      6,986,984
  Investment in marketable securities                                                  7,714,847                549,446
  Restricted cash                                                                     15,368,287                      0
  Accounts receivable, net                                                               185,216              1,070,242
  Inventories                                                                            561,243                769,218
  Prepaid expenses and other                                                           2,244,263              3,000,170
  Assets held for sale                                                                         0             63,497,055
                                                                               ------------------      -----------------

Total current assets                                                                  46,187,248             75,873,115

Land held for development                                                             23,109,400             23,109,400

Property and equipment, net                                                           32,487,119             34,629,736

Rental property held for investment, net                                             144,126,813                      0

Deferred income taxes                                                                          0             10,982,007

Other assets                                                                           4,064,079              1,001,612
                                                                               ------------------      -----------------

Total assets                                                                   $     249,974,659       $    145,595,870
                                                                               ==================      =================

LIABILITIES and STOCKHOLDERS' EQUITY (DEFICIENCY)
-------------------------------------------------

Current liabilities:
  Accounts payable                                                             $       1,324,053       $      2,441,253
  Interest payable                                                                       274,859              4,178,684
  Accrued and other liabilities                                                        3,621,467              6,287,287
  Note payable - officer                                                                       0              1,500,000
  Debt to be paid upon sale of assets                                                          0            174,894,440
  Current portion of long-term debt                                                       66,315                 72,685
  Current portion of non-recourse debt                                                 5,057,388                      0
                                                                               ------------------      -----------------

Total current liabilities                                                             10,344,082            189,374,349

Long-term debt - less current portion                                                    300,556                349,801

Non-recourse debt - less current portion                                             127,716,828                      0

Obligation under lease                                                                33,990,470                      0

Deferred income taxes                                                                 35,853,007                      0

Other liabilities                                                                        427,688                      0

Minority interest                                                                        100,000                      0

Stockholders' equity (deficiency)                                                     41,242,028            (44,128,280)
                                                                               ------------------      -----------------

Total liabilities and stockholders' equity (deficiency)                        $     249,974,659       $    145,595,870
                                                                               ==================      =================
</TABLE>

See the accompanying Notes to Unaudited Consolidated Condensed Financial
Statements.

                                       2
<PAGE>

                      Archon Corporation and Subsidiaries
                Consolidated Condensed Statements of Operations
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                     Three Months                           Nine Months
                                                                     Ended June 30,                        Ended June 30,
                                                                2001               2000               2001              2000
                                                           -------------      -------------      -------------      -------------
<S>                                                        <C>                <C>                <C>                <C>
Revenues:
   Casino                                                  $   8,038,720      $  25,257,231      $  25,853,948      $  78,374,902
   Hotel                                                         730,428          1,650,434          1,932,851          4,479,743
   Food and beverage                                           2,130,227          5,872,954          6,474,566         17,315,033
   Investment properties                                       3,768,213                  0          4,136,807                  0
   Other revenues                                              1,338,054          3,652,362          5,130,751         11,197,498
                                                           -------------      -------------      -------------      -------------
Gross revenues                                                16,005,642         36,432,981         43,528,923        111,367,176
   Less casino promotional allowances                         (1,809,215)        (3,755,710)        (5,893,122)       (11,690,609)
                                                           -------------      -------------      -------------      -------------
Net operating revenues                                        14,196,427         32,677,271         37,635,801         99,676,567
                                                           -------------      -------------      -------------      -------------
Operating expenses:
   Casino                                                      4,265,805         11,082,779         13,177,859         33,982,422
   Hotel                                                         244,557            583,823            598,175          1,529,726
   Food and beverage                                           1,288,275          4,301,911          3,402,598         11,847,472
   Other                                                         794,626          2,721,553          2,713,972          8,447,064
   Selling, general and administrative                         1,365,395          3,052,151          4,482,919         10,046,048
   Corporate expenses                                            693,509            713,123          2,077,790          2,162,252
   Utilities and property expenses                             1,497,230          2,534,807          3,996,871          8,780,935
   Depreciation and amortization                               1,293,735          2,590,682          2,895,879          8,493,055
   Reorganization expenses                                             0          1,170,394                  0          2,575,503
                                                           -------------      -------------      -------------      -------------
Total operating expenses                                      11,443,132         28,751,223         33,346,063         87,864,477
                                                           -------------      -------------      -------------      -------------
Operating income                                               2,753,295          3,926,048          4,289,738         11,812,090

   Interest expense                                           (5,016,496)        (5,410,223)        (6,922,787)       (16,869,374)
   Gain on sale of assets                                              0                  0        137,238,005         12,098,609
   Litigation settlement, net                                   (319,296)                 0          3,374,482                  0
                                                           -------------      -------------      -------------      -------------
Income (loss) before income tax (expense)
   benefit and extraordinary item                             (2,582,497)        (1,484,175)       137,979,438          7,041,325

   Federal income tax (expense) benefit                          878,049                  0        (46,913,009)                 0
                                                           -------------      -------------      -------------      -------------
Income (loss) before extraordinary item                       (1,704,448)        (1,484,175)        91,066,429          7,041,325

Extraordinary item-gain
   on early extinguishment of debt,
   net of tax provision of $0                                          0             12,028                  0          2,786,308
                                                           -------------      -------------      -------------      -------------
Net income (loss)                                             (1,704,448)        (1,472,147)        91,066,429          9,827,633

Dividends accrued on preferred shares, net                      (378,747)          (592,289)        (1,589,119)        (1,729,483)
                                                           -------------      -------------      -------------      -------------
Net income (loss) applicable to common shares              $  (2,083,195)     $  (2,064,436)     $  89,477,310      $   8,098,150
                                                           =============      =============      =============      =============
Average common shares outstanding                              6,205,374          6,195,356          6,206,856          6,195,356
                                                           =============      =============      =============      =============
Extraordinary item, net of tax
   provision per common share
         Basic                                             $        0.00      $        0.00      $        0.00      $        0.45
                                                           =============      =============      =============      =============
         Diluted                                           $        0.00      $        0.00      $        0.00      $        0.41
                                                           =============      =============      =============      =============
Income (loss) per common share
         Basic                                             $       (0.34)     $       (0.33)     $       14.42      $        1.31
                                                           =============      =============      =============      =============
         Diluted                                           $       (0.31)     $       (0.30)     $       13.10      $        1.19
                                                           =============      =============      =============      =============
</TABLE>

See the accompanying Notes to Unaudited Consolidated Condensed Financial
Statements.

                                       3
<PAGE>

                      Archon Corporation and Subsidiaries
    Consolidated Condensed Statements of Stockholders' Equity (Deficiency)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                     Additional Paid    Accumulated
                                      Common Stock  Preferred Stock    in Capital         Deficit      Treasury Stock     Total
                                      ------------  ---------------  ---------------  ---------------  -------------- -------------
<S>                                   <C>            <C>            <C>               <C>              <C>             <C>
Balances, October 1, 2000             $    62,004    $  26,439,760    $  51,520,954   $ (122,063,224)   $   (87,774)  $ (44,128,280)

Net income                                                                                91,066,429                     91,066,429
Preferred stock
  dividends accrued, net                                 1,589,119                        (1,589,119)                             -
Common and preferred stock
  acquired in litigation settlement                    (10,800,869)       5,605,086                        (241,200)     (5,436,983)
Preferred stock purchased                                 (512,241)         245,103                                        (267,138)
Stock options exercised                        65                             7,935                                           8,000
                                      ------------  ---------------  ---------------  ---------------  -------------- -------------
Balances, June 30, 2001               $    62,069    $  16,715,769    $  57,379,078   $  (32,585,914)   $  (328,974)  $  41,242,028
                                      ============  ===============  ===============  ===============  ============== =============
</TABLE>

See the accompanying Notes to Unaudited Consolidated Condensed Financial
Statements.

                                       4
<PAGE>

                      Archon Corporation and Subsidiaries
                Consolidated Condensed Statements of Cash Flows
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                     Nine Months Ended June 30,
                                                                                    2001                    2000
--------------------------------------------------------------                 -------------------------------------
<S>                                                                            <C>                     <C>
Cash flows from operating activities:
Cash and cash equivalents provided by (used in) operations                     $  (40,591,788)         $  7,813,778
Changes in assets and liabilities:
   Accounts receivable, net                                                           885,026               135,389
   Inventories                                                                        207,975              (160,029)
   Prepaid expenses and other                                                       1,755,905              (372,872)
   Deferred income taxes                                                           46,835,014                     0
   Other assets                                                                      (493,398)              569,971
   Accounts payable                                                                (1,117,200)           (1,539,374)
   Interest payable                                                                (3,847,329)           (7,190,713)
   Accrued and other liabilities                                                   (3,443,876)           (2,240,572)
                                                                               --------------          ------------
Net cash provided by (used in) operating activities
   before reorganization items                                                        190,329            (2,984,422)
Reorganization expenses incurred in connection with
   Chapter 11 and related legal proceedings                                                 0            (2,575,503)
                                                                               --------------          ------------

Net cash provided by (used in) operating activities                                   190,329            (5,559,925)
                                                                               --------------          ------------
Cash flows from investing activities:
   Proceeds of sale of assets                                                     207,500,000            37,126,512
   Increase in restricted cash                                                    (15,368,287)                    0
   Cost and expenses related to sale of asets                                      (3,691,166)                    0
   Capital expenditures                                                           (68,601,172)           (1,332,624)
   Increase in marketable securities                                               (7,165,401)                    0
   Development costs                                                                        0               (25,388)
                                                                               --------------          ------------

Net cash provided by investing activities                                         112,673,974            35,768,500
                                                                               --------------          ------------
Cash flows from financing activities:
   Non-recourse debt                                                               55,434,006                     0
   Obligation under lease                                                          32,500,000                     0
   Paid on long-term debt                                                        (177,381,432)          (37,742,951)
   Paid on note payable - officer                                                  (1,500,000)                    0
   Proceeds of note payable - officer                                                       0             1,500,000
   Proceeds of long-term debt                                                               0             1,000,000
   Minority capital contribution                                                      100,000                     0
   Common and preferred stock acquired                                             (5,704,120)                    0
   Stock options exercised                                                              8,000                     0
   Debt issue costs                                                                (3,194,349)                    0
                                                                               --------------          ------------

Net cash used in financing activities                                             (99,737,895)          (35,242,951)
                                                                               --------------          ------------
Increase (decrease) in cash and cash equivalents                                   13,126,408            (5,034,376)

Cash and cash equivalents, beginning of period                                      6,986,984            13,710,226
                                                                               --------------          ------------
Cash and cash equivalents, end of period                                       $   20,113,392          $  8,675,850
                                                                               ==============          ============
</TABLE>

See the accompanying Notes to Unaudited Consolidated Condensed Financial
Statements.

                                       5
<PAGE>

                      ARCHON CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                  (Unaudited)

1.  Basis of Presentation and General Information

Archon Corporation, formerly known as Santa Fe Gaming Corporation (the "Company"
or "Archon"), is a publicly traded Nevada corporation. The Company changed its
name to Archon Corporation on May 11, 2001. The Company's primary business
operations are conducted through a wholly-owned subsidiary corporation, Pioneer
Hotel Inc. ("PHI") which operates the Pioneer Hotel & Gambling Hall (the
"Pioneer") in Laughlin, Nevada under long-term lease and license arrangements.
In addition, the Company owns real estate on Las Vegas Boulevard South (the
"Strip") and at the corner of Rainbow and Lone Mountain Road, both in Las Vegas,
Nevada, and owns investment properties in Dorchester, Massachusetts and
Gaithersburg, Maryland.

Until October 2, 2000, the Company, through its wholly-owned subsidiary SFHI
INC. ("SFHI"), owned and operated the Santa Fe Hotel and Casino (the "Santa
Fe"), located in Las Vegas, Nevada. On October 2, 2000, SFHI sold substantially
all of its assets including the rights to the name "Santa Fe Hotel and Casino"
and any derivative names and marks for $205 million (the "SFHI Asset Sale"). See
Notes 5, 8 and 13

On December 29, 2000, the Company entered into a series of agreements to
exchange, pursuant to Sections 721 and 351 of the Internal Revenue Code (the
"Code"), the real and personal property, excluding gaming equipment, and
intangible assets used in the operation of the Pioneer to a third party (the
"Purchaser") and agreed to lease and license the assets for up to 20 years,
during which period the Company will operate the Pioneer (collectively, the
"Pioneer Transactions"). See Notes 4, 6, 9 and 11

In March 2001, SFHI completed the acquisition of investment properties in
Dorchester, Massachusetts and Gaithersburg, Maryland for an aggregate purchase
price of $145.0 million plus expenses of $3.2 million, consisting of $15.5
million in cash and $132.7 million of non-recourse indebtedness. The
acquisitions are intended to qualify as like-kind exchanges of real property
under Section 1031 of the Internal Revenue Code and defer a portion of the
federal corporate income tax resulting from the SFHI Asset Sale. See Notes 5, 7
and 10

2.  Summary of Significant Accounting Policies

Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Significant

                                       6
<PAGE>

estimates used by the Company include estimated useful lives for depreciable and
amortizable assets, certain other estimated liabilities and valuation reserves
and estimated cash flows in assessing the recoverability of long-lived assets.
Actual results may differ from estimates.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Costs
of maintenance and repairs of property and equipment are expensed as incurred.
Costs of major improvements are capitalized and depreciated over the estimated
useful lives of the assets or the remaining term of the leases. Gains or losses
on the disposal of property and equipment are recognized in the year of sale. In
sale/leaseback transactions of equipment, gains are deferred and recognized over
the lease term and losses are recognized in the year of sale.

In sale/leaseback transactions of real property, where the Company retains an
option to purchase the assets under lease, the Company accounts for the
transaction as a financing pursuant to Statement of Financial Accounting
Standards No. 98, Accounting for Leases ("SFAS 98").

Treasury Stock

Treasury stock is the Company's common stock that has been issued and
subsequently reacquired. The acquisition of common stock is accounted for under
the cost method, and presented as a reduction of stockholders' equity.

Earnings Per Share

The dilutive effect of the assumed exercise of stock options increased the
weighted average number of shares of common stock by 620,488 and 623,035 shares
for the three and nine months ended June 30, 2001, respectively, and 624,499 and
629,453 shares for the three and nine months ended June 30, 2000, respectively.

In December 2000, the Company announced that the Board of Directors had
authorized the use of up to $500,000 to purchase preferred stock. Additionally,
as discussed in Note 14, in connection with the settlement of litigation
initiated by the Company, the Company, among other items, acquired 3,456,942
shares of preferred stock held by Mr. Lesser, Hudson Bay Partners, L.P. ("HBP")
and their affiliates. Pursuant to the certificate of designation of the
preferred stock, shares of preferred stock acquired by the Company are retired.
See Note 14

Revenue recognition policy for rental income

Revenue from real estate rentals is recognized and accrued as earned on a pro
rata basis over the term of the lease.

                                       7
<PAGE>

Investment in Marketable Securities

Debt securities available-for-sale are stated at market value with unrealized
gains or losses, when material, reported as a component of accumulated other
comprehensive income (loss). Gains or losses on dispositions are based on the
net proceeds and the adjusted carrying amount of the securities. Debt securities
available-for-sale at June 30, 2001 includes investments in government
obligations and corporate securities.

Equity securities available-for-sale are reported at fair value with unrealized
gains or losses, when material, reported as a component of accumulated other
comprehensive income (loss). Realized gains and losses are determined on a
specific identification method. At June 30, 2001, equity securities
available-for-sale included investments in common and preferred stock.

As market value approximates cost for the above securities, the Company did not
record any other comprehensive income associated with unrealized gains or losses
on these securities during the quarters ended June 30, 2001 and 2000.

Recently Issued Accounting Standards

In January 2001, the Emerging Issues Task Force determined in Issue No. 00-22,
Accounting for "Points and Certain Other Time-Based or Volume-Based Sales
Incentive Offers, and Offers for Free Products or Services to be Delivered in
the Future," that cash rebates arising from loyalty programs should be
recognized as a reduction of revenues.

Accordingly, beginning with the quarter ended March 31, 2001, the Company has
recorded the expense of cash paid for slot play based points earned as a
reduction of revenue. Prior periods presented in the Statements of Operations
have been reclassified. These amounts are included in casino promotional
allowances.

In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 141 ("SFAS 141"), "Business Combinations."
SFAS 141 requires the purchase method of accounting for business combinations
initiated after June 30, 2001 and eliminates the pooling-of-interests method.
The Company does not believe that the adoption of SFAS 141 will have a
significant impact on its financial statements.

In July 2001, the FASB issued Statement of Financial Accounting Standards No.
142 ("SFAS 142"), "Goodwill and Other Intangible Assets", which is effective
January 1, 2002. SFAS 142 requires, among other things, the discontinuance of
goodwill amortization. In addition, the standard includes provisions for the
reclassification of certain existing recognized intangibles as goodwill,
reassessment of the useful lives of existing recognized intangibles,
reclassification of certain intangibles out of previously reported goodwill and
the identification of reporting units for purposes of assessing potential future
impairments of goodwill. The Company does not believe that the

                                       8
<PAGE>

adoption of SFAS 141 will have a significant impact on its financial statements.

Reclassification

Certain reclassifications have been made in the prior year's consolidated
financial statements to conform to the presentation used in 2001.

3.  Cash and Cash Equivalents

At June 30, 2001, the Company held cash and cash equivalents of $20.1 million
compared to $7.0 million at September 30, 2000. Approximately $3.4 million was
held by PHI and was subject to certain restrictions and limitations on its use,
including restrictions on its availability for distribution to the Company, by
the terms of the agreements entered into in the Pioneer Transactions. See Note 9

At June 30, 2001, approximately $1.6 million is held in escrow, subject to the
terms of the agreement of sale, until October 2001 pursuant to the agreements
related to the SFHI Asset Sale. See Note 5

4.  Restricted Cash

Approximately $15.4 million held by SFHI has been pledged to secure SFHI's
guaranty of PHI's lease and license obligations. The permitted investments for
the restricted cash are investment grade commercial paper, money market
accounts, government backed securities and preferred stock of the Purchaser.
Additionally, $5.0 million of the $15.4 million may be used for capital
expenditures at the Pioneer and acquisition of real property and equipment under
lease at the Pioneer. Disbursements from the $5.0 million for other purposes and
of the remaining $10.4 million may be made only with the approval of the
Purchaser. See Note 9

5.  Assets Held For Sale

On October 2, 2000, the Company and the Company's subsidiary, SFHI, consummated
the SFHI Asset Sale. The carrying value of the assets sold was approximately
$63.5 million and is included in Assets held for sale in the accompanying
Consolidated Condensed Balance Sheet at September 30, 2000. The Company received
cash consideration of $205.0 million and used approximately $182.2 million of
the net proceeds to satisfy substantially all of its indebtedness outstanding at
that date, plus accrued interest thereon, and to pay costs of the transactions.
The remaining proceeds, net of funds held in escrow, were added to working
capital. See Notes 3, 8 and 13

6.  Property and Equipment, net

In December 2000, PHI sold all of its gaming equipment for cash consideration of
$2.5 million. Simultaneously, PHI entered into an agreement to lease the
equipment for a period of four years at $59,000 per month. The lease has been
accounted for as an operating lease in the accompanying Consolidated Condensed
Balance Sheet, and accordingly, the gain on sale of approximately $800,000 has
been deferred and is being amortized over the term of the lease.

                                       9
<PAGE>

Included in Property and equipment, net in the accompanying Consolidated
Condensed Balance Sheet at June 30, 2001 are certain assets held under lease at
the Pioneer with a net carrying value of approximately $31.0 million. See Note 9


7.   Rental Property Held for Investment

The property in Dorchester, Massachusetts is located on 12 acres and includes
several buildings with approximately 425,000 square feet of commercial office
space. The property was acquired for approximately $82.4 million plus $500,000
in expenses. The Company paid $5.6 million in cash and assumed $77.3 million in
non-recourse debt associated with the property. The property is under a net
lease through 2019 with a single tenant with an investment grade credit rating.
Under the lease, the tenant is responsible for substantially all obligations
related to the property. The Company allocated approximately $15.0 million of
the purchase price to land and the balance to building and improvements. The
expense incurred to acquire the property is recorded in Other assets in the
accompanying Consolidated Condensed Balance Sheet and is being amortized over
the remaining term of the lease. See Note 10

The property in Gaithersburg, Maryland is located on 55 acres and includes one
building with approximately 342,000 square feet of commercial office space. The
property was acquired for $62.6 million, plus expenses of $2.7 million. The
Company paid $9.9 million in cash and issued $55.4 million in non-recourse first
mortgage indebtedness. The building is located on approximately 20 acres of the
property and is under lease to a single tenant with an investment grade credit
rating. Under the lease, the tenant is responsible for substantially all
obligations related to the property. The Company allocated approximately $23.0
million of the purchase price to land and the balance to building, improvements
and equipment. The expenses incurred to acquire the property is recorded in
Other assets in the accompanying Consolidated Condensed Balance Sheet and is
being amortized over the remaining term of the lease. See Note 10

8.   Debt To Be Paid Upon Sale of Assets

Debt to be paid upon sale of assets in the accompanying Consolidated Condensed
Balance Sheet as of September 30, 2000 consists of debt net of unamortized debt
discounts and debt obligations owned, but not retired by the Company, and was
repaid in full with proceeds of the SFHI Asset Sale. In addition, the Company
repaid the Note payable-officer reported in the September 30, 2000 Consolidated
Condensed Balance Sheet contained herein with proceeds from the SFHI Asset Sale.
See Note 5

                                       10
<PAGE>

9.   Obligations Under Lease

On December 29, 2000, the Company entered into the Pioneer Transactions and
agreed to lease and license the real and personal property, (excluding gaming
equipment) and intangible assets used by the Pioneer for up to 20 years, during
which period the Company will operate the Pioneer. The consideration for the
Pioneer Transactions consisted of the assumption and immediate repayment by the
Purchaser of $32.5 million of debt owed by PHI to SFHI and preferred stock of
the Purchaser having a $1.0 million liquidation preference. The preferred stock
is classified in Prepaid and other in the accompanying Consolidated Condensed
Balance Sheet. See Notes 4 and 6

In accordance with SFAS 98, the Pioneer Transactions are accounted for as a
financing transaction. As of June 30, 2001, the Company has recorded $34.0
million as an Obligation under lease in the accompanying Consolidated Condensed
Balance Sheet. Future minimum lease payments including interest thereon under
the lease are as follows by fiscal year: 2001 - $855,000; 2002 - $3.4 million;
2003 - $3.4 million; 2004 - $3.9 million; 2005 - $4.2 million and thereafter -
$101.1 million.

Archon and SFHI guaranteed the payments under the lease and license agreements
and agreed to certain covenants, including restrictions on the payment of
management fees, restriction on competing in the Laughlin, Nevada area,
limitations on the incurrence of recourse debt obligations by Archon and
restrictions on dividend payments on the Archon preferred stock. In addition,
Archon agreed to maintain minimum consolidated liquidity amounts and agreed to
forgo receipt of a management fee and to contribute capital to PHI and in
certain events to the restricted cash account in the event the ratio of fixed
charges to operating cash flow at the Pioneer falls below 1.20 to 1 and 1.00 to
1, respectively, during any twelve month period, determined on a quarterly basis
beginning March 31, 2001. The Company has an option to purchase the assets under
the lease and license agreements between the end of the third and seventh years
of the lease and license arrangements , at purchase price amounts which
approximate estimated fair market value at the relevant dates, and at the end of
the lease term for fair market value. See Notes 4, 6 and 11

10.  Non-recourse Debt Obligations

The Company assumed $77.3 million of indebtedness, consisting of approximately
$75.1 million of first mortgage indebtedness and $2.1 million of indebtedness
under Section 467 of the Code, in connection with its acquisition on March 2,
2001 of the commercial office building located in Dorchester, Massachusetts. The
building is under a net lease through June 2019, which requires the tenant to
make higher semi-annual lease payments through June 2005 and lower semi-annual
lease payments thereafter. The lease payments are applied to the outstanding
indebtedness and are intended to reduce the first mortgage note balance to $31.2
million by June 2005. The portion of higher lease payments attributable to
future periods is considered an advance of rent

                                       11
<PAGE>

under section 467 of the Code. The first mortgage indebtedness is non-recourse
and matures in June 2019 to coincide with the end of the lease term. See Note 7

The Company issued approximately $55.4 million of first mortgage debt with a
7.01% interest rate per annum in connection with its acquisition of a commercial
office building located in Gaithersburg, Maryland. The building is under lease
through April 2014. The monthly lease payments are applied against the
outstanding indebtedness. Monthly principal and interest payments amortize the
debt to approximately $22.3 million by the end of the lease in April 2014. See
Note 7

11.  Minority Interest

In connection with the Pioneer Transactions, PHI formed Pioneer LLC, a limited
liability company ("PLLC"), to which PHI transferred 100% of its real and
personal property (excluding gaming equipment) and intangible assets, valued at
approximately $1.0 million, net of $32.5 million of debt secured by the assets
of Pioneer for a 100% interest in PLLC. Subsequently, PLLC admitted LICO, a
Nevada corporation, wholly owned by Mr. Paul W. Lowden, as a 10% minority
interest member, in exchange for a capital contribution of $100,000 (the
"Minority Member"). PLLC subsequently transferred the assets contributed by PHI
to the Purchaser in exchange for preferred stock of the Purchaser with a
liquidation preference of $1.0 million and the assumption and immediate
repayment by the Purchaser of $32.5 million of indebtedness owed to SFHI. The
investment by the Minority Member is reflected as Minority interest in the
Consolidated Condensed Balance Sheet contained herein.

12.  Contingency

The Company is the defendant in a pending action titled Local Joint Executive
Board et al. v. Santa Fe Gaming Corporation et al., No. CV-S-01-0233-RLH. The
plaintiffs instituted the action on or about February 28, 2001 in the United
States District Court for the District of Nevada, alleging that the Company
violated the Worker Adjustment Retraining and Notification Act by improperly
providing notification of the closing of the Santa Fe Hotel and Casino. The
plaintiffs seek damages in the amount provided for by the statute. The
plaintiffs have filed a motion for class certification, which remains pending.

The Company intends to defend the lawsuit vigorously and does not believe that
future operating results will be materially adversely affected by the final
resolution of the lawsuit.

13.  Gain on Sale of Assets

The Company recorded a pre-tax gain on the SFHI Asset Sale of approximately
$137.2 million in the quarter ended December 31, 2000. In connection with the
sale, the Company, Paul W. Lowden, majority stockholder of the Company, and
members of the family of Paul W. Lowden entered into a three year non-compete
agreement, in which they agreed not to compete through October 2, 2003 within a
three mile radius of the Santa Fe. The Company and SFHI granted to the buyer a
three-year option to purchase for $5.0 million the approximately 20-acre parcel
of undeveloped real property

                                       12
<PAGE>

located at the corner of Rainbow and Lone Mountain Road adjacent to the Santa
Fe. See Notes 5 and 8

In November 1999, Sahara Las Vegas Corp., an indirect wholly-owned subsidiary of
the Company ("SLVC"), sold real property located in Henderson, Nevada it had
acquired in March 1999 for $37.2 million. The Company recorded a pre-tax gain on
the sale of approximately $12.1 million in the quarter ended December 31, 1999.
In connection with the sale, the Company, SLVC, SFHI, Paul W. Lowden and members
of the family of Paul W. Lowden entered into non-compete agreements, in which
they agreed not to compete through November 15, 2014 within a five-mile radius
of two of the buyer's casinos located in the Henderson, Nevada area.

14.  Litigation Settlement, net

On March 20, 2001 the Company agreed to settle the lawsuit titled Sahara Gaming
Corporation, et al. v. Francis L. Miller, et al., CV-S-94-01109-LRL, filed by
the Company alleging, among other things, violations of the Securities Exchange
Act of 1934. The terms of the settlement required that (i) the defendants'
insurers pay the Company approximately $4.9 million and the Company dismiss with
prejudice all its claims against all defendants, (ii) the Company pay Francis
Miller approximately $900,000 and Francis Miller dismiss with prejudice all his
counterclaims and third-party claims against the Company, and (iii) plaintiffs
and defendants cause the lawsuit and counterclaims to be dismissed with
prejudice.

The Company has reflected the net proceeds received in the settlement, net of
legal expenses incurred, as gain from litigation settlement in the accompanying
Consolidated Condensed Statement of Operations. All payments were made and the
legal proceedings dismissed in April 2001.

On April 20, 2001, the Company entered into a settlement agreement with David H.
Lesser, Hudson Bay Partners, L.P. and certain of their affiliates. In accordance
with the settlement agreement, among other things, (i) the Company and its
subsidiaries agreed to dismiss with prejudice pended litigation by the Company
against HBP and Mr. Lesser styled Santa Fe Gaming Corp. v. Hudson Bay Partners,
L. P., et al., CV-5-99-00298-KJD (LRL) and Santa Fe Gaming Corporation v. Hudson
Bay Partners L.P. and David H. Lesser., CV-5-99-00416 LDG (LRL), and Mr. Lesser
agreed to dismiss with prejudice his application for reimbursement of
approximately $1.1 million in attorneys' fees in connection with the PHI and PFC
bankruptcies, pursuant to legal proceedings styled In re Pioneer Finance Corp.,
Case No. BK-S-99-11404-LBR and In re Pioneer Hotel Inc., Case No. BK-S-99-12854-
LBR; (ii) the Company received the 3,456,942 shares of the Company's preferred
stock and 53,600 shares of common stock held by the Hudson Bay affiliates; (iii)
Mr. Lesser agreed to forfeit options to acquire 12,500 shares of the Company's
common stock, (iv) Mr. Lesser forfeited his claim to director fees, (v) Mr.
Lesser resigned from the Company's Board of Directors and withdrew his name as
the nominee for election by preferred stockholders as a special director at the

                                       13
<PAGE>

Company's annual meeting held on May 11, 2001 and (vi) the Company paid Mr.
Lesser $5.75 million.

The Company allocated the payment for financial reporting purposes to the
preferred and common shares, based upon quoted market prices, with the remaining
amount being recorded as litigation settlement, net in the accompanying
Consolidated Condensed Statements of Operations.

15.  Supplemental Statement of Cash Flows Information

Supplemental statement of cash flows information for the nine month periods
ended June 30, 2001 and 2000 is presented below:

<TABLE>
<CAPTION>
                                                               2001          2000
                                                             ---------    ----------
                                                              (Amount in Thousands)
<S>                                                          <C>          <C>
     Operating activities
          Cash paid during the period for interest           $   9,426    $   19,855
                                                             =========    ==========
          Cash paid during the period for income taxes:      $     198    $        0
                                                             =========    ==========
     Investing and financing activities:
          Non-recourse debt assumed with the acquisition
          of investment properties                           $  77,255    $        0

                                                             =========    ==========
          Long-term debt incurred in connection with
          the acquisition of machinery and equipment         $       0    $      391
                                                             =========    ==========

          Increase in Non-recourse debt                      $   2,193    $        0
                                                             =========    ==========
          Increase in obligations under lease                $     490    $        0
                                                             =========    ==========
</TABLE>

16.  Segment Information

The Company's primary operations are in the hotel/casino industry and subsequent
to October 2, 2000, are conducted at the Pioneer in Laughlin, Nevada. During
fiscal year 2000, the Company also conducted operations at the Santa Fe in Las
Vegas, Nevada.

                                       14
<PAGE>

<TABLE>
<CAPTION>
                                                  Three Months Ended                 Nine Months Ended
                                           ----------------------------------  -------------------------------
                                                       June 30,                           June 30,
                                           ----------------------------------  -------------------------------
                                                 2001              2000             2001            2000
                                           ------------------  --------------  ---------------  --------------
                                                (Dollars in thousands)             (Dollars in thousands)
Pioneer Hotel
-----------------------------------------
<S>                                        <C>                 <C>             <C>              <C>
Operating revenues                         $            9,987  $       11,410  $        31,308  $       34,600
                                           ==================  ==============  ===============  ==============
Operating income                           $              115  $          253  $         2,116  $        2,178
                                           ==================  ==============  ===============  ==============
Interest expense                           $            1,159  $        1,816  $         3,207  $        5,141
                                           ==================  ==============  ===============  ==============
Depreciation and amortization              $              478  $          606  $         1,591  $        1,889
                                           ==================  ==============  ===============  ==============
Rents                                      $              384  $          186  $           954  $          554
                                           ==================  ==============  ===============  ==============
EBITDA (1)                                 $            1,227  $        2,466  $         5,352  $        7,948
                                           ==================  ==============  ===============  ==============
Capital expenditures                       $              133  $          159  $           463  $          985
                                           ==================  ==============  ===============  ==============
Identifiable assets (2)                                                        $        37,563  $       40,594
                                                                               ===============  ==============
</TABLE>

During the fiscal 2001, the Comoany acquired nvestment properties in Dorchester,
Massachusetts and Gaitherburg, Maryland. The payments recieved under lease
agreements wiht respect to both properties are applied to dept service payments
on non-recourse indeptness secured by the respective properties.

<TABLE>
<CAPTION>
                                                  Three Months Ended                 Nine Months Ended
                                           ----------------------------------  -------------------------------
                                                       June 30,                           June 30,
                                           ----------------------------------  -------------------------------
                                                 2001              2000             2001            2000
                                           ------------------  --------------  ---------------  --------------
                                                (Dollars in thousands)             (Dollars in thousands)
Investment Properties
<S>                                        <C>                 <C>             <C>              <C>
Revenues                                   $            3,768  $            0  $         4,137  $            0
                                           ==================  ==============  ===============  ==============
Operating income                           $            3,037  $            0  $         3,129  $            0
                                           ==================  ==============  ===============  ==============
Interest expense                           $            3,894  $            0  $         4,207  $            0
                                           ==================  ==============  ===============  ==============
Depreciation and amortization              $              732  $            0  $         1,008  $            0
                                           ==================  ==============  ===============  ==============
EBITDA (1)                                 $            3,769  $            0  $         4,137  $            0
                                           ==================  ==============  ===============  ==============
Capital expenditures                       $                0  $            0  $       145,019  $            0
                                           ==================  ==============  ===============  ==============
Identifiable assets (2)                                                        $       147,209  $            0
                                                                               ===============  ==============
</TABLE>


(1) EBITDA represents earnings before interest, taxes, depreciation and
amortiation, rents, obligations due under lease, corporate expenses,
reorganization expenses and other nonrecurring charges. The Company's definition
of EBITDA may not be the same as that of similarly captioned measures used by
other companies.

(2) Identifiable assets represents total assets less
elimination for intercompany items.

                                       15
<PAGE>

                      ARCHON CORPORATION AND SUBSIDIARIES

           Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
               -------------------------------------------------
                      CONDITION AND RESULTS OF OPERATIONS
                      -----------------------------------

General
-------

Results of Operations - Nine Months Ended June 30, 2001 and 2000
----------------------------------------------------------------

Consolidated

Net Operating Revenues. Consolidated net operating revenues for the nine months
ended June 30, 2001 were $37.6 million, a $62.1 million, or 62.2%, decrease from
$99.7 million for the same period in fiscal 2000. The nine months ended June 30,
2000 included net revenues of approximately $64.4 million at the Santa Fe Hotel
and Casino (the "Santa Fe") which was sold on October 2, 2000. Revenues
decreased by $3.3 million at the Pioneer Hotel and Gambling Hall (the
"Pioneer"). The nine months ended June 30, 2001 includes rental income of $4.1
million from investment properties, which were purchased in the current fiscal
year.

Operating Expenses. Total operating expenses decreased $54.6 million, or 62.0%,
to $33.3 million for the nine months ended June 30, 2001 from $87.9 million in
the nine months ended June 30, 2000. The nine months ended June 30, 2000
included operating expenses of approximately $54.1 million at the Santa Fe.
Operating expenses decreased by $3.2 million, or 10.0%, at the Pioneer.
Operating expenses of Sahara Las Vegas Corp. ("SLVC") decreased by $700,000,
attributable to loan issue costs being fully amortized by December 1999.
Investment properties had $1.0 million in operating expenses. In the prior year
period the Company recorded restructuring expenses of $2.6 million.

Operating Income. Consolidated operating income for the nine months ended June
30, 2001 was $4.3 million, a $7.5 million, or 63.7%, decrease from operating
income of $11.8 million for the same period in fiscal 2000. The nine months
ended June 30, 2000 included operating income of approximately $10.3 million at
the Santa Fe. Operating income decreased by $100,000 at the Pioneer and
increased $500,000 at SLVC. Operating income from investment properties was $3.1
million in the current year period.

Interest Expense. Consolidated interest expense for the nine months ended June
30, 2001 was $6.9 million, a $10.0 million decrease compared to $16.9 million in
the nine months ended June 30, 2000, due to the repayment of substantially all
of the Company's debt in October 2000 offset by $2.2 million related to
obligations under lease at the Pioneer and interest expense from investment
properties of $4.2 million.

Gain on Sale of Assets. The Company recorded a $137.2 million gain on the sale
of substantially all of the assets of SFHI in the quarter ended December 31,
2000. The

                                       16
<PAGE>

Company recorded a $12.1 million gain on the sale of real property in Henderson,
Nevada and related agreements in the quarter ended December 31, 1999.

Litigation Settlement, net. The Company recorded an approximate $3.7 million net
gain from a litigation settlement in the period ended March 31, 2001 and
allocated $319,000 to expense of litigation settlement, net in the period ended
June 30, 2001.

Income Before Income Tax and Extraordinary Item. Consolidated income before
income tax and extraordinary item for the nine months ended June 30, 2001 was
$138.0 million, a $131.0 million increase compared to $7.0 million in the nine
months ended June 30, 2000, principally due to the gain on sale of the Santa Fe
assets.

Federal Income Tax. The Company recorded a federal income tax provision of $46.9
million in the current nine month period. The Company did not record an income
tax provision in the prior year nine month period. In the nine month period
ended June 30, 2000, the Company's annualized effective rate was 0%.

Extraordinary Item. During the nine months ended June 30, 2000, SLVC purchased
$16.7 million principal amount of outstanding debt of Pioneer Finance Corp, plus
accrued and unpaid interest, for approximately $17.1 million, resulting in a
$2.8 million gain on the extinguishment of debt.

Preferred Share Dividends. Dividends of approximately $1.6 million and $1.7
million for the nine months ended June 30, 2001 and 2000, respectively, accrued
on the preferred stock. The accrued dividend rate increased to 13.5% effective
April 1, 2001 from 13.0% beginning on October 1, 2000 compared to a 12.0%
dividend rate beginning on October 1, 1999 and increasing to 12.5% effective
April 1, 2000. Dividends for the nine months ended June 30, 2001 are reported
net of the 3,612,670 shares of preferred stock acquired and retired by the
Company.

Net Income. Consolidated net income applicable to common shares was $89.5
million, or $14.42 per common share, in the 2001 period compared to $8.1
million, or $1.31 per common share, in the prior year period.

Pioneer

Net Operating Revenues. Revenues at the Pioneer decreased $3.3 million, or 9.5%,
to $31.3 million in the nine months ended June 30, 2001 from $34.6 million in
the nine months ended June 30, 2000. The decline in revenues at the Pioneer is
consistent with a continuing general decline in the Laughlin market, which
management believes is due to expansion of Native American gaming facilities in
Southern California.

Casino revenues decreased $2.1 million, or 7.7%, to $25.9 million in the nine
months ended June 30, 2001 from $28.0 million in the nine months ended June 30,
2000. Slot and video poker revenues decreased $1.8 million, or 7.3%, to $22.7
million in the nine months ended June 30, 2001 from $24.5 million in the nine
months ended June 30,

                                       17
<PAGE>

2000. Other gaming revenues, including table games, decreased $400,000. Casino
promotional allowances were unchanged at $5.9 million in the nine months ended
June 30, 2001 and 2000.

Hotel revenues were relatively unchanged at $1.9 million for the nine months
ended June 30, 2001 compared to $2.0 million for the nine months ended June 30,
2000. Food and beverage revenues decreased $100,000, or 1.2%, to $6.5 million in
the nine months ended June 30, 2001 from $6.6 million in the nine months ended
June 30, 2000. Other revenues decreased $1.0 million, or 24.9%, to $2.9 million
in the nine months ended June 30, 2001 from $3.9 million in the nine months
ended June 30, 2000 due to decreased sales in retail outlets caused by increased
competition from other retail establishments.

Operating Expenses. Operating expenses decreased $3.2 million, or 10.0%, to
$29.2 million in the nine months ended June 30, 2001 from $32.4 million in the
nine months ended June 30, 2000. Operating expenses as a percentage of revenue
decreased to 93.2% in the nine months ended June 30, 2001 from 93.7% in the nine
months ended June 30, 2000 primarily as a result of the fact that no
reorganization expenses were incurred in the 2001 period. The June 2000 period
included reorganization expenses of $2.6 million.

Casino expenses increased $200,000, or 1.8%, to $13.1 million in the nine months
ended June 30, 2001 from $12.9 million in the nine months ended June 30, 2000,
largely due to an increase in labor costs. Casino expenses as a percentage of
casino revenues increased to 51.0% in the nine months ended June 30, 2001 from
46.2% in the nine months ended June 30, 2000. Hotel expenses were unchanged at
$600,000 in the nine months ended June 30, 2001 and 2000. Food and beverage
expenses decreased $200,000, or 4.4%, to $3.4 million in the nine months ended
June 30, 2001 compared to $3.6 million in the nine months ended June 30, 2000,
primarily due to a decrease in beverage cost of sales. Food and beverage
expenses as a percentage of food and beverage revenues decreased to 52.6% in the
nine months ended June 30, 2001 from 54.3% in the nine months ended June 30,
2000. Other expenses decreased $900,000, or 26.1%, to $2.7 million for the nine
months ended June 30, 2001 compared to $3.6 million for the nine months ended
June 30, 2000 related to the decrease in retail sales. Other expenses as a
percentage of other revenues decreased to 91.8% in the nine months ended June
30, 2001 from 93.3% in the nine months ended June 30, 2000.

Selling, general and administrative expenses were relatively unchanged at $4.1
million in the nine months ended June 30, 2001 compared to $4.2 million in the
nine months ended June 30, 2000. Selling, general and administrative expenses as
a percentage of revenues increased to 13.2% in the nine months ended June 30,
2001 from 12.1% in the nine months ended June 30, 2000. Utilities and property
expenses increased $600,000, or 19.9% to $3.6 million in the nine months
ended June 30, 2001 from $3.0 million in the nine months ended June 30, 2000,
primarily due to rent expense increases of $400,000 associated with the lease of
gaming equipment. Utilities and property expenses as a percentage of revenues
increased to 11.5% in the nine months
                                       18
<PAGE>

ended June 30, 2001 from 8.6% in the nine months ended June 30, 2000.
Depreciation and amortization expenses decreased $300,000, or 15.8%, to $1.6
million in the nine months ended June 30, 2001 from $1.9 million in the nine
months ended June 30, 2000, due to the sale of gaming equipment. No
reorganization expenses were incurred in the 2001 period. During the nine months
ended June 30, 2000, PHI incurred approximately $2.6 million in reorganization
expenses related to the restructuring of the PFC's 13 1/2% Notes.

Results of Operations - Three Months Ended June 30, 2001 and 2000
-----------------------------------------------------------------

Consolidated

Net Operating Revenues. Consolidated net operating revenues for the three months
ended June 30, 2001 were $14.2 million, a $18.5 million, or 56.6%, decrease from
$32.7 million for the same period in fiscal 2000. The three months ended June
30, 2000 included net revenues of approximately $21.1 million at the Santa Fe.
Revenues decreased by $1.4 million at the Pioneer. Operating revenues from
investment properties was $3.8 million.

Operating Expenses. Total operating expenses decreased $17.4 million, or 60.2%,
to $11.4 million for the quarter ended June 30, 2001 from $28.8 million in the
quarter ended June 30, 2000. The three months ended June 30, 2000 included
operating expenses of approximately $17.9 million at the Santa Fe. Total
operating expenses as a percentage of revenue decreased to 80.6% in the quarter
ended June 30, 2001 from 88.0% in the quarter ended June 30, 2000. Operating
expenses decreased by $1.3 million, or 11.5%, at the Pioneer. Investment
properties had $700,000 in operating expenses.

Operating Income. Consolidated operating income for the quarter ended June 30,
2001 was $2.8 million, a $1.2 million, or 29.9%, decrease from operating income
of $3.9 million for the same period in fiscal 2000. The three months ended June
30, 2000 included operating income of approximately $3.2 million at the Santa
Fe. Operating income decreased by $100,000 at the Pioneer in the 2001 quarter.
Operating income from investment properties was $3.0 million in the current year
period.

Interest Expense. Consolidated interest expense for the quarter ended June 30,
2001 was $5.0 million, a $400,000 decrease compared to $5.4 million in the
quarter ended June 30, 2000, due to the repayment of substantially all of the
Company's debt in October 2000 offset by $1.1 million related to obligations
under lease at the Pioneer and interest expense from investment properties of
$3.9 million.

Income (Loss) Before Income Tax and Extraordinary Item. Consolidated loss before
income tax and extraordinary item for the quarter ended June 30, 2001 was $2.6
million, a $1.1 million increase compared to $1.5 million in the fiscal 2000
quarter.

                                       19
<PAGE>

Federal Income Tax. The Company recorded a federal income tax benefit of
$900,000 in the current quarter. The Company did not record an income tax
provision in the prior year quarter. In the quarter ended June 30, 2000, the
Company's annualized effective rate was 0%.

Preferred Share Dividends. Dividends of approximately $400,000 and $600,000 for
each of the quarters ended June 30, 2001 and 2000, respectively, accrued on the
preferred stock. The accrued dividend rate increased to 13.5% in the current
period compared to 12.5% in the prior year. Dividends for the current quarter
are reported net of 3,627,800 shares of preferred stock acquired and retired
by the Company.

Net Loss. Consolidated net loss applicable to common shares was $2.1 million, or
$.34 per common share, in the 2001 period compared to $2.1 million, or $.33 per
common share, in the prior year period.

Pioneer

Net Operating Revenues. Revenues at the Pioneer decreased $1.4 million, or
12.5%, to $10.0 million in the quarter ended June 30, 2001 from $11.4 million in
the quarter ended June 30, 2000. The decline in revenues at the Pioneer is
consistent with a continuing general decline in the Laughlin market, which
management believes is due to expansion of Native American gaming facilities in
Southern California.

Casino revenues decreased $1.0 million, or 10.4%, to $8.0 million in the quarter
ended June 30, 2001 from $9.0 million in the quarter ended June 30, 2000. Slot
and video poker revenues decreased $700,000, or 8.3%, to $7.1 million in the
quarter ended June 30, 2001 from $7.8 million in the quarter ended June 30,
2000. Other gaming revenues, including table games, decreased $300,000. Casino
promotional allowances were unchanged at $1.8 million.

Hotel revenues were relatively unchanged at $700,000 for the quarter ended June
30, 2001 compared to $800,000 for the quarter ended June 30, 2000. Food and
beverage revenues decreased $100,000, or 3.2%, to $2.1 million in the quarter
ended June 30, 2001 from $2.2 million in the quarter ended June 30, 2000. Other
revenues decreased $400,000, or 31.5%, to $900,000 in the quarter ended June 30,
2001 from $1.3 million in the quarter ended June 30, 2000 due to decreased sales
in retail outlets caused by increased competition from other retail
establishments.

Operating Expenses. Operating expenses decreased $1.3 million, or 11.5%, to $9.9
million in the quarter ended June 30, 2001 from $11.2 million in the quarter
ended June 30, 2000. Operating expenses as a percentage of revenue increased to
98.9% in the quarter ended June 30, 2001 from 97.8% in the quarter ended June
30, 2000, primarily as a result of the fact that no reorganization expenses were
incurred in the 2001 quarter. The June 2000 quarter included reorganization
expenses of $1.2 million.

                                       20
<PAGE>

Casino expenses increased $100,000, or 1.4%, to $4.3 million in the three months
ended June 30, 2001 from $4.2 million in the three months ended June 30, 2000.
Casino expenses as a percentage of casino revenues increased to 53.1% in the
quarter ended June 30, 2001 from 46.9% in the quarter ended June 30, 2000. Hotel
expenses were unchanged at $200,000 in the quarters ended June 30, 2001 and
2000. Food and beverage expenses were unchanged at $1.3 million in the quarters
ended June 30, 2001 and 2000. Food and beverage expenses as a percentage of food
and beverage revenues increased to 60.5% in the quarter ended June 30, 2001 from
59.9% in the quarter ended June 30, 2000. Other expenses decreased $400,000, or
34.5%, to $800,000 for the quarter June 30, 2001 compared to $1.2 million for
the quarter ended June 30, 2000 related to the decrease in retail sales. Other
expenses as a percentage of other revenues decreased to 88.2% in the quarter
ended June 30, 2001 from 92.3% in the quarter ended June 30, 2000.

Selling, general and administrative expenses increased $100,000, or 6.8%, to
$1.5 million in the quarter ended June 30, 2001 compared to $1.4 million in the
quarter ended June 30, 2000. Selling, general and administrative expenses as a
percentage of revenues increased to 14.8% in the quarter ended June 30, 2001
from 12.1% in the quarter ended June 30, 2000. Utilities and property expenses
increased $300,000, or 31.6%, to $1.3 million in the quarter ended June 30, 2001
from $1.0 million in the quarter ended June 30, 2000, primarily due to increased
rent expense associated with the lease of gaming equipment. Utilities and
property expenses as a percentage of revenues increased to 13.3% in the quarter
ended June 30, 2001 from 8.9% in the quarter ended June 30, 2000. Depreciation
and amortization expenses decreased $100,000, or 21.1%, to $500,000 in the
quarter ended June 30, 2001 from $600,000 in the quarter ended June 30, 2000,
due to the sale of gaming equipment. No reorganization expenses were incurred in
the 2001 quarter. During the quarter ended June 30, 2000, PHI incurred
approximately $1.2 million in reorganization expenses related to the
restructuring of the PFC's 13 1/2% Notes.

Liquidity and Capital Resources; Trends and Factors Relevant to Future
Operations

Liquidity. As of June 30, 2001, the Company held cash and cash equivalents of
$20.1 million compared to $7.0 million at September 30, 2000. In addition, the
Company had $7.7 million in investment in marketable securities at June 30,
2001.

Management believes that the Company will have sufficient available cash and
cash resources to meet its cash requirements through the twelve month period
ending June 30, 2002.

Cash Flow from Operating Activities. The Company's cash provided by operations
was $200,000 for the nine months ended June 30, 2001 as compared to $5.6 million
used in operations for the same period in the prior year.

                                       21
<PAGE>

Cash Flow from Investing Activities. Cash provided by investing activities was
$112.7 million during the nine months ended June 30, 2001, compared to $35.8
million during the nine months ended June 30, 2000. In October 2000, the Company
completed the SFHI Asset Sale for total consideration of $205.0 million which
was offset in part by $67.7 million used in the acquisition of investment
properties in March 2001. Additionally, in December 2000, in connection with the
Pioneer Transactions, $15.0 million of cash was placed in restricted use
accounts. In the first nine months of fiscal 2001, the Company incurred $800,000
of capital expenditures, excluding the purchase of investment properties,
comprised of improvements at the Pioneer and the build-out of a new corporate
office, compared to $1.3 million in fiscal 2000. In November 1999, the Company
sold real property in Henderson, Nevada and entered into related agreements for
total consideration of $37.2 million.

Cash Used in Financing Activities. Cash used in financing activities was $99.7
million in the nine months ended June 30, 2001 compared to $35.2 million during
the same period in 2000. In October 2000, the Company used proceeds from the
SFHI Asset Sale to retire substantially all debt outstanding in October 2000.
The Pioneer Transactions resulted in net cash of $32.5 million. In March 2001,
the Company issued $55.4 million of non-recourse first mortgage indebtedness in
connection with the acquisition of an investment property. The Company incurred
an aggregate $3.2 million of costs in conjunction with issuing the $55.4 million
of non-recourse debt and assuming $77.3 million non-recourse debt in connection
with the acquisition of another investment property. In fiscal 2000, the Company
used proceeds from the sale of the Henderson, Nevada property and related
agreements to reduce the outstanding principal amount of indebtedness.

The Company's primary source of cash is from Pioneer operations and from
interest income on available cash and cash equivalents and investments in
marketable securities. The agreements relating to the Pioneer Transactions
restrict the ability of PHI to make distribution to the Company and, under
certain circumstances, to pay management fees to the Company. Cash from PHI is
not currently, and is not expected in the foreseeable future to be, available
for distribution to the Company.

Earnings before interest, taxes, depreciation and amortization, rents,
obligations due under lease, corporate expenses, reorganization expenses and
other non-recurring charges ("EBITDA") decreased $17.0 million, or 62.5%, to
$10.2 million in the nine months ended June 30, 2001 from $27.2 million in the
nine months ended June 30, 2000. The Company's earnings for the nine months
ended June 30, 2001 were from the Pioneer operations and investment properties
while in fiscal 2000 earnings were from the Santa Fe and the Pioneer operations.
In the current period, EBITDA from investment properties was $3.8 million.
Rental income from the investment properties is committed to reducing non-
recourse liabilities. Under the leases, the tenants are responsible for
substantially all expenses related to the property. Excluding operations at the
Pioneer, the Company's primary use of cash is for selling, general and
administrative expenses of the Company and its subsidiaries including lease
costs relating to new corporate offices and costs associated with the evaluation
of development opportunities. Additionally, the Company will be required to make
capital contributions to PHI or cash
                                       22
<PAGE>

payments to the restricted cash accounts and to forgo all or a portion of its
management fee from PHI if the ratio of fixed charges to operating cash flow at
the Pioneer is not maintained at 1:00 to 1 and 1:20 to 1, respectively. The
ratio for the 12 month period ended June 30, 2001 was 1.01 to 1, and as a
result, PHI is prohibited from paying management fees to the Company. See
"Pioneer Transactions". SLVC, an indirect wholly-owned subsidiary of the
Company, owns an approximately 27-acre parcel of real property on Las Vegas
Boulevard South which is subject to a lease with a water theme park operator.
SLVC generates minimal cash from the lease agreement after payment of property
costs. SLVC's principal use of cash is to pay real property taxes. Additionally,
in connection with the acquisition of the property, SLVC assumed an operating
lease under which the water theme park operates. The lease may be terminated at
any time by SLVC; however, if it is terminated prior to 2004, SLVC has agreed to
pay a loan owed by the tenant to the prior owner which amortizes over the
remaining life of the lease. The loan owed by the tenant had an outstanding
balance of $3.0 million as of June 30, 2001.

Results of operations at the Pioneer for the three and nine months ended June
30, 2001 generated EBITDA, as defined, of $1.2 million and $5.4 million,
compared to $2.5 million and $7.9 million, respectively, of EBITDA in the same
period in 2000, respectively. The EBITDA margin decreased to 17.1% in fiscal
2001 from 23.0% in fiscal 2000 in the nine month periods, and to 12.3% in fiscal
2001 from 21.6% in fiscal 2000 in the three month periods. PHI's principal uses
of cash are for lease payments, the management fee payable to the Company and
capital expenditures to maintain the facility. As a result of the completion of
the Pioneer Transactions on December 30, 2000, PHI's lease payments have
increased. In addition to the ground lease, monthly lease payments for gaming
equipment are $59,000 per month and monthly lease and license payments related
to the real and intangible assets are $285,000 for the first three years and
will increase thereafter. Capital expenditures to maintain the facility in
fiscal 2001 are expected to be approximately $1.0 million.

EBITDA should not be construed as a substitute for operating income or a better
indicator of liquidity than cash flow from operating, investing and financing
activities, which are determined in accordance with generally accepted
accounting principles ("GAAP"), and it is included herein to provide additional
information with respect to the ability of the Company to meet its future debt
service, capital expenditures and working capital requirements. Although EBITDA
is not necessarily a measure of the Company's ability to fund its cash needs,
management believes that EBITDA is a useful tool for measuring the ability of
the Company to service its debt. The Company's definition of EBITDA may not be
the same as that of similarly captioned measures used by other companies.

As a result of the SFHI Asset Sale, the Company incurred an estimated $165.0
million tax gain for federal income tax purposes for fiscal 2001. As of
September 30, 2000, the Company had an estimated net operating loss carry
forward for regular tax purpose of approximately $67.8 million, all of which can
be utilized in fiscal 2001. In March 2001, SFHI acquired investment properties
in Dorchester, Massachusetts and Gaithersburg,

                                       23
<PAGE>

Maryland. The acquisitions are intended to qualify as like-kind exchanges of
real property under Section 1031 of the Internal Revenue Code and to defer
approximately $90.0 million of the gain for federal corporate income tax
purposes resulting from the SFHI Asset Sale. The Company expects to make an
alternative minimum tax payment in fiscal 2001 from available cash resources.

Pioneer Transactions
--------------------

On December 29, 2000, the Company entered into a series of agreements to
transfer, pursuant to Sections 721 and 351 of the Code, the real and personal
property, excluding gaming equipment, and intangible assets used in the
operation of the Pioneer to a third party (the "Purchaser") and agreed to lease
and license the assets for up to 20 years, during which period the Company will
operate the Pioneer (collectively, the "Pioneer Transactions"). The
consideration for the Pioneer Transactions consisted of the assumption and
immediate repayment by the Purchaser of $32.5 million of debt owed by PHI to
SFHI and preferred stock of the Purchaser having a $1.0 million liquidation
preference.

Archon and SFHI guaranteed the payments under the lease and license agreements
and agreed to certain covenants, including restrictions on the payment of
management fees, restriction on competing in the Laughlin, Nevada area and
restrictions on dividend payments on Archon preferred stock. In addition, Archon
agreed to maintain minimum consolidated liquidity amounts. Archon has agreed to
forgo all or a portion of the management fees payable by PHI if the ratio of
operating cash flow to fixed charges falls below 1.20 to 1.0. The ratio
of operating cash flow to fixed charges at June 30, 2001 was 1.01 to 1.0.
Further, Archon has agreed to contribute capital to PHI and in certain events to
deposit cash to the restricted cash accounts in the event the ratio of fixed
charges to operating cash flow at the Pioneer falls below 1.00 to 1 during any
rolling four quarter period, calculated on a quarterly basis beginning March 31,
2001. The agreements related to the Pioneer Transactions provide an option for
the Company to purchase the assets under the lease and license agreements to PHI
between the end of the third and seventh years, at purchase price amounts which
approximate estimated fair market value at the relevant dates, and at the end of
the lease term for fair market value.

Preferred Stock
---------------

The Company's preferred stock provides that dividends accrue on a semi-annual
basis, to the extent not declared. Prior to fiscal 1997, the Company satisfied
the semi-annual dividend payments on its preferred stock through the issuance of
paid in kind dividends. The Company has accrued the semi-annual preferred stock
dividends since October 1, 1996. The dividend rate per annum was equal to 8% of
$2.14 for each share of preferred stock until September 30, 1998, at which date
the dividend rate increased to 11% of $2.14 for each share of preferred stock
and the dividend continues to increase by an additional 50 basis points on each
succeeding semi-annual dividend payment date up to a maximum of 16% per annum.
In April 2001, the dividend rate increased to

                                       24
<PAGE>

13.5% of $2.14 for each share per annum. The accrued stock dividends have been
recorded as an increase to the preferred stock account. As of June 30, 2001, the
aggregate liquidation preference of the preferred stock was $16.7 million, or
$3.20 per share, net of 3,627,800 shares acquired by the Company and retired.

In December 2000, the Board of Directors of the Company authorized the purchase
from time to time by the Company of preferred stock, for total consideration of
up to $500,000. As of June 30, 2001, the Company has purchased 170,858 shares of
preferred stock for $267,138. In addition, the Company acquired approximately
3.5 million shares of preferred stock pursuant to the settlement agreement. See
Part II, Item I, "Legal Proceedings."

Pursuant to the Certificate of Designations of Preferred Stock, dividends are
payable only when, as and if declared by the Board of Directors and the
liquidation preference is payable only upon a liquidation, dissolution or
winding up of the Company. Because dividends in an amount equal to dividend
payments for one dividend period have accrued and remain unpaid for at least two
years, the preferred stockholders, voting as a separate class, are entitled to
elect two directors. The agreements relating to the Pioneer Transactions
restrict the payment of dividends on the preferred stock.

Recently Issued Accounting Standards
------------------------------------

In January 2001, the Emerging Issues Task Force determined in Issue No. 00-22,
Accounting for "Points and Certain Other Time-Based or Volume-Based Sales
Incentive Offers, and Offers for Free Products or Services to be Delivered in
the Future," that cash rebates arising from loyalty programs should be
recognized as a reduction of revenues.

Accordingly, beginning with the quarter ended March 31, 2001, the Company has
recorded the expense of cash paid for slot play based points earned as a
reduction of revenue. Prior periods presented in the Statements of Operations
have been reclassified. These amounts are included in casino promotional
allowances.

In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 141 ("SFAS 141"), "Business Combinations."
SFAS 141 requires the purchase method of accounting for business combinations
initiated after June 30, 2001 and eliminates the pooling-of-interests method.
The Company does not believe that the adoption of SFAS 141 will have a
significant impact on its financial statements.

In July 2001, the FASB issued Statement of Financial Accounting Standards No.
142 ("SFAS 142"), "Goodwill and Other Intangible Assets", which is effective
January 1, 2002. SFAS 142 requires, among other things, the discontinuance of
goodwill amortization. In addition, the standard includes provisions for the
reclassification of certain existing recognized intangibles as goodwill,
reassessment of the useful lives of

                                       25
<PAGE>

existing recognized intangibles, reclassification of certain intangibles out of
previously reported goodwill and the identification of reporting units for
purposes of assessing potential future impairments of goodwill. The Company does
not believe that the adoption of SFAS 141 will have a significant impact on its
financial statements.

Effects of Inflation
--------------------

The Company has been generally successful in recovering costs associated with
inflation through price adjustments in its hotels. Any such future increases in
costs associated with casino operations and maintenance of properties may not be
completely recovered by the Company.

Private Securities Litigation Reform Act
----------------------------------------

Certain statements in this Quarterly Report on Form 10-Q which are not
historical facts are forward looking statements, such as statements relating to
future operating results, existing and expected competition, financing and
refinancing sources and availability and plans for future development or
expansion activities, capital expenditures and expansion of business operations
into new areas. Such forward looking statements involve a number of risks and
uncertainties that may significantly affect the Company's liquidity and results
in the future and, accordingly, actual results may differ materially from those
expressed in any forward looking statements. Such risks and uncertainties
include, but are not limited to, those related to effects of competition,
leverage and debt service, general economic conditions, changes in gaming laws
or regulations (including the legalization of gaming in various jurisdictions)
and risks related to development activities and the startup of non-gaming
operations.


                        Item 3. Market Risk Disclosure
                                ----------------------

Market risk is the risk of loss arising from changes in market rates and prices,
such as interest rates, foreign currency exchange rates and commodity process.
The Company has no debt instruments subject to market risks.

The Company holds investments in various available-for-sale securities; however,
exposure to price risk arising from the ownership of these investments is not
material to our consolidated financial position, results of operations or cash
flow.

                                       26
<PAGE>

                      ARCHON CORPORATION AND SUBSIDIARIES

                          PART II - OTHER INFORMATION

Item 1 - Legal Proceedings
--------------------------

         On March 20, 2001 the Company agreed to settle the lawsuit Sahara
         Gaming Corporation, et al. v. Francis L. Miller, et al.,
         CV-S-94-01109-LRL, filed by the Company alleging, among other things,
         violations of the Securities Exchange Act of 1934. The terms of the
         settlement required that (i) the defendants' insurers pay the Company
         approximately $4.9 million and the Company dismiss with prejudice all
         its claims against all defendants, (ii) the Company pay Francis Miller
         approximately $900,000 and Francis Miller dismiss with prejudice all
         his counterclaims and third-party claims against the Company, and (iii)
         plaintiffs and defendants cause the lawsuit and counterclaims to be
         dismissed with prejudice.

         On April 20, 2001, the Company entered into a settlement agreement with
         David H. Lesser, Hudson Bay Partners, L.P. and certain of their
         affiliates. In accordance with the settlement agreement, among other
         things, (i) the Company and its subsidiaries agreed to dismiss with
         prejudice pended litigation by the Company against HBP and Mr. Lesser
         styled Santa Fe Gaming Corp. v. Hudson Bay Partners, L. P., et-al., CV-
         5-99-00298-KJD (LRL) and Santa Fe Gaming Corporation v. Hudson Bay
         Partners L.P. and David H. Lesser., CV-5-99-00416 LDG (LRL), and Mr.
         Lesser agreed to dismiss with prejudice his application for
         reimbursement of approximately $1.1 million in attorneys' fees in
         connection with the PHI and PFC bankruptcies, pursuant to legal
         proceedings styled In re Pioneer Finance Corp., Case
         No. BK-S-99-11404-LBR and In re Pioneer Hotel Inc., Case No. BK-S-99-
         12854-LBR; (ii) the Company received the 3,456,942 shares of the
         Company's preferred stock and 53,600 shares of common stock held by the
         Hudson Bay affiliates; (iii) Mr. Lesser agreed to forfeit options to
         acquire 12,500 shares of the Company's common stock, (iv) Mr. Lesser
         forfeited his claim to director fees, (v) Mr. Lesser resigned from the
         Company's Board of Directors and withdrew his name as the nominee for
         election by preferred stockholders as a special director at the
         Company's annual meeting held on May 11, 2001 and (vi) the Company paid
         Mr. Lesser $5.75 million.

         The Company is the defendant in a pending action titled Local Joint
         Executive Board et al. v. Santa Fe Gaming Corporation et al., No.
         CV-S-01-0233-RLH. The plaintiffs instituted the action on or about
         February 28, 2001 in the United States District Court for the District
         of Nevada, alleging that the Company violated the Worker Adjustment
         Retraining and Notification Act by improperly providing notification of
         the closing of the Santa Fe Hotel and Casino. The plaintiffs seek
         damages in the amount provided for by the statute. The plaintiffs have
         filed a motion for class certification, which remains pending.

         The Company intends to defend the lawsuit vigorously and does not
         believe that future operating results will be materially adversely
         affected by the final resolution of the lawsuit.

                                       27
<PAGE>

Item 2 - Changes in Securities

         None


Item 3 - Defaults Upon Senior Securities
----------------------------------------

         The Company has outstanding redeemable exchangeable cumulative
         preferred stock ("Preferred Stock"). Prior to fiscal 1997, the Company
         satisfied the semi-annual dividend payments on its Preferred Stock
         through the issuance of paid in kind dividends. Commencing in fiscal
         1997, dividends paid on the Preferred Stock, to the extent declared,
         must be paid in cash. No dividends have been declared since October 1,
         1996. Pursuant to the terms of the Certificate of Designation with
         respect to the Preferred Stock, dividends that are not declared are
         cumulative and accrue. The dividend rate per annum was equal to 8% of
         $2.14 for each share of preferred stock until September 30, 1998, at
         which date the dividend rate increased to 11% and the dividend
         continues to increase by an additional 50 basis points on each
         succeeding semi-annual dividend payment date up to a maximum of 16% per
         annum. The dividend rate is 13.5% effective April 1, 2001. The accrued
         stock dividends have been recorded as an increase to the Preferred
         Stock account. As of June 30, 2001, the aggregate liquidation
         preference of the Preferred Stock was $16.7 million, or $3.20 per
         shares, net of 3,627,800 shares acquired by the Company and retired.

Item 4 - Submission of Matters to a Vote of Security Holders

         None

Item 5 - Other Information

         None

Item 6 - Exhibits and Reports on Form 8-K
-----------------------------------------

Exhibits

         None

Reports

         None

                                       28
<PAGE>

                                  SIGNATURES

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

ARCHON CORPORATION, Registrant



                                    By: /s/ Thomas K. Land
                                        ---------------------------------------
                                        Thomas K. Land, Chief Financial Officer


Dated: August 13, 2001

                                       29