Sands Reports Growing Loss

19 February 2002

For the second quarter ended December 31, 2001, a seasonally slow period, the Company reported a net loss of $252,000 or $(0.06) loss per share, compared to a net loss of $145,000 or $(0.03) loss per share for the prior year's second quarter.

The Company also reported an operating loss of $228,000 on revenues of $7.5 million in the second quarter, versus a loss from operations of $74,000 on revenues of $8.0 million in the same period last year. EBITDA was reported at $612,000 in the December 2001 quarter versus $784,000 in the December 2000 quarter. EBITDA is defined as earnings before depreciation and amortization, interest expense, income taxes and any gain or loss on the disposal of property.

For the six months ended December 31, 2001, the Company reported revenues of $16.5 million versus $18.1 million in the six months ended December 31, 2000. For the same comparable periods, income from operations declined from $1.3 million to $687,000.

Net income for the first half of fiscal 2002 was $216,000, or $0.05 per share (diluted), compared to $612,000, or $0.13 per share (diluted), in the first half of fiscal 2001. The Company also reported EBITDA of $2.4 million in the six months ended December 31, 2001 versus $3.0 million in the six months ended December 31, 2000.

Ferenc B. Szony, President and CEO of The Sands Regent, commented, "All in all, we are pleased with our operating performance in the second quarter and first half of fiscal 2002. Although operating results are somewhat down from last year, which was a good first half for us, they are better than the operating results for the first half of fiscal 2000. Besides the negative impact of the September 11, 2001 catastrophe, we also continue to be somewhat negatively impacted by the weakening of the economy, especially in California.

"However, our local business component has allowed us to fare better than many of our competitors. In addition, the Reno area's reliance on drive-up and motor coach business continues to be beneficial given the overall decline in air traffic.

"Our advertising and marketing approach, both in the Reno area and out-of-market, continues to be multi-faceted and designed to both attract new customers and provide value for repeat visitors. We continue to utilize many different marketing programs so as to create excitement and enhance the overall experience of our guests. Innovation, and not solely relying on our past successes, is the name of the game.

"We have almost completed our room renovation project which will be done by early spring. We also recently added a new, state-of-the-art computerized slot system designed to enhance our player reward programs and to allow for improved slot accountability. We will continue to make positive changes and improvements in order to maintain our Company-wide objective of creating an affordable experience in a casual and comfortable setting with efficient service.

"As announced last month, we have taken the first step in pursuing expansion opportunities by entering into an agreement to acquire the Gold Ranch Casino and RV Resort in Verdi, Nevada. Subject to certain contingencies, including completion of financing and approval by the Nevada Gaming Authorities, we expect the transaction to be completed in the spring of 2002. Gold Ranch Casino and RV Resort, with its strong base of local customers and Interstate 80 travelers, its high-volume California lottery outlet and other features, will complement our downtown Reno operation with its market niche of serving both locals and tourists and will allow for various cross-marketing opportunities that will benefit both properties.

"We will continue to pursue gaming expansion opportunities by building or acquiring gaming facilities. Our criteria include striving for synergies of operations with our present operations and location proximity so that our management team may be readily involved."

The Sands Regent owns and operates the Sands Regency Casino and Hotel in downtown Reno, Nevada. The Sands Regency is an 850-room hotel and casino with 29,000 square feet of gaming space offering table games, keno, bingo and slot machines. In addition to complete amenities and on-site brand-name restaurants, the Company's property also includes a 12,000-square-foot convention and meeting center which seats close to 1,000 people.