Other definitive proxy statements
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934 (Amendment No. )
Filed
by
the Registrant [X]
Filed
by
a Party other than the Registrant [ ]
Check
the
appropriate box:
[
] Preliminary
Proxy Statement
[
] Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X]
Definitive
Proxy Statement
[
] Definitive
Additional Materials
[
] Soliciting
Material Pursuant to §240.14a-12
CENTURY
CASINOS, INC.
------------------------------------------------
(Name
of
Registrant as Specified In Its Charter)
-------------------------------------------------
(Name
of
Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
[X]
No
fee
required.
[
] Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
1) Title
of
each class of securities to which transaction applies:
2) Aggregate
number of securities to which transaction applies:
|
3)
|
Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is
calculated and state how it was
determined):
|
4) Proposed
maximum aggregate value of transaction:
[
] Fee
paid
previously with preliminary materials.
[ ] Check
box
if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and
identify the filing for which the offsetting fee was paid previously. Identify
the previous
filing by registration
statement number, or the Form or Schedule and the date of its
filing.
1) Amount
Previously Paid:
2) Form,
Schedule or Registration No.:
3) Filing
Party:
4) Date
Filed:
CENTURY
CASINOS, INC.
1263
A Lake Plaza Drive
Colorado
Springs, CO 80906
NOTICE
OF ANNUAL MEETING OF SECURITY HOLDERS
Notice
is hereby given that the Annual Meeting of Security Holders of Century Casinos,
Inc. (the “Company”), a Delaware corporation, will be convened at 121 Main
Street, Third Floor, Central City, Colorado on Tuesday, June 20, 2006, at 10:00
a.m. Mountain Time (18:00hrs Central European Time, 12:00 p.m. Eastern Time),
for the following purposes:
1. |
To
elect two Class III directors to the Board of Directors;
and
|
2. |
To
transact such other business as may properly come before the meeting
in
accordance with the Company’s bylaws or any adjournment
thereof.
|
Security
holders are cordially invited to attend the meeting in person or by calling
+1
877
903 2255 (U.S. TOLL FREE) or +1 303 928 2617 (INTERNATIONAL).
When prompted, enter Conference ID:
7935899 followed by the “#” sign.
Subject
to space availability, all security holders as of the record date, or their
duly
appointed proxies, may attend the meeting. Admission to the meeting will be
on a
first-come, first-served basis. If you attend, please note that you may be
asked
to present valid picture identification, such as a driver’s license. Cameras,
recording devices and other electronic devices will not be permitted at the
meeting.
Please
also note that if you hold your shares in “street name” (that is, through a
broker or other nominee) you will need to bring a brokerage statement reflecting
your stock ownership as of the record date and check in at the registration
desk
at the meeting.
Security
holders who cannot attend in person should vote by using the enclosed proxy.
Please fill in, date, sign and return the enclosed proxy in the enclosed
envelope so that your shares may be voted at the meeting. If you attend the
meeting, you may revoke your proxy and vote in person. Your vote is important.
By
order of the Board of Directors
Erwin
Haitzmann
Chairman
of the Board
Colorado
Springs, CO
April
28, 2006
CENTURY
CASINOS, INC.
1263
A Lake Plaza Drive
Colorado
Springs, CO 80906
PROXY
STATEMENT
Annual
Meeting of Security Holders
To
Be Held on June 20, 2006
IN
GENERAL
This
proxy statement is furnished in connection with the solicitation of proxies
by
the Board of Directors of Century Casinos, Inc. to be used at the Annual Meeting
of Security Holders to be held on June 20, 2006 at 121 Main Street, Third
Floor, Central City, Colorado, United States at 10:00 a.m. Mountain Time (18:00
Central European Time and 12:00 p.m. Eastern Time), for the purposes set forth
in the accompanying Notice of Annual Meeting of Security Holders. The enclosed
material was mailed on or about May 5, 2006 to security holders of the Company
as of April 27, 2006.
All
properly executed proxies received at or prior to the Annual Meeting will be
voted at the Annual Meeting. If a security holder directs how a proxy is to
be
voted with respect to the business coming before the Annual Meeting, the proxy
will be voted in accordance with the security holder’s directions. If a security
holder does not direct how a proxy is to be voted, it will be voted in favor
of
the election of the nominees to the Board of Directors named in this proxy
statement. A proxy may be revoked at any time before it is exercised by giving
written notice to the Secretary of the Company at the above address or by a
subsequently executed proxy. Security holders may vote their shares in person
if
they attend the Annual Meeting, even if they have executed and returned a proxy.
If no instructions are indicated on the proxy, the shares will be voted in
favor
of the proposals presented in this proxy statement, and in the proxy holder’s
discretion for any other matters presented in accordance with the Company’s
bylaws to be considered at the Annual Meeting.
The
matters to be brought before the Annual Meeting are the election of two Class
III directors of the Board of Directors and the transaction of such other
business that has been brought forward in accordance with the Company’s
bylaws.
Expenses
in connection with the solicitation of proxies in regard to the proposals
brought forward by the Company and included in this proxy statement will be
paid
by the Company.
Proxies
are being solicited by mail, and, in addition, directors, officers and regular
employees of the Company (who will not receive any additional compensation)
may
solicit proxies personally, by telephone, by email, or by special
correspondence. The Company will reimburse brokerage firms and others for their
expenses in forwarding proxy materials to the beneficial owners of the Company’s
common stock, including beneficial owners who hold the Company's Austrian
Depositary Certificates, or ADCs.
VOTING
SECURITIES
Only
security holders of record at the close of business on April 27, 2006, will
be
entitled to vote at the Annual Meeting. On that date, there were issued and
outstanding 22,380,567 shares of the Company’s $.01 par value common stock, the
only class of voting securities of the Company. This number
includes 4,745,925 shares
of
common stock represented by ADCs. Each share of common stock is entitled to
one
vote per share. Cumulative voting in the election of directors is not
permitted.
A
majority of the number of the outstanding shares of common stock, represented
either in person or by proxy, will constitute a quorum for the transaction
of
business at the Annual Meeting. Of the votes cast at the Annual Meeting, a
vote
of the holders of a majority of the common stock present, either in person
or by
proxy, and entitled to vote, is required to elect each director nominee. In
accordance with Delaware law, a security holder entitled to vote for the
election of directors can withhold authority to vote for nominees for director.
Abstentions
are counted for purposes of determining a quorum to conduct business, but are
ignored in vote tabulation, thereby increasing the number of votes necessary
to
approve any proposal. The inspectors of election will treat any shares held
by
brokers or nominees for which the broker or nominee has no discretionary power
to vote on a particular matter and for which they have received no instructions
from the beneficial owners or persons entitled to vote (“broker non-votes”) as
shares that are present for purposes of determining the presence of a quorum.
However, for purposes of determining the outcome of any matters as to which
the
broker has indicated on the proxy that it does not have discretionary authority
to vote, those shares will be treated as not entitled to vote with respect
to
that matter (even though those shares may be entitled to vote on other matters).
All
shares of common stock, including shares underlying the ADCs, will vote as
a
single class. Neither the Company’s Certificate of Incorporation nor its Bylaws
provide for cumulative voting rights.
SECURITY
HOLDER PROPOSALS
If
you
are a security holder who wishes to present a proposal for inclusion
in the proxy statement and form of proxy for consideration at our 2007 Annual
Meeting of Security Holders, you must submit your proposals to the attention
of
our Secretary at our principal executive office so that the proposal is received
by us no later than December 29, 2006. In order for a security holder proposal
to be properly considered at the 2007 Annual Meeting, our Secretary must have
received notice of the proposal no sooner than December 22, 2006 and no later
than February 20, 2007. Proposals received by us after February 20, 2007 will
be
deemed untimely and will not be considered at the 2007 Annual Meeting.
PROPOSAL
1
ELECTION
OF DIRECTORS
The
Board
is divided into three classes of directors as nearly equal in number as
possible. Each director who is elected at an Annual Meeting will be elected
for
a three-year term expiring at the third Annual Meeting of Security Holders
after
such director’s election. Accordingly, directors of one Class only are elected
at each year’s Annual Meeting of Security Holders. If elected, all nominees are
expected to serve until the expiration of their respective terms and until
their
successors are duly elected and qualified. Presently, the Board consists of
five
directors comprising the following: (i) two Class I directors, Mr. Eichberg
and
Dr. Corbaci, whose terms will expire at the 2007 Annual Meeting; (ii) one Class
II director, Mr. Hoetzinger, whose term will expire at the 2008 Annual Meeting;
and (iii) two Class III directors, Dr. Haitzmann and Mr. Schellmann, who are
standing for re-election at the 2006 Annual Meeting.
At
the
2006 Annual Meeting, two Class III directors will be elected. The proxies named
on the enclosed proxy intend to vote for the election of the nominees for Class
III directors, Erwin Haitzmann and Gottfried Schellmann. Proxies cannot be
voted
for a greater number of directors than the number nominated.
Erwin
Haitzmann, a nominee for Class III director, is presently a member of the Board
of Directors, having served continuously as a director since March 1994. Dr.
Haitzmann is also presently serving as Chairman of the Board and Co Chief
Executive Officer of the Company. He has indicated a willingness to serve;
however, in the event he should become unable to serve as a director, the proxy
will be voted in accordance with the best judgment of the persons acting under
the proxy.
Gottfried
Schellmann, a nominee for Class III director, is presently a member of the
Board
of Directors, having served continuously as a director since January 1997.
He
has indicated a willingness to serve; however, in the event he should become
unable to serve as a director, the proxy will be voted in accordance with the
best judgment of the persons acting under the proxy.
The
information concerning Dr. Haitzmann and Mr. Schellmann, the nominees for the
Class III directors, is set forth below under “Information Concerning Directors
and Executive Officers.”
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE ABOVE NOMINEES.
INFORMATION
CONCERNING DIRECTORS AND EXECUTIVE OFFICERS
Information
regarding the Board of Directors and executive officers of the Company as of
April 27, 2006 is as follows:
|
Name
|
Age
|
Position
Held
|
Officer
or Director
Since
|
|
|
Erwin
Haitzmann
|
52
|
Chairman
of the Board &
Co
Chief Executive Officer
|
March
1994
|
|
|
Peter
Hoetzinger
|
43
|
Vice
Chairman of the Board,
Co
Chief Executive Officer & President
|
March
1994
|
|
|
Robert
S. Eichberg
|
60
|
Director
|
January
1997
|
|
|
Gottfried
Schellmann
|
52
|
Director
|
January
1997
|
|
|
Dinah
Corbaci
|
51
|
Director
|
April
2000
|
|
|
Larry
Hannappel
|
53
|
Senior
Vice President, Secretary & Treasurer
|
October
1999
|
|
|
Christian
Gernert
|
40
|
Chief
Operating Officer
|
March
2006
|
|
|
Rich
Rabin
|
59
|
Chief
Operating Officer for North America
|
August
2004
|
|
|
Ray
Sienko
|
48
|
Chief
Accounting Officer
|
March
2005
|
|
Erwin
Haitzmann
holds a
Doctorate and a Masters degree in Social and Economic Sciences from the
University of Linz, Austria (1980), and has over 30 years of casino gaming
experience ranging from dealer through various casino management positions.
Dr.
Haitzmann has been employed full-time by the Company since May
1993.
Peter
Hoetzinger
received
a Masters degree from the University of Linz, Austria, in 1986. He thereafter
was employed in several managerial positions in the gaming industry with
Austrian casino companies. Mr. Hoetzinger has been employed full-time by the
Company since May 1993.
Robert
S. Eichberg
graduated from Bradley University in 1968 with a B.S. Degree in Accounting
and
is a Certified Public Accountant. He was employed by the public accounting
firm
of Deloitte & Touche, LLP from 1974 to 1994, ending his tenure there as Tax
Partner. From 1994 to 1996, he served as Tax Partner for the public accounting
firm Price Bednar LLP, before joining the public accounting firm of Causey,
Demgen & Moore, Inc. in September 1996, where he has been employed since, as
shareholder and President.
Gottfried
Schellmann
graduated from University of Vienna with a law degree and is a certified tax
advisor in Austria. After having worked for several firms, including KPMG
Germany as tax and accounting manager, he formed Schellmann & Partner in
1993, where he has been employed since, which specializes in tax and accounting
work for provinces and municipalities in Austria. He is a member of the
International Bar Association. He is also one of the main co-authors, together
with certain officers of the Austrian Ministry of Finance, of the Austrian
corporate tax code.
Dinah
Corbaci
holds a
Doctorate degree in Law from the University of Salzburg, Austria (1981). One
year practice on the Austrian Court in Salzburg was followed by working for
the
Austrian Association of Realtors in Vienna. In 1984 she joined IBM Austria,
where she is responsible as Account Manager for large government customers,
with
special focus on e-business for large IBM mainframe hardware and e-government
solutions. During the last six years of her 22 years of employment at IBM,
she
has served as eServer Manager where she is responsible for all Austrian
governmental customers concerning their strategic hardware development
compliance for governmental and legal requirements.
Larry
Hannappel
graduated from National College, Rapid City, South Dakota (1976) with a B.S.
Degree in Accounting. From 1976 to 1979, he was employed by the public
accounting firm of Hamma & Nelson. From 1979 to 1994, he served in various
financial management capacities in manufacturing and gaming. Mr. Hannappel
has
been employed full-time by the Company since May 1994. He became Chief
Accounting Officer in October 1999, was appointed as Secretary of the Company
in
March 2000, as Treasurer in June 2001 and as Senior Vice President in March
2005.
Christian
Gernert
holds a
Doctorate and Masters degree in Law from the University of Vienna, Austria,
and
has more than 20 years of experience in the Austrian and international gaming
industries. He started his career with the Austrian Gaming Authority and joined
Casinos Austria AG in 1990. From 1997 to 2004, he was an independent business
consultant, concentrating on the business development of various publicly traded
companies and a charitable gaming organization utilizing sports betting as
a
funding source. In 2004, Mr. Gernert joined the Company as Managing Director
of
The Caledon Hotel, Spa & Casino in South Africa. In March 2006, he was
appointed Chief Operating Officer for the Company.
Rich
Rabin earned
undergraduate degrees from Roosevelt University, Chicago, Illinois in Accounting
and Finance. He earned his MBA from the University of Wisconsin specializing
in
Finance. From 1973 until 1999, he was employed in various positions within
the
hospitality industry. Additionally, he was employed from 1995 to 1999 as the
Senior Vice President of Operations, President, and Chief Operating Officer
for
the Colorado Gaming and Entertainment Company. In 2000, he was employed as
a
Vice President, Casino Operations for the International Thunderbird Gaming
Corp.
From 2000 to 2001, he was a consultant for Peak Management, from 2001 to 2002,
he was employed as the Senior Vice President, Casino Operations for PDS Gaming,
and from 2002 to 2004, he was employed as the Director for The Innovation Group
in Las Vegas. In his capacity as Director, Mr. Rabin was responsible for the
design and implementation of process improvement programs for clients with
special emphasis on casino gaming, hotel and food and beverage operations.
He
has been employed by the Company since August 2004 as the Chief Operating
Officer for North America.
Ray
Sienko
graduated from St. Joseph’s University in Philadelphia, Pennsylvania (1979) with
a B.S. Degree in Accounting, and passed the CPA exam in November 1979. From
1979
to 1981, he was employed by the public accounting firm of Samuel M. Fischer
& Co., CPAs. From 1981 to 1985, he was employed by Amerigas, Inc. From 1985
to 2000, he was employed as the Controller for Bayard Sales Corp. Mr. Sienko
has
been employed by the Company since June 2000 as Controller. He was appointed
Chief Accounting Officer in March 2005.
There
are
no family relationships between or among the Company’s executive officers and
directors.
The
Company has adopted a Code of Ethics that applies to all directors, officers
and
employees, including the Co Chief Executive Officers, the Senior Vice
President and the Chief Accounting Officer. A complete text of the Code of
Ethics is available as Exhibit 14 filed with the Company's Form 10-K for the
year ended December 31, 2003.
CERTAIN
INFORMATION REGARDING THE BOARD OF DIRECTORS
The
Board
of Directors held four meetings during 2005 and on several occasions executed
unanimous written consents in lieu of meetings, in accordance with Delaware
law.
Each director attended at least 75% of the meetings of the Board of Directors,
and of each committee on which he or she sits.
The
Company’s policy regarding attendance by members of the Board of Directors at
the Company’s annual meeting of security holders is to encourage directors to
attend, either in person or by teleconference, subject to their availability
during that time. In 2005, three members of the board attended the annual
meeting.
The
Company has an Audit Committee of the Board of Directors, which is comprised
of
Robert S. Eichberg (Chairman), Gottfried Schellmann and Dinah Corbaci and which
is governed by an Amended and Restated Charter and Powers of the Audit Committee
(attached to this proxy statement as Exhibit A). The Audit Committee selects
and
appoints the Company’s independent auditors, reviews the performance of the
independent auditors, and approves independent auditor’s fees. The Audit
Committee also reviews the independence of such accountants, the Company’s
annual and quarterly financial statements and the Company’s system of internal
controls. During 2005, the Audit Committee held four meetings.
The
Board
of Directors and the Audit Committee believe that the Audit Committee’s current
composition satisfies the applicable rules and pronouncements of the National
Association of Securities Dealers, Inc. and the Securities and Exchange
Commission that govern audit committee selection, experience, and composition,
including the requirement that audit committee members all be “independent
directors” as that term is defined by such rules. The Board of Directors has
also determined that Robert S. Eichberg is an “audit committee financial expert”
as defined in applicable rules of the Securities and Exchange
Commission.
The
Compensation Committee of the Board of Directors is comprised of Dinah Corbaci
and Gottfried Schellmann. The Compensation Committee sets the compensation
to be
paid to each of the Company’s executive officers on an annual basis, and
periodically sets compensation for the Company’s non-employee directors. During
2005, the Compensation Committee held two meetings.
The
Incentive Plan Committee of the Board of Directors is comprised of Gottfried
Schellmann and Dinah Corbaci. The Incentive Plan Committee authorizes and
approves the issuance of options in accordance with the 2005 Equity Incentive
Plan,
reviews
and makes changes to the Company’s employee benefit plans, including the amount
of the Company’s contributions, if any, and otherwise advises on equity
compensation matters within the Committee’s expertise. During 2005, the
Incentive Plan Committee did not meet.
The
Company has no standing nominating committee. All of the directors participate
in the consideration of director nominees, but the Company’s nominations must be
approved by a majority of the independent directors in order to be presented
to
the security holders. The board does not have an express policy with regard
to
the consideration of any director candidates recommended by security holders,
because Delaware law permits any security holder to nominate director
candidates, and the board believes it can adequately evaluate any such nominees
on a case by case basis. The board will consider director candidates proposed
in
accordance with the procedures set forth under “Security Holder Communications”
below, and will evaluate security holder-recommended candidates under the same
criteria as internally generated candidates.
The
general criteria the Board uses to select nominees are:
· |
Such
individual’s reputation for integrity, honesty and adherence to high
ethical standards;
|
· |
Demonstrated
business acumen;
|
· |
Experience
and ability to exercise sound judgments in matters that relate to
the
current and long-term objectives of the
Company;
|
· |
Willingness
and ability to contribute positively to the decision making process
of the
Company;
|
· |
Commitment
to understand the Company and its industry and to regularly attend
and
participate in meetings of the Board and its
committees;
|
· |
Interest
and ability to understand the sometimes conflicting interests of
the
various constituencies of the Company, which include security holders,
employees, customers, governmental units, creditors, and the general
public;
|
· |
Ability
to act in the interest of all
stakeholders;
|
· |
Shall
not have, or appear to have, a conflict of interest that would impair
the
nominee’s ability to represent the interests of all Company’s security
holders and to fulfill the responsibilities of a
director;
|
· |
Understanding
the complexity of diverse international business
structures.
|
It
is the
Board of Directors’ view, considering the size of the Company and the
composition of the Board of Directors, which is comprised of five directors,
three of whom are independent, that the Board of Directors can select nominees
to the Board meeting these criteria without a separate nominating
committee.
SECURITY
HOLDER COMMUNICATIONS
Security
holders or other interested parties may communicate with the Company’s Board of
Directors, any individual director, or members of any board committee. Security
holders should send any communications to [email protected], and identify the
intended recipient or recipients. All communications addressed to the Board
of
Directors or any identified director or directors will be forwarded to the
identified person or persons.
In
order
to nominate candidates for election to the Company’s Board, nominations must be
timely received from a security holder of record at the Company’s principal
executive office as described above under “Security Holder Proposals”, and must
set forth the name, age, business address and residence address of each nominee,
the nominees’ principal occupations or employment, the number of shares of the
Company’s common stock owned by each nominee, and information required to be
disclosed regarding each nominee by applicable laws. The nomination must also
state the name and address of the security holder making such nominations,
and
the number of shares of the Company’s stock owned by such person.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth information as of April 27, 2006, concerning common
stock ownership by beneficial owners of five percent or more of the Company’s
common stock and the executive officers and directors of the Company. All of
the
named persons below, other than Thomas Graf, Janus Capital Management LLC,
Cortina Asset Management, LLC and William Blair & Company, L.L.C., are
officers or directors of the Company. The Company has no knowledge of any
arrangement that would at a subsequent date result in a change in control of
the
Company.
TITLE
OF CLASS
|
NAME
AND ADDRESS OF BENEFICIAL OWNER
|
AMOUNT
AND NATURE OF BENEFICIAL OWNERSHIP
|
PERCENT
OF
CLASS
|
Common
Stock,
$.01
par value
|
Erwin
Haitzmann
c/o
Century Casinos, Inc.
1263
A Lake Plaza Dr.
Colorado
Springs, CO 80906
|
1,488,432
(a)
|
6.5%
|
Common
Stock,
$.01
par value
|
Peter
Hoetzinger
c/o
Century Casinos, Inc.
1263
A Lake Plaza Dr.
Colorado
Springs, CO 80906
|
981,432
(b)
|
4.3%
|
Common
Stock,
$.01
par value
|
Robert
S. Eichberg
1801
California St. Ste. 4650
Denver,
CO 80202
|
61,000
(c)
|
*
|
Common
Stock,
$.01
par value
|
Gottfried
Schellmann
Riemerschmidg
30
2340
Maria Enzersdorf,
Austria/Europe
|
81,200
(c)
|
*
|
Common
Stock,
$.01
par value
|
Dinah
Corbaci
Blechturmgasse
28/31
1040
Vienna
Austria/
Europe
|
31,000
(d)
|
*
|
Common
Stock,
$.01
par value
|
Larry
Hannappel
c/o
Century Casinos, Inc.
1263
A Lake Plaza Dr.
Colorado
Springs, CO 80906
|
50,750
(e)
|
*
|
Common
Stock,
$.01
par value
|
Ray
Sienko
c/o
Century Casinos, Inc.
1263
A Lake Plaza Drive
Colorado
Springs, CO 80906
|
11,500
(f)
|
*
|
Common
Stock,
$.01
par value
|
Christian
Gernert
c/o
Century Casinos, Inc.
1263
A Lake Plaza Drive
Colorado
Springs, CO 80906
|
7,500
(g)
|
*
|
Common
Stock,
$.01
par value
|
All
Executive Officers and Directors as a Group
(eight
persons)
|
2,712,814
|
11.6%
|
Common
Stock,
$.01
par value
|
Thomas
Graf
Liechtensteinstrasse
54
A-2344
Maria Enzersdorf
Austria/Europe
|
2,144,300
(h)
|
9.6%
|
Common
Stock,
$.01
par value
|
Janus
Capital Management LLC
100
Fillmore Street, 2nd Floor
Denver,
CO 80206
|
1,663,235
(i)
|
7.4%
|
Common
Stock,
$.01
par value
|
Cortina
Asset Management, LLC
330
East Kilborn Avenue
Suite
850
Milwaukee,
WI 53202
|
1,186,340
(j)
|
5.3%
|
Common
Stock,
$.01
par value
|
William
Blair & Company, L.L.C.
222
W. Adams
Chicago,
IL 60606
|
1,164,369
(k)
|
5.2%
|
|
(a)
|
Includes
non-statutory stock options for 350,000 shares exercisable at $0.75
per
share and 188,432 shares exercisable at $2.93 per share, indirectly
owned
and held by The Haitzmann Family Foundation.
|
|
(b)
|
Includes
non-statutory stock options for 250,000 shares exercisable at $0.75
per
share and 188,432 shares exercisable at $2.93 per share, indirectly
owned
and held by The Hoetzinger Family
Foundation.
|
|
(c)
|
Includes
an option for 10,000 shares exercisable at $2.12 per share and an
option
for 6,000 shares exercisable at $3.26 per
share.
|
|
(d)
|
Includes
an option for 6,000 shares exercisable at $3.26 per
share.
|
|
(e)
|
Includes
an option for 10,000 shares exercisable at $.75 per share, an option
for
7,500 shares exercisable at $1.50 per share and an option for 8,250
shares
exercisable at $2.93 per share.
|
|
(f)
|
Includes
an option for 10,000 shares exercisable at $1.75 per share and an
option for 1,500 shares exercisable at $2.93 per
share.
|
|
(g)
|
Includes
an option for 7,500 shares exercisable at $2.93 per
share.
|
In
November 2005, in accordance with the 2005 Equity Incentive Plan, options to
purchase 25,000 shares of common stock of the Company at the price of $7.68
per
share were granted to Dr. Gernert. These shares are not included in the number
of shares beneficially owned as these options are not exercisable within 60
days
of April 27, 2006.
|
(h)
|
As
reported on Form 4 filed with the Securities and Exchange Commission
on
December 15, 2004.
|
|
(i)
|
As
reported on Schedule 13G filed with the Securities and Exchange Commission
on February 14, 2006.
|
|
(j)
|
As
reported on Schedule 13G filed with the Securities and Exchange Commission
on February 8, 2006.
|
|
(k)
|
As
reported on Schedule 13G/A filed with the Securities and Exchange
Commission on February 14, 2006.
|
* Less
than
1%.
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The
table
below sets forth executive compensation during 2005, 2004 and 2003 to the
Company’s Co Chief Executive Officers and to each other executive officer who
received greater than $100,000 in compensation in 2005.
|
|
|
|
|
Awards
|
Payouts
|
|
Name
& Principal
Position
|
Year
|
Salary
(a)
($)
|
Bonus
(b)
($)
|
Other
Annual/ Compensation
(c)
($)
|
Restricted
Stock Awards
($)
|
Securities
Underlying Options/
SARs
(#)
|
LTIP
Payouts
($)
|
All
Other Compensation
(d)
($)
|
Erwin
Haitzmann
|
2005
|
303,866
|
236,149
|
|
|
|
|
|
Chairman
of the Board
|
2004
|
199,703
|
341,690
|
|
|
628,105
|
|
|
and
Co Chief Executive Officer
|
2003
|
180,737
|
262,390
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter
Hoetzinger
|
2005
|
303,866
|
236,149
|
|
|
|
|
|
Vice
Chairman of the Board,
|
2004
|
199,703
|
341,690
|
|
|
628,105
|
|
|
Co
Chief Executive Officer
|
2003
|
191,357
|
251,800
|
|
|
|
|
|
and
President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry
Hannappel
|
2005
|
120,507
|
40,000
|
|
|
|
|
1,800
|
Senior
Vice President
|
2004
|
80,507
|
80,000
|
|
|
27,500
|
|
1,200
|
Secretary
& Treasurer
|
2003
|
80,507
|
60,000
|
|
|
|
|
1,200
|
|
|
|
|
|
|
|
|
|
Rich
Rabin
|
2005
|
150,507
|
|
|
|
|
|
2,250
|
Chief
Operating Officer -
|
2004
|
61,240
|
|
21,336
|
|
|
|
|
North
America
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ray
Sienko
|
2005
|
95,221
|
15,000
|
|
|
|
|
1,178
|
Chief
Accounting Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
Dr.
Haitzmann’s salaries for 2005 and 2004 include $216,996 and $120,000 paid,
respectively, to Flyfish Casino Consulting AG for the benefit of
Dr.
Haitzmann’s Family Foundation. Mr. Hoetzinger’s salaries for 2005 and 2004
include $216,996 and $120,000 paid, respectively, to Focus Casino
Consulting AG for the benefit of Mr. Hoetzinger’s Family Foundation. These
payments are made pursuant to separate management agreements with
the
Company (see “Executive Employment
Agreements”).
|
(b) |
Dr.
Haitzmann’s bonuses for 2005 and 2004 were paid to Flyfish Casino
Consulting AG for the benefit of Dr. Haitzmann’s Family Foundation. Mr.
Hoetzinger’s bonuses for 2005 and 2004 were paid to Focus Casino
Consulting AG for the benefit of Mr. Hoetzinger’s Family
Foundation.
|
(c) |
Other
annual compensation for Mr. Rabin in 2004 includes relocation costs
of
$21,336.
|
(d) |
Consists
solely of matching contributions made by the Company to the 401(k)
Savings
and Retirement Plan.
|
AGGREGATED
OPTIONS EXERCISED IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The
following table sets forth the aggregate options exercised and held by certain
executive officers of the Company.
Name
|
Shares
Acquired on Exercise
|
Value
Realized
|
Number
of Securities Underlying Options at December 31, 2005 Exercisable/
Unexercisable
|
Value
of Unexercised In-the-Money Options at December 31, 2005 Exercisable/
Unexercisable
(e)
|
Erwin
Haitzmann
|
950,000
|
$5,614,500
(a)
|
412,811
/ 565,294 (c)
|
$3,103,639
/ 3,205,217
|
Peter
Hoetzinger
|
543,000
|
$3,209,130
(a)
|
312,811
/ 565,294 (d)
|
$2,318,639
/ 3,205,217
|
Larry
Hannappel
|
20,000
|
$115,250
(b)
|
20,250
/ 24,750
|
$147,342
/ 140,332
|
Ray
Sienko
|
-
|
-
|
10,500
/ 4,500
|
$71,335
/ 25,515
|
(a) |
Based
on the closing price ($7.41) of the Company’s common stock on the NASDAQ
Capital Market on August 5, 2005, the date that options were
exercised.
|
(b) |
Based
on the closing price ($7.45) of the Company’s common stock on the NASDAQ
Capital Market on January 11, 2005, the date that options were
exercised.
|
(c) |
All
options are held by The Haitzmann Family Foundation. (See Certain
Relationships and Related
Transactions.)
|
(d) |
All
options are held by The Hoetzinger Family Foundation. (See Certain
Relationships and Related
Transactions.)
|
(e) |
Based
on the closing price ($8.60) of the Company’s common stock on the NASDAQ
Capital Market on December 30,
2005.
|
DIRECTOR
COMPENSATION
Directors
who are full-time employees of the Company receive no compensation for their
services as directors. Messrs. Eichberg and Schellmann and Dr. Corbaci, the
outside directors of the Company, are being compensated for their services
as
follows:
(a) |
Compensation,
Reimbursement
-
Each outside director receives $1,000 per board or committee meeting
attended (and per gaming application completed). In addition, Mr.
Eichberg receives $10,000 per year for his work as Chairman of the
Audit Committee. Dr. Corbaci and Mr. Schellmann each receive $3,000
per
year for their work as members of the Audit Committee, the Compensation
Committee and the Incentive Plan
Committee.
|
(b) |
Amounts
paid in 2005:
|
|
Mr.
Eichberg
|
$18,000
|
|
|
Dr.
Corbaci
|
$15,000
|
|
|
Mr.
Schellmann
|
$15,000
|
|
Equity
Compensation Plans
The
following table provides the information as of December 31, 2005 relating to
securities authorized for issuance under equity compensation plans.
Plan
category
|
Number
of securities to be issued upon exercise of outstanding options,
warrants
and rights
|
Weighted-average
exercise price of outstanding options, warrants and rights
|
Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities underlying outstanding options,
warrants and rights)
|
Equity
compensation plans approved by security holders
|
2,066,210
|
$2.36
|
1,965,000
|
Equity
compensation plans not approved by security holders
|
-
|
-
|
-
|
Total
|
2,066,210
|
$2.36
|
1,965,000
|
An
Employees’ Equity Incentive Plan (the “EEIP”) which expired in April 2004
continues to be administered for previously issued and outstanding options.
Security holders approved a new equity incentive plan (the “2005 Plan”) at the
2005 annual meeting. The 2005 Plan provides for the grant of awards to eligible
individuals in the form of stock, restricted stock, stock options, performance
units or other stock-based awards, all as defined in the 2005 Plan. The 2005
Plan provides for the issuance of up to 2,000,000 shares of common stock to
eligible individuals through the various forms of awards permitted. The 2005
Plan limits the number of options that can be awarded to an individual to
200,000 per year. Stock options may not be issued at an option price lower
than
fair market value at the date of grant. All stock options must have an exercise
period not to exceed ten years. Through December 31, 2005, only incentive stock
option awards, for which the option price may not be less than fair market
value
at the date of grant, or non-statutory options, which may be granted at any
option price (as permitted under the EEIP), have been granted under the EEIP
and
2005 Plan. Options granted to date have one-year, two-year or four-year vesting
periods. The Company’s Incentive Plan Committee has the power and discretion to,
among other things, prescribe the terms and conditions for the exercise of,
or
modification of, any outstanding awards in the event of a merger, acquisition
or
any other form of acquisition other than a reorganization of the Company under
United States Bankruptcy Code or liquidation of the Company. Both plans also
allow limited transferability of any non-statutory stock options to legal
entities that are 100% owned or controlled by the optionee or to the optionee’s
family trust. As of December 31, 2005, there were 2,066,210 options outstanding,
of which 2,031,210 options were issued under the EEIP and 35,000 options were
issued under the 2005 Plan.
EXECUTIVE
EMPLOYMENT AGREEMENTS
On
October 12, 2001, the Company entered into separate Employment Agreements with
Dr. Haitzmann and Mr. Hoetzinger. The agreements were amended February 18,
2003
to extend the dates of employment to December 31, 2008 and to specify the duties
of Dr. Haitzmann and Mr. Hoetzinger. Additionally, the agreements were amended
February 3, 2005 to reassign the employment agreements to a wholly owned foreign
subsidiary of the Company and to include changes to the employees’ salary and
termination clauses.
As
compensation for the services rendered by the employees for the Company, the
employees shall be paid not less than €70,000 (Euro seventy thousand)
(approximately $82,884 U.S. dollars at December 31, 2005) in base salary, plus
annual increases and bonuses, and such other incentives, benefits, insurance
policies and compensation as may have been and may be awarded to them from
time
to time by the Compensation Committee of the Board of Directors. The
Compensation Committee is required to review the salaries on an annual basis.
The Company shall either provide the employees with, or shall reimburse them
for, all reasonable expenses incurred in connection with the performance of
their duties as executives for the Company, in substantially at least the same
form and fashion as it has done during the twelve months preceding the date
of
the agreements. The employees are also each entitled to the use of a car
provided to them and paid for by the Company for business and private purposes.
The
agreements provide that in the event of termination “without cause” by the
Company, that they shall be paid their base salary then in effect (including
bonuses, if any) for a period of three years from the date on which the employee
receives written notice of termination regardless of whether the term of the
employee agreement ends prior to such time. They must continue to make
themselves available to, and shall cooperate with the Company, as may be
reasonably required to assist the Company during a six-month transition period
following termination of the agreement without cause.
In
addition to the employment agreements, as amended, that the Company has with
Dr.
Haitzmann and Mr. Hoetzinger, the Company is party to separate management
agreements with Flyfish Casino Consulting AG, a Swiss corporation, to secure
the
services of Dr. Haitzmann, and with Focus Casino Consulting AG, a Swiss
corporation, to secure the services of Mr. Hoetzinger, to provide executive
casino management services to the Company through December 31, 2010, and for
five year renewable periods thereafter, unless sooner terminated by them or
by
the Company.
Effective
January 1, 2005, the management agreements provide for an annual base management
fee of $216,996 each for Dr. Haitzmann and Mr. Hoetzinger, plus such annual
increases and bonuses, and such other incentives, benefits and compensation
as
may be awarded to them, respectively, by the Compensation Committee of the
Board
of Directors of the Company. Payments to each of these management companies
are
included in the Executive Compensation Table.
Each
of
the management fees will be reviewed annually by the Compensation Committee.
The
management agreements further provide for termination payments to be made for
a
period of six (6) months if the management agreement is terminated by the
Company without cause, or for a payment of three times the management company’s
annual fee and average bonus if the termination occurs (a) after a Change of
Control of the Company, or (b) by the management company, for
cause.
The
Company entered into an employment agreement with Mr. Larry Hannappel effective
January 1, 2005, pursuant to which the Company will pay to Mr. Hannappel a
yearly salary of $120,000. Mr. Hannappel is eligible to receive a yearly bonus
of up to $56,000, based upon satisfactorily reaching various budget, financial
and other criteria that are established for each calendar year plus benefits
as
defined until terminated. Mr. Hannappel received a $40,000 bonus in 2005. The
bonus amount can be reviewed by the Company annually, and the Compensation
Committee is required to review Mr. Hannappel’s salary on an annual basis.
The
Company either provides Mr. Hannappel with, or shall reimburse him for, all
reasonable expenses incurred in connection with the performance of his duties
as
an executive for the Company.
The
Company may terminate Mr. Hannappel’s employment at any time without cause. If
the Company terminates his employment without cause, Mr. Hannappel will receive
all earned base salary through the last day of his employment, plus a severance
amount equal to six months of his base salary and a payment equal to 50% of
the
bonus received for the year preceding his termination and his
medical/hospitalization insurance will be continued for a period of six months.
A noncompete and nonsolicitation period will end six months after the last
day
of employment. If Mr. Hannappel is terminated for cause, he will receive his
base salary only through the last day of his employment and the noncompete
and
nonsolicitation period will end on the first anniversary of the last day of
his
employment. If he is terminated within three years from a change of control
(as
defined in the agreement), the Company will pay him a severance amount equal
to
12 months of his base salary, he will receive a payment equal to the bonus
received for the year preceding his termination, and all stock options and
other
awards granted to him under the Company’s equity compensation plans will vest
immediately.
The
Company entered into a two year employment agreement, extendable for six-month
periods after the original term, with Mr. Richard S. Rabin on July 19, 2004,
pursuant to which the Company pays Mr. Rabin a yearly salary of $150,000. The
agreement will expire on July 19, 2006 and will not be renewed.
The
Company will reimburse all reasonable expenses incurred by Mr. Rabin on behalf
of the Company in connection with Mr. Rabin’s performance of duties under the
agreement.
Subject
to the approval of the relevant Committees of the Company’s Board of
Directors, Mr. Rabin shall be granted 25,000 options, of
which 10% of this number shall vest at the time of such grant, with 20% of
this number vesting one year later, 30% one year after that and 40% in the
year
subsequent to that. Further, Mr. Rabin shall receive another 25,000 options
on
the date of the first contract extension, if any. The strike price and vesting
of these options will be in accordance with the 2005 Plan and subject to the
Incentive Plan Committee’s discretion.
The
Company may terminate Mr. Rabin’s employment at any time, without cause. If the
Company terminates his employment without cause, he will continue to receive
his
base salary for the remaining term of the agreement unless he secures other
employment, he will receive a payment equal to 50% of the bonus received for
the
year preceding his termination, and his medical/hospitalization insurance will
be continued for the remaining term of the agreement. A noncompete and
nonsolicitation period will end six months after the last day of employment.
If
Mr. Rabin is terminated for cause, he will receive his base salary only through
the last day of his employment, and the noncompete and nonsolicitation period
will end on the first anniversary of the last day of his
employment.
The
Company entered into an employment agreement with Mr. Ray Sienko effective
March
15, 2005, pursuant to which the Company will pay to Mr. Sienko a yearly salary
of $100,000. Mr. Sienko shall be eligible to receive a yearly bonus of up to
$15,000, based upon satisfactorily reaching various budget, financial and other
criteria that are established for each calendar year plus benefits as defined
until terminated. Mr. Sienko received a $15,000 bonus is 2005. The bonus amount
can be reviewed by the Company annually, and the Compensation Committee is
required to review Mr. Sienko’s salary on an annual basis.
The
Company shall continue to either provide Mr. Sienko with, or shall reimburse
him
for, all reasonable expenses incurred in connection with the performance of
his
duties as an executive for the Company.
The
Company may terminate Mr. Sienko’s employment at any time, without cause. If the
Company terminates Mr. Sienko’s employment without cause, he will receive all
earned base salary through the last day of his employment, plus a severance
amount equal to six months of his base salary and a payment equal to 50% of
the
bonus received for the year preceding his termination and his
medical/hospitalization insurance will be continued for a period of six months.
A noncompete and nonsolicitation period will end six months after the last
day
of employment. If Mr. Sienko is terminated for cause, he will receive his base
salary only through the last day of his employment and the noncompete and
nonsolicitation period will end on the first anniversary of the last day of
his
employment.
COMPLIANCE
WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section
16(a) of the Securities Exchange Act of 1934 (the "Exchange Act") requires
the
Company’s directors and executive officers, and persons who beneficially own
more than 10% of its outstanding common stock, to file with the Securities
and
Exchange Commission (the “SEC”) initial reports of ownership and reports of
changes in ownership of common stock and other equity securities of the Company.
SEC rules also require the Company’s directors, officers and greater than 10%
stockholders to furnish the Company with copies of all Section 16(a) reports
they file.
To
the
Company’s knowledge (based solely on review of the copies of such reports
furnished to the Company and representations that no other reports were
required, during the fiscal year ended December 31, 2005), all Section 16(a)
filing requirements applicable to its officers, directors and greater than
10%
stockholders were complied with in a timely manner.
STOCK
PRICE PERFORMANCE
The
following graph
illustrates the cumulative shareholder return of our common stock during the
period beginning December 29, 2000 through December 30, 2005, and compares
it to
the cumulative total return on the NASDAQ Capital Market and the Dow Jones
Gambling Index. The table is not intended to forecast future performance of
our
common stock.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Both
Dr.
Haitzmann and Mr. Hoetzinger are Austrian citizens, and have established
Austrian trusts, The Haitzmann Family Foundation and The Hoetzinger Family
Foundation, respectively, to hold a certain portion of their interests in the
Company. See "Security Ownership of Certain Beneficial Owners and
Management."
Dr.
Haitzmann, Mr. Hoetzinger and their respective family trusts collectively own
3.5% of the outstanding share of common stock of Century Resorts Ltd. (“CRL”), a
subsidiary of the Company that owns the Company's South African interests and
provides technical casino services to the Company's South African
subsidiaries.
This
committee report is not deemed to be “soliciting material” or to be “filed” with
the SEC or subject to the SEC’s proxy rules or to the liabilities of
Section 18 of the Exchange Act, and this committee report shall not be deemed
to
be incorporated by reference into any prior or subsequent filing by the Company
under the Securities Act of 1933, as amended (the “Securities Act”), or the
Exchange Act.
REPORT
OF THE COMPENSATION COMMITTEE
OF
THE BOARD OF DIRECTORS
ON
EXECUTIVE COMPENSATION
The
Compensation Committee has responsibility to: (i) develop guidelines and review
the compensation and performance of executive officers of the Company, review
and approve corporate goals relevant to the compensation of executive officers
in light of Company goals and objectives, set the Co Chief Executive Officers’
and other executive officers’ compensation based on this evaluation, and produce
an annual report on executive compensation for inclusion in the Company’s proxy
statement, in accordance with applicable laws, rules and regulations; (ii)
make
recommendations to the Equity Incentive Plan Committee with respect to
incentive-compensation plans and equity-based plans; (iii) develop plans for
management succession of the Company; (iv) review major organizational and
staffing matters; (v) review director compensation levels and practices, and
recommend, from time to time changes in such compensation levels and practices
to the Board; (vi) annually review and reassess the adequacy of the Compensation
Committee Charter and recommend any proposed changes to the Board for approval;
(vii) annually review the Committee’s own performance; and (viii) perform any
other activities consistent with the Compensation Committee Charter, the
Company’s Bylaws and applicable laws, rules and regulations the Committee or the
Board deem appropriate.
Executive
Officer Compensation Policies
The
Committee's executive compensation policies are designed to provide competitive
levels of compensation that integrate pay with the Company’s performance,
recognize individual initiative and achievements, and assist the Company in
attracting and retaining qualified executives.
The
Committee relies in large part on independent compensation studies for the
determination of competitive compensation.
In
2004,
an independent compensation review was utilized to assist in the determination
of executive compensation. We continue to rely on this review for our
compensation policies.
In
general, the Company compensates its executive officers through a combination
of
base salary, annual incentive compensation in the form of cash bonuses, and
long-term incentive compensation in the form of stock options or other
equity-based incentives.
Compensation
for Dr. Haitzmann and Mr. Hoetzinger is paid in part to them personally in
accordance with an employment agreement and in part as management fees to
Flyfish Casino Consulting AG and Focus Casino Consulting AG, in accordance
with
a management agreement. In addition, executive officers may participate in
benefit plans, including medical, dental and 401(k), that are available
generally to the Company’s employees.
Base
Salary
The
Company has developed a straightforward compensation approach. Base salary
levels for the Company’s executive officers are generally set significantly
below, slightly below or at the market level in relation to the salary levels
of
executive officers in other companies within the gaming industry, taking into
consideration the Company’s as well as the position's complexity, responsibility
and need for special expertise. For each individual executive, in reviewing
salaries, the Compensation Committee also takes into account individual
experience, performance and personal commitment. In establishing the salary
levels against the range of comparable companies, the Compensation Committee
considers salaries and bonuses in determining the competitiveness of the total
compensation package. The Compensation Committee believes that the base salaries
of the Co Chief Executive Officers, i.e. Dr. Haitzmann and Mr. Hoetzinger,
have
been set significantly below the market level. The salaries of other executive
officers were either at or slightly below the market level.
Annual
Incentive Compensation
The
Compensation Committee reviews and approves all bonus payments made to the
Company’s executive officers. Payment of bonuses is determined by both corporate
and individual performance criteria. In 2005, the bonuses for executive officers
were based mainly on the successful offering of ADCs on the Vienna Stock
Exchange and an increase in net earnings of 39.6% at our South African casino,
offset by a 7.5% reduction in earnings attributable to our Cripple Creek casino.
We did not include the impact of incremental costs associated with the
compliance of the Sarbanes-Oxley Act of 2002, nor the costs associated with
the
development of our new facilities in Edmonton, Alberta, Canada and Central
City,
Colorado for our 2005 bonus determination.
Long-term
Incentive Compensation
The
Company provides long-term incentive compensation through its 2005 Equity
Incentive Plan. The exercise price of each option grant is equal to the fair
market value of the Company's common stock on the date of grant. The number
of
shares covered by any grant is generally determined by the position, the
executive officer's salary at the time of grant, amounts granted in previous
years, and the then current stock price. In special cases, however, grants
may
be made to reflect increased responsibilities or reward extraordinary
performance. In 2005, no stock option grants were made to our named executive
officers under the incentive compensation plan. The Compensation Committee
decides on at least an annual basis whether or not to issue option grants to
the
executive officers.
Certain
Tax Considerations
Section
162(m) of the Internal Revenue Code generally disallows a tax deduction to
public corporations for compensation greater than $1 million paid for any
taxable year to any "covered employee" (defined as the Chief Executive Officer
and the corporation's other four most highly compensated officers as of the
end
of a taxable year). However, the statute exempts qualifying performance-based
compensation from the deduction limit if certain requirements are met. The
2005
Equity Incentive Plan is structured to qualify awards as performance-based
compensation that is exempt from the $1 million deduction limit. In 2005, stock
options granted in 1995 to Dr. Haitzmann and Mr. Hoetzinger under the Employees’
Equity Incentive Plan were exercised that exceeded the $1 million deduction
limit.
Compensation
Committee:
Dinah
Corbaci
Gottfried
Schellmann
Notwithstanding
anything to the contrary set forth in any of the Company’s filings under the
Securities Act or the Exchange Act, the following report of the Audit
Committee shall not be incorporated by reference into any such filings and
shall
not otherwise be deemed filed under such acts.
REPORT
OF THE AUDIT COMMITTEE
OF
THE BOARD OF DIRECTORS
In
accordance with its written charter adopted by the Board of Directors, a copy
of
which is attached to the Proxy Statement as Exhibit A, the Audit Committee
assists the Board of Directors with fulfilling its oversight responsibility
regarding the quality and integrity of the accounting, auditing and financial
reporting practices of the Company.
Management
has primary responsibility for the financial reporting process, including the
preparation of the Company’s consolidated financial statements in accordance
with generally accepted accounting principles. Management also has
responsibility for establishing and maintaining the Company’s system of internal
controls over financial reporting, and assessing the effectiveness of those
controls annually, as required by Section 404 of the Sarbanes-Oxley Act of
2002.
The independent auditors are responsible for auditing the Company’s financial
statements and management’s conclusion that the Company’s internal control
structure was effective as of December 31, 2005. The Audit Committee’s
responsibility is to monitor and review these processes. It is not the duty
of
the Audit Committee to conduct auditing or accounting reviews or procedures.
Therefore, the Audit Committee has relied on the information provided to it
and
on management’s representation that the financial statements have been prepared
with integrity and objectivity and in conformity with accounting principles
generally accepted in the United States of America. The Committee has also
relied on the representations of the independent auditors included in their
report on the Company’s financial statements.
The
Audit
Committee has reviewed and discussed with the Company’s management the audited
consolidated financial statements of the Company for the year ended December
31,
2005. The Committee discussed with Grant Thornton LLP, the Company’s independent
auditors, the matters required to be discussed by Statement on Auditing
Standards No. 61 (Communication with Audit Committees), as amended by Statement
on Auditing Standards No. 90 (Audit Committee Communications), which included
a
discussion of the quality and adequacy of the Company’s internal
controls.
The
Committee has received the written disclosures and the letter from Grant
Thornton LLP, required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and has discussed with Grant
Thornton LLP, its independence.
Based
upon the review and discussions noted above, the Audit Committee recommended
to
the Board of Directors that the Company’s audited financial statements be
included in the Company’s Annual Report on Form 10-K for the year ended December
31, 2005, which was filed with the Securities and Exchange Commission on March
10, 2006.
The
Audit
Committee annually selects the Company’s independent accountants and auditors,
and has selected Grant Thornton LLP to serve in this capacity for 2006.
The
Board
of Directors and the Audit Committee believe that the Audit Committee’s current
member composition (three independent directors) satisfies the applicable rules
and pronouncements of the National Association of Securities Dealers, Inc.
and
the Securities and Exchange Commission governing audit committee selection,
experience, and composition, including the requirement that audit committee
members all be “independent directors” as that term is defined by such
rules.
Audit
Committee:
Robert
S.
Eichberg, Chairman
Gottfried
Schellmann
Dinah
Corbaci
INDEPENDENT
ACCOUNTANTS
Grant
Thornton LLP was the Company’s independent public accounting firm for the fiscal
year ended December 31, 2005. The Audit Committee has selected Grant Thornton
LLP to be the Company’s independent accountants for the fiscal year ending
December 31, 2006. A representative of Grant Thornton LLP is expected to be
present at the Annual Meeting either in person or via telephone to respond
to
appropriate questions, and will have an opportunity to make a statement if
the
representative desires to do so.
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
The
following table sets forth the aggregate fees billed to the Company for the
years ended December 31, 2005 and 2004, by Grant Thornton LLP:
Fee
Category
|
Year
Ended December 31,
|
2005
|
2004
|
Audit
Fees (1)
|
$665,551
|
$316,925
|
Audit
Related Fees (2)
|
-
|
12,123
|
Tax
Fees (3)
|
78,500
|
18,625
|
All
Other Fees
|
-
|
-
|
Total
|
$744,051
|
$347,673
|
1) |
Audit
fees consist of fees incurred for professional services rendered
for the
audit of the Company’s consolidated financial statements included in its
Annual Report on Form 10-K, attestation work required by Section
404 of
the Sarbanes-Oxley Act of 2002 in order to issue an opinion on
management’s assessment of the effectiveness of internal controls over
financial reporting, reviews of the interim consolidated financial
statements included in quarterly reports on Form 10-Q and consents
for
filings with the SEC. In 2005, this category includes fees relating
to our
public offering and listing of ADCs on the Vienna Stock
Exchange.
|
2) |
Audit
related fees consist of assurance and related services that are reasonably
related to the performance of the audit or review of the Company’s
financial statements and other required regulatory filings.
|
3) |
Tax
fees consist of aggregate fees billed for professional services for
tax
compliance, tax advice, and tax planning. In 2005, this category
includes
fees paid to Grant Thornton LLP relating to the audit of our 2003 US
tax return by the United States Internal Revenue
Service.
|
The
amounts shown above include out-of-pocket expenses incurred by Grant Thornton
LLP. Fees of $439,743 had been billed through December 31, 2005, and the
remaining $304,308 was billed subsequent to December 31, 2005.
The
Audit
Committee of the Board of Directors concluded Grant Thornton LLP's provision
of
the services generating all other fees is compatible with maintaining Grant
Thornton LLP's independence.
The
Audit
Committee approves in advance any and all audit services, including audit
engagement fees and terms, and non-audit services provided to the Company by
its
independent auditors (subject to the de minimis exception for non-audit services
contained in Section 10A (i)(1)(B) of the Exchange Act), all as required by
applicable laws or listing standards.
The
independent auditors and the Company’s management are required to periodically
report to the Audit Committee the extent of services provided by the independent
auditors and the fees associated with these services.
On
January 27, 2005, the Company appointed Grant Thornton LLP as the principal
independent accountant for its subsidiary Century Casinos Africa (Proprietary)
Limited ("Century Africa"), replacing PricewaterhouseCoopers Inc., which was
the
previous auditor for Century Africa. Grant Thornton LLP, which continues to
be
the principal independent accountant for the Company, relied in past years
on
the reports of PricewaterhouseCoopers Inc. regarding Century Casinos Africa,
a
significant subsidiary of the Company. PricewaterhouseCoopers Inc. was dismissed
on January 27, 2005. The decision to change accountants was approved by the
Audit Committee of the Company's Board of Directors and by the Board of
Directors.
The
report of PricewaterhouseCoopers Inc. on the financial statements for the fiscal
year ended December 31, 2003 contained no adverse opinion or disclaimer of
opinion, nor was it qualified or modified as to uncertainty, audit scope or
accounting principles.
During
the Company's fiscal year ended December 31, 2003, and through January 27,
2005,
there were no disagreements with PricewaterhouseCoopers Inc. on any matter
of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreement(s), if not resolved to the satisfaction
of PricewaterhouseCoopers Inc., would have caused it to make reference to the
subject matter of the disagreement(s) in connection with its report on the
financial statements for such year.
In
connection with reporting the dismissal of PricewaterhouseCoopers Inc. on a
Current Report on Form 8-K filed with the SEC on February 2, 2005, the Company
requested that PricewaterhouseCoopers Inc. furnish it with a letter addressed
to
the SEC stating whether or not PricewaterhouseCoopers Inc. agreed with the
statements made in the Form 8-K. A copy of such letter, dated February 2, 2005,
was filed as an Exhibit to the Form 8-K.
Exhibit
A
CENTURY
CASINOS, INC.
AMENDED
AND RESTATED CHARTER AND POWERS
OF
THE AUDIT COMMITTEE
20
MARCH 2006
The
Audit
Committee of the Board of Directors (the "Audit Committee") is a committee
of
the Board of Directors. Its primary function is to assist the Board in
fulfilling its oversight responsibilities by reviewing the financial
information, which will be provided to the shareholders and others, the systems
of internal controls, which management and the Board of Directors have
established, and the audit process.
The
membership of the Audit Committee shall consist of at least three members of
the
Board of Directors, each of whom shall be independent, and who shall serve
at
the pleasure of the Board of Directors. Audit Committee members and the
Committee Chairman shall be designated by the full Board of
Directors.
In
carrying out its responsibilities, the Audit Committee believes its policies
and
procedures should be designed to best react to changing conditions and to ensure
to the directors and shareholders that corporate accounting and reporting
practices of the Company are in accordance with all requirements and are of
the
highest quality.
RESOLVED,
that the charter and powers of the Audit Committee shall be:
1. |
Overseeing
that management has maintained the reliability and integrity of the
accounting policies and financial reporting and disclosure practices
of
the Company.
|
2. |
Overseeing
that management has established and maintained processes to assure
that an
adequate system of internal control is functioning within the
Company.
|
3. |
Overseeing
that management has established and maintained processes to assure
compliance by the Company with all applicable laws, regulations and
Company policy.
|
4. |
Overseeing
the Company’s independent accountants’ qualifications, independence and
performance.
|
RESOLVED,
that the Audit Committee shall have the following specific powers and
duties:
1. |
Reviewing,
selecting, and engaging the independent accountants to audit the
financial
statements of the Company and its
subsidiaries.
|
2. |
Holding
such regular meetings as may be necessary and such special meetings
as may
be called by the Chairman of the Audit Committee or at the request
of the
independent accountants.
|
3. |
Creating
an agenda for the ensuing year.
|
4. |
Reviewing,
pre-approving, and overseeing any engagement by the Company of the
Company’s independent accountants for permissible audit-related and
non-audit related work, in accordance with applicable law. The Audit
Committee may delegate its authority to pre-approve services to one
or
more Audit Committee members, provided that these designees present
any
approvals to the full Audit Committee at the next Audit Committee
meeting.
|
5. |
Reviewing
and approving the fees and terms of compensation paid to the Company’s
independent accountants.
|
6. |
Conferring
with the independent accountants concerning the scope of their examination
of the books and records of the Company and its subsidiaries; directing
the special attention of the auditors to specific matters or areas
deemed
by the Committee or the auditors to be of special significance; and
authorizing the auditors to perform such supplemental reviews or
audits as
the Committee may deem desirable.
|
7. |
Reviewing
with management and the independent accountants significant risks
and
exposures, audit activities and significant audit
findings.
|
8. |
Reviewing
the Company's audited annual financial statements and the independent
accountants' opinion rendered with respect to such financial statements,
including reviewing the nature and extent of any significant changes
in
accounting principles or the application
therein.
|
9. |
Reviewing
the adequacy of the Company's systems of internal control and disclosure
controls and procedures.
|
10. |
Obtaining
from the independent accountants their recommendations regarding
internal
controls and other matters relating to the accounting procedures
and the
books and records of the Company and its subsidiaries and reviewing
the
correction of controls deemed to be
deficient.
|
11. |
Providing
an independent, direct communication between the Board of Directors
and
independent accountants.
|
12. |
Reviewing
the adequacy of internal controls and procedures related to executive
travel and entertainment.
|
13. |
Reviewing
with appropriate Company personnel the actions taken to ensure compliance
with all applicable gaming rules and regulations and the results
of
confirmations and violations of such rules and
regulations.
|
14. |
Reviewing
the procedures established by the Company that monitor the compliance
by
the Company with its loan and indenture covenants and
restrictions.
|
15. |
Reporting
through its Chairman to the Board of Directors following the meetings
of
the Audit Committee and preparing the annual Audit Committee report
for
the Company’s proxy statement.
|
16. |
Maintaining
minutes or other records of meetings and activities of the Audit
Committee.
|
17. |
Reviewing
the charter and powers of the Committee annually and reporting and
making
recommendations to the Board of Directors on these
responsibilities.
|
18. |
Conducting
or authorizing investigations into any matters within the Audit
Committee's scope of responsibilities. The Audit Committee shall
be
empowered to retain independent counsel, accountants, or others to
assist
it in the conduct of any investigation. The Audit Committee shall
also
adopt a procedure for the receipt, retention and treatment of complaints
regarding accounting, internal controls or auditing matters, which
must
include a means for employees to submit confidential, anonymous complaints
regarding questionable accounting or auditing
matters.
|
19. |
Reviewing
compliance with, and authorize waivers from any provisions of, the
Company’s Code of Business Conduct and
Ethics.
|
20. |
Considering
such other matters in relation to the financial affairs of the Company
and
its accountants and in relation to the external audit of the Company
as
the Audit Committee may, in its discretion, determine to be
advisable.
|
21. |
Assuring
regular rotation of the audit partner, as required by
law.
|
22. |
Receiving
communications required by Industry Standards Board Statement No.
1;
reviewing relationship to ensure auditor
independence.
|
23. |
Reviewing
disclosures in Form 10-K, 10-Q and Proxy
Statements.
|
24. |
Reviewing
transactions between the Company and related parties for actual or
apparent conflicts of interest.
|
25. |
Evaluating
the independent accountants’ qualifications, performance and independence,
including a presentation of its conclusions with respect to the
independent accountants to the full Board on at least an annual basis.
As
part of such evaluation, at least annually, the Audit Committee
shall:
|
· |
obtain
and review a report or reports from the Company’s independent
accountants:
|
o |
describing
the independent accountants’ internal quality-control
procedures.
|
o |
describing
any material issues raised by (i) the most recent internal quality-control
review or peer review of the firm, or (ii) any inquiry or investigation
by
government or professional authorities, within the preceding five
years,
regarding one or more independent audits carried out by the firm
and any
steps taken to deal with any such
issues.
|
· |
review
and evaluate the senior members of the independent accountants teams(s),
particularly the partners on the audit engagement
teams;
|
· |
consider
whether the independent accountants should be rotated, so as to assure
continuing auditor independence;
and
|
· |
obtain
the opinion of management of the independent accountants’
performance.
|
26. |
The
Audit Committee shall establish policies for the Company’s hiring of
current or former employees of the independent accountants consistent
with
applicable laws and regulations.
|
27. |
Reviewing
off-balance sheet transactions and structures and the Company’s practices
with respect to non-GAAP financial information in its public disclosures;
discuss risk assessment and risk management with management regarding
the
Company’s major financial risk exposures and the steps that have been
taken to monitor and control such
exposures.
|
/s/
Erwin Haitzmann /s/
Peter Hoetzinger
Erwin
Haitzmann Peter
Hoetzinger
Chairman
of the Board Vice
Chairman of the Board
/s/
Gottfried Schellmann /s/
Robert Eichberg
Gottfried
Schellmann Robert
Eichberg
Director Director
/s/
Dinah Corbaci
Dinah
Corbaci
Director