UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
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SCHEDULE 14A INFORMATION
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NEW CENTURY EQUITY HOLDINGS CORP.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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The following press release was issued on March 29, 2004.
(NEW CENTURY EQUITY HOLDINGS LOGO)
NEWS RELEASE
FOR INFORMATION CONTACT:
David P. Tusa, Executive Vice President and Chief Financial Officer
(210) 302-0410
david.tusa@newcenturyequity.com
www.newcenturyequity.com
MARCH 29, 2004
NEW CENTURY EQUITY HOLDINGS CORP.
ANNOUNCES DEFINITIVE AGREEMENT TO SELL HOLDINGS IN PRINCETON,
PLAN OF LIQUIDATION AND DISSOLUTION AND
RESULTS FOR THE FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2003
SAN ANTONIO, TX...New Century Equity Holdings Corp. (OTC BB: NCEH) (the
"Company" or "New Century") announced today that it has signed a definitive
agreement to sell all of its holdings in Princeton eCom Corporation
("Princeton"). The Company also announced that its Board of Directors has
approved a plan of liquidation and dissolution of the Company and that it will
file a proxy statement seeking shareholder approval of the proposed sale of New
Century's holdings in Princeton and New Century's proposed liquidation and
dissolution.
SALE OF HOLDINGS IN PRINCETON
The Company has entered into an agreement to sell all of its holdings in
Princeton for $10.0 million in cash to existing and new investors of Princeton.
This agreement was executed in conjunction with an equity financing that has
infused an additional $10.3 million in Princeton for working capital purposes.
Subsequent to this financing and prior to the closing of the sale of the
Company's holdings in Princeton, the Company's fully diluted interest in
Princeton has been reduced to approximately 23%. Additionally, the Company has
lost its right to appoint a member of the Princeton board as well as other
preferred stockholder rights, including the right to vote its stock in
Princeton.
In connection with entering into the agreement, the Company has also been
released from its guaranty of the Princeton office lease in Princeton, NJ.
The agreement to sell all of the Company's holdings in Princeton for $10.0
million is subject to the approval of the Company's shareholders and is expected
to be completed as early as late July 2004.
New Century Equity Holdings Corp. Announces Definitive Agreement to Sell
Holdings in Princeton, Plan of Liquidation and Dissolution and Results For
The Fourth Quarter and Year Ended December 31, 2003
Page 2
PLAN OF LIQUIDATION
After considering all options, the Board of Directors determined that the sale
of New Century's interest in Princeton followed by the liquidation of the
Company would be advisable and in the best interest of its stockholders. As a
result, the Company's Board of Directors has unanimously recommended to the
stockholders that the sale of Princeton and related liquidation of the Company
be approved. Princeton engaged in an additional equity financing in March 2004
in which the Company did not participate, since the Company no longer has the
cash resources to participate in equity financings of Princeton. Because New
Century did not participate in the financing, New Century lost its seat on
Princeton's board of directors as well as other rights as holders of preferred
stock of Princeton. If and when Princeton engages in additional equity
financings, the inability to participate will result in New Century's holdings
in Princeton being further diluted, which may result in decreased value
available to stockholders. In addition, New Century has limited resources to
continue to support its current holdings or invest in new businesses, and
currently anticipates that as early as mid-to-late 2005, the Company would be
required to begin the process of liquidating its holdings in Princeton to raise
cash necessary to pay corporate overhead expenses as well as expenses associated
with being a public company. This would further dilute the Company's interest in
Princeton, and would eventually deplete any assets New Century might have
available to distribute to stockholders. As a result, the Board of Directors
believes that it is important to sell the Company's holdings in Princeton now
and subsequently liquidate New Century to maximize the amount of cash available
to the stockholders.
As of July 31, 2004 (the anticipated date of a special shareholders meeting),
the Company's cash position is estimated to be approximately $4.0 million. In
addition to the Company's cash, the liquidation proceeds would include $10.0
million in cash from the sale of the Company's holdings in Princeton. The
Company also currently holds 375,000 common shares in Sharps Compliance Corp.
("Sharps") which would be sold for an estimated $0.3 million. The above items
represent approximately $14.3 million in estimated liquidation proceeds, before
related transaction expenses.
In conjunction with the proposed liquidation, the Company anticipates utilizing
cash through completion of the liquidation, including but not limited to: (i)
ongoing operating costs of approximately $0.2 million for a sixty (60) day
period subsequent to shareholder approval, (ii) payment of approximately $0.6
million to the Company's Chief Executive Officer for his interest in the
Company's holdings of Princeton, (iii) legal, consulting and other transaction
related fees estimated at $0.5 million, (iv) severance related expenditures
totaling approximately $2.6 million, (v) other costs, including costs of accrued
liabilities, insurance, vendor arrangement and lease terminations and other
wind-down costs estimated to range from $0.6 million to $1.5 million. In
addition, the Company has initially determined that approximately $0.6 million
to $0.8 million should be reserved for any unknown liabilities that may arise.
As a result, the Company currently estimates that it should be able to
distribute to its shareholders, in one or more cash distributions over time,
approximately $8.1 million to $9.2 million, or $0.23 to $0.27 per share, in
liquidation. These amounts are estimates only and could ultimately be higher or
lower.
New Century Equity Holdings Corp. Announces Definitive Agreement to Sell
Holdings in Princeton, Plan of Liquidation and Dissolution and Results For
The Fourth Quarter and Year Ended December 31, 2003
Page 3
If the shareholders approve the sale of the Company's holdings in Princeton and
the plan of liquidation, the Company intends to dissolve by filing articles of
dissolution, liquidate its remaining assets, satisfy its remaining obligations
and make one or more distributions to its shareholders of cash or assets
available for distribution. The Company currently anticipates that the articles
of dissolution would be filed within approximately 10 days following shareholder
approval of the plan of liquidation. Upon filing the articles of dissolution,
the Company expects to delist its shares from the Over-The-Counter Bulletin
Board exchange and close its stock transfer books, which would generally
prohibit any further transfers of record of its shares following dissolution.
The Company anticipates making an initial distribution to shareholders within
approximately 60 days following the filing of the articles of dissolution.
However, the precise timing of these events cannot be predicted, and the initial
distribution may be made after the 60-day period. If the stockholders do not
approve the Princeton sale and related liquidation, New Century will not
liquidate, and the Board of Directors will continue to manage the Company as a
publicly owned corporation and will explore what, if any, alternatives are then
available for the future of the business.
YEAR END 2003 RESULTS
BUSINESS DISCUSSION
The Company's balance sheet at December 31, 2003, reflects cash and cash
equivalents of $5.3 million and stockholders' equity of $11.7 million.
For the three months ended December 31, 2003, the Company's statement of
operations included a $0.6 million equity in net loss of affiliate. This amount,
which is fifty-two percent (52%) lower than the corresponding prior year loss
amount of $1.1 million, represents the Company's equity interest in the net loss
of Princeton for the three months ended September 30, 2003 (recorded on a three
month lag). Also, included in the fourth quarter 2003 statement of operations is
$1.3 million of corporate general and administrative expenses which includes
$0.7 million related to the amendment of the employment agreement of the
Company's Chief Executive Officer to terminate the split-dollar life insurance
agreement (previously disclosed in the Company's Form 8-K dated December 19,
2003).
For the twelve months ended December 31, 2003, the Company recorded a $2.7
million equity in net loss of affiliate, which represents an eighty-six percent
(86%) improvement over the corresponding prior year amount of $18.9 million
equity in net loss of affiliate. Corporate general and administrative expenses
of $3.0 million for the twelve months ended December 31, 2003 were eleven
percent (11%) lower than the corresponding prior year amount of $3.4 million.
The Company recently announced an agreement with the former majority
shareholders of OSC to settle all claims related to the April 2000 acquisition
of OSC by the Company. Under the terms of the agreement, the Company transferred
to the former OSC majority shareholders 525,000 shares of the common stock of
Sharps owned by the Company. In addition, the former OSC majority shareholders
agreed to a voting rights agreement which allows the Company to direct the vote
of New Century shares owned by them. Subsequent to the transfer of the Sharps
New Century Equity Holdings Corp. Announces Definitive Agreement to Sell
Holdings in Princeton, Plan of Liquidation and Dissolution and Results For
The Fourth Quarter and Year Ended December 31, 2003
Page 4
common stock shares, the Company's interest in Sharps decreased to 3.6% of the
outstanding shares. During the three months ended December 31, 2003, the Company
recorded a non-cash charge to discontinued operations of $0.4 million in
conjunction with the settlement agreement.
PRINCETON
For the three months ended September 30, 2003, Princeton recorded revenues of
$8.3 million, an operating loss of $1.6 million and an EBITDA (earnings before
interest, taxes, depreciation and amortization) loss of $0.1 million. The EBITDA
loss of $0.1 million, for the three months ended September 30, 2003, is
calculated by excluding depreciation and amortization expense of $1.5 million
from Princeton's net loss of $1.6 million.
EBITDA is a key indicator that management uses to evaluate the operating
performance of Princeton. While EBITDA is not intended to represent cash flow
from operations as defined by generally accepted accounting principles and
should not be considered as an indicator of operating performance or an
alternative to cash flow as a measure of liquidity, it is included herein to
provide additional information with respect to Princeton's ability to meet
future debt service, capital expenditure and working capital requirements. This
calculation may differ in method of calculation from similarly titled measures
used by other companies.
The Company does not consolidate the accounts of Princeton in its financial
statements, but rather discloses Princeton's results in the Company's footnotes
to its financial statements consistent with the accounting for an equity
investee.
Princeton's revenues for the quarter ended December 31, 2003 were adversely
affected by the loss of certain customers.
IMPORTANT ADDITIONAL INFORMATION WILL BE FILED WITH THE SEC
New Century plans to file with the SEC and mail to its shareholders a Proxy
Statement in connection with the proposed sale of its interest in Princeton and
the proposed liquidation and dissolution. The Proxy Statement will contain
important information about New Century and the matters submitted for
shareholder approval. Investors and shareholders are urged to read the Proxy
Statement carefully when it is available.
Investors and shareholders will be able to obtain free copies of the Proxy
Statement under Schedule 14A and other documents filed with the SEC by New
Century through the website maintained by the SEC at www.sec.gov. In addition,
investors and shareholders will be able to obtain free copies of the Proxy
Statement from New Century by contacting the Chief Financial Officer of New
Century at (210) 302-0444.
New Century and its directors and executive officers may be deemed to be
participants in the solicitation of proxies in respect of the proposed sale of
New Century's interest in Princeton and New Century's related liquidation and
dissolution. Information regarding New Century's
New Century Equity Holdings Corp. Announces Definitive Agreement to Sell
Holdings in Princeton, Plan of Liquidation and Dissolution and Results For
The Fourth Quarter and Year Ended December 31, 2003
Page 5
directors and executive officers is contained in New Century's Form 10-K for the
year ended December 31, 2002, Form 10-Q for the quarter ended September 30, 2003
and Proxy Statement dated April 23, 2003 in connection with New Century's 2003
Annual Meeting of Shareholders, which are filed with the SEC. As of March 22,
2004, New Century's directors and executive officers beneficially owned
5,339,584 shares (assuming the exercise of all 4,612,406 vested options), or
approximately 15.4 percent, of New Century's common stock. None of the options
held by the Company's directors or executive officers are considered
"in-the-money". Options would be considered "in-the-money" if the exercise price
of the options were less that $0.27 per share, which is the high end of the
Company's estimated range of the aggregate approximate liquidation distributions
to stockholders. As a result, the Company does not anticipate that any currently
outstanding options will be exercised.
New Century Equity Holdings Corp. Announces Definitive Agreement to Sell
Holdings in Princeton, Plan of Liquidation and Dissolution and Results For
The Fourth Quarter and Year Ended December 31, 2003
Page 6
ABOUT NEW CENTURY EQUITY HOLDINGS CORP.
New Century Equity Holdings Corp. (OTC BB:NCEH) is a company focused on high
growth organizations. The Company's holdings include its investments in
Princeton eCom Corporation and Sharps Compliance Corp. New Century Equity
Holdings Corp. is headquartered in San Antonio, Texas.
This press release contains forward-looking statements with respect to our plans
and objectives, distributions resulting from the sale and liquidation of our
assets, general economic conditions and other matters. For this purpose, any
statement that is not a statement of historical fact and any statement using the
term "believes," "expects," "plans," "anticipates," "estimates" or any similar
expression is a forward-looking statement, including without limitation
statements concerning the estimated amount and timing of closing of the sale of
New Century's interest in Princeton and any distribution(s) to stockholders, the
timing of dissolution, liquidation and closure of our stock transfer books and
the future operation and wind-down of our business. Those statements include
statements regarding our intent, belief, or current expectations, as well as the
assumptions on which such statements are based. Such forward-looking statements
are not guarantees of future performance and involve risks and uncertainties,
and actual results may differ materially from those contemplated by such
forward-looking statements. Important factors that could cause the results to
differ materially from those in forward-looking statements include those
discussed in New Century's filings with the Securities and Exchange Commission,
including the proxy statement to be filed in connection with the Princeton sale
and related plan of liquidation.
# # #
NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
----------------------- -----------------------
2003 2002 2003 2002
--------- --------- --------- ---------
(UNAUDITED)
Revenues .............................................. $ -- $ -- $ -- $ --
Operating expenses:
Selling, general and administrative expenses ......... 1,298 836 3,021 3,403
Depreciation and amortization expense ................ 32 40 153 157
--------- --------- --------- ---------
Operating loss from continuing operations ........... (1,330) (876) (3,174) (3,560)
Other income (expense):
Interest income, net ................................. 12 30 77 154
Equity in net loss of affiliate ...................... (554) (1,147) (2,723) (18,891)
Impairment of investment in affiliate ................ (306) -- (306) --
Litigation settlement ................................ -- -- (354) --
Consulting income .................................... -- 313 -- 3,125
Other (expense) income, net .......................... (16) 15 (6) 634
--------- --------- --------- ---------
Total other expense, net ............................ (864) (789) (3,312) (14,978)
--------- --------- --------- ---------
Net loss from continuing operations ................... (2,194) (1,665) (6,486) (18,538)
Discontinued operations:
Net loss from discontinued operations ................ -- -- -- (962)
Net (loss) income from disposal of
discontinued operations ............................. (389) 78 (30) 2,254
--------- --------- --------- ---------
Net loss .............................................. $ (2,583) $ (1,587) $ (6,516) $ (17,246)
========= ========= ========= =========
Basic and diluted net (loss) income per common share:
Net loss from continuing operations .................. $ (0.06) $ (0.05) $ (0.19) $ (0.54)
Net loss from discontinued operations ................ -- -- -- (0.03)
Net (loss) income from disposal of
discontinued operations ............................. (0.01) -- -- 0.07
--------- --------- --------- ---------
Net loss ............................................ $ (0.07) $ (0.05) $ (0.19) $ (0.50)
========= ========= ========= =========
Weighted average common shares outstanding ............ 34,653 34,218 34,379 34,217
========= ========= ========= =========
NEW CENTURY EQUITY HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
DECEMBER 31,
------------------------
2003 2002
--------- ---------
ASSETS
Current assets:
Cash and cash equivalents .............................. $ 5,330 $ 8,704
Accounts receivable .................................... 28 9
Prepaid and other assets ............................... 309 330
Net current assets from discontinued operations ........ -- 1,427
--------- ---------
Total current assets .................................. 5,667 10,470
Property and equipment, net .............................. 83 248
Other non-current assets ................................. 53 53
Investments in affiliates ................................ 7,233 9,353
--------- ---------
Total assets .......................................... $ 13,036 $ 20,124
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ....................................... $ 58 $ 30
Accrued liabilities .................................... 1,252 551
Net current liabilities from discontinued operations ... -- 1,435
--------- ---------
Total current liabilities ............................. 1,310 2,016
Other non-current liabilities ............................ -- 1
--------- ---------
Total liabilities ..................................... 1,310 2,017
Stockholders' equity ..................................... 11,726 18,107
--------- ---------
Total liabilities and stockholders' equity ............ $ 13,036 $ 20,124
========= =========