As filed with the Securities and Exchange Commission on February 23, 1998
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 10, 1997
dELiA*s Inc.
(Exact name of Registrant as specified in charter)
Delaware 0-21869 13-3914035
(State or other (Commission File No.) (IRS Employer
jurisdiction of Identification
incorporation) Number)
435 Hudson Street
New York, New York 10014
(Address of principal executive officers) (Zip Code)
(212) 807-9060
(Registrant's telephone number, including area code)
<PAGE>
This Form 8-K/A amends and completes the Registrant's Form 8-K filed on
December 24, 1997.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Business Acquired
Financial Statements of TSI Soccer Corporation
(i) Report of BDO Seidman LLP, Independent Certified Public
Accountants
(ii) Balance Sheets as of December 31, 1996 and September 30, 1997
(unaudited)
(iii) Statements of Operations for the year ended December 31, 1996
and the nine months ended September 30, 1996 and 1997
(unaudited)
(iv) Statements of Changes in Capital Deficit for the year
ended December 31, 1996 and the nine months ended September
30, 1997 (unaudited)
(v) Statements of Cash Flows for the year ended December 31, 1996
and the nine months ended September 30, 1996 and 1997
(unaudited)
(vi) Notes to Financial Statements
(b) Pro Forma Financial Information
(i) Introduction to Unaudited Pro Forma Condensed Combined
Financial Information
(ii) Unaudited Pro Forma Condensed Combined Balance Sheet as of
October 31, 1997
(iii) Unaudited Pro Forma Condensed Combined Statement of
Operations for the nine months ended October 31, 1997
(iv) Unaudited Pro Forma Condensed Combined Statement of
Operations for the nine months ended October 31, 1996
(v) Unaudited Pro Forma Condensed Combined Statement of
Operations for the fiscal year ended January 31, 1997
(vi) Unaudited Pro Forma Condensed Combined Statement of
Operations for the fiscal year ended January 31, 1996
(vii) Unaudited Pro Forma Condensed Combined Statement of
Operations for the fiscal year ended January 31, 1995
(viii) Notes to Unaudited Pro Forma Condensed Financial Information
<PAGE>
(c) Exhibits
Exhibit 2.1 Agreement and Plan of Merger dated December 10, 1997
by and among dELiA*s Inc., dELiA*s Woodstock
Company, TSI Soccer Corporation ("TSI"), certain
stockholders of TSI, and Evan L. Jones.*
Exhibit 23.1 Consent of BDO Seidman LLP.
- ------------
* Previously filed.
<PAGE>
Independent Auditors' Report
TSI Soccer Corporation
Durham, North Carolina
We have audited the accompanying balance sheet of TSI Soccer Corporation as of
December 31, 1996 and the related statements of operations, change in capital
deficit, and cash flows. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
These standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of TSI Soccer Corporation at
December 31, 1996 and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
March 27, 1997
BDO Seidman LLP
<PAGE>
TSI Soccer Corporation
Balance Sheets
(In thousands, except share data)
- --------------------------------------------------------------------------------
December 31, September 30,
1996 1997
- --------------------------------------------------------------------------------
(unaudited)
Assets (Notes 2 and 3)
Current
Cash $ 401 $ 82
Accounts receivable 340 911
Refundable income taxes 59 148
Inventories 2,933 4,523
Prepaid expenses and other
current assets 260 407
Deferred income tax assets (Note 4) 63 30
- --------------------------------------------------------------------------------
Total current assets 4,056 6,101
Property and equipment, less accumulated
depreciation (Note 1) 1,190 1,304
Other assets 13 18
- --------------------------------------------------------------------------------
$ 5,259 $7,423
================================================================================
Liabilities and Capital Deficit
Current liabilities
Note payable - bank (Note 2) $ 503 $ 744
Accounts payable 3,857 5,781
Accrued expenses:
Payroll 181 135
Other 225 558
Current maturities of
long-term debt (Note 3) 160 47
Current maturities of obligations
under capital lease (Note 5) 44 15
- --------------------------------------------------------------------------------
Total current liabilities 4,970 7,280
Long-term debt, less current
maturities (Note 3) 293 637
Obligations under capital leases,
less current maturities (Note 5) 90 255
Deferred credits -- 116
Deferred income taxes (Note 4) 13 30
- --------------------------------------------------------------------------------
Total liabilities 5,366 8,318
- --------------------------------------------------------------------------------
Commitments (Note 5)
Capital deficit (Note 7)
Common stock, 50,000,000 shares
authorized, $.01 stated value,
1,000,000 and 1,134,411 shares issued
and outstanding at December 31, 1996
and September 30, 1997, respectively 10 11
Additional paid-in capital 4 641
Deficit (121) (1,547)
- --------------------------------------------------------------------------------
Capital deficit (107) (895)
- --------------------------------------------------------------------------------
$ 5,259 $7,423
================================================================================
See accompanying summary of significant accounting policies and notes to
financial statements.
<PAGE>
TSI Soccer Corporation
Statements of Operations
(In thousands)
- --------------------------------------------------------------------------------
Nine Months Nine Months
Year Ended Ended Ended
December 31, September 30, September 30,
1996 1996 1997
- --------------------------------------------------------------------------------
(unaudited) (unaudited)
Net sales $23,999 $17,572 $19,307
Cost of goods sold 11,952 8,851 10,683
- --------------------------------------------------------------------------------
Gross profit 12,047 8,721 8,624
Selling, general
and administrative
expenses (Note 6) 12,059 8,786 9,808
- --------------------------------------------------------------------------------
Operating (loss) income (12) (65) (1,184)
- --------------------------------------------------------------------------------
Other income (expense)
Interest, net (73) (58) (139)
Loss on sale of assets -- -- (68)
- --------------------------------------------------------------------------------
Total other income (expense) (73) (58) (207)
- --------------------------------------------------------------------------------
Loss before income tax benefit (85) (123) (1,391)
Income tax provision
(benefit) (Note 4) (23) (33) 35
- --------------------------------------------------------------------------------
Net loss $ (62) $ (90) $(1,426)
================================================================================
See accompanying summary of significant accounting policies
and notes to financial statements.
<PAGE>
TSI Soccer Corporation
Statements of Changes in Capital Deficit
(In thousands, except share data)
- --------------------------------------------------------------------------------
Common Stock Additional
------------------- Paid-In Capital
Shares Amount Capital Deficit Deficit
- --------------------------------------------------------------------------------
Balance,
December 31, 1995 1,000,000 $10 $ 4 $ (59) $ (45)
Net loss -- -- -- (62) (62)
--------- ------- -------- ----------- -----------
Balance,
December 31, 1996 1,000,000 10 4 (121) (107)
Issuance of
common stock 134,411 1 637 -- 638
Net loss -- -- -- (1,426) (1,426)
--------- ------- -------- ----------- -----------
Balance,
September 30, 1997
(unaudited) 1,134,411 $11 $641 $(1,547) $(895)
========= ======= ======== =========== ===========
<PAGE>
TSI Soccer Corporation
Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Year Ended Nine Months Ended Nine Months Ended
December 31, September 30, September 30,
1996 1996 1997
- -----------------------------------------------------------------------------------------------------------------------
(unaudited) (unaudited)
<S> <C> <C> <C>
Cash flows from operating activities
Net loss $ (62) $ (90) $(1,426)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 192 90 183
Provision for doubtful accounts -- -- 26
Loss on sale of property and equipment -- -- 68
Deferred income taxes (41) 27 50
Changes in assets and liabilities:
Decrease (increase) in accounts receivable (148) (373) (439)
Decrease (increase) in inventories (976) (1,872) (1,591)
Decrease (increase) in refundable income taxes (59) -- (89)
Decrease (increase) in prepaid expenses
and other current assets (58) (27) (151)
Increase (decrease) in accounts payable and
accrued expenses 1,678 2,605 2,208 s
- -----------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 526 360 (1,161)
- -----------------------------------------------------------------------------------------------------------------------
Cash flows used in investing activities -
Capital expenditures (611) (338) (226)
- -----------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities
Net borrowings under line of credit agreement 503 -- 241
Proceeds from issuance of long term debt 68 -- 609
Principal payments on long-term debt (114) (56) (263)
Proceeds from issuance of common stock -- -- 525
Principal payments on capital lease obligations (23) 34 (44)
- -----------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 434 (22) 1,068
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash 349 -- (319)
Cash, beginning of period 52 52 401
- -----------------------------------------------------------------------------------------------------------------------
Cash, end of period $ 401 $ 52 82
=======================================================================================================================
</TABLE>
See accompanying summary of significant accounting policies
and notes to financial statements.
<PAGE>
TSI Soccer Corporation
Summary of Significant Accounting Policies
Information as of September 30, 1997 and for the periods ended September 30,
1996 and 1997 is unaudited.
- --------------------------------------------------------------------------------
Unaudited Interim Financial Statements. In the opinion of management, the
unaudited financial statements as of September 30, 1997 and for the nine month
periods ended September 30, 1996 and 1997 are presented on a basis consistent
with the audited financial statements and reflect all adjustments, consisting of
only normal recurring adjustments, necessary for a fair presentation of the
results thereof. The results of operations for interim periods are not
necessarily indicative of the results to be expected for the entire year.
Business TSI Soccer Corporation (the "Company") was incorporated
in the State of North Carolina on December 29, 1994. The
Company is a retailer of soccer clothing and gear through
mail-order catalogs throughout the United States and
through retail stores located in the Southeastern United
States.
Revenue Recognition Mail-order sales are recognized when products are shipped
and invoiced to customers. Retail sales are recognized at
point of sale. The Company provides an allowance for
estimated sales returns in accordance with its return
policy for merchandise sold during the year. The
allowance for estimated sales returns was $145,000 at
December 31, 1996.
Credit Risk Substantially all of the Company's accounts receivable
are from club or school soccer teams. Management
periodically performs credit evaluations of its customers
and generally does not require collateral. The Company
has no concentrated credit risk with any individual
customer.
Inventories Inventories are valued at lower of cost (first-in,
first-out) or market. Inventories consist primarily of
merchandise for resale.
Catalog Costs Catalog costs, which primarily consist of catalog
production and mailing costs, are capitalized and
amortized over three months. Deferred catalog costs as of
December 31, 1996 were $260,000. Catalog costs which are
reflected in selling, general and administrative expenses
for 1996 approximated $3,622,000.
Property, Equipment Property and equipment are stated at cost. Depreciation
and Depreciation is computed over the estimated useful lives of the assets
using the straight-line method for financial reporting
purposes and accelerated methods for income tax purposes.
Assets are depreciated for financial reporting purposes
based on estimated useful lives as follows:
Years
-----
Store furniture, fixtures and equipment 7-10
Computer equipment 5-7
Vehicles 5
Leasehold improvements Lease term
See accompanying notes to financial statements.
<PAGE>
TSI Soccer Corporation
Summary of Significant Accounting Policies
(Concluded)
Information as of September 30, 1997 and for the periods ended September 30,
1996 and 1997 is unaudited.
- --------------------------------------------------------------------------------
Long-Lived Assets Long-lived assets, such as property and equipment, are
evaluated for impairment when events or changes in
circumstances indicate that the carrying amount of the
assets may not be recoverable through the estimated
undiscounted future cash flows from the use of these
assets. When any such impairment exists, the related
assets will be written down to fair value. This policy is
in accordance with Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of," which is effective for fiscal years
beginning after December 15, 1995. No impairment losses
have been necessary through December 31, 1996.
Income Taxes Income taxes are calculated using the asset and liability
method specified by Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes."
Statement of For purposes of the statement of cash flows, the Company
Cash Flows considers investments purchased with a maturity of three
months or less to be cash equivalents.
Use of Estimates The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts
of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Fair Value of Financial instruments of the Company include long-term
Financial Instruments debt. Based upon the current borrowing rates available to
the Company, estimated fair values of these financial
instruments approximated their recorded carrying amounts.
See accompanying notes to financial statements.
<PAGE>
TSI Soccer Corporation
Notes to Financial Statements
Information as of September 30, 1997 and for the periods ended September 30,
1996 and 1997 is unaudited.
- --------------------------------------------------------------------------------
1. Property Property and equipment consists of the following:
and Equipment
December 31, 1996
------------------------------------------------------
Store furniture, fixtures
and equipment $ 643,000
Computer equipment 371,000
Leasehold improvements 302,000
Vehicles 187,000
------------------------------------------------------
1,503,000
Less accumulated depreciation 313,000
------------------------------------------------------
Net property and equipment $1,190,000
======================================================
2. Note Payable In October, 1996, the Company entered into a line of
- Bank credit agreement with a bank which provides for maximum
borrowings of $800,000 with interest at the bank's prime
rate plus 1.25% (9.50% at December 31, 1996). The
agreement is collateralized by inventories, accounts
receivable and equipment and a personal guarantee by the
majority stockholder. At December 31, 1996, $503,000 was
outstanding under the line of credit.
In June 1997, the Company entered into an agreement with
a bank which provides for a line of credit with maximum
borrowings up to $1,200,000 with interest at the bank's
prime rate plus 1.0% (9.50% at September 30, 1997) and
term debt of $500,000 (see Note 3). The agreement is
collateralized by inventories, accounts receivable and
furniture, fixtures and equipment, a $300,000 letter of
credit, personal investments of certain majority
stockholders aggregating $230,000, assignment of
$1,000,000 term life insurance policy on the president of
the Company and personal guarantees by three
stockholders. At September 30, 1997, $744,000 was
outstanding under the line of credit. The line of credit
expires July, 1998.
<PAGE>
TSI Soccer Corporation
Notes to Financial Statements
(Continued)
Information as of September 30, 1997 and for the periods ended September 30,
1996 and 1997 is unaudited.
- --------------------------------------------------------------------------------
3. Long-Term Debt Long-term debt consists of the following:
December 31, 1996
---------------------------------------------------------
Note to bank, payable $5,555 per
month, plus interest at the prime
rate plus 1.25% (9.50% at December
31, 1996) through October, 1999,
collateralized by substantially all
the assets of the Company $ 189,000
Subordinated unsecured notes
payable to stockholders, $13,500
per quarter, plus interest at 10%
through December, 1999 (see Note 7) 162,000
Installment notes payable, $2,184
per month, including interest at
9.9% through November, 1999,
collateralized by vehicles 102,000
---------------------------------------------------------
453,000
Less current maturities 160,000
---------------------------------------------------------
Total long-term debt $ 293,000
=========================================================
Annual maturities of the Company's long-term debt for the
next three years are as follows: 1997 - $160,000; 1998 -
$160,000; and 1999 - $132,000.
In May 1997, the Company entered into an agreement with a
bank which provides for an unsecured term loan of
$75,000. The agreement requires monthly payments of
$2,403 including interest at 9.25% through May 2000. At
September 30, 1997, $68,000 was outstanding under the
term loan.
In June 1997, the Company entered into an agreement with
a bank which provides for a line of credit with maximum
borrowings up to $1,200,000 with interest at the bank's
prime rate plus 1% (9.5% at September 30, 1997) and term
debt of $500,000. The term debt agreement requires
monthly payments of $8,333 plus interest at the bank's
prime rate plus 1% through June 2002. At September 30,
1997, $475,000 was outstanding under the term loan. (See
Note 2).
The agreement is collateralized by inventories, accounts
receivable and furniture, fixtures and equipment, a
$300,000 Letter of Credit, personal investments of
certain majority stockholders aggregating $230,000,
assignment of $1,000,000 term life insurance policy on
the president of the Company and personal guarantees by
three stockholders.
During the nine months ended September 30, 1997, 134,409
additional shares of the Company's common stock were
issued at $4.75 per share. Of the 134,409 shares issued,
$113,400 of the subordinated unsecured notes payable to
stockholders were repaid through the issuance of 23,834
shares of common stock of the Company. (See Note 7). At
September 30, 1997, the subordinated unsecured notes
payable to stockholders amounted to $40,500.
<PAGE>
TSI Soccer Corporation
Notes to Financial Statements
(Continued)
Information as of September 30, 1997 and for the periods ended September 30,
1996 and 1997 is unaudited.
- --------------------------------------------------------------------------------
4. Income Taxes Income tax benefit in the statement of operations
consisted of the following components:
December 31, 1996
---------------------------------------------------------
Current:
Federal $ 14,000
State 4,000
---------------------------------------------------------
Total current 18,000
Deferred:
Federal (33,000)
State (8,000)
---------------------------------------------------------
Total deferred (41,000)
---------------------------------------------------------
Total benefit $(23,000)
=========================================================
Deferred income taxes reflect the net tax effects of
temporary differences between the carrying amount of the
assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes. The sources
of the temporary differences and their effect on deferred
taxes are as follows:
December 31, 1996
---------------------------------------------------------
Non-compete agreement $ 22,000
Allowance for sales returns 36,000
Inventories 27,000
Gross deferred tax assets 85,000
Deferred tax liability - accumulated
depreciation (35,000)
---------------------------------------------------------
Net deferred tax asset $ 50,000
=========================================================
Included in the balance sheet:
Deferred income tax asset - current $ 63,000
Deferred income tax liability -
noncurrent (13,000)
---------------------------------------------------------
Net deferred tax asset $ 50,000
=========================================================
The Company believes that it is more likely than not that
the results of future operations will generate sufficient
taxable income to realize the deferred tax assets.
The effective rate of tax differs from the statutory rate
due primarily to graduated tax rates and a portion of
meals and entertainment which are not deductible for
income tax purposes.
5. Commitments Leases
The Company leases office, store, and warehouse
facilities under operating leases that expire over the
next five years. In most cases, management expects that
in the normal course of business leases will be renewed
or replaced with other leases. Rent expense was
approximately $602,000 for the year ended December 31,
1996.
<PAGE>
TSI Soccer Corporation
Notes to Financial Statements
(Continued)
Information as of September 30, 1997 and for the periods ended September 30,
1996 and 1997 is unaudited.
- --------------------------------------------------------------------------------
5. Commitments Subsequent to December 31, 1996, the Company entered into
(Concluded) a lease agreement for an office and warehouse facility.
The rental agreement has a ten year term with annual
rental payments totaling $3,590,000 over the life of the
lease. The Company has the option to buy the facility at
the end of five years. The lease term has not yet
commenced and no payments have been made to date.
As of December 31, 1996, future net minimum lease
payments required under capital leases and future minimum
rental payments required under operating leases that have
initial or remaining non-cancelable terms in excess of
one year are as follows:
Capital Operating
Leases Leases
---------------------------------------------------------
1997 $ 55,000 $ 593,000
1998 53,000 587,000
1999 47,000 591,000
2000 -- 489,000
2001 -- 195,000
---------------------------------------------------------
Total minimum lease payments 155,000 $2,455,000
=============
Less amount representing
interest 21,000
-------------------------------------------
Present value of future minimum
lease payments 134,000
Less current portion 44,000
-------------------------------------------
Long-term portion $ 90,000
===========================================
Retirement Plan
The Company has a 401(k) retirement plan covering all
eligible employees. Under the plan employees can defer 1%
to 15% of compensation. The Company may make matching
contributions on a discretionary basis. The employee's
contribution is 100% vested and the Company's matching
contribution vests over a five-year period. The Company's
contribution was $5,000 in 1996.
<PAGE>
TSI Soccer Corporation
Notes to Financial Statements
(Continued)
Information as of September 30, 1997 and for the periods ended September 30,
1996 and 1997 is unaudited.
- --------------------------------------------------------------------------------
6. Related Party The Company has an agreement with an affiliate to provide
Transactions certain management services. The agreement which expires
in 1998, provides that the Company pay a monthly fee in
exchange for management services provided. Total fees
paid under this agreement approximated $230,000 in 1996.
7. Capital Stock Issuance of Common Stock
Subsequent to December 31, 1996, 134,409 additional
shares of the Company's common stock were issued at $4.75
per share. Of the 134,409 shares issued, $113,400 of the
subordinated unsecured notes payable to stockholders were
repaid through the issuance of 23,834 shares of common
stock of the Company. Net proceeds from the sale of the
additional 110,575 shares at $4.75 per share were used
principally to fund working capital.
Stock Appreciation Rights
In 1995, the Company adopted the TSI Soccer Corporation
1995 Stock Appreciation Rights Plan (the "Plan"). Under
the Plan, the Board of Directors can grant Stock
Appreciation Rights (SARs) to eligible employees,
exercisable three years from the date such SARs are
granted. The SARs entitle the eligible employee to be
paid, in cash, all amounts credited to their SARs share
account. Such payment is equal to the excess of the fair
market value of the SARs at the exercise date over the
grant price for such SARs. The Company can elect to pay
the entire amount in a lump sum payment or in annual
installments not to exceed three years. As of December
31, 1996, the Company granted 8,000 SARs. The impact to
the financial statements of such rights was immaterial.
8. Supplemental Cash Cash paid during the year for:
Flow Information Year ended December 31, 1996
--------------------------------------------------------
Interest $ 92,000
Income taxes 81,000
========================================================
1996 non-cash transactions consisted of the purchase of
warehouse equipment through issuance of a capital lease
obligation of approximately $85,000.
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
On December 10, 1997, dELIA*s Inc. ( "dELIA*s") acquired TSI Soccer Corporation
("TSI"). Pursuant to an Agreement and Plan of Merger dated December 10, 1997, a
wholly-owned subsidiary of dELIA*s was merged with and into TSI (the "TSI
Merger"). As a result of the TSI Merger, TSI became a wholly-owned subsidiary of
dELIA*s. In connection with the TSI Merger, dELIA*s issued an aggregate of
308,687 shares of common stock, par value $.01 per share ("Common Stock")
including 297,927 shares to certain stockholders of TSI, and 10,760 shares of
Common Stock to employees of TSI pursuant to a "change of control" provision in
TSI's stock appreciation rights plan. dELIA*s also made cash payments of
approximately $730,000 to former stockholders of TSI who exercised statutory
dissenters' rights. The TSI Merger was structured as a tax-free exchange and
dELIA*s expects the TSI Merger to be accounted for as a pooling-of-interests.
The following unaudited condensed combined financial information sets forth the
combined financial position and combined results of operations of dELiA*s and
TSI assuming the TSI Merger was accounted for using the "pooling of interests"
method of accounting and that the TSI Merger was consummated (i) as of October
31, 1997, for the unaudited pro forma condensed combined balance sheet and (ii)
as of the beginning of the earliest period presented in the unaudited pro forma
condensed combined statements of operations.
The unaudited pro forma information combines the historical balance sheets of
dELiA*s as of October 31, 1997 with the historical balance sheets of TSI as of
September 30, 1997 and the historical statement of operations of dELiA*s for the
nine months ended October 31, 1997 and 1996 and the fiscal years ended January
31, 1997, 1996 and 1995 with the historical statements of operations of TSI for
the nine months ended September 30, 1997 and 1996 and the fiscal years ended
December 31, 1996, 1995 and 1994, respectively.
The following unaudited pro forma condensed combined information is presented
for illustration purposes only and is not necessarily indicative of the
financial position or results of operations which would actually have been
reported had the TSI Merger been in effect during those periods or which may be
reported in the future. The statements should be read in conjunction with the
historical financial statements and notes thereto of TSI which have been
included elsewhere herein in this 8-K filing. The statements should also be read
in conjunction with the historical financial statements of dELiA*s included in
its most recent Annual Report on Form 10-K.
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
OCTOBER 31, 1997
(In thousands, except share data)
<TABLE>
<CAPTION>
dELiA*s TSI
OCTOBER 31, SEPTEMBER 30, COMBINED
1997 1997 OCTOBER 31,
HISTORICAL HISTORICAL ADJUSTMENTS 1997
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 8,888 $ 82 $ (730)(a) $ 8,240
Accounts receivable -- 911 911
Short-term investments 12,692 -- 12,692
Merchandise inventories 9,823 4,523 14,346
Prepaid expenses and other current assets 5,543 585 6,128
--------- --------- -------- ---------
Total current assets 36,946 6,101 (730) 42,317
PROPERTY AND EQUIPMENT - Net 4,551 1,304 5,855
LONG-TERM INVESTMENTS 15,077 -- 15,077
OTHER ASSETS 182 18 200
--------- --------- -------- ---------
TOTAL ASSETS $ 56,756 $ 7,423 $ (730) $ 63,449
========= ========= ======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable - bank $ -- $ 744 $ 744
Accounts payable 7,067 5,781 12,848
Accrued expenses and other current liabilities 3,614 732 4,346
Liabilities due to customers 1,107 23 1,130
Deferred taxes 729 -- 729
--------- --------- -------- ---------
Total current liabilities 12,517 7,280 19,797
--------- --------- -------- ---------
LONG-TERM DEBT -- 637 637
LONG-TERM LIABILITIES 134 401 535
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
dELiA*s Preferred Stock, par value
$.01 per share; Authorized -
1,000,000 shares; Shares issued and
outstanding - none -- -- -- --
dELiA*s Common Stock, par value
$.01 per share; Authorized -
50,000,000 shares; Issued and outstanding -
13,002,977 shares 130 -- 3(a) 133
TSI Common Stock, par value
$.01 per share; Authorized -
50,000,000 shares; issued and outstanding -
1,134,411 shares -- 11 (11)(a) --
Deferred compensation (72) -- -- (72)
Additional paid-in capital 40,285 641 (722)(a) 40,204
Retained earnings (deficit) 3,762 (1,547) -- 2,215
--------- --------- -------- ---------
Total stockholders' equity (deficit) 44,105 (895) (730) 42,480
--------- --------- -------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 56,756 $ 7,423 $ (730) $ 63,449
========= ========= ======== =========
</TABLE>
See accompanying notes to unaudited pro forma condensed combined financial
information.
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
NINE MONTHS ENDED OCTOBER 31, 1997
(In thousands, except per share data)
<TABLE>
<CAPTION>
dELiA*s TSI
NINE MONTHS NINE MONTHS COMBINED
ENDED ENDED NINE MONTHS
OCTOBER 31, SEPTEMBER 30, ENDED
1997 1997 OCTOBER 31,
HISTORICAL HISTORICAL ADJUSTMENTS 1997
<S> <C> <C> <C> <C>
NET SALES $ 50,881 $ 19,307 $ -- $ 70,188
COST OF SALES 24,872 10,683 976(b) 36,531
--------- --------- ------ ---------
GROSS PROFIT 26,009 8,624 (976) 33,657
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 21,615 9,876 (976)(b) 30,515
INTEREST INCOME (EXPENSE), NET 959 (139) -- 820
--------- --------- ------ ---------
INCOME (LOSS) BEFORE PROVISION
FOR INCOME TAXES 5,353 (1,391) -- 3,962
PROVISION (BENEFIT) FOR INCOME TAXES 1,925 35 (619)(c) 1,341
--------- --------- ------ ---------
NET INCOME (LOSS) $ 3,428 $ (1,426) $ 619 $ 2,621
========= ========= ====== =========
NET INCOME (LOSS) PER SHARE $ 0.27 $ 0.20
========= =========
SHARES USED IN THE CALCULATION OF
NET INCOME (LOSS) PER SHARE 12,719 13,028
========= =========
</TABLE>
See accompanying notes to unaudited pro forma condensed combined financial
information.
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
NINE MONTHS ENDED OCTOBER 31, 1996
(In thousands, except per share data)
<TABLE>
<CAPTION>
dELiA*s TSI
NINE MONTHS NINE MONTHS COMBINED
ENDED ENDED NINE MONTHS
OCTOBER 31, SEPTEMBER 30, ENDED
1996 1996 OCTOBER 31,
HISTORICAL HISTORICAL ADJUSTMENTS 1996
<S> <C> <C> <C> <C>
NET SALES $ 15,482 $ 17,572 $ -- $ 33,054
COST OF SALES 7,421 8,851 1,261 (b) 17,533
--------- --------- -------- ---------
GROSS PROFIT 8,061 8,721 (1,261) 15,521
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 6,331 8,786 (1,261)(b) 13,856
INTEREST INCOME (EXPENSE), NET 24 (58) -- (34)
--------- --------- -------- ---------
INCOME (LOSS) BEFORE PROVISION
FOR INCOME TAXES 1,754 (123) -- 1,631
PROVISION (BENEFIT) FOR INCOME TAXES 15 (33) $ -- (18)
--------- --------- -------- ---------
NET INCOME (LOSS) $ 1,739 $ (90) $ -- $ 1,649
========= ========= ======== =========
PRO FORMA INCOME DATA:
Income (loss) before provision for
income taxes as reported $ 1,754 $ (123) $ -- $ 1,631
Pro forma provision (benefit) for income taxes 719 (33) (17)(c) 669
--------- --------- -------- ---------
Pro forma net income (loss) $ 1,035 $ (90) $ 17 $ 962
========= ========= ======== =========
Pro forma net income (loss) per share $ 0.10 $ 0.09
========= =========
Shares used in the calculation of pro forma
net income (loss) per share 10,000 10,309
========= =========
</TABLE>
See accompanying notes to unaudited pro forma condensed combined financial
information.
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FISCAL YEAR ENDED JANUARY 31, 1997
(In thousands, except per share data)
<TABLE>
<CAPTION>
dELiA*s TSI
FISCAL FISCAL COMBINED
YEAR ENDED YEAR ENDED FISCAL
JANUARY 31, DECEMBER 31, YEAR ENDED
1997 1996 JANUARY 31,
HISTORICAL HISTORICAL ADJUSTMENTS 1997
<S> <C> <C> <C> <C>
NET SALES $ 30,225 $ 23,999 $ -- $ 54,224
COST OF SALES 14,624 11,952 1,715(b) 28,291
--------- --------- ------ ---------
GROSS PROFIT 15,601 12,047 (1,715) 25,933
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 11,850 12,059 (1,715)(b) 22,194
INTEREST INCOME (EXPENSE), NET 176 (73) -- 103
--------- --------- ------ ---------
INCOME (LOSS) BEFORE PROVISION
FOR INCOME TAXES 3,927 (85) -- 3,842
PROVISION (BENEFIT) FOR INCOME TAXES (328) (23) -- (351)
--------- --------- ------ ---------
NET INCOME (LOSS) $ 4,255 $ (62) $ -- $ 4,193
========= ========= ====== =========
PRO FORMA INCOME DATA:
Income (loss) before provision for income
taxes as reported $ 3,927 $ (85) $ -- $ 3,842
Pro forma provision (benefit) for income taxes 1,620 (23) (12)(c) 1,585
--------- --------- ------ ---------
Pro forma net income (loss) $ 2,307 $ (62) $ 12 $ 2,257
========= ========= ====== =========
Pro forma net income (loss) per share $ 0.23 $ 0.21
========= =========
Shares used in the calculation of pro forma
net income (loss) per share 10,214 10,523
========= =========
</TABLE>
See accompanying notes to unaudited pro forma condensed combined financial
information.
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FISCAL YEAR ENDED JANUARY 31, 1996
(In thousands, except per share data)
<TABLE>
<CAPTION>
dELiA*s TSI
FISCAL FISCAL COMBINED
YEAR ENDED YEAR ENDED FISCAL
JANUARY 31, DECEMBER 31, YEAR ENDED
1996 1995 JANUARY 31,
HISTORICAL HISTORICAL ADJUSTMENTS 1996
<S> <C> <C> <C> <C>
NET SALES $ 5,652 $ 17,739 $ -- $ 23,391
COST OF SALES 3,078 9,444 1,130 (b) 13,652
--------- --------- ------ ---------
GROSS PROFIT 2,574 8,295 (1,130) 9,739
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 2,569 8,281 (1,130)(b) 9,720
INTEREST INCOME (EXPENSE), NET 25 (81) -- (56)
--------- --------- ------ ---------
INCOME (LOSS) BEFORE PROVISION
FOR INCOME TAXES 30 (67) -- (37)
PROVISION (BENEFIT) FOR INCOME TAXES 3 (8) -- (5)
--------- --------- ------ ----------
NET INCOME (LOSS) $ 27 $ (59) $ -- $ (32)
========= ========= ====== =========
PRO FORMA INCOME DATA:
Income (loss) before provision for income
taxes as reported $ 30 $ (67) $ -- $ (37)
Pro forma provision (benefit) for income taxes 12 (8) (19)(c) (15)
--------- --------- ------ ---------
Pro forma net income (loss) $ 18 $ (59) $ 19 $ (22)
========= ========= ====== =========
Pro forma net income (loss) per share $ 0.00 $ 0.00
========= =========
Shares used in the calculation of pro forma
net income (loss) per share 10,000 10,309
========= =========
</TABLE>
See accompanying notes to unaudited pro forma condensed combined financial
information.
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FISCAL YEAR ENDED JANUARY 31, 1995
(In thousands, except per share data)
<TABLE>
<CAPTION>
dELiA*s TSI
FISCAL FISCAL COMBINED
YEAR ENDED YEAR ENDED FISCAL
JANUARY 31, DECEMBER 31, YEAR ENDED
1995 1994 JANUARY 31,
HISTORICAL HISTORICAL ADJUSTMENTS 1995
<S> <C> <C> <C> <C>
NET SALES $ 139 $ 11,914 $ -- $ 12,053
COST OF SALES 89 6,365 758 (b) 7,212
--------- --------- ------ ---------
GROSS PROFIT 50 5,549 (758) 4,841
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 384 5,323 (758) (b) 4,949
INTEREST INCOME (EXPENSE), NET 2 (47) -- (45)
--------- --------- ------ ---------
INCOME (LOSS) BEFORE PROVISION
FOR INCOME TAXES (332) 179 -- (153)
PROVISION (BENEFIT) FOR INCOME
TAXES -- -- -- --
--------- --------- ------ ---------
NET INCOME (LOSS) $ (332) $ 179 $ -- $ (153)
========= ========= ====== =========
PRO FORMA INCOME DATA:
Income (loss) before provision for
income taxes as reported $ (332) $ 179 $ - $ (153)
Pro forma provision (benefit) for
income taxes (130) 72 -- (58)
--------- --------- ------ ---------
Pro forma net income (loss) $ (202) $ 107 $ -- $ (95)
========= ========= ====== =========
Pro forma net income (loss) per share $ (0.02) $ (0.01)
========= =========
Shares used in the calculation of pro forma
net income (loss) per share 10,000 10,309
========= =========
</TABLE>
See accompanying notes to unaudited pro forma condensed combined financial
information.
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL INFORMATION
I. ADJUSTMENTS
(a) The pro forma adjustment to reflect the exchange of TSI common stock
for 308,687 shares of dELIA*s common stock and the cash payments of
approximately $730,000 to former shareholders of TSI who exercised
statutory dissenters' rights.
(b) The pro forma adjustment to reflect the reclass of certain expenses
in the TSI financial statements to conform with classifications in
dELIA*s financial statements.
(c) The pro forma adjustment to reflect the provision/benefit for income
taxes assuming the TSI Merger was consummated as of February 1, 1994,
the beginning of the earliest period presented in the unaudited
Pro forma Condensed Combined Statements of Operations.
II. OTHER ITEMS
(A) The pro forma condensed combined statements of operations for the
nine months ended September 30, 1997, do not reflect nonrecurring
costs and charges resulting directly from the TSI Merger nor their
related tax effect. Merger related costs represent management's best
estimate of fees to be paid for investment banking, legal,
accounting and other professional services, management travel, and
filing and registration fees. Merger related costs are estimated to
range from $800,000 to $900,000 and will be recorded during the
fourth quarter of the fiscal year ended January 31, 1998.
(B) Subsequent to the close of the transaction, significantly all of
TSI's note payable to a bank and long-term debt totaling
approximately $1,730,000 was repaid. Accordingly, interest expense is
expected to be reduced in future periods. The pro forma condensed
combined financial statements do not reflect adjustments to interest
expense for this item.
(C) Pro forma income data for the nine months ended October 31, 1996 and
for the fiscal years ended January 31, 1997, 1996 and 1995 is
adjusted to reflect dELIA*s financial statements as if it were a C
Corporation for the entire period. dELIA*s converted from an L.L.C.
(Limited Liability Company) to a C Corporation during the fourth
quarter of fiscal 1996. Pro forma income data for the fiscal year
ended December 31, 1994 is adjusted to reflect TSI's financial
statements as if it were a C Corporation for the entire period. TSI
converted from a partnership to a C Corporation in 1995. Pro forma
income data for TSI for 1995, 1996 and 1997 represents actual
reported amounts.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized. Dated: February 20, 1998
Dated: February 23, 1998 dELiA*s Inc.
By: /s/ Stephen I. Kahn
Stephen I. Kahn
Chairman of the Board, President and
Chief Executive Officer
[BDO SEIDMAN, LLP LETTERHEAD]
Consent of Independent Certified Public Accountants
TSI Soccer Corporation
Durham, North Carolina
We hereby consent to the incorporation by reference in the following
Registration Statements of dELiA*s Inc.:
(i) Form S-3 (Registration No. 333-43665);
(ii) Form S-8 (Registration No. 333-42135);
(iii) Form S-8 (Registration No. 333-22449)
of our report dated March 27, 1997, relating to the financial statements of TSI
Soccer Corporation, appearing in dELiA*s Inc.'s current report on Form 8-K/A,
dated February 23, 1998.
BDO Seidman, LLP
February 23, 1998
