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Filed by iTurf Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Subject company: dELiA*s Inc.
Commission file no. for related registration statement: 333-44916
On September 8, 2000, iTurf Inc., a Delaware corporation, issued the following
press release:
Contacts: Dennis Goldstein
iTurf Inc.
Chief Financial Officer
(212) 742-1640
Investors: Stacey Bibi/ Shannon Moody-
Froehlich/Bernadette Garfinkle
FOR IMMEDIATE RELEASE Media: Michael McMullan/Aeron Noe
Morgen-Walke Associates
(212) 850-5600
ITURF REPORTS SECOND QUARTER RESULTS
-- REVENUES INCREASE 160% --
-- GROSS MARGIN IMPROVES MORE THAN 500 BASIS POINTS --
-- NET LOSS NARROWER THAN EXPECTED --
New York, NY, September 8, 2000 - iTurf Inc. (Nasdaq:TURF), a leading
online network for teens and young adults, today announced results for the
second quarter and twenty-six weeks ended July 29, 2000.
Net revenues for the second quarter increased to $7.7 million from $3.0
million in the second quarter of last year. Gross profit for the second quarter
increased to $3.8 million, or 49.4% of revenues, compared to $1.3 million, or
44.1% of revenues in the second quarter of last year. Operating expenses totaled
$14.8 million, or 193.6% of revenues, compared to $4.1 million, or 137.3% of
revenues a year ago. The Company reported a net loss for the quarter before
amortization of intangible assets and non-cash compensation charges of $8.0
million or $0.40 per share, compared to a net loss of $1.7 million or $0.10 per
share a year ago. The Company reported a net loss for the quarter, including
amortization of intangible assets and
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non-cash compensation charges, of $10.4 million, or $0.52 per share, compared to
a net loss of $1.8 million, or $0.10 per share a year ago.
Net revenues for the six months ended July 29, 2000 increased to $18.7
million from $5.6 million last year. Gross profit increased to $9.3 million, or
49.9% of sales, compared to $2.6 million, or 46.4% of sales. Operating expenses
totaled $30.4 million, or 162.7% of revenues, compared to $5.8 million, or
104.3% of revenues. The Company reported a net loss for the six-month period
before amortization of intangible assets and non-cash compensation charges of
$15.7 million or $0.79 per share, compared to a net loss of $1.9 million or
$0.13 per share a year ago. The Company reported a net loss for the six month
period, including amortization of intangible assets and non-cash compensation
charges, of $19.6 million, or $0.99 per share, compared to a net loss of $2.0
million, or $0.13 per share a year ago.
Commenting on the results, Stephen Kahn, President and Chief Executive
Officer, stated, "Our solid second quarter performance was driven by the
strength of our e-commerce properties, as well as significant increases in
advertising revenue over last year. iTurf's non-commerce revenues grew 25% on a
sequential basis, and we continue to aggressively build this key component of
our online operations. Our progress to date, coupled with our successful efforts
to drive e-commerce revenue, leaves us more enthusiastic than ever about the
many opportunities presented to us through our planned recombination with
dELiA*s, which was announced on August 16, 2000."
Dennis Goldstein, Chief Financial Officer of iTurf added, "This
upcoming strategic recombination is significant for both our commerce and
advertising-based media businesses. On the commerce side, managing the online,
catalog and retail sales channels together will enable us to maximize the power
of the dELiA*s brand under a true `bricks-and-clicks' structure. On the media
side, our ability to leverage the strength of the brand and offer advertisers
integrated solutions is unique in the teen space."
Mr. Kahn concluded, "Looking ahead, we are confident that our
initiatives will enable us to leverage what we have built both online and
offline and enhance our leadership position in the teen market."
iTurf's traffic was 179 million page views in the month of July
compared to 82 million page views in July 1999. The Company also reported that
the number of unique visitors to its
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sites in July 2000 was 2.9 million, as measured by Nielsen Net Ratings,
indicating Internet reach of 3.3%. Finally, cumulative commerce customers
increased 17.5% during the second quarter to approximately 458,000 from 390,000
as of April 2000.
iTurf Inc. is a leading network provider of online destinations focused
on consumers between the ages of 13 and 24. Through its network of web sites,
iTurf provides a comprehensive offering of community, content and commerce
services, which include: interactive magazines, proprietary content, chat rooms,
posting boards, personal homepages, e-mail, and online shopping. The iTurf
network of web sites includes iTurf.com, dELiAs.cOm, gURL.com, droog.com,
TheSpark.com, SparkNotes.com, discountdomain.com, tsisoccer.com, OnTap.com and
StorybookHeirlooms.com.
iTurf has filed a proxy/registration statement and other documents with
the United States Securities and Exchange Commission relating to the proposed
merger between iTurf and dELiA*s. The proxy/registration statement will be
mailed to shareholders after the SEC has declared the registration statement
effective. Shareholders are urged to read the proxy/registration statement and
other documents carefully because they will contain important information about
the merger. These documents are available for free from the SEC's web site
(www.sec.gov) and from dELiA*s and iTurf by contacting Morrow & Co., Inc., 445
Park Avenue, New York, NY 10022.
iTurf, its executive officers and its board of directors will be
soliciting proxies from iTurf stockholders to vote in favor of the merger.
iTurf's executive officers and board of directors include Stephen Kahn,
Christopher Edgar, Evan Guillemin, Dennis Goldstein, Thomas Evans, Bruce Nelson,
Timothy Nye, Douglas Platt and Beth Vanderslice. For information about these
directors and executive officers, stockholders should refer to the
proxy/registration statement filed by iTurf on August 31, 2000, which is
available for free from the SEC's web site (www.sec.gov).
Forward-looking statements in this press release, including but not limited to
those related to consummation of the proposed merger, expectations relating to
future financial performance, synergies resulting from the proposed merger, the
divestiture of non-core assets and the expansion and growth of each company's
businesses are made pursuant to the Safe Harbor provisions of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements generally
relate to future results or events. The terms "believes," "expects," "intends,"
"anticipates" or "plans" and similar expressions are intended to identify some
of the forward-looking statements contained in this press release.
Forward-looking statements involve a number of risks, uncertainties and other
factors beyond iTurf's and dELiA*s control, which may cause material differences
in actual results, performance or other expectations. These factors include, but
are not limited to, the condition of the financial markets generally; the risk
that dELiA*s and iTurf's businesses will not be integrated successfully after
the proposed merger; costs related to the merger; the risk that dELiA*s or iTurf
stockholders will fail to approve the merger or that litigation will delay or
prevent the transaction's consummation; the ability of dELiA*s and iTurf to
divest non-core assets on satisfactory terms or at all; access to financing to
fund operations and the expansion strategies of each business; increases in the
cost of materials, printing, paper, postage, shipping and labor; timing and
quantity of catalog and electronic mailings;
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response rates; each company's ability to leverage investments made in
infrastructure to support expansion; acceptance of new retail concepts;
availability of acceptable store sites and lease terms; ability to open new
stores; possibility of increasing comparable store sales; adverse weather
conditions and other factors affecting retail stores generally; levels of
competition; iTurf's ability to sell advertising; changes in the growth rate of
Internet usage and online user traffic levels; levels of demand for Internet
advertising; the ability to retain key personnel; the ability of computer
systems to scale with growth in online traffic; difficulties in integrating
acquisitions of new businesses and technology; general economic conditions and
other factors affecting retail sales; dELiA*s ability to anticipate and respond
to fashion trends; each company's dependence on third parties; and other factors
detailed elsewhere in this press release, in iTurf's most recent registration
statement on Form S-4 and in iTurf's and dELiA*s most recent annual reports on
Form 10-K and quarterly reports on Form 10-Q filed with the Securities and
Exchange Commission.
(Tables to follow)
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iTurf Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED
7/31/99 7/29/00 7/31/99 7/29/00
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net revenues $ 2,952 $ 7,663 $ 5,567 $ 18,658
Cost of product sales 1,651 3,881 2,983 9,345
-------- -------- -------- --------
Gross profit 1,301 3,782 2,584 9,313
Selling, general and
administrative expenses 4,033 12,465 5,767 26,428
Amortization of intangible assets 19 1,673 38 3,228
Non-cash compensation charge -- 700 -- 700
Interest income (989) (636) (1,101) (1,401)
-------- -------- -------- --------
Loss before income taxes (1,762) (10,420) (2,120) (19,642)
Income tax benefit -- -- (161) --
-------- -------- -------- --------
Net loss $ (1,762) $(10,420) $ (1,959) $(19,642)
======== ======== ======== ========
Basic and diluted net loss per share $ (0.10) $ (0.52) $ (0.13) $ (0.99)
======== ======== ======== ========
Basic and diluted net loss per share
before amortization of intangible assets
and non-cash compensation charge $ (0.10) $ (0.40) $ (0.13) $ (0.79)
======== ======== ======== ========
Shares used in the calculation of basic and
diluted net loss per share 17,331 20,024 15,372 19,921
</TABLE>
-more-
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iTurf Inc.
SELECTED BALANCE SHEET DATA
(In thousands)
<TABLE>
<CAPTION>
January 29, 2000 July 29, 2000
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(Unaudited)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $19,009 $11,324
Short-term investments 32,893 25,274
Other current assets 4,687 13,204
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Total current assets 56,589 49,802
Investments 11,024 2,002
Property and equipment, net 3,286 3,782
Intangible assets, net 17,703 28,558
Other assets 206 277
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Total assets $88,808 $84,421
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LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and other current liabilities $ 3,856 $ 4,126
Stockholders' equity 84,952 80,295
------- -------
Total liabilities and stockholders' equity $88,808 $84,421
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</TABLE>
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