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Filed by dELiA*s 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. 0-21869
On August 16, 2000, iTurf Inc., a Delaware corporation, and dELiA*s Inc., a
Delaware corporation, jointly issued the following press release:
Contacts: Dennis Goldstein, iTurf Inc.
Chief Financial Officer
(212) 742-1640
Jim Cooper, dELiA*s Inc.
Executive Vice President and
Chief Financial Officer
(212) 807-9060
FOR IMMEDIATE RELEASE
Investors: Stacey Bibi/Shannon Moody/
Bernadette Garfinkle
Media: Aeron Noe
Morgen-Walke Associates
(212) 850-5600
ITURF INC. AND DELIA*S INC. ANNOUNCE DEFINITIVE AGREEMENT TO MERGE; STRATEGIC
COMBINATION TO CREATE DOMINANT ONLINE AND OFFLINE ENTITY IN THE TEEN SPACE
-- CORE BUSINESSES EXPECTED TO GENERATE POSITIVE OPERATING CASH FLOW
IN FOURTH QUARTER OF FISCAL 2000 --
New York, NY - August 16, 2000 - iTurf Inc. (Nasdaq: TURF) and dELiA*s
Inc. (Nasdaq: DLIA) today announced that they have entered into a definitive
agreement to merge in a stock-for-stock transaction. The combined company will
be restructured to focus on two core businesses: multi-channel retailing under
the dELiA*s brand, and online content and community under the iTurf network. The
combined entity, which will be named dELiA*s iTurf Inc., will be the leading
company serving the teen market in terms of catalog and e-commerce sales as well
as online community membership.
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Moreover, the company's core businesses are expected to generate positive
operating cash flow in the fourth quarter of this year and to generate positive
EBITDA on an ongoing basis beginning in the second half of fiscal 2001.
Under the terms of the agreement, iTurf will issue 1.715 Class A shares in
exchange for each share of dELiA*s common stock. The transaction is subject to
shareholder approval and customary closing conditions, and is expected to close
in the
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fourth quarter of fiscal 2000. Following the closing, the merged company's
symbol will be DLTF and its stock will trade on the Nasdaq Stock Market.
Stephen Kahn, who is currently Chairman and Chief Executive Officer of
both dELiA*s and iTurf and will serve in the same capacity at the new company,
stated, "dELiA*s spin-off of iTurf in April 1999 provided a unique opportunity
to incubate a very successful online business. It enabled us to build the
infrastructure necessary to support enormous growth in online traffic and sales,
to attract a solid team of Internet professionals, and to make a significant
acquisition. At the same time, the IPO allowed dELiA*s management to lay the
foundation for a powerful retail franchise that is now poised for a nationwide
store rollout."
"Recombining the companies at this time will facilitate a more effective
management of our commerce business, create a true multi-channel
`clicks-and-bricks' structure for the dELiA*s branded business and allow iTurf
to package integrated online and offline advertising packages to third parties
more effectively. With our catalogs, e-commerce and community sites and brick
and mortar stores, we can offer advertisers more exciting options to reach teens
than any other player in the space."
Mr. Kahn continued, "As we look ahead, we believe we can grow both
businesses more quickly and reach profitability at an accelerated pace by
recombining dELiA*s and iTurf. The combined entity will have a powerful balance
sheet with a strong cash position and more than adequate resources to execute
our near-term growth strategies. Additionally, we believe that simplifying the
relationship between the entities will enhance shareholder value by eliminating
the confusion in the capital markets that has resulted from our structural
complexity and has contributed to a severe under-valuation of both businesses."
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dELiA*s iTurf will consist of two core businesses. The dELiA*s branded
business will target teens via the dELiA*s catalog, www.dELiAs.cOm and dELiA*s
retail stores. The iTurf Internet business will offer a compelling assortment of
community features and proprietary content to teens and young adults through
sites such as gURL.com, TheSpark.com, iTurf.com and SparkNotes.com.
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As part of its efforts to maximize shareholder value and allocate
resources most appropriately following the merger, dELiA*s also announced that
it intends to divest the assets of its non-core properties, including Storybook
Heirlooms and TSI Soccer. The Company has retained Tucker Alexander (a Tucker
Capital affiliate) to advise it with regard to the sale of the Storybook
business and Kurt Salmon Associates Capital Advisors to advise it with regard to
the sale of TSI Soccer.
Evan Guillemin, President of dELiA*s, and Dennis Goldstein, Chief
Financial Officer of iTurf, will become Co-Presidents of dELiA*s iTurf. Mr.
Guillemin will oversee the combined company's dELiA*s branded business
(including dELiAs.cOm), and Mr. Goldstein will lead the combined company's iTurf
Internet properties. Jim Cooper, currently Chief Financial Officer of dELiA*s,
will become CFO of the combined company. dELiA*s iTurf's Board of Directors will
be comprised of the iTurf Board of Directors and four members from dELiA*s Board
of Directors, which will bring the total number of board members to twelve.
Mr. Goldstein said, "This transaction will give iTurf more direct access
to dELiA*s land-based assets, including its 12-million name database, catalog
circulation, and fulfillment capabilities. We believe it also allows us to offer
more fully integrated online and offline advertising packages to third parties,
which will be critical to the ongoing growth of our Internet business."
Mr. Guillemin stated, "dELiA*s assets include one of the most powerful
brands in the teen market, the leading e-commerce site and catalog targeting
this demographic group and a rapidly expanding base of specialty retail stores.
By bringing together the dELiA*s branded businesses under a single corporate
structure, the company will be in a
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better position to realize a host of synergies and present a seamless
brand-based experience to our customers."
Mr. Kahn concluded, "We are confident that it is in the best interests of
the shareholders of both iTurf and dELiA*s to rationalize the operating
structure of the businesses and streamline management's focus on our core
assets, which are best positioned for growth and profitability."
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iTurf is a majority-owned subsidiary of dELiA*s. The transaction will be
accounted for as the purchase by dELiA*s of the minority interest in iTurf held
by the public. The agreement was negotiated and unanimously recommended by an
independent committee of the iTurf Board of Directors established to represent
the interests of holders of iTurf shares not owned by dELiA*s, and has been
unanimously approved by the Boards of Directors of both companies. The
independent committee of the iTurf Board of Directors was advised by U.S.
Bancorp Piper Jaffray and independent legal advisors. Salomon Smith Barney acted
as financial advisor to dELiA*s.
iTurf will be filing a proxy/registration statement and other documents
with the United States Securities and Exchange Commission relating to the
merger. 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 will be 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 most recent
annual report on Form 10-K/A issued by iTurf, which is available for free from
the SEC's web site (www.sec.gov).
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dELiA*s, its executive officers and its board of directors will be
soliciting proxies from dELiA*s stockholders to vote in favor of the merger.
dELiA*s executive officers and board of directors include Stephen Kahn,
Christopher Edgar, Evan Guillemin, Jim Cooper, Clare Copeland, S. Roger Horchow,
Geraldine Karetsky and Joseph Pinto. For information about these directors and
executive officers, stockholders should refer to the most recent proxy statement
issued by dELiA*s, which is available for free from the SEC's web site
(www.sec.gov).
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ABOUT ITURF
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, dELiA*s.cOm, gURL.com, droog.com, TheSpark.com,
SparkNotes.com, discountdomain.com, tsisoccer.com, OnTap.com and
StorybookHeirlooms.com.
ABOUT DELIA*S
dELiA*s Inc. is a leading marketer of apparel, accessories, home furnishings and
athletic goods to consumers between the ages of 13 to 24. The Company offers
proprietary and other brands through various catalogs and retail stores and
provides on-line community, content and commerce services to Generation Y.
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; 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 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; 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
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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; changes in the growth rate of Internet usage and online user traffic
levels, 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 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.
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