**Filedwith the Securities and Exchange Commission on June 17, 2003**

 

 

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C.20549**

 

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**FORM 10-Q**

 
| **ý** | **QUARTERLY REPORT** |   |
|------------|----------------------|--------|

 

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**Pursuant to Section 13 or 15(d) of theSecurities Exchange Act of 1934**

 

**For the thirteenweeks ended May 3, 2003**

 

**Commission file number 0-25347**

 

**dELiA*s Corp.**

(Exact name of registrantas specified in its charter)

** **

| **Delaware**                                                    |   | **13-3963754**                       |
|-----------------------------------------------------------------|--------|--------------------------------------|
| (State or other jurisdiction of  incorporation or organization) |   | (I.R.S. Employer Identification No.) |

 

## **435 Hudson Street, New York, New York 10014**

(Address of principal executive offices)

(Zip Code)

 

## **(212) 807-9060**

(Registrant’s telephone number, including areacode)

 

Indicate by check mark whetherthe registrant (1) has filed all reports required to be filed by Section 13 or15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (orfor such shorter period that the registrant was required to file such reports),and (2) has been subject to such filing requirements for the past 90 days.  ý**YES**o**NO**

 

Indicate by check mark ifthe registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2):

ý**YES**o**NO**

 

Number of shares of common stockoutstanding (excluding shares in treasury) as of June 7, 2003:

| Class A: 53,308,710 |
|---------------------|
| Class B: none       |

 

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*Statementscontained in this document or incorporated by reference, including, withoutlimitation, information appearing under “Part I - Item 2 - Management’s Discussion and Analysis of Financial Conditionand Results of Operations,” may be forward-looking statements (withinthe meaning of Section 27A of the amended Securities Act of 1933 and Section21E of the amended Securities Exchange Act of 1934). The words “believe,”“plan,” “intend,” “expect” and similar expressions are intended to identifyforward-looking statements. Readers are cautioned not to place undue relianceon these forward-looking statements, which apply only as of the date of thisreport. These statements are subject to risks and uncertainties that couldcause actual results to differ materially from those contemplated in theforward-looking statements. Such risks and uncertainties include, but are notlimited to: the condition of the financial markets generally; access tofinancing to fund the operations and the expansion strategies of our business;future conditions of the market for our common stock; the risk that we could bedelisted from the NASDAQ stock exchange; the risk that our restructuringefforts will not produce savings from additional operating efficiencies in a timelyfashion or at all; costs related to restructuring initiatives; our ability toreduce expenses successfully; the risk that cost reduction initiatives may leadto reduced service levels or product quality, which could have an adverseimpact on revenues; increases in the cost of materials, printing, paper,postage, shipping and labor; timing and quantity of catalog and electronicmailings; response rates; our ability to leverage investments made ininfrastructure; possibility of increasing comparable store sales; adverseweather conditions and other factors affecting retail stores generally; theability of our computer systems to scale with growth in online traffic;difficulty in integrating new technologies; our ability to retain keypersonnel; levels of competition; general economic conditions; changes inconsumer spending patterns; our ability to anticipate and respond to fashiontrends; our dependence on third parties; and other factors detailed elsewherein this report. These factors and other factors that appear in our annualreport on Form 10-K filed with the Securities and Exchange Commission couldaffect our actual results and could cause our actual results to differmaterially from those expressed in any forward-looking statements made by us oron our behalf. We undertake no obligation to publicly update any forward-lookingstatements, whether as a result of new information, future events or otherwise.*

 

*We filereports and other information with the Securities and Exchange Commissionpursuant to the information requirements of the Securities Exchange Act of1934. Readers may read and copy any document we file at the SEC’s publicreference room in Washington D.C. Please call the SEC at 1-800-SEC-0330 forfurther information on the public reference room. Our filings are alsoavailable to the public from commercial document retrieval services and at theSEC’s website at www.sec.gov.*

 

*Ourannual report on Form 10-K, quarterly reports on Form 10-Q, current reports onForm 8-K and amendments to such reports are available on our internet websitefree of charge. Our website address is www.dELiAs.cOm. The informationavailable at our website is not incorporated by reference in this report.*

 

*Ourfiscal year is the 52 or 53 weeks ended onthe Saturday closest to January 31 following the corresponding calendaryear. For example, “fiscal 2003” means the period from February 2, 2003 toJanuary 31, 2004.*

 

2

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## **PART I**

**FINANCIAL INFORMATION**

**Item 1. Consolidated Financial Statements**

 

**CONSOLIDATED BALANCE SHEETS**

**(in thousands, except share data)**

 
|                                                                                                                                                               |   | **February 1, 2003** |   | **May 3, 2003** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------|--------|-----------------|--------|
|                                                                                                                                                               |   |                 |   | **(Unaudited)** |   |
| **ASSETS**                                                                                                                                                         |   |                 |   |            |   |
| CURRENT ASSETS                                                                                                                                                     |   |                 |   |            |   |
| Cash and cash equivalents                                                                                                                                          |   | $                    | 124    |            | $      | 7,390 |   |
| Restricted cash                                                                                                                                                    |   | 3,655                |   | 3,655           |   |
| Merchandise inventories                                                                                                                                            |   | 16,770               |   | 17,368          |   |
| Prepaid expenses and other current assets                                                                                                                          |   | 3,989                |   | 4,060           |   |
| Total current assets                                                                                                                                               |   | 24,538               |   | 32,473          |   |
|                                                                                                                                                               |   |                 |   |            |   |
| PROPERTY AND EQUIPMENT, net of accumulated depreciation  of $24,062 and $25,678, respectively                                                                      |   | 32,049               |   | 30,951          |   |
| OTHER ASSETS                                                                                                                                                       |   | 377                  |   | 183             |   |
| TOTAL ASSETS                                                                                                                                                       |   | $                    | 56,964 |            | $      | 63,607 |   |
|                                                                                                                                                               |   |                 |   |            |   |
| **LIABILITIES AND STOCKHOLDERS’ EQUITY**                                                                                                                      |   |                 |   |            |   |
| CURRENT LIABILITIES                                                                                                                                                |   |                 |   |            |   |
| Accounts payable and accrued expenses                                                                                                                              |   | $                    | 18,612 |            | $      | 14,510 |   |
| Liabilities due to customers                                                                                                                                       |   | 5,702                |   | 5,551           |   |
| Accrued restructuring                                                                                                                                              |   | 930                  |   | 196             |   |
| Bank loan payable                                                                                                                                                  |   | 3,912                |   | 6,099           |   |
| Current portion of long-term debt and capital leases                                                                                                               |   | 3,563                |   | 3,551           |   |
| Total current liabilities                                                                                                                                          |   | 32,719               |   | 29,907          |   |
|                                                                                                                                                               |   |                 |   |            |   |
| Deferred licensing revenue                                                                                                                                         |   | —               |   | 16,500          |   |
| Long-term debt and capital leases                                                                                                                                  |   | 142                  |   | —          |   |
| Other long-term liabilities                                                                                                                                        |   | 3,085                |   | 3,410           |   |
|                                                                                                                                                               |   |                 |   |            |   |
| STOCKHOLDERS’ EQUITY                                                                                                                                          |   |                 |   |            |   |
| Preferred stock, par value $.01 per share;  Authorized shares – 1,000,000; Issued shares – none                                                          |   | —               |   | —          |   |
| Class A common stock, par value $.01 per share;   Authorized shares – 100,000,000;   Issued shares – 47,502,811 shares (including 1,685,580 in treasury) |   | 475                  |   | 475             |   |
| Class B common stock, par value $.01 per share;   Authorized shares – 12,500,000;   Issued shares – 11,425,000 (all in treasury)                         |   | 114                  |   | 114             |   |
| Additional paid-in capital                                                                                                                                         |   | 138,475              |   | 138,487         |   |
| Less common stock in treasury, at cost                                                                                                                             |   | (11,041              | )      | (11,041         | )      |
| Deferred compensation                                                                                                                                              |   | (134                 | )      | (67             | )      |
| Retained deficit                                                                                                                                                   |   | (106,871             | )      | (114,178        | )      |
| Total stockholders’ equity                                                                                                                                    |   | 21,018               |   | 13,790          |   |
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                    |   | $                    | 56,964 |            | $      | 63,607 |   |

 

SeeNotes to Unaudited Consolidated Financial Statements

 

3

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**CONSOLIDATED STATEMENTS OF OPERATIONS**

**(in thousands, except per share data)**

 
|                                                                             |   | **Thirteen Weeks Ended** |   |
|----------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                             |   | **May 4, 2002**          |   | **May 3, 2003** |   |
|                                                                             |   | **(Unaudited)**          |   |
|                                                                             |   |                     |   |   |   |
| NET SALES                                                                        |   | $                        | 28,770 |   | $ | 29,453 |   |
|                                                                             |   |                     |   |   |   |
| COST OF SALES                                                                    |   | 15,463                   |   | 17,163 |   |
|                                                                             |   |                     |   |   |   |
| GROSS PROFIT                                                                     |   | 13,307                   |   | 12,290 |   |
|                                                                             |   |                     |   |   |   |
| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                                     |   | 17,564                   |   | 18,213 |   |
|                                                                             |   |                     |   |   |   |
| FINANCE CHARGES AND TRANSACTION FEES                                             |   | —                   |   | 1,246 |   |
|                                                                             |   |                     |   |   |   |
| INTEREST AND OTHER EXPENSE, NET                                                  |   | 12                       |   | 138 |   |
|                                                                             |   |                     |   |   |   |
| NET  LOSS BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE             |   | (4,269                   | )      | (7,307 | ) |
|                                                                             |   |                     |   |   |   |
| CUMULATIVE  EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE                             |   | 15,383                   |   | — |   |
|                                                                             |   |                     |   |   |   |
| NET INCOME (LOSS)                                                                |   | $                        | 11,114 |   | $ | (7,307 | ) |
|                                                                             |   |                     |   |   |   |
| BASIC AND DILUTED NET INCOME (LOSS) PER SHARE:                                   |   |                     |   |   |   |
| BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING  PRINCIPLE                      |   | $                        | (0.09  | ) | $ | (0.16 | ) |
| CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE                              |   | 0.34                     |   | — |   |
| NET INCOME (LOSS)                                                                |   | $                        | 0.25   |   | $ | (0.16 | ) |
|                                                                             |   |                     |   |   |   |
| SHARES USED IN THE CALCULATION OF BASIC AND DILUTED NET  INCOME (LOSS) PER SHARE |   | 45,037                   |   | 45,651 |   |

 

See Notes to Unaudited Consolidated Financial Statements

 

4

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**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(in thousands)**

 
|                                                                                                                                     |   | **Thirteen Weeks Ended** |   |
|------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                                                                     |   | **May 4, 2002**          |   | **May 3, 2003** |   |
|                                                                                                                                     |   | **(Unaudited)**          |   |
| OPERATING ACTIVITIES:                                                                                                                    |   |                     |   |   |   |
| Net  loss before cumulative effect of change in accounting principle                                                                     |   | $                        | (4,269 | ) | $ | (7,307 | ) |
|                                                                                                                                     |   |                     |   |   |   |
| Adjustments to reconcile net loss before cumulative  effect of change in accounting principle to net cash used in operating  activities: |   |                     |   |   |   |
| Depreciation and amortization                                                                                                            |   | 1,412                    |   | 1,616 |   |
| Non-cash compensation expense related to restricted  stock                                                                               |   | 256                      |   | 67 |   |
| Non-cash expense related to warrants                                                                                                     |   | —                   |   | 12 |   |
| Changes  in operating assets and liabilities:                                                                                            |   |                     |   |   |   |
| Merchandise inventories                                                                                                                  |   | (4,016                   | )      | (598 | ) |
| Prepaid expenses and other current assets                                                                                                |   | 374                      |   | (71 | ) |
| Other assets                                                                                                                             |   | (126                     | )      | 194 |   |
| Current liabilities                                                                                                                      |   | (2,140                   | )      | (4,987 | ) |
| Deferred revenue                                                                                                                         |   | —                   |   | 16,500 |   |
| Long-term liabilities                                                                                                                    |   | (524                     | )      | 325 |   |
| Net cash (used in) provided by operating activities                                                                                      |   | (9,033                   | )      | 5,751 |   |
|                                                                                                                                     |   |                     |   |   |   |
| INVESTING  ACTIVITIES:                                                                                                                   |   |                     |   |   |   |
| Capital expenditures                                                                                                                     |   | (3,552                   | )      | (518 | ) |
| Net  cash used in investing activities                                                                                                   |   | (3,552                   | )      | (518 | ) |
|                                                                                                                                     |   |                     |   |   |   |
| FINANCING  ACTIVITIES:                                                                                                                   |   |                     |   |   |   |
| Net  borrowings under line of credit agreements                                                                                          |   | 6,000                    |   | 2,187 |   |
| Principal  payments on long-term debt and capital lease obligations                                                                      |   | (144                     | )      | (154 | ) |
| Exercise of options to purchase 157,788 shares in 2002                                                                                   |   | 480                      |   | — |   |
| Net cash provided by financing activities                                                                                                |   | 6,336                    |   | 2,033 |   |
|                                                                                                                                     |   |                     |   |   |   |
| (DECREASE)  INCREASE IN CASH AND CASH EQUIVALENTS                                                                                        |   | (6,249                   | )      | 7,266 |   |
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                                                                           |   | 27,915                   |   | 124 |   |
| CASH AND CASH EQUIVALENTS, END OF PERIOD                                                                                                 |   | $                        | 21,666 |   | $ | 7,390 |   |

 

SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ANDINVESTING ACTIVITY:

March 2002 issuance of common stock as finalconsideration for a fiscal 2000 acquisition.

 

SeeNotes to Unaudited Consolidated Financial Statements

 

5

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**NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**

 

**1.****                                      Business**

 

We are a multichannel retailer that markets apparel,accessories and home furnishings to teenage girls and young women. We reach ourcustomers through the dELiA*s catalog, www.dELiAs.cOm and the dELiA*s retailstores.

 

In connection with our fiscal 2002 adoption of SFAS142, we recorded a $15.4 million cumulative effect of change in accountingprinciple which represented the reversal of the unamortized balance of thenegative goodwill recorded on our books in connection with a fiscal 2000transaction.

 

We are subject to seasonal fluctuations in ourmerchandise sales and results of operations. We expect our net sales generallyto be higher in the second half of each fiscal year than in the first half ofthe same fiscal year.

 

**2.****                                      Summaryof Significant Accounting Policies and Basis of Presentation**

 

*Principles of Consolidation—*Our consolidated financial statements include theaccounts of dELiA*s and subsidiaries, all of which were wholly-owned for allperiods presented. All significant intercompany balances and transactions havebeen eliminated in consolidation.

 

*Unaudited Interim Financial Statements*—The accompanying unaudited consolidated financialstatements have been prepared in accordance with the requirements for Form 10-Qand in accordance with generally accepted accounting principles in the UnitedStates for interim financial reporting. In the opinion of management, theaccompanying consolidated financial statements are presented on a basisconsistent with the audited consolidated financial statements and reflect alladjustments (consisting of normal recurring items) necessary for a fair presentationof results for the interim periods presented. The financial statements andfootnote disclosures should be read in conjunction with our fiscal 2002 auditedconsolidated financial statements and the notes thereto, which are included inour annual report on Form 10-K for the year ended February 1, 2003, which wasfiled under the Securities Exchange Act of 1934. Results for the interimperiods are not necessarily indicative of the results to be expected for theyear.

 

*Stock-based Compensation —*We measurecompensation cost for stock-based awards as the excess of the quoted marketprice of our stock as of the time of grant over the amount that an employeemust pay to acquire the stock. Stock options are generally granted withexercise prices equal to the fair value of the shares as of the date of grant; accordingly, we do not generally recognizecompensation expense in connection with stock options. In December 2002, theFASB issued SFAS No. 148, “Accounting for Stock-Based Compensation – Transitionand Disclosure”. This standard provides alternative methods of transition tothe fair value method of accounting for stock-based employee compensation underSFAS No. 123, “Accounting for Stock-Based Compensation,” but does not requireus to use the fair value method. Had compensation expense beendetermined based on the fair value of stock option grants on the date of grantin accordance with SFAS No. 148, our net loss and net loss per share would havebeen as follows:

 
|                                                                          |   | **Thirteen  weeks ended** |       |
|-------------------------------------------------------------------------------|--------|---------------------------|------------|
|                                                                          |   | **May 4,  2002**          |       | **May 3,  2003** |   |
| Net  income (loss), as reported                                               |   | $                         | 11,114,000 |   | $ | (7,307,000 | ) |
| Less  stock-based compensation expense determined using the fair value method |   | 471,000                   |       | 477,000 |   |
| Pro  forma net income (loss)                                                  |   | $                         | 10,643,000 |   | $ | (7,784,000 | ) |
|                                                                          |   |                      |       |   |   |
| Basic  and diluted net income (loss) per share, as reported                   |   | $                         | 0.25       |   | $ | (0.16 | ) |
| Pro  forma basic and diluted net income (loss) per share                      |   | $                         | 0.24       |   | $ | (0.17 | ) |

 

6

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The average estimated fair market value of options granted during thefirst quarters of 2002 and 2003 was $2.59 per share. In preparing suchestimates, we used the Black-Scholes option pricing model with the followingassumptions: no dividend yield, expected volatility of 95%, risk-free interestrate of 3.0% and expected lives of four years.The Black-Scholes option valuation model was developed for use in estimatingthe fair value of traded options, which have no vesting restrictions and arefully transferable. In addition, option valuation models require the input ofhighly subjective assumptions including the expected stock price volatility.Because our stock options have characteristics significantly different fromthose of traded options, and because changes in the subjective inputassumptions can materially affect the fair value estimate, in our opinion, thismodel and other existing models do not necessarily provide a reliable measureof the fair value of our stock options.

 

**3.****                                      Segments**

 

We currently have two reportable segments: dELiA*sDirect and dELiA*s Retail. Our two segments offer similar products to similarcustomers, but are managed separately because of their distribution methods.Certain prior year amounts have been reclassified to conform to the currentpresentation. 

 
|                                                                     |   | **Thirteen  weeks ended** |       |
|--------------------------------------------------------------------------|--------|---------------------------|------------|
|                                                                     |   | **May 4, 2002**           |       | **May 3, 2003** |   |
| **Net revenues**                                                         |   |                      |       |   |   |
| dELiA*s  Direct                                                          |   | $                         | 16,028,000 |   | $ | 14,054,000 |   |
| dELiA*s  Retail                                                          |   | 12,742,000                |       | 15,399,000 |   |
| Total                                                                    |   | $                         | 28,770,000 |   | $ | 29,453,000 |   |
|                                                                     |   |                      |       |   |   |
| **Net loss before cumulative effect of change in accounting  principle** |   |                      |       |   |   |
| dELiA*s  Direct operating income                                         |   | $                         | 1,500,000  |   | $ | 89,000 |   |
| dELiA*s  Retail operating loss                                           |   | (2,114,000                | )          | (2,189,000 | ) |
| Unallocated  shared expenses                                             |   | (1,975,000                | )          | (2,129,000 | ) |
| Depreciation,  amortization and non-cash compensation                    |   | (1,668,000                | )          | (1,683,000 | ) |
| Finance  charges and transaction fees                                    |   | —                    |       | (1,246,000 | ) |
| Interest  and other expense, net                                         |   | (12,000                   | )          | (138,000 | ) |
| Non-core                                                                 |   | —                    |       | (11,000 | ) |
| Total                                                                    |   | $                         | (4,269,000 | ) | $ | (7,307,000 | ) |

 

**4.****                                      Restructuring**

 

During fiscal 2000, we announced our intention tofocus on our core dELiA*s brand and to sell or shut down our non-corebusinesses. The restructuring of our businesses included a number ofinitiatives and resulted in related charges in fiscal 2000 and 2001.

 

As of May 3, 2003, approximately $200,000 remainsaccrued for future lease obligations relating to our restructuring initiatives.We expect this amount to be paid over the remaining term of the lease, whichexpires in March 2005.

 

**5.****                                      Stock Issuance for Fiscal 2000 Acquisition**

 

On March 1, 2002, weissued the former stockholders of theSpark.com, Inc. 197,835 shares of ourClass A common stock as final consideration for our February 2000 acquisitionof that business. Because this consideration was paid subsequent to ourdecision to sell the businesses, the value of the stock issued was reserved aspart of our prior year restructuring accruals.

 

7

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**6.****                                      Commitments and Contingencies**

 

**Litigation**

 

In June 1999, two purportedsecurities class action lawsuits were filed against dELiA*s Inc. and certain ofits officers and directors, and one former officer of a subsidiary. Theoriginal complaints were filed in Federal District Court for the SouthernDistrict of New York. The suits were consolidated into a single class actionand an amended and consolidated complaint was filed on March 22, 2000. Thecomplaint in this lawsuit purports to be a class action on behalf of thepurchasers of our securities during the period January 20, 1998 throughSeptember 10, 1998. The complaint generally alleges that the defendantsviolated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5thereunder by making material misstatements and by failing to discloseallegedly material information regarding trends in our business. The complaintalso alleges that the individual defendants are liable for those violationsunder Section 20(a) of the Securities Exchange Act. The complaint seeksunspecified damages, attorneys’ and experts’ fees and costs, and such otherrelief as the court deems proper.

 

Theparties have reached an agreement in principle on a settlement of the action.That agreement has not yet been memorialized and will not become effectiveuntil a stipulation of settlement is executed by all parties and finallyapproved by the Court, after notice is given and an opportunity to object and ahearing has been accorded to all interested parties.  There can be no assurances that the settlement will be completed. The claim and proposed settlement are covered under our insurancepolicy.However, if the settlement is not completed, we cannot predict the outcome ofany litigation or whether the resolution of the litigation could have amaterial adverse effect on our business.

 

**7.****                                      Long-term Debt and Credit Facilities**

 

We are subject to certain covenantsunder the mortgage loan agreement relating to our fiscal 1999 purchase of ourdistribution facility in Hanover, Pennsylvania, including a covenant tomaintain a fixed charge coverage ratio. Effective May 1, 2001, the bank agreedto waive the fixed charge coverage ratio covenant through August 6, 2003 inexchange for a principal payment of $2.0 million on May 7, 2001 and ouragreement to pay on August 6, 2003 the outstanding principal balance as of thatdate. The principal balance of $3.0 million as of May 3, 2003 is scheduled tobe paid in full by August 2003. We are currently considering several optionswith respect to the mortgage, including a refinancing, extension and othertransactions, including a sale-leaseback, that would enable us to satisfy ourobligations. We expect to complete these efforts prior to the final paymentdate, although no assurances can be made that we will be successful. If we donot finalize an arrangement by that time, we have the right to exercise a putoption to sell the facility (see Note 9) and continue to use the facility undera new lease arrangement.

 

During and subsequent to fiscal 2002, we amended our creditagreement with Wells Fargo Retail Finance LLC. As amended, our credit agreementconsists of a revolving line of credit that permits us to borrow up to $20million. Until October 29, 2004, we retain the right to increase the limit to$25 million at our option. The credit line is secured by our assets andborrowing availability fluctuates depending on our levels of inventory andcertain receivables. The agreement contains certain covenants and defaultprovisions, including a limitation on our capital expenditures that the bankreset as of May 3, 2003. At our option, borrowings under this facility bearinterest at Wells Fargo Bank’s prime rate plus 25 basis points or at the LIBORRate plus 250 basis points.  A fee of0.375% per year is assessed monthly on the unused portion of the line of creditas defined in the agreement. The facility matures in April 2006.  As of May 3, 2003, the outstandingbalance, which is classified as a current liability, was $6.1 million,outstanding letters of credit were $3.7 million and unused available credit was$800,000.

 

8

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**8.****                                      Licensing Agreement, Financing Charges andTransaction Fees**

 

In February 2003, we entered into an agreement withJLP Daisy LLC, an affiliate of Schottenstein Stores, to license our dELiA*sbrand on an exclusive basis for wholesale distribution in certain product categories.Group 3 Design Corp., a leading brand management firm, has been retained tomanage these licensing activities, which will focus on the distribution ofdELiA*s products primarily in mid- and upper-tier department stores. Wereceived a $16.5 million non-recourse cash advance against future royaltiesfrom the licensing ventures. Once JLP Daisy recoups its advance plus apreferred return, we will receive a majority of the royalty stream after brandmanagement fees. We have recorded the $16.5 million as deferred revenue thatwill be recognized as income to the extent that the royalties earned exceed thepreferred return balance. As of May 3, 2003, the preferred return balance isapproximately $550,000. The initial term of the master license agreement is 10years, which is subject to extension under specified circumstances. The masterlicense agreement may be terminated early under certain circumstances,including at our option upon payment to JLP Daisy of an amount based uponroyalties received from the sale of the licensed products. In addition, wegranted to JLP Daisy a security interest in the dELiA*s trademarks, althoughthe only event that would entitle JLP Daisy to exercise its rights with respectto these trademarks is a termination or rejection of the master licenseagreement in a bankruptcy proceeding. In connection with the engagement ofGroup 3 Design as brand manager, an executive of Group 3 Design received awarrant to purchase 50,000 shares of our Class A Common Stock and recorded arelated charge.

 

During fiscal 2003, weincurred $1.2 million in financing charges and transaction feesprimarily related to ourlicensing agreement.

 

**9.****                                      Subsequent Events**

 

In May 2003, we receivedan equity infusion of $2.7 million when a group of our directors and officerspurchased 7,297,298 shares at $0.37 per share. In addition to the equity transaction, the investing groupprovided us with a put option that would require them to purchase, but wouldnot require us to sell, our Hanover distribution facility for $3.0 million,which would allow us to satisfy our outstanding mortgage. This put optionexpires in August 2003 and is intended to provide us with an alternative meansof satisfying the mortgage in case we are not able to refinance, extend orotherwise satisfy the mortgage such as through a sale-leaseback arrangement.In consideration for the grant of the put option, the investors receivedwarrants, exercisable for an aggregate 600,000 shares of our stock at $0.37 pershare. We will record a related charge in the second quarter of fiscal 2003.

 

9

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**Item 2. Management’s Discussion andAnalysis of Financial Condition and Results of Operations**

 

*The following discussion and analysis should be readin conjunction with our consolidated financial statements and notes theretoincluded elsewhere in this report. Except for the historical informationpresented, the discussion in this report contains forward-looking statementsthat involve risks and uncertainties, such as statements of our plans,objectives, expectations and intentions. The cautionary statements made in thisreport should be read as being applicable to all related forward-lookingstatements wherever they appear in this report. Our actual results could differmaterially from those discussed here. Factors that could cause or contribute tothese differences include, but are not limited to, those discussed below and elsewhere in this report and in our annual report on Form 10-K.*

 

### **Overview**

 

We are a multichannel retailer that markets apparel,accessories and home furnishings to teenage girls and young women. We reach ourcustomers through the dELiA*s catalog, www.dELiAs.cOm and the dELiA*s retailstores.

 

*Restructuring.*During fiscal 2000, we announced our intention to focus onour core dELiA*s brand and to sell or shut down our non-core businesses. Therestructuring of our businesses was substantially completed in fiscal 2001. Werecorded related charges during fiscal 2000, 2001 and 2002. As of May 3, 2003,approximately $200,000 remains accrued for future lease obligations relating toour restructuring initiatives.

 

*GeneralMatters Affecting Our Core dELiA*s Business.*The operatingresults of our ongoing dELiA*s business are subject to the followinguncertainties, each of which is described in more detail in our annual reporton Form 10-K under “Risk Factors”:

 

•                 access to financing to fundoperations;

•                 our ability to anticipate and respondto fashion trends;

•                 timing and quantity of catalog andelectronic mailings and customer response rates;

•                 availability of acceptable store sitesand lease terms and the possibility of increasing comparable store sales; and

•                 other factors described in our annualreport on Form 10-K, particularly under “Risk Factors.”

 

*CriticalAccounting Policies Involving Estimates*. Our financialstatements are based on the selection and application of significant accountingpolicies, which require management to make significant estimates andassumptions. We believe that the following are some of the more criticaljudgment areas in the application of our accounting policies currently affectour financial condition and results of operations:

 

•                 *Revenue Recognition**—* Revenue is recognized whenmerchandise is shipped to customers or at the point of retail sale. We accrue asales return allowance in accordance with our return policy for estimatedreturns of merchandise subsequent to the balance sheet date that relate tosales prior to that date. Such estimates are based on historical return timingand rates. In connection with the advance received for our licensing agreement,deferred revenue will be recognized to the extent that the royalties earnedexceed the preferred return balance.

•                 *Catalog Costs**—* Catalog costs, whichprimarily consist of catalog production and mailing costs, are capitalized andamortized over the expected life of the related future revenue stream, whichgenerally covers three to five months from mailing date. We account for catalogcosts in accordance with AICPA Statement of Position (“SOP”) 93-7, “Reportingon Advertising Costs.” SOP 93-7 requires that expenses relating to capitalizedadvertising costs be computed using the ratio of current period revenues forthe catalog cost pool to the total of current and estimated future periodrevenues, based on our budgets, for that catalog cost pool.

 

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•                 *Merchandise Inventories —* Merchandiseinventories, which are primarily finished goods, are stated at the lower ofcost (determined on a first-in, first-out basis) or estimated net realizablevalue based on market conditions.

•                 *Long-Lived Assets —* In accordance with theSFAS No. 144, we periodically review long-lived assets and certain identifiableintangibles for impairment whenever events or changes in circumstances indicatethat the carrying amount of an asset may not be recoverable. The carryingamount of a long-lived asset is considered impaired when the anticipated cashflows expected to be generated by the asset, based on our detailed projections,are less than its carrying amount. The impairment charge is the amount requiredto bring the carrying value to the fair value based on expected futurediscounted cash flows.

 

**Results of Operations**

 

The following table sets forth,for the periods indicated, the percentage relationship of certain items fromour consolidated statements of operations to net sales. Any trends reflected bythe following table may not be indicative of future results.

 
|                                                |   | **Fiscal Quarter Ended** |   |
|-----------------------------------------------------|--------|--------------------------|--------|
|                                                |   | **May 4, 2002**          |   | **May 3, 2003** |   |
| Net sales                                           |   | 100.0                    | %      | 100.0 | % |
| Cost of sales                                       |   | 53.7                     |   | 58.3 |   |
| Gross profit                                        |   | 46.3                     |   | 41.7 |   |
| Selling, general and administrative expenses        |   | 61.1                     |   | 61.8 |   |
| Finance charges and transaction fees                |   | —                   |   | 4.2 |   |
| Interest and other expense, net                     |   | 0.0                      |   | 0.5 |   |
| Loss  before cumulative effect of accounting change |   | (14.8                    | )      | (24.8 | ) |
| Cumulative  effect of accounting change             |   | 53.4                     |   | — |   |
| Net income (loss)                                   |   | 38.6                     | %      | (24.8 | )% |

 

**Comparison of Fiscal Quarters EndedMay 4, 2002 and May 3, 2003**

 

*NetSales.*Net sales increased approximately $700,000 from $28.8million in the first quarter of fiscal 2002 to $29.5 million in the firstquarter of fiscal 2003. Due to additional stores, net sales increased 21% inour Retail segment. In our Direct segment, our decision to reduce catalogcirculation by 22% resulted in a 12% decrease in net sales.

 

*Gross Margin*. Gross margin decreased from 46.3% in the first quarter of fiscal 2002to 41.7% in the first quarter of fiscal 2003. The decrease is due to markdownsand liquidations related to winter and holiday inventory early in the quarter.

 

*Selling,General and Administrative Expenses*.  Selling, general and administrative expensesincreased approximately $600,000 from $17.6 million in the first quarter offiscal 2002 to $18.2 million in the first quarter of fiscal 2003. Afterexcluding a one-time offset to catalog amortization of $750,000 relating to afiscal 2002 change in estimate, selling, general and administrative expensesdecreased slightly. Operating expenses for Retail increased in connection withour new stores. Redutions in catalog expenses, fulfillment costs and corporatepayroll expense more than offset higher expense related to the greater numberof stores.

 

*FinanceCharges and Transaction Fees*.  During fiscal 2003, weincurred $1.2 million in financing charges and transaction fees relatingto our licensing agreement and bankline.

 

*CumulativeEffect of Change in Accounting Principle*. In connection withour fiscal 2002 adoption of SFAS 142, we recorded a $15.4 million cumulativeeffect of change in accounting principle which represented the reversal of theunamortized balance of the negative goodwill recorded on our books inconnection with a fiscal 2000 transaction.

 

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*IncomeTaxes*. No tax benefit has been recorded and our deferred taxassets are fully reserved due to the uncertainty of our ability to utilize thebenefit.

 

**Seasonality**

 

Weexperience seasonal and cyclical fluctuations in our revenues and results ofoperations. For example, sales of apparel, accessories and footwear aregenerally lower in the first half of each year than in the second half. Inaddition, due to the cyclical nature of our businesses and our sensitivity toconsumer spending patterns, purchases of apparel and accessories tend todecline during recessionary periods and may decline at other times.Consequently, our results of operations from quarter to quarter may become lesscomparable. Our quarterly results will also be affected by the timing of retailstore openings and catalog mailings and promotions and may alsofluctuate as a result of a number of other factors described in our annualreport on Form 10-K, particularly under “Risk Factors.” As a result of seasonaland cyclical patterns and these other factors, you should not rely onquarter-to-quarter comparisons of our results of operations as indicative ofour future performance.

 

**Liquidity and Capital Resources**

 

*CurrentCapital Initiatives*

In February 2003, we entered into an agreement withJLP Daisy LLC, an affiliate of Schottenstein Stores, to license our dELiA*sbrand on an exclusive basis for wholesale distribution in certain productcategories. Group 3 Design Corp., a leading brand management firm, has beenretained to manage these licensing activities, which will focus on thedistribution of dELiA*s products primarily in mid- and upper-tier departmentstores. We received a $16.5 million cash advance against future royalties fromthe licensing ventures. Once JLP Daisy recoups its advance plus a preferredreturn, the Company will receive a majority of the royalty stream after brandmanagement fees. The initial term of the master license agreement is 10 years,which is subject to extension under specified circumstances. The master licenseagreement may be terminated early under certain circumstances, including at theoption of the Company upon payment to JLP Daisy of an amount based uponroyalties received from the sale of the licensed products. In addition, theCompany granted to JLP Daisy a security interest in the dELiA*s trademarks,although the only event that would entitle JLP Daisy to exercise its rightswith respect to these trademarks is a termination or rejection of the masterlicense agreement in a bankruptcy proceeding. In connection with the engagementof Group 3 Design as brand manager, an executive of Group 3 Design received awarrant to purchase 50,000 shares of our Class A Common Stock.

 

During and subsequent to fiscal 2002, we signedseveral amendments to our credit facility with Wells Fargo Retail Finance LLC.The most recent amendment, which was effective April 29, 2003, extended thelife of the agreement to April 2006 and reduced our revolving line of creditlimit from $25 million to $20 million so that our unused fees were reduced.Until October 29, 2004, we retain the right to increase the limit to $25million at our option. The credit line is secured by our assets and borrowingavailability fluctuates based on inventory levels. The April 2003 amendmentincreased the advance rate from the prior quarter based on inventory value andalso expanded the borrowing base to include certain receivables. The agreementcontains certain covenants and default provisions, including a limitation onour capital expenditures that the bank reset as of May 3, 2003. At our option,borrowings under this facility bear interest at Wells Fargo Bank’s prime rateplus 25 basis points or at the LIBOR Rate plus 250 basis points.  A fee of 0.375% per year is assessed monthlyon the unused portion of the line of credit as defined in the agreement. As ofMay 3, 2003, the outstanding balance on our Wells Fargo credit facility, whichis classified as a current liability, was $6.1 million, outstanding letters ofcredit were $3.7 million and unused available credit was $800,000.

 

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During fiscal 2003, weincurred $1.2 million in financing charges and transaction feesprimarily related to ourlicensing agreement.

 

We are currently subject tocertain covenants under our mortgage loan agreement relating to ourdistribution facility in Hanover, Pennsylvania, including a covenant tomaintain a fixed charge coverage ratio. Effective May 1, 2001, the bank agreedto waive the fixed charge coverage ratio covenant through August 6, 2003 inexchange for an adjustment in our payment schedule. The principal balance of$3.0 million as of May 3, 2003 is scheduled to be paid in full by August 2003.We are currently considering several options with respect to the mortgage,including a refinancing and other transactions, including a sale-leaseback thatwould enable us to satisfy our obligations. We expect to complete these effortsprior to the final payment date. If we do not finalize an arrangement by thattime, we have the right to exercise a put option to sell the facility, which isbeing provided to us by a group of our officers and directors, and continue touse the facility under a new lease arrangement.

 

In May 2003, we received an equity infusion of $2.7million from a group of our directors and officers. In addition to the equity transaction, the investing groupprovided us with a put option that would require them to purchase, but wouldnot require us to sell, our Hanover distribution facility for $3.0 million,which would allow us to satisfy our outstanding mortgage. This put optionexpires in August 2003 and is intended to provide us with an alternative meansof satisfying the mortgage in case we are not able to refinance, extend orotherwise satisfy the mortgage such as through a sale-leaseback arrangement. Inconsideration for the grant of the put option, the investors received warrants,exercisable for an aggregate 600,000 shares of our stock at $0.37 per share. Wewill record a related charge in the second quarter of fiscal 2003.

 

*CashRequirements Related to Operations*

As a result of our recent licensing arrangement,credit facility amendments and equity infusion, as well as our expectedmortgage transaction or distribution facility sale, we believe that our cash onhand and cash expected to be generated from operations, together with the fundsavailable under our credit agreement, will be sufficient to meet our cashrequirements in the year ahead. However, our future capital requirements willdepend on numerous factors, including, without limitation, the successfulturnaround of sales and profit margin performance of both of our operatingsegments. Additional funds, if required, may not be available to us onfavorable terms or at all.

 

*Sourcesand Uses of Cash in Fiscal Quarters Ended May 4, 2002 and May 3, 2003*

For the first quarters of fiscal2002 and 2003, cash from operations used $9.0 million and provided $5.8million, respectively. The increase in cash provided by operations primarilyrelates to a $16.5 million cash advance received in connection with our fiscal2003 licensing agreement.

 

Investing activities used $3.5million and $500,000 for capital expenditures in the first quarter of fiscal2002 and 2003, respectively. During fiscal 2003, we expect our total capitalexpenditures, primarily for storeimprovements and computer equipment, to be less than $1.0 million.

 

Financing activities, primarily net activity under ourcredit agreement, provided $6.3 million and $2.0 million in the first quartersof fiscal 2002 and 2003, respectively.

 

**Item 3. Quantitative and Qualitative Disclosure About MarketRisk.**

 

Our variable-rate mortgagearrangement and our credit facility expose us to changes in interest rates. Basedon our outstanding balances of $3.0 million and $6.1 million, respectively, atMay 3, 2003, a hypothetical 100 basis point increase in interest rates wouldcause an increase in our quarterly interest expense of approximately $22,750.However, the amount of our variable rate debt, and therefore our sensitivity tomarket interest rates, can fluctuate significantly as a result of changes inthe amount our outstanding credit facility indebtedness.

 

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**Item 4. Controls and Procedures**

 

As of May 3, 2003, an evaluation was performed underthe supervision and with the participation of our management, including theChief Executive Officer and the Chief Financial Officer, of the effectivenessof the design and operation of the Company’s disclosure controls and procedures(as defined in Rules 13a-14 and 15d-14 under the Exchange Act). Based on thatevaluation, our management, including the Chief Executive Officer and ChiefFinancial Officer, concluded that our disclosure controls and procedures wereeffective as of May 3, 2003. Further, there have been no significant changes inour internal controls or in other factors that could significantly affectinternal controls subsequent to May 3, 2003.

 

**PART II- OTHER INFORMATION**

 

**Item 1. Legal Proceedings**

 

In June 1999, two purportedsecurities class action lawsuits were filed against dELiA*s Inc. and certain ofits officers and directors, and one former officer of a subsidiary. Theoriginal complaints were filed in Federal District Court for the SouthernDistrict of New York. The suits were consolidated into a single class actionand an amended and consolidated complaint was filed on March 22, 2000. Thecomplaint in this lawsuit purports to be a class action on behalf of thepurchasers of our securities during the period January 20, 1998 throughSeptember 10, 1998. The complaint generally alleges that the defendantsviolated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5thereunder by making material misstatements and by failing to discloseallegedly material information regarding trends in our business. The complaintalso alleges that the individual defendants are liable for those violationsunder Section 20(a) of the Securities Exchange Act. The complaint seeksunspecified damages, attorneys’ and experts’ fees and costs, and such other reliefas the court deems proper.

 

Theparties have reached an agreement in principle on a settlement of the action.That agreement has not yet been memorialized and will not become effectiveuntil a stipulation of settlement is executed by all parties and finallyapproved by the Court, after notice is given and an opportunity to object and ahearing has been accorded to all interested parties.  There can be no assurances that the settlement will be completed. The claim and proposed settlement are covered under our insurancepolicy.However, if the settlement is not completed, we cannot predict the outcome ofany litigation or whether the resolution of the litigation could have amaterial adverse effect on our business.

 

**Item 2. Changes in Securities and Use ofProceeds**

None.

 

**Item 3. Defaults Upon Senior Securities**

None.

 

**Item 4. Submission of Matters to a Vote of Security Holders**

None.

 

**Item 5. Other Information**

None.

 

**Item 6. Exhibits and Reports on Form8-K.**

See Exhibit Index following signature and certificationspages.

 

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The company filed a current report on Form 8-K datedFebruary 24, 2003, in connection with (i) an agreement with JLP Daisy LLC tolicense the dELiA*s brand on an exclusive basis for wholesale distribution incertain categories of products and (ii) the third, fourth and fifth amendmentsto our Loan and Security Agreement with Wells Fargo Retail Finance, LLC.  No financial statements were filed with thisForm 8-K.

 

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**SIGNATURES**

 

Pursuant to the requirements ofthe Securities Exchange Act of 1934, the registrant has duly caused this reportto be signed on its behalf by the undersigned thereunto duly authorized.

 
|                 |   | dELiA*s  Corp. |                                               |             |
|----------------------|--------|----------------|----------------------------------------------------|------------------|
|                 |   | (Registrant)   |                                               |             |
| Date:  June 17, 2003 |   |           |                                               |             |
|                 |   |           |                                               |             |
|                 |   | By:            | /s/                                                | Stephen  I. Kahn |   |   |
|                 |   |           | Stephen  I. Kahn                                   |             |
|                 |   |           | Chairman  of the Board and Chief Executive Officer |             |
|                 |   |           |                                               |             |
|                 |   |           |                                               |             |
|                 |   | By:            | /s/                                                | Evan  Guillemin  |   |   |
|                 |   |           | Evan  Guillemin                                    |             |   |
|                 |   |           | Chief  Financial Officer                           |             |   |
|                 |   |           | (principal  financial and accounting officer)      |             |   |
|                      |        |                |                                                    |                  |  |  |  |  |

 

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CERTIFICATION PURSUANT TORULE 13A-14 OR 15D-14 OF THE SECURITIES

EXCHANGE ACT OF 1934, ASADOPTED PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF2002

 

I, Stephen I. Kahn,certify that:

 

1.             I have reviewed thisquarterly report on Form 10-Q of dELiA*s Corp.;

 

2.             Based on myknowledge, this quarterly report does not contain any untrue statement of amaterial fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, notmisleading with respect to the period covered by this quarterly report;

 

3.             Based on myknowledge, the financial statements, and other financial information includedin this quarterly report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, andfor, the periods presented in this quarterly report;

 

4.             The registrant’sother certifying officers and I are responsible for establishing andmaintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-14 and 15d-14) for the registrant and we have:

 

a.               designedsuch disclosure controls and procedures to ensure that material informationrelating to the registrant, including its consolidated subsidiaries, is madeknown to us by others within those entities, particularly during the period inwhich this quarterly report is being prepared;

b.              evaluatedthe effectiveness of the registrant’s disclosure controls and procedures as ofa date within 90 days prior to the filing date of this quarterly report (the“Evaluation Date”); and

c.               presentedin this quarterly report our conclusions about the effectiveness of thedisclosure controls and procedures based on our evaluation as of the EvaluationDate;

 

5.             The registrant’sother certifying officers and I have disclosed, based on our most recentevaluation, to the registrant’s auditors and the audit committee ofregistrant’s board of directors (or persons performing the equivalentfunction):

 

a.               allsignificant deficiencies in the design or operation of internal controls whichcould adversely affect the registrant’s ability to record, process, summarizeand report financial data and have identified for the registrant’s auditors anymaterial weaknesses in internal controls; and

b.              anyfraud, whether or not material, that involves management or other employees whohave a significant role in the registrant’s internal controls; and

 

6.             The registrant’sother certifying officers and I have indicated in this quarterly report whetheror not there were significant changes in internal controls or in other factorsthat could significantly affect internal controls subsequent to the date of ourmost recent evaluation, including any corrective actions with regard tosignificant deficiencies and material weaknesses.

 
| Dated: June 17, 2003 |
|----------------------|
|                 |
| By                   | :/s/ Stephen I. Kahn |   |   |
|                 | Stephen I. Kahn |
|                 | Chairman of the Board  and Chief Executive Officer |

 

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CERTIFICATION PURSUANT TORULE 13A-14 OR 15D-14 OF THE SECURITIES

EXCHANGE ACT OF 1934, ASADOPTED PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF2002

 

I,               Evan Guillemin, certify that:

 

1.             I have reviewed thisquarterly report on Form 10-Q of dELiA*s Corp.;

 

2.             Based on myknowledge, this quarterly report does not contain any untrue statement of amaterial fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, notmisleading with respect to the period covered by this quarterly report;

 

3.             Based on myknowledge, the financial statements, and other financial information includedin this quarterly report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, andfor, the periods presented in this quarterly report;

 

4.             The registrant’sother certifying officers and I are responsible for establishing andmaintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-14 and 15d-14) for the registrant and we have:

 

a.               designedsuch disclosure controls and procedures to ensure that material informationrelating to the registrant, including its consolidated subsidiaries, is madeknown to us by others within those entities, particularly during the period inwhich this quarterly report is being prepared;

b.              evaluatedthe effectiveness of the registrant’s disclosure controls and procedures as ofa date within 90 days prior to the filing date of this quarterly report (the“Evaluation Date”); and

c.               presentedin this quarterly report our conclusions about the effectiveness of thedisclosure controls and procedures based on our evaluation as of the EvaluationDate;

 

5.             The registrant’sother certifying officers and I have disclosed, based on our most recentevaluation, to the registrant’s auditors and the audit committee ofregistrant’s board of directors (or persons performing the equivalentfunction):

 

a.               allsignificant deficiencies in the design or operation of internal controls whichcould adversely affect the registrant’s ability to record, process, summarizeand report financial data and have identified for the registrant’s auditors anymaterial weaknesses in internal controls; and

b.              anyfraud, whether or not material, that involves management or other employees whohave a significant role in the registrant’s internal controls; and

 

6.             The registrant’sother certifying officers and I have indicated in this quarterly report whetheror not there were significant changes in internal controls or in other factorsthat could significantly affect internal controls subsequent to the date of ourmost recent evaluation, including any corrective actions with regard to significantdeficiencies and material weaknesses.

 
| Dated: June 17, 2003 |
|----------------------|
|                 |
| By:                  | /s/ Evan Guillemin |   |   |
|                 | Evan  Guillemin |
|                 | Chief Financial Officer |

 

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**EXHIBITINDEX**

 
| 10.42 |   | Fourth Amendment to  Loan and Security Agreement by and among Wells Fargo Retail Finance LLC, as  lender, and dELiA*s Corp., as lead borrower and agent for the other borrowers  named within, dated February 10, 2003 (incorporated by reference to Exhibit  10.4 to our Current Report on Form 8-K dated February 24, 2003)                                     |
|-------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.43 |   | Fifth Amendment to Loan  and Security Agreement by and among Wells Fargo Retail Finance LLC, as  lender, and dELiA*s Corp., as lead borrower and agent for the other borrowers  named within, dated February 24, 2003 (incorporated by reference to Exhibit  10.5 to our Current Report on Form 8-K dated February 24, 2003)                                      |
| 10.45 |   | Sixth Amendment to Loan  and Security Agreement by and among Wells Fargo Retail Finance LLC, dELiA*s  Corp., dELiA*s Operating Company, dELiA*s Distribution Company, and dELiA*s  Retail Company, dated April 29, 2003 (incorporated by reference to Exhibit  10.45 to the dELiA*s Corp. Annual Report on Form 10-K for the fiscal year  ended February 1, 2003) |
| 10.46 |   | First Amendment to the  Employment Agreement between dELiA*s Corp. and Christopher Edgar, dated  December 23, 2002 (incorporated by reference to Exhibit 10.46 to the dELiA*s  Corp. Annual Report on Form 10-K for the fiscal year ended February 1, 2003)                                                                                                       |
| 10.47 |   | First Amendment to the  Employment Agreement between dELiA*s Corp. and Evan Guillemin, dated December  23, 2002 (incorporated by reference to Exhibit 10.47 to the dELiA*s Corp.  Annual Report on Form 10-K for the fiscal year ended February 1, 2003)                                                                                                          |
| 10.48 |   | Securities Purchase  Agreement dated May 12, 2003, by and between dELiA*s Corp. and Stephen I.  Kahn (incorporated by reference to Exhibit 10.48 to the dELiA*s Corp. Annual  Report on Form 10-K for the fiscal year ended February 1, 2003)                                                                                                                     |
| 10.49 |   | Securities Purchase  Agreement dated May 12, 2003, by and between dELiA*s Corp. and Geraldine  Karetsky (incorporated by reference to Exhibit 10.49 to the dELiA*s Corp.  Annual Report on Form 10-K for the fiscal year ended February 1, 2003)                                                                                                                  |
| 10.50 |   | Securities Purchase  Agreement dated May 12, 2003, by and between dELiA*s Corp. and Christopher C.  Edgar (incorporated by reference to Exhibit 10.50 to the dELiA*s Corp. Annual  Report on Form 10-K for the fiscal year ended February 1, 2003)                                                                                                                |
| 10.51 |   | Securities Purchase  Agreement dated May 12, 2003, by and between dELiA*s Corp. and Evan Guillemin  (incorporated by reference to Exhibit 10.51 to the dELiA*s Corp. Annual  Report on Form 10-K for the fiscal year ended February 1, 2003)                                                                                                                      |
| 10.52 |   | Registration Rights  Agreement dated as of May 12, 2003, by and between dELiA*s Corp. and Stephen  I. Kahn, Geralidine Karetsky, Christopher C. Edgar and Evan Guillemin  (incorporated by reference to Exhibit 10.52 to the dELiA*s Corp. Annual  Report on Form 10-K for the fiscal year ended February 1, 2003)                                                |
| 10.53 |   | Put Option Agreement  dated as of May 12, 2003, by and among Stephen I. Kahn, Geralidine Karetsky,  Evan Guillemin and Christopher C. Edgar and dELiA*s Corp. (incorporated by  reference to Exhibit 10.53 to the dELiA*s Corp. Annual Report on Form 10-K  for the fiscal year ended February 1, 2003)                                                           |
| 10.54 |   | dELiA*s Corp. Warrant  dated May 12, 2003 issued to Stephen I. Kahn (incorporated by reference to  Exhibit 10.54 to the dELiA*s Corp. Annual Report on Form 10-K for the fiscal  year ended February 1, 2003)                                                                                                                                                     |
| 10.55 |   | dELiA*s Corp. Warrant  dated May 12, 2003 issued to Geraldine Karetsky (incorporated by reference to  Exhibit 10.55 to the dELiA*s Corp. Annual Report on Form 10-K for the fiscal  year ended February 1, 2003)                                                                                                                                                  |
| 10.56 |   | dELiA*s Corp. Warrant  dated May 12, 2003 issued to Christopher C. Edgar (incorporated by reference  to Exhibit 10.56 to the dELiA*s Corp. Annual Report on Form 10-K for the  fiscal year ended February 1, 2003)                                                                                                                                                |
| 10.57 |   | dELiA*s Corp. Warrant  dated May 12, 2003 issued to Evan Guillemin (incorporated by reference to  Exhibit 10.57 to the dELiA*s Corp. Annual Report on Form 10-K for the fiscal  year ended February 1, 2003)                                                                                                                                                      |
| 10.58 |   | Master License  Agreement, dated February 24, 2003, by and between dELiA*s Brand LLC and JLP  Daisy LLC (incorporated by reference to Exhibit 10.1 to our Current Report on  Form 8-K dated February 24, 2003)                                                                                                                                                    |
| 10.59 |   | License Agreement,  dated February 24, 2003, by and between dELiA*s Corp. and dELiA*s Brand LLC  (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K  dated February 24, 2003)                                                                                                                                                           |
| 99.1* |   | Certification of Chief  Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                               |
| 99.2* |   | Certification of Chief  Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                               |

 

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*               Filed herewith

 

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