10-Q 1 hottopic_10q-080401.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended August 4, 2001 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR l5 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to -------------------- --------------------- COMMISSION FILE NUMBER: 0-28784 HOT TOPIC, INC. --------------- (Exact name of Registrant as specified in Its Charter) CALIFORNIA 77-0198182 ---------- ---------- (State of Incorporation) (IRS Employer Identification No.) 18305 EAST SAN JOSE AVE., CITY OF INDUSTRY, CA 91748 ---------------------------------------------- --------- (address of principal executive offices) (Zip Code) (Telephone number of registrant) (626) 839-4681 -------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for 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. Yes [X] No [ ] APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of the issuer's common stock as of the latest practicable date: September 7, 2001 - 20,737,751 shares, no par value. HOT TOPIC, INC. INDEX TO FORM 10-Q
Page No. PART I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited): Consolidated Balance Sheets - August 4, 2001 and February 3, 2001 3 Consolidated Statements of Income for the 13 and 26 weeks ended August 4, 2001 and July 29, 2000 4 Consolidated Statements of Cash Flows for the 26 weeks ended August 4, 2001 and July 29, 2000 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7-10 Item 3. Quantitative and Qualitative Disclosures about Market Risk 11 PART II. OTHER INFORMATION 11 Item 4. Submission of Matters to a Vote of Security Holders 11 Item 6. Exhibits and Reports on form 8-K 12 SIGNATURE PAGE 12 2
HOT TOPIC, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED)
August 4, February 3, 2001 2001 (a) ------------- ------------- ASSETS Current Assets Cash and cash equivalents $ 38,434,000 $ 51,288,000 Inventory 35,646,000 21,336,000 Prepaid expenses and other 10,442,000 5,552,000 Deferred tax asset 944,000 944,000 ------------- ------------- Total current assets 85,466,000 79,120,000 Leaseholds, fixtures and equipment: Furniture, fixtures and equipment 38,539,000 31,300,000 Leasehold improvements 37,391,000 29,135,000 ------------- ------------- 75,930,000 60,435,000 Less accumulated depreciation 25,457,000 21,270,000 ------------- ------------- Net leaseholds, fixtures and equipment 50,473,000 39,165,000 Deposits and other assets 179,000 101,000 Deferred tax asset 260,000 260,000 ------------- ------------- Total Assets $136,378,000 $118,646,000 ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $ 11,772,000 $ 6,632,000 Accrued payroll and related expenses 7,718,000 10,093,000 Accrued sales and other taxes payable 1,588,000 1,103,000 Income taxes payable 4,479,000 - Current portion of capital lease obligations 59,000 38,000 ------------- ------------- Total current liabilities 25,616,000 17,866,000 Deferred rent 1,562,000 1,404,000 Capital lease obligations, less current portion 89,000 85,000 Shareholders' equity Common shares, no par value; 50,000,000 shares authorized; 20,675,685 and 20,293,855 issued and outstanding at August 4, 2001 and February 3, 2001, respectively 51,624,000 49,429,000 Retained earnings 57,487,000 49,862,000 ------------- ------------- Total shareholders' equity 109,111,000 99,291,000 ------------- ------------- Total liabilities and shareholders' equity $136,378,000 $118,646,000 ============= ============= (a) - The balance sheet at Feb. 3, 2001 is derived from the audited financial statements at that date. See accompanying notes to consolidated financial statements. 3
HOT TOPIC, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Second Quarter -------------- (13 weeks ended) August 4, 2001 July 29, 2000 -------------------------------- Net Sales $ 71,944,000 $ 51,718,000 Cost of goods sold, including buying, distribution and occupancy costs 45,784,000 32,431,000 ------------- ------------- Gross Margin 26,160,000 19,287,000 Selling, general, and administrative expenses 19,818,000 14,709,000 ------------- ------------- Operating Income 6,342,000 4,578,000 Interest income-net 450,000 376,000 ------------- ------------- Income before income taxes 6,792,000 4,954,000 Provision for income taxes 2,513,000 1,833,000 ------------- ------------- Net income $ 4,279,000 $ 3,121,000 ============= ============= Net income per share Basic $ 0.21 $ 0.16 Diluted $ 0.19 $ 0.15 Weighted average shares outstanding Basic 20,600,000 19,732,000 Diluted 22,196,000 21,294,000 See accompanying notes to consolidated financial statements. Six Months ---------- (26 weeks ended) August 4, 2001 July 29, 2000 -------------------------------- Net Sales $134,871,000 $ 96,556,000 Cost of goods sold, including buying, distribution and occupancy costs 85,234,000 60,501,000 ------------- ------------- Gross Margin 49,637,000 36,055,000 Selling, general, and administrative expenses 38,552,000 28,021,000 ------------- ------------- Operating Income 11,085,000 8,034,000 Interest income-net 1,020,000 798,000 ------------- ------------- Income before income taxes 12,105,000 8,832,000 Provision for income taxes 4,479,000 3,268,000 ------------- ------------- Net income $ 7,626,000 $ 5,564,000 ============= ============= Net income per share Basic $ 0.37 $ 0.28 Diluted $ 0.34 $ 0.26 Weighted average shares outstanding Basic 20,499,000 19,586,000 Diluted 22,172,000 21,154,000 See accompanying notes to consolidated financial statements. 4 HOT TOPIC, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS - (UNAUDITED)
Year-to-date (26 weeks) ended ------------------------------- August 4, 2001 July 29, 2000 ------------------------------- OPERATING ACTIVITIES: Net income $ 7,626,000 $ 5,564,000 Adjustments to reconcile net income to net cash flows provided by (used in) operating activities: Depreciation and amortization 4,992,000 3,667,000 Deferred rent 158,000 147,000 Deferred compensation - 7,000 Loss on disposal of fixed assets 164,000 70,000 Changes in operating assets and liabilities: Inventory (14,310,000) (9,563,000) Prepaid expenses and other (4,890,000) (6,152,000) Accounts payable 5,140,000 5,150,000 Accrued payroll and related expenses (2,375,000) (921,000) Accrued sales and other taxes payable 485,000 366,000 Income taxes payable 4,479,000 (2,545,000) ------------- ------------- Net cash provided by (used in) operating activities 1,469,000 (4,210,000) INVESTING ACTIVITIES: Deposits and Other Assets (78,000) (13,000) Purchases of property and equipment (16,429,000) (8,723,000) ------------- ------------- Net cash used in investing activities (16,507,000) (8,736,000) FINANCING ACTIVITIES: Payments on capital lease obligations (10,000) (17,000) Proceeds from exercise of stock options 2,194,000 2,060,000 ------------- ------------- Net cash provided by financing activities 2,184,000 2,043,000 ------------- ------------- Decrease in cash and cash equivalents (12,854,000) (10,903,000) Cash and cash equivalents at the beginning of period 51,288,000 39,550,000 ------------- ------------- Cash and cash equivalents at the end of period $ 38,434,000 $ 28,647,000 ============= ============= SUPPLEMENTAL INFORMATION: Cash paid during the period for interest $ 10,000 $ 17,000 ============= ============= Cash paid during the period for income taxes $ 3,372,000 $ 9,772,000 ============= ============= See accompanying notes to consolidated financial statements. 5
HOT TOPIC, INC. and SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1. Organization and Basis of Presentation: --------------------------------------- Hot Topic, Inc. (the "Company") is a mall-based specialty retailer of music-licensed and music-influenced apparel, accessories and gift items for young men and women principally between the ages of 12 and 22. In the first half of fiscal 2001 (the fiscal year ending February 2, 2002) the Company also launched a second retail concept with the opening of six stores under the trade name Torrid(TM). Torrid offers a selection of apparel, lingerie, shoes and accessories centered around various lifestyles for plus-size young women between the ages of 15 and 30. At the end of the second quarter (August 4, 2001), the Company operated 316 Hot Topic stores and six Torrid stores in 47 states throughout the United States and websites hottopic.com and Torrid.com. The information set forth in these financial statements is unaudited except for the February 3, 2001 Balance Sheet. These statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information, the instructions to Form 10-Q, and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring accruals, necessary for a fair presentation have been included. The results of operations for the 13 and 26 weeks ended August 4, 2001 are not necessarily indicative of the results that may be expected for the year ending February 2, 2002. For further information, refer to the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended February 3, 2001. NOTE 2. Net Income Per Share: --------------------- The Company computes net income per share pursuant to Statement of Financial Accounting Standards Board No. 128 "Earnings Per Share" (Statement No. 128). Basic net income per share is computed based on the weighted average number of shares outstanding for the period. Diluted net income per share is computed based on the weighted average number of common and potentially dilutive common stock equivalents outstanding for the period. A two-for-one stock split became effective December 27, 2000. All share and per share amounts have been restated to reflect the split. NOTE 3. Impact of Recently Issued Accounting Standards: ----------------------------------------------- In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements". SAB No. 101, "Revenue Recognition in Financial Statements". SAB No. 101 summarizes the staff's views in applying accounting principles generally accepted in the United States of America to revenue recognition in financial statements. The Company adopted SAB No. 101 in fiscal year 2000. The adoption of SAB No. 101 did not have an impact on the Company's consolidated results of operations or equity. 6 In March 2000, the FASB issued Interpretation ("FIN") No. 44, "Accounting for Certain Transactions Involving Stock Compensation." FIN No. 44 is an interpretation of Accounting Principal Board's ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees." Among other matters, FIN No. 44 clarifies the application of APB Opinion No. 25 regarding the definition of employee for purposes of applying APB Opinion No. 25, the criteria for determining whether a plan qualifies as non compensatory and the accounting consequences of modifications to the terms of a previously issued stock options or similar awards. The Company adopted the provisions of FIN No. 44 in fiscal 2000. The adoption of FIN No. 44 did not have a material impact on the Company's consolidated results of operations or financial condition. Pursuant to Emerging Issues Task Force Issue 00-10 "Accounting for Shipping and Handling Fees and Costs", cost of sales includes the cost of merchandise, inventory markdowns, inventory shrinkage, inbound freight, distribution and warehousing, payroll for buying personnel, and retail store occupancy costs. ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management's discussion and analysis should be read in conjunction with the Company's Consolidated Financial Statements and the Notes related thereto. RESULTS OF OPERATIONS 13 Weeks Ended August 4, 2001 (Second Quarter of Fiscal 2001) Compared to ------------------------------------------------------------------------- 13 Weeks Ended July 29, 2000 (Second Quarter of Fiscal 2000) ------------------------------------------------------------ Net sales increased $20,226,000, or 39.1%, to $71,944,000 during the second quarter of fiscal 2001 from $51,718,000 during the second quarter of fiscal 2000. The increased net sales in the second quarter of fiscal 2001 were attributable to an increase in the number of stores and to a 2.4% increase in comparable store sales as compared to the corresponding 13 weeks last year. Net sales for the 113 stores not yet qualifying as comparable stores (107 Hot Topic stores and six Torrid stores) contributed approximately $19,100,000 of the increase in net sales. The comparable store sales increase of 2.4% contributed approximately $1,100,000 of the increase in net sales. In the second quarter of fiscal 2000, comparable store sales increased by 21.8%. The Company considers a store comparable after it has been open for 15 full months. If a store is relocated or expanded by more than 15% in total square footage, it is removed from the comparable store base and, similar to new stores, becomes comparable after 15 full months. At the end of the second quarter of fiscal 2001, 209 of the Company's 316 Hot Topic stores were included in the comparable store base, compared to 163 of the 247 stores open at the end of last year's second quarter. Sales of apparel and tee shirt category merchandise, as a percentage of total net sales, were 51% in the second quarter of fiscal 2001 compared to 49% in the second quarter of fiscal 2000. The primary reason for the increase was because the first week of the back-to-school sales season occurred in the last week of the Company's second quarter in fiscal 2001 versus the first week in the third quarter of fiscal 2000. This fluctuation was because the Company, like other retailers, ends its fiscal year on a date that fluctuates from year to year (the Saturday closest to January 31 of each year). The back-to-school sales season typically results in an increase in apparel and tee shirts sales as a percentage of total net sales. 7 Gross margin increased approximately $6,873,000 to $26,160,000 during the second quarter of fiscal 2001 from $19,287,000 during the second quarter of fiscal 2000. As a percentage of net sales, gross margin decreased to 36.4% during the second quarter of fiscal 2001 from 37.3% in the second quarter of fiscal 2000. This 0.9% decrease in gross margin as a percentage of net sales is primarily attributable to a 0.2% increase in store occupancy expenses related to higher common area maintenance charges, a 0.1% increase in distribution expenses associated with higher inventory levels and a 0.6% decrease in merchandise margin. Approximately one-half of the decrease in merchandise margin, or 0.3%, was attributable to the planned promotional activity resulting from the earlier back-to-school season in fiscal 2001 compared to fiscal 2000. The balance of approximately 0.3% was attributable to the higher planned markdowns in the Company's Torrid stores. Selling, general and administrative expenses increased approximately $5,109,000 or 34.7% to $19,818,000 during the second quarter of fiscal 2001 from $14,709,000 during the second quarter of fiscal 2000, but decreased as a percentage of net sales to 27.6% in the second quarter of fiscal 2001 from 28.4% in the second quarter of fiscal 2000. The total dollar increase in selling, general and administrative expenses is primarily attributable to an increase in the number of retail stores from 247 at the end of the second quarter of fiscal 2000 to 322 at the end of the second quarter of fiscal 2001 and the corresponding additional payroll and other miscellaneous expenses needed to support these additional stores. The decrease as a percentage of net sales was primarily attributable to leveraging headquarters and field management expenses, and lower store operating expense resulting from management's efforts to control such expenses. This leverage was offset in part by slightly higher store management payroll expense as a percentage of sales. Operating income increased approximately $1,764,000 or 39% to $6,342,000 during the second quarter of fiscal 2001 from $4,578,000 during the second quarter of fiscal 2000. As a percentage of net sales, the operating income was 8.8% in the second quarter of fiscal 2001 compared to 8.9% in the second quarter of fiscal 2000. Interest income, net, increased approximately $74,000 to $450,000 in the second quarter of fiscal 2001 from $376,000 in the second quarter of fiscal 2000, principally due to higher average cash balances somewhat offset by slightly lower interest rates. 26 Weeks Ended August 4, 2001 (First Six Months of Fiscal 2001) Compared to --------------------------------------------------------------------------- 26 Weeks Ended July 29, 2000 (First Six Months of Fiscal 2000) -------------------------------------------------------------- Net sales increased $38,315,000, or 39.7%, to $134,871,000 during the first six months of fiscal 2001 from $96,556,000 during the first six months of fiscal 2000. The increased net sales in the first six months of fiscal 2001 were attributable to an increase in the number of stores, and to a 5.0% increase in comparable store sales as compared to the corresponding 26 weeks last year. Net sales for the 113 stores not yet qualifying as comparable stores contributed approximately $33,800,000 of the increase in net sales. The comparable store sales increase of 5.0% contributed approximately $4,500,000 of the increase in net sales. In the first six months of fiscal 2000, comparable store sales increased by 22.9%. Sales of apparel category merchandise, as a percentage of total net sales, were 51% in the first six months of fiscal 2001 compared to 50% in the first six months of fiscal 2000. 8 Gross margin increased approximately $13,582,000 to $49,637,000 during the first six months of fiscal 2001 from $36,055,000 during the first six months of fiscal 2000. As a percentage of net sales, gross margin decreased to 36.8% during the first six months of fiscal 2001 from 37.3% in the first six months of fiscal 2000. This 0.5% decrease in gross margin as a percentage of net sales reflects an increase in store occupancy expenses of 0.2% related to higher common area maintenance charges. The Company's merchandise margins, as a percentage of sales, were approximately 0.2% lower in the first six months of 2001 compared to the first six months of 2000. This is principally due to the planned promotional activity resulting from the earlier back-to-school season in fiscal 2001 compared to fiscal 2000, as well as higher planned markdowns in the Company's Torrid stores. Buying expenses were also higher by 0.1% as a percentage of sales in the first six months of 2001 compared to the first six months of 2000, reflecting additional expenses related to the Torrid staffing. Selling, general and administrative expenses increased approximately $10,531,000 or 37.6% to $38,552,000 during the first six months of fiscal 2001 from $28,021,000 during the first six months of fiscal 2000, but decreased as a percentage of net sales to 28.6% in the first six months of fiscal 2001 from 29.0% in the first six months of fiscal 2000. The total dollar increase in selling, general and administrative expenses is primarily attributable to an increase in the number of retail stores from 247 at the end of the second quarter of fiscal 2000 to 322 at the end of the second quarter of fiscal 2001 and the corresponding additional payroll and other expenses to support the additional stores. The decrease as a percentage of net sales was primarily attributable to leveraging headquarters and field management expenses, and lower store operating expense, resulting from management's efforts to control such expenses. This leverage was offset in part by slightly higher store management payroll expense as a percentage of sales. Operating income increased approximately $3,051,000 or 38% to $11,085,000 during the first six months of fiscal 2001 from $8,034,000 during the first six months of fiscal 2000. As a percentage of net sales, the operating income was 8.2% in the first six months of fiscal 2001 compared to 8.3% in the first six months of fiscal 2000. Interest income, net, increased approximately $222,000 to $1,020,000 in the first six months of fiscal 2001 from $798,000 in the first six months of fiscal 2000, principally due to higher average cash balances somewhat offset by slightly lower interest rates. LIQUIDITY AND CAPITAL RESOURCES Historically, as well as during the first six months of fiscal 2001, the Company's primary uses of cash have been to finance store openings and purchase merchandise inventories. The Company has historically satisfied its cash requirements principally from cash flows from operations, and, in earlier years, also from proceeds from the sale of equity securities. Cash flows provided by (used in) operating activities were $1,469,000 and ($4,210,000) in the first six months of fiscal 2001 and 2000, respectively. This $5,679,000 increase in cash flows provided by operating activities in the first six months of fiscal 2001 compared to the first six months of fiscal 2000 was primarily due to an increase in income taxes payable of $7,024,000 due to the timing of income tax payments, an increase in net income of $2,062,000, an increase in depreciation and amortization of $1,325,000 and a reduction in prepaid expenses and other of $1,262,000. These increases were offset by an increase in inventories net of accounts payable of ($4,757,000) resulting from the seasonal buildup of inventories relating to our back to school season, and a decrease in accrued payroll and related expenses of ($1,454,000). The Company's average store inventories vary throughout the year and increase in advance of the peak selling periods such as back-to-school, Halloween and Christmas. The changes in other items of working capital for the first six months of fiscal 2001 were consistent with the first six months of fiscal 2000. 9 Cash flows used in investing activities were ($16,507,000) and ($8,736,000) in the first six months of fiscal 2001 and 2000, respectively. Cash flows used in investing activities relate primarily to store openings and the purchase of computer hardware and software. The higher capital expenditures during the first six months of fiscal 2001 versus the first six months of fiscal 2000 relate primarily to the opening of 14 more new stores (including six Torrid stores) in the first six months of fiscal 2001 compared to the first six months of fiscal 2000 as well as expenditures related to new store openings in early third quarter of fiscal 2001 (twelve August 2001 new Hot Topic store openings versus nine August 2000 new Hot Topic store openings), and expenditures made for the Company's new point of sale equipment being rolled out to all existing stores between March 2001 and October 2001. Cash flows provided by financing activities were $2,184,000 and $2,043,000 in the first six months of fiscal 2001 and 2000, respectively. This increase was primarily due to the additional proceeds received from the exercise of stock options in the first six months of fiscal 2001 versus the first six months of fiscal 2000. The Company believes that its current cash balances and cash generated from operations will be sufficient to fund its operations and planned expansion through at least the next 12 months. QUARTERLY RESULTS AND SEASONALITY The Company's quarterly results of operations may fluctuate materially depending on, among other things, the timing of store openings and related pre-opening and other startup expenses, net sales contributed by new stores, increases or decreases in comparable store sales, releases of new music and music-related products, shifts in timing of certain holidays, changes in the Company's merchandise mix and overall economic conditions. The Company's business is also subject to seasonal influences, with heavier concentrations of sales during the Christmas, back-to-school and Halloween seasons, and other periods when schools are not in session. The Christmas holiday season remains the Company's single most important selling season. The Company believes, however, that the importance of the summer vacation and back-to-school seasons (which affect operating results in the second and third quarters, respectively) and to a lesser extent, the spring break season (which affects operating results in the first quarter) as well as Halloween (which affects operating results in the third quarter), all reduce the Company's dependence on the Christmas holiday selling season. Furthermore, summer vacation, spring break and the back-to-school seasons take place at somewhat different times in different parts of the country, spreading the impact of these events on the Company's sales over a longer period. As is the case with many retailers of apparel, accessories and related merchandise, the Company typically experiences lower first fiscal quarter net sales relative to other quarters. 10 STATEMENT REGARDING FORWARD LOOKING DISCLOSURE Certain sections of this Quarterly Report on Form 10-Q, including the preceding "Management's Discussion and Analysis of Financial Condition and Results of Operations," contain various forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which represent the Company's expectations or beliefs concerning future events. These forward looking statements involve risks and uncertainties, and the Company cautions that these statements are further qualified by important factors that could cause actual results to differ materially from those in the forward looking statements, including, without limitation, the sufficiency of the Company's working capital and cash flows from operating activities, the implementation and management of the Company's growth strategy - (including the Company's new retail concept Torrid), the demand for the merchandise offered by the Company, the ability of the Company to obtain adequate merchandise supply, the ability of the Company to gauge the fashion tastes of its customers and provide merchandise that satisfies customer demand, the effect of economic conditions, the effect of severe weather or natural disasters, and the effect of competitive pressures from other retailers as well as other risks detailed from time to time in the Company's SEC reports, including the Company's Annual Report on Form 10-K for the fiscal year ended February 3, 2001. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable. PART II. - OTHER INFORMATION Items 1-3 and 5 are not applicable. Item 4. Submission of Matters to a vote of Security Holders The annual meeting of shareholders of the Company (the "Annual Meeting") was held on June 7, 2001 in the City of Industry, California. The Company had 20,495,590 shares of Common Stock outstanding as of April 20, 2001, the record date for the Annual Meeting. Proposal 1 - Election of Directors Each of the candidates listed below was duly elected to the Board of Directors at the Annual Meeting by the tally indicated. Candidate Votes in Favor Votes Withheld --------- -------------- -------------- Robert M. Jaffe 17,886,614 1,123,140 Elizabeth M. McLaughlin 19,003,211 6,543 Edgar F. Berner 18,821,101 188,653 Bruce A. Quinnell 18,798,401 211,353 Corrado Federico 18,798,347 211,407 Andrew Schuon 18,796,996 212,758 Proposal 2 - Ratification of Selection of Ernst & Young, LLP as Independent Auditors Votes in favor Votes Against Votes Abstained -------------- ------------- --------------- 19,087,097 67,951 3,689 11 Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits Exhibit Number Description of Document ------ ----------------------- 3.1 Amended and Restated Articles of Incorporation. (1) 3.2 Amended and Restated Bylaws. (2) 4.1 Reference is made to Exhibits 3.1 and 3.2 4.2 Specimen stock certificate. (1) (1) Filed as an exhibit to Registrant's Registration Statement on Form SB - (No. 333-5054-LA) and incorporated herein by reference (2) Filed as an exhibit to Registrant's Annual Report on Form 10-K for the year ended February 3, 2001 and incorporated herein by reference. (b) Reports on Form 8-K No reports on Form 8-K were filed during the period. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Hot Topic, Inc. (Registrant) Date: 9/14/01 /s/ Elizabeth M. McLaughlin --------------------------- Elizabeth M. McLaughlin Chief Executive Officer, President and Director (Principal Executive Officer) Date: 9/14/01 /s/ Jim McGinty --------------------------- Jim McGinty Chief Financial Officer (Principal Financial and Accounting Officer) 12