-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MgstrxM0bybFq0WxJQiSQ18/NqQ7DODOOjzJ6sXwPb2IOFNywbfsMobEd095v6oy Pky4L8ujsMdPrTRnYDi6Dw== 0001019687-05-000577.txt : 20050302 0001019687-05-000577.hdr.sgml : 20050302 20050302163104 ACCESSION NUMBER: 0001019687-05-000577 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050225 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050302 DATE AS OF CHANGE: 20050302 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HOT TOPIC INC /CA/ CENTRAL INDEX KEY: 0001017712 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-APPAREL & ACCESSORY STORES [5600] IRS NUMBER: 770198182 STATE OF INCORPORATION: CA FISCAL YEAR END: 0130 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-28784 FILM NUMBER: 05654682 BUSINESS ADDRESS: STREET 1: 18305 EAST SAN JOSE AVENUE CITY: CITY OF INDUSTRY STATE: CA ZIP: 91748 BUSINESS PHONE: 6268394681 MAIL ADDRESS: STREET 1: 18305 EAST SAN JOSE AVENUE CITY: CITY OF INDUSTRY STATE: CA ZIP: 91768 8-K 1 hottopic_8k-022505.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________ FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): FEBRUARY 25, 2005 _____________ HOT TOPIC, INC. (Exact name of registrant as specified in its charter) CALIFORNIA 0-28784 77-0198182 (State or other (Commission File Number) (I.R.S. Employer jurisdiction of Identification No.) incorporation) 18305 E. SAN JOSE AVENUE, CITY OF INDUSTRY, CALIFORNIA 91748 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (626) 839-4681 NOT APPLICABLE. (Former name or former address, if changed since last report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02 Results of Operations and Financial Condition. Attached hereto as Exhibit 99.1 is a copy of a press release that Hot Topic, Inc. issued on March 2, 2005. The press release includes certain sales information of the Registrant for the fiscal month ended February 26, 2005. In addition, the release includes certain additional information relating to past reporting periods. The information in this Item 2.02 and the corresponding exhibit are being furnished and shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing. Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review. (a) On February 25, 2005, the Audit Committee of the Board of Directors of the Registrant met with the Registrant's management and independent registered public accounting firm to discuss the correction of certain errors related to the Registrant's lease accounting that were recently identified by the Registrant's management. Specifically, the Registrant previously reflected the unamortized portion of construction allowances as a reduction of capital expenditures rather than recording those transactions as a deferred rent credit. In addition, the Registrant previously recognized straight-line rent expense for leases beginning on the rent commencement date (i.e., store opening date), which had the effect of excluding the build-out period from the calculation of the period over which rent is expensed. The Registrant's Audit Committee and management concluded that (i) the Registrant's consolidated financial statements as of January 31, 2004 and February 1, 2003 and for the fiscal years ended January 31, 2004, February 1, 2003 and February 2, 2002 and (ii) the Registrant's consolidated financial statements as of and for the interim periods ended October 30, 2004, July 31, 2004, May 1, 2004, November 1, 2003, August 2, 2003, and May 3, 2003, should be restated to reflect adjustments required to correct these errors. Accordingly, those previously filed financial statements should no longer be relied upon. The Registrant believes that these adjustments are consistent with similar adjustments currently being made by many other retailers and other publicly traded companies related to accounting for leases. These adjustments are not being made as a result of a determination of any fraudulent activity or misconduct of the Registrant, its Board of Directors, its Audit Committee, or its management. The Registrant intends to file this restated financial information together with its Form 10-K for the fiscal year ended January 29, 2005. 2 The restatement will increase property and equipment, as well as increase the deferred rent liability, for the consolidated balance sheet included within the affected financial statements. The restatement is expected to reduce net income per diluted share by $0.01 for each of fiscal years 2004, 2003 and 2002. In addition, the Registrant estimates that net income per diluted share will be lower by approximately $0.01 in fiscal 2005 as a result of these adjustments. While the adjustments have no effect on the cash flow of the Registrant in the aggregate, cash flow from operations will increase, offset by an increase in cash used for capital expenditures. The Registrant believes the restatement will comply with Statement of Financial Accounting Standards No. 13, "Accounting for Leases"; Financial Accounting Standards Board Technical Bulletin No. 88-1, "Issues Relating to Accounting for Leases"; Financial Accounting Standards Board Technical Bulletin No. 85-3, "Accounting for Operating Leases with Scheduled Rent Increases"; and the views of the Office of the Chief Accountant of the Securities and Exchange Commission expressed in its letter related to these matters dated February 7, 2005. The Audit Committee of the Registrant reviewed the accounting treatment and disclosures referred to in this Item 4.02(a) and discussed such treatment and disclosures with the Registrant's independent registered public accounting firm. Item 9.01 Financial Statements and Exhibits. (c) Exhibits: Exhibit No. Description ----------- ----------- 99.1 Press Release issued by Hot Topic, Inc. on March 2, 2005 [Remainder of page intentionally left blank; signature on following page.] 3 SIGNATURE 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 hereunto duly authorized. HOT TOPIC, INC. By: /s/ JAMES MCGINTY ------------------------- James McGinty CHIEF FINANCIAL OFFICER Date: March 2, 2005 4 INDEX TO EXHIBITS Exhibit No. Description - ----------- ----------- 99.1 Press Release issued by Hot Topic, Inc. on March 2, 2005 5 EX-99.1 2 hottopic_8kex99-1.txt Exhibit 99.1 ** NEWS RELEASE ** HOT TOPIC, INC. REPORTS FEBRUARY COMP STORE SALES UP 0.2% AND RESTATEMENT TO CHANGE LEASE ACCOUNTING CITY of INDUSTRY, CA, March 2, 2005 -- Hot Topic, Inc. (Nasdaq National Market: HOTT) today announced the following sales results for the month of February (ended February 26, 2005): Comparable Store Net Sales Sales % Change This $ Millions % Increase Year Last Year ---------- ---------- ---- --------- February $46.0 16% 0.2% 7.6% The Company also stated that, based upon review with its audit committee and consultations with its independent auditors, it will restate its consolidated financial statements for certain prior periods to reflect changes related to lease accounting. The Company previously reflected the unamortized portion of construction allowances as a reduction of capital expenditures, but will adjust to record those transactions as a deferred rent credit. In addition, the restatement will include a change in the manner in which the Company has accounted for rent expense to include the store build-out period used primarily for construction activities prior to the commencement of new store operations. Previously, the Company did not include the period prior to opening a new store in its calculation of straight-line rent expense. Hot Topic estimates the restatement will reduce earnings per diluted share by $0.01 for each fiscal year 2004, 2003 and 2002. In addition, the Company estimates that earnings per diluted share will be lower by approximately $0.01 in fiscal 2005. The Company reiterated that it is comfortable with the consensus earnings per diluted share of $0.38 for the fourth quarter of 2004. Including the interim periods of 2004 that will be restated, the full year 2004 earnings guidance is $0.83 per diluted share. Based upon the restatement of 2004, the Company is revising its guidance for the first quarter of 2005 to $0.11 per diluted share, consistent with consensus earnings estimates. 1 For more detailed information on February sales results, please call 626-709-1209 to listen to a recorded commentary. Additionally, a conference call to discuss fourth quarter results, business trends and other matters is scheduled for March 16, 2005 at 4:30 PM (ET). The conference call number is 800-370-0869, and will be accessible to all interested parties. It will also be webcast at www.companyboardroom.com. A replay will be available at 877-519-4471, pass code 5620263, for approximately two weeks. Hot Topic, Inc. is a national mall-based specialty retailer. Hot Topic offers apparel, accessories and gifts to young men and women principally between the ages of 12 and 22. Torrid, the Company's second concept, provides plus-size fashion-forward apparel and accessories that target young women principally between the ages of 15 and 29. The Company currently operates 596 Hot Topic stores in all 50 states and Puerto Rico, 77 Torrid stores, and Internet stores www.hottopic.com and www.torrid.com. In addition to the historical information contained herein, this news release contains forward-looking statements, which include statements relating to financial results, guidance, projections and other financial performance, and managing growth. These statements involve risks and uncertainties, including risks and uncertainties associated with meeting expected financial results, management of growth, relationships with mall developers and operators, the risk that available cash or mall space will not be adequate for planned expansion, fluctuations in sales and comparable store sales results, risks and uncertainties with respect to new store openings including risks associated with the Company's new store concepts and Internet stores, music and fashion trends, competition from other retailers, uncertainties generally associated with specialty retailing, the effect of economic conditions, the effect of severe weather or natural disasters, political and/or social changes or events that could negatively impact shopping patterns and/or mall traffic as well as other risks detailed in the Company's SEC reports, including its Quarterly Reports on Form 10-Q and its Annual Report on Form 10-K for the year ended January 31, 2004. Historical results achieved are not necessarily indicative of the future prospects of the Company, and actual results or circumstances could differ materially from the forward-looking statements. Contact: Hot Topic, Inc., City of Industry, CA Mr. Jim McGinty, CFO 626-839-4681 x2675 Ms. Megan Hall, Manager of I.R. 626-839-4681 x2173 2 -----END PRIVACY-ENHANCED MESSAGE-----