EX-99.1 2 hottopic_8kex99-1.txt EXHIBIT 99.1 ** NEWS RELEASE ** HOT TOPIC, INC. REPORTS 4TH QUARTER AND FISCAL YEAR 2004 EARNINGS 4TH QUARTER EPS OF $0.38 PER DILUTED SHARE CITY of INDUSTRY, CA, March 16, 2005 -- Hot Topic, Inc. (Nasdaq National Market: HOTT) reported net income for its fourth quarter ended January 29, 2005 of $17.4 million or $0.38 per diluted share, compared to $22.5 million or $0.45 per diluted share for the same period last fiscal year. At the end of the fourth quarter, the Company operated 668 stores, including 76 Torrid stores, compared to 554 stores, including 52 Torrid stores, at the end of the fourth quarter of fiscal 2003. For the fiscal year ended January 29, 2005, net income was $39.7 million or $0.83 per diluted share, compared to $47.6 million or $0.96 per diluted share for the comparable period last year. The Company also stated that all financial results presented, both for current and prior year, reflect the restatement related to accounting for leases as discussed in the press release and 8K filing on March 2, 2005. The Company also reiterated that it expects to open 110 new stores in 2005. This includes an estimated 65 new Hot Topic stores and an estimated 45 new Torrid stores. The Company expects to end the year operating 121 Torrid stores and 657 Hot Topic stores. A conference call to discuss fourth quarter results, business trends and other matters is scheduled for today 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 10 days. 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 600 Hot Topic stores in all 50 states and Puerto Rico, 79 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 IR 626-839-4681 x2173 HOT TOPIC, INC. SUMMARY STATEMENTS OF INCOME (Unaudited) Fourth Quarters Ended ------------------------------ Jan. 29, 2005 Jan. 31, 2004 ------------- ------------- (restated) (In thousands, except per share amounts) Net sales $ 211,254 $ 194,108 Cost of goods sold, including buying, distribution and occupancy costs 132,873 113,847 Gross margin 78,381 80,261 Selling, general and administrative expenses 50,331 44,170 Operating income 28,050 36,091 Interest income-net 175 380 Income before income taxes 28,225 36,471 Provision for income taxes 10,805 13,969 Net income $ 17,420 $ 22,502 Earnings per share Basic $ 0.39 $ 0.47 Diluted $ 0.38 $ 0.45 Weighted average shares outstanding Basic 44,944 47,932 Diluted 46,127 50,342 Fiscal Years Ended ------------------------------ Jan. 29, 2005 Jan. 31, 2004 ------------- ------------- (restated) (In thousands, except per share amounts) Net sales $ 656,468 $ 572,039 Cost of goods sold, including buying, distribution and occupancy costs 422,712 352,277 Gross margin 233,756 219,762 Selling, general and administrative expenses 170,384 143,952 Operating income 63,372 75,810 Interest income-net 919 1,318 Income before income taxes 64,291 77,128 Provision for income taxes 24,618 29,539 Net income $ 39,673 $ 47,589 Earnings per share Basic $ 0.86 $ 1.00 Diluted $ 0.83 $ 0.96 Weighted average shares outstanding Basic 46,379 47,479 Diluted 47,875 49,588 HOT TOPIC, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) Jan. 29, 2005 Jan. 31, 2004 ------------- ------------- (restated) Current Assets: Cash, cash equivalents and short-term investments $ 66,339 $ 128,205 Inventory 60,481 51,937 Prepaid expenses and other 12,390 10,654 Deferred tax assets 2,541 2,259 Total current assets 141,751 193,055 Leaseholds, fixtures and equipment - net 136,401 102,838 Deposits and other 243 189 Total assets $ 278,395 $ 296,082 Current Liabilities: Accounts payable $ 17,874 $ 15,841 Accrued liabilities 27,769 28,133 Income taxes payable 8,887 7,278 Total current liabilities 54,530 51,252 Deferred rent 30,227 21,843 Deferred tax liability 6,076 1,708 Total liabilities 90,833 74,803 Shareholders' equity 187,562 221,279 Total liabilities and shareholders' equity $ 278,395 $ 296,082 HOT TOPIC, INC. OTHER DATA (Dollars in thousands) (Unaudited) Fiscal Years Ended -------------------------------- Jan. 29, 2005 Jan. 31, 2004 ------------- ------------- (restated) Depreciation and amortization $ 24,635 $ 20,360 Capital expenditures $ 57,853 $ 41,959 Number of stores open at end of period: Hot Topic 592 502 Torrid 76 52 Total store square footage 1,214,400 998,600 HOT TOPIC, INC. SUMMARY STATEMENTS OF INCOME (Unaudited) Quarters Ended ----------------------------------------- Oct. 30, 2004 July 31, 2004 May 1, 2004 ------------- ------------- ----------- (restated) (restated) (restated) (In thousands, except per share amounts) Net sales $ 180,808 $ 136,263 $ 128,143 Cost of goods sold, including buying, distribution and occupancy costs 116,268 89,613 83,958 Gross margin 64,540 46,650 44,185 Selling, general and administrative expenses 44,553 39,515 35,985 Operating income 19,987 7,135 8,200 Interest income-net 188 204 352 Income before income taxes 20,175 7,339 8,552 Provision for income taxes 7,727 2,811 3,275 Net income $ 12,448 $ 4,528 $ 5,277 Earnings per share Basic $ 0.27 $ 0.10 $ 0.11 Diluted $ 0.26 $ 0.09 $ 0.11 Weighted average shares outstanding Basic 46,086 46,565 48,019 Diluted 47,202 48,023 50,131