8-K

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): November 15, 2006

Hot Topic, Inc.

(Exact name of registrant as specified in its charter)

California	0-28784	77-0198182
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

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 November 15, 2006 containing certain financial information for the third quarter ended October 28, 2006.

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 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

(c) Appointment of Principal Officers.

On November 15, 2006, Hot Topic, Inc. announced that effective immediately Christopher Daniel, 49, has been promoted to President, Torrid. A press release to that effect is filed as Exhibit 99.2 hereto. From August 2006 to November 2006, he served as Senior Vice President and Chief Merchandising Officer, Torrid. He joined us as Vice President, General Merchandise Manager for Torrid in October 2004. From September 1996 until September 2004, he was the Vice President of Design and Product Development for Mervyn’s, a division of Target Corporation. Prior to that, Mr. Daniel held management positions in merchandising and product development with Structure, a division of Limited, Inc., Charming Shoppes, a national women’s specialty retailer, and Dayton-Hudson, the department store division of Target Corporation. Prior to that, he held merchandising positions with Bullock’s, a Los Angeles based division of Federated Stores, and Miller and Rhoads, a division of Allied stores based in Richmond, Virginia. Mr. Daniel holds a B.A. degree in English literature from the University of Richmond in Richmond, Virginia.

We entered into a severance and change of control letter agreement with Mr. Daniel as of November 15, 2006, which is filed as Exhibit 99.3 hereto and incorporated by reference. Also in connection with his promotion, his annual base salary was increased from $315,000 to $425,000. Moreover, our Compensation Committee approved an option grant, effective November 15, 2006, to purchase 100,000 shares of our common stock, subject to 4-year vesting and other terms and conditions consistent with our 2006 equity incentive plan. With respect to potential annual bonuses, our Compensation Committee annually establishes targeted profitability levels for the ensuing fiscal year in conjunction with our company’s annual financial plan. Mr. Daniel’s 2006 bonus plan provides for various cash bonus amounts based upon increasing levels of operating income for the Torrid division, and his target bonus was increased from 50% of his base salary to 75% of his base salary in connection with his promotion. Cash bonuses under the 2006 plan, if earned, are expected to be paid following completion of our audit of the results of operations for the 2006 fiscal year (ending February 3, 2007).

Item 9.01 Financial Statements and Exhibits.

(c) Exhibits:

Exhibit No.	Description
99.1	Press Release of Hot Topic, Inc. dated November 15, 2006, regarding fiscal third quarter.
99.2	Press Release of Hot Topic, Inc. dated November 15, 2006, regarding Christopher Daniel.
99.3	Severance and Change of Control Letter Agreement dated November 15, 2006.

[Remainder of page intentionally left blank; signature on following page.]

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: November 15, 2006

INDEX TO EXHIBITS

Exhibit No.	Description
99.1	Press Release issued by Hot Topic, Inc. on November 15, 2006, regarding fiscal third quarter.
99.2	Press Release of Hot Topic, Inc. dated November 15, 2006, regarding Christopher Daniel.
99.3	Severance and Change of Control Letter Agreement dated November 15, 2006.

EX-99.1

Exhibit 99.1

** NEWS RELEASE **

HOT TOPIC, INC. REPORTS 3rd QUARTER EARNINGS

OF $0.16 PER DILUTED SHARE

CITY of INDUSTRY, CA, November 15, 2006 — Hot Topic, Inc. (Nasdaq Global Select Market: HOTT), reported results for its third fiscal quarter (13 weeks) ended October 28, 2006.

The company reported net income in the third quarter of $7.1 million, or $0.16 per diluted share, compared to $5.9 million or $0.13 per diluted share for the comparable period last year. The third quarter 2006 results include approximately $0.02 per share of stock-based compensation. Net sales for the third quarter increased 2% to $196.7 million from $192.7 million for the third quarter of fiscal 2005.

As previously reported, comparable store sales decreased 6.8% for the quarter compared to a decrease of 6.2% during the third quarter of fiscal 2005.

At the end of the quarter, the company operated 693 Hot Topic stores and 129 Torrid stores compared to 648 Hot Topic stores and 114 Torrid stores at the end of the third quarter of fiscal 2005. During the third quarter of fiscal 2006, the company opened a total of 11 Hot Topic stores and 3 Torrid stores and closed 1 Torrid store. The company also remodeled or relocated 7 Hot Topic stores during the quarter.

The company also announced that it expects to open 35 new stores in fiscal 2007 (year ending February 2, 2008). This includes opening an estimated 15 new Hot Topic stores and 20 new Torrid stores. In addition, the company plans to remodel approximately 60 to 80 Hot Topic stores.

A conference call to discuss third quarter, business trends, guidance and other matters is scheduled for today at 4:30 PM Eastern time. The conference call number is 800-561-2601, pass code “Hot Topic”, and will be accessible to all interested parties. The conference call will also be webcast at www.companyboardroom.com. A replay will be available at 888-286-8010, pass code 85899277, 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. As of October 28, 2006 the company operated 693 Hot Topic stores in all 50 states and Puerto Rico, 129 Torrid stores, and Internet stores www.hottopic.com and www.torrid.com.

In addition to historical information, this news release and the aforementioned conference call contain forward-looking statements, which include statements relating to financial results, guidance, projections and other financial performance, managing growth, and litigation matters and contingent liabilities. 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, litigation proceedings and contingent liabilities, 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 28, 2006. 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

HOT TOPIC, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)

	Third Quarter Ended
	Oct. 28, 2006		Oct. 29, 2005
Net sales	$	196,669	$	192,747
Cost of goods sold, including buying, distribution and occupancy costs		128,271		129,271
Gross margin		68,398		63,476
Selling, general & administrative expenses		56,904		54,043
Income from operations		11,494		9,433
Interest income, net		277		180
Income before income taxes		11,771		9,613
Provision for income taxes		4,701		3,682
Net income	$	7,070	$	5,931
Earnings per share:
Basic	$	0.16	$	0.13
Diluted	$	0.16	$	0.13
Weighted average shares outstanding
Basic		44,207		45,108
Diluted		44,735		45,738
	Nine Months Ended
	Oct. 28, 2006		Oct. 29, 2005
Net sales	$	511,058	$	494,743
Cost of goods sold, including buying, distribution and occupancy costs		343,566		332,479
Gross margin		167,492		162,264
Selling, general & administrative expenses		160,388		143,942
Income from operations		7,104		18,322
Interest income, net		919		840
Income before income taxes		8,023		19,162
Provision for income taxes		3,265		7,339
Net income	$	4,758	$	11,823
Earnings per share:
Basic	$	0.11	$	0.26
Diluted	$	0.11	$	0.26
Weighted average shares outstanding
Basic		44,150		44,978
Diluted		44,744		46,064

HOT TOPIC, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

	Oct. 28, 2006		Oct. 29, 2005
Current Assets:
Cash, cash equivalents and short-term investments	$	37,704	$	19,917
Inventory		102,030		96,404
Prepaid expenses and other		7,007		19,258
Deferred tax assets		2,725		2,541
Total current assets		149,466		138,120
Property and equipment, net		173,457		173,712
Deposits and other		387		248
Total assets	$	323,310	$	312,080
Current Liabilities:
Accounts payable	$	33,027	$	29,141
Accrued liabilities		34,962		35,545
Income taxes payable		1,870		—
Total current liabilities		69,859		64,686
Deferred rent		41,411		38,624
Deferred tax and other		314		5,994
Total liabilities		111,584		109,304
Shareholders’ equity		211,726		202,776
Total liabilities and shareholders’ equity	$	323,310	$	312,080

HOT TOPIC, INC.

OTHER DATA

(Dollars in thousands)

(Unaudited)

	Nine Months Ended
	Oct. 28, 2006		Oct. 29, 2005
Depreciation and amortization	$	28,398	$	23,526
Capital expenditures	$	31,522	$	61,101
Number of stores open at end of period:
Hot Topic		693		648
Torrid		129		114
Total store square footage		1,533,100		1,409,300

EX-99.2

Exhibit 99.2

** NEWS RELEASE **

CHRIS DANIEL PROMOTED TO PRESIDENT, TORRID

CITY of INDUSTRY, CA, November 15, 2006 — Hot Topic, Inc. (Nasdaq Global Select Market: HOTT), announced today that Chris Daniel has been promoted to President, Torrid.

As President of Torrid, Chris will oversee merchandising, planning and allocation, stores, marketing and brand development for the division. Chris will report to Betsy McLaughlin, the company’s Chief Executive Officer.

Betsy McLaughlin said, “Over the past two years, Chris has made significant contributions to the development and growth of Torrid. He has taken the lead role in architecting the brand positioning and developed a strong merchandising team. With his strategic approach to the business and leadership strength, he is a tremendous asset to both the Torrid division and the Hot Topic senior team. I am thrilled to have such a talented, creative and progressive thinker to lead Torrid into its next stage of growth.”

Chris Daniel has been the Chief Merchandising Officer of Torrid since August 2006. Chris originally joined Hot Topic as Vice President, General Merchandise Manager of Torrid in October 2004. From September 1996 until September 2004, he was the Vice President of Design and Product Development for Mervyn’s, a division of Target Corporation. Prior to that, Chris held management positions in merchandising and product development with Structure, a division of Limited, Inc., Charming Shoppes, a national women’s specialty retailer, and Dayton-Hudson, the department store division of Target Corporation. Chris holds a B.A. degree in English literature from the University of Richmond in Richmond, Virginia.

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. As of October 28, 2006 the company operated 693 Hot Topic stores in all 50 states and Puerto Rico, 129 Torrid stores, and Internet stores www.hottopic.com and www.torrid.com.

In addition to historical information, this news release contains forward-looking statements, which include statements relating to company management and structure, financial results, guidance, projections and other financial performance, managing growth, and litigation matters and contingent liabilities. These statements involve risks and uncertainties, including risks and uncertainties associated with company management, 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, litigation proceedings and contingent liabilities, 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 28, 2006. 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

EX-99.3

Exhibit 99.3

November 15, 2006

Mr. Chris Daniel

c/o Hot Topic, Inc.

18305 E. San Jose Ave.

City of Industry, CA

91748

RE: Severance/Change of Control Provisions

Dear Chris,

Hot Topic, Inc. (the “Company”) is pleased about your promotion, as of the date of this letter, to the position of President, Torrid, which will be an executive officer position of the Company. In consideration of your acceptance of the position, and for other good and valuable consideration, the Company agrees to the following provisions, and asks you to agree to the same by execution of this letter below:

1. TERMINATION

The Company may terminate your employment at any time and for any or no reason, with or without Cause (as defined herein) or advance notice, by giving written notice of such termination. Similarly, you may terminate your employment with the Company at any time at your election, in your sole discretion, for any or no reason upon two weeks notice to the Company during which time you shall provide reasonable transition assistance to the Company. The Company reserves the right to ask you to expedite your resignation date and to leave prior to the end of the two weeks notice period.

If the Company terminates your employment without Cause (as defined herein), then upon your furnishing to the Company an executed and effective release and waiver of all claims in the Company’s form, you shall be entitled to receive severance payments in the form of continuation of your base salary and medical insurance benefits that are in effect at the time of your termination, subject to standard payroll deductions and withholdings, for six (6) months (the “Severance Period”). If you voluntarily resign or your employment is terminated for Cause (as defined herein), all compensation and benefits will cease immediately and you will receive no additional payments from the Company other than your accrued base salary and accrued and unused vacation benefits earned through the date of your termination.

For purposes of this Agreement, “Cause” shall mean (i) willful misconduct by you, including, but not limited to, dishonesty which materially and adversely reflects upon your ability to perform your duties for the Company, (ii) your conviction of, or the entry of a pleading of guilty or nolo contendere by you to, any crime involving moral turpitude or any felony, (iii) fraud, embezzlement or theft against the Company, (iv) a material breach by you of any material provision of any employment contract, assignment of inventions, confidentiality and/or nondisclosure agreement between you and the Company, or (v) your willful and habitual failure to attend to your duties as assigned by the Hot Topic CEO or Board of Directors of the Company, after written notice to you and no less than a 90-day period to cure such failure provided such failure to perform is subject to cure with the passage of time.

2. CHANGE OF CONTROL

Following a Change in Control (as defined herein) the vesting of your Stock Options will be immediately accelerated such that one hundred percent (100%) of the Stock Options shall be vested and exercisable. For purposes of this Agreement, Change of Control is defined as follows: (i) a sale of all or substantially all of the assets of the Company; (ii) a merger or consolidation in which the Company is not the surviving corporation and in which beneficial ownership of securities of the Company representing at least fifty percent (50%) of the combined voting power entitled to vote in the election of Directors has changed; (iii) an acquisition by any person, entity or group within the meaning of Section 13(d) or 14(d) of the Exchange Act, or any comparable successor provisions (excluding any employee benefit plan, or related trust, sponsored or maintained by the Company or subsidiary of the Company or other entity controlled by the Company) of the beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act, or comparable successor rule) of securities of the Company representing at least fifty percent (50%) of the combined voting power entitled to vote in the election of Directors.

3. OTHER

As a continuing employee of the Company, your employment will continue to be “at will”, subject to the terms of this letter, and the at-will nature of your employment relationship may not be modified except by a written agreement with the Chief Executive Officer of the Company. You will be expected to perform various duties consistent with your position. Your base salary will be subject to at least annual review, and you are eligible to participate in the Company’s standard benefits, and other benefits and compensation as may be granted to you from time to time. The Company may modify its benefits plans and compensation policies and other terms of employment (subject to the terms of this letter and applicable law) from time to time, as it deems necessary. This Agreement will be governed by and construed according to the laws of the State of California. You hereby expressly consent to the personal jurisdiction of the state and federal courts located in Los Angeles County, California for any lawsuit filed there against you by the Company arising from or related to this Agreement. In the event of any litigation arising out of or relating to this Agreement, its breach or enforcement, including an action for declaratory relief, the prevailing party in such action or proceeding shall be entitled to receive his or its damages, court costs, and all out-of-pocket expenses, including attorneys’ fees. Such recovery shall include court costs, out-of-pocket expenses, and attorneys’ fees on appeal, if any. This Agreement will be binding upon your heirs, executors, administrators and other legal representatives and will be for the benefit of the Company, its successors, and its assigns.

Sincerely,

/s/ Elizabeth McLaughlin

Elizabeth McLaughlin

CEO, Hot Topic

Accepted:

/s/ Chris Daniel

Chris Daniel

November 14, 2006

Date