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Business Events | 3 Months Ended
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May 04, 2013
Business Events | NOTE 2. Business Events Strategic Business Changes In March 2011, our Board approved certain strategic business changes to better position the company for growth. The business changes involved discontinuing the operations of ShockHound, an online digital music website launched in fiscal 2008; writing down inventory due to a change in management’s inventory strategy; writing down property and equipment that are no longer critical to our strategic direction; and implementing other strategic business and operational initiatives. As of the end of the second quarter of fiscal 2011, we had recorded all charges related to the strategic business changes. Cost Reduction Plan In November 2010, our Board approved a cost reduction plan, designed to meet the challenges of the environment at that time, which involved closing approximately 50 underperforming stores, a majority of which closed by the end of the first quarter of fiscal 2011. These closures occurred as a result of natural lease expirations, exercising lease kick out clauses and other negotiations. The cost reduction plan also included reducing our home office and field management positions, reducing planned capital expenditures in fiscal 2011 relative to fiscal 2010 and implementing other non-payroll overhead expense reduction initiatives. As of the end of the second quarter of fiscal 2011, we had recorded all charges related to the cost reduction plan, completed the announced reduction of our home office and field management positions, and completed the implementation of non-payroll overhead expense reduction initiatives as part of the cost reduction plan. As of the end of the second quarter of fiscal 2012, we had closed all underperforming stores related to the cost reduction plan, totaling 41 Hot Topic stores and seven Torrid stores. The following table details charges related to the strategic business changes and cost reduction plan recorded since their implementation in the first quarter of fiscal 2011 and the fourth quarter of fiscal 2010, respectively (in thousands).
|  |  |  |  | Non-Store Related |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  | Severance and |  |  | Inventory and |  |  |  |  |  |  |  |  |  |
|  | Store Related |  |  | Outplacement |  |  | Asset-Related |  |  | Consulting |  |  | Stock Option |  |  |  |
|  | Closure Costs 1 |  |  | Costs |  |  | Costs 2 |  |  | Fees |  |  | Expense |  |  | Total |
Balance at October 30, 2010 |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Cost Reduction Plan charges |  |  | (7,077 | ) |  |  | (1,850 | ) |  |  | (830 | ) |  |  | - |  |  |  | - |  |  |  | (9,757 | )
Cash payments |  |  | 93 |  |  |  | 985 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,078 |
Non-cash adjustments |  |  | 6,497 |  |  |  | - |  |  |  | 830 |  |  |  | - |  |  |  | - |  |  |  | 7,327 |
Balance at January 29, 2011 |  |  | (487 | ) |  |  | (865 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (1,352 | )
Cost Reduction Plan recovery |  |  | 365 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 365 |
Strategic Business Changes charges |  |  | - |  |  |  | (1,583 | ) |  |  | (9,605 | ) |  |  | (1,606 | ) |  |  | - |  |  |  | (12,794 | )
Cash payments |  |  | 699 |  |  |  | 889 |  |  |  | - |  |  |  | 1,645 |  |  |  | - |  |  |  | 3,233 |
Non-cash adjustments |  |  | (659 | ) |  |  | - |  |  |  | 4,891 |  |  |  | - |  |  |  | - |  |  |  | 4,232 |
Balance at April 30, 2011 |  |  | (82 | ) |  |  | (1,559 | ) |  |  | (4,714 | ) |  |  | 39 |  |  |  | - |  |  |  | (6,316 | )
Cost Reduction Plan recovery |  |  | 174 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 174 |
Strategic Business Changes charges |  |  | - |  |  |  | (1,330 | ) |  |  | (532 | ) |  |  | (1,383 | ) |  |  | (1,072 | ) |  |  | (4,317 | )
Cash payments |  |  | 144 |  |  |  | 812 |  |  |  | 182 |  |  |  | 753 |  |  |  | - |  |  |  | 1,891 |
Non-cash adjustments |  |  | (455 | ) |  |  | - |  |  |  | 4,866 |  |  |  | - |  |  |  | 1,072 |  |  |  | 5,483 |
Balance at July 30, 2011 |  |  | (219 | ) |  |  | (2,077 | ) |  |  | (198 | ) |  |  | (591 | ) |  |  | - |  |  |  | (3,085 | )
Cash payments |  |  | 197 |  |  |  | 464 |  |  |  | - |  |  |  | 473 |  |  |  | - |  |  |  | 1,134 |
Non-cash adjustments |  |  | 22 |  |  |  | (43 | ) |  |  | 18 |  |  |  | 20 |  |  |  | - |  |  |  | 17 |
Balance at October 29, 2011 |  |  | - |  |  |  | (1,656 | ) |  |  | (180 | ) |  |  | (98 | ) |  |  | - |  |  |  | (1,934 | )
Cash payments |  |  | - |  |  |  | 682 |  |  |  | 20 |  |  |  | - |  |  |  | - |  |  |  | 702 |
Non-cash adjustments |  |  | - |  |  |  | - |  |  |  | 75 |  |  |  | - |  |  |  | - |  |  |  | 75 |
Balance at January 28, 2012 |  |  | - |  |  |  | (974 | ) |  |  | (85 | ) |  |  | (98 | ) |  |  | - |  |  |  | (1,157 | )
Cash payments |  |  | - |  |  |  | 476 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 476 |
Non-cash adjustments |  |  | - |  |  |  | 17 |  |  |  | 68 |  |  |  | 98 |  |  |  | - |  |  |  | 183 |
Balance at April 28, 2012 |  |  | - |  |  |  | (481 | ) |  |  | (17 | ) |  |  | - |  |  |  | - |  |  |  | (498 | )
Cash payments |  |  | - |  |  |  | 318 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 318 |
Non-cash adjustments |  |  | - |  |  |  | 23 |  |  |  | 17 |  |  |  | - |  |  |  | - |  |  |  | 40 |
Balance at July 28, 2012 |  |  | - |  |  |  | (140 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (140 | )
Cash payments |  |  | - |  |  |  | 133 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 133 |
Non-cash adjustments |  |  | - |  |  |  | 7 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 7 |
Balance at October 27, 2012 and May 4, 2013 |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
1 Store related closure costs represent charges for the closure of approximately 50 underperforming stores. Such charges include the write down and accelerated depreciation of store assets, the write down of inventory, early lease terminations and store severance, partially offset by certain credits and allowances. 2 Inventory and asset-related costs represent charges related to the write down and impairment of inventory and non-critical property and equipment. We recorded charges related to store closures, write down of assets; store severance; non-store related severance and outplacement; consulting fees; and stock option expense in selling, general and administrative expenses in our consolidated statements of operations. Charges related to the write down of store inventory; accelerated depreciation of store assets; and early lease terminations were recorded in cost of goods sold in our consolidated statements of operations.

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- Definition The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 5 -Section P -Subsection 3, 4 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6394359&loc=d3e17939-110869 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 146 -Paragraph 20 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB TOPIC 5.P.4) -URI http://asc.fasb.org/extlink&oid=6394695&loc=d3e140904-122747 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 5.P.3) -URI http://asc.fasb.org/extlink&oid=6394695&loc=d3e140864-122747 + Details
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