##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended: July 31, 2010OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission file number 0-21296
 PACIFIC SUNWEAR OF CALIFORNIA, INC.
  California
    
    95-3759463(State of incorporation)
    
    (I.R.S. Employer Identification No.)
 
 
 
    
    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 þ No o
    
    Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required to submit and post such
files). Yes o No o
    
    Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the definition of large
accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the
Exchange Act. (Check one):
 Large Accelerated Filer o
    
    Accelerated Filer þ
    
    Non-Accelerated Filer o
(Do not check if a smaller reporting company)
    
    Smaller Reporting Company o
 
    
    Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2
of the Exchange Act). Yes o No þ




---



##### 



PACIFIC SUNWEAR OF CALIFORNIA, INC.
FORM 10-Q
For the Quarter Ended July 31, 2010
 Index
 Page #PART I.
    
    FINANCIAL INFORMATIONItem 1.
    
    Condensed Consolidated Financial Statements (unaudited):Condensed Consolidated Balance SheetsJuly 31, 2010 and January 30, 2010
    
    
    3Condensed Consolidated Statements of Operations and Comprehensive OperationsSecond
quarter (13 weeks) and first half (26 weeks) ended July 31, 2010 and August 1, 2009
    
    
    4Condensed Consolidated Statements of Cash FlowsFirst half (26 weeks) ended July
31, 2010 and August 1, 2009
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    11Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    20Item 4.
    
    Controls and Procedures
    
    
    20PART II.
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    21Item 1A.
    
    Risk Factors
    
    
    21Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    21Item 3.
    
    Defaults upon Senior Securities
    
    
    21Item 4.
    
    Reserved
    
    
    21Item 5.
    
    Other Information
    
    
    21Item 6.
    
    Exhibits
    
    
    22SIGNATURE PAGE
    
    
    23EX-31.1EX-32.1
  2




---



##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1.
    
    Financial Statements.
 PACIFIC SUNWEAR OF CALIFORNIA, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (unaudited, all amounts in thousands except share and per share amounts)
 July 31, 2010
    
    
    January 30, 2010ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    25,041
    
    
    $
    93,091Merchandise inventories
    
    
    174,790
    
    
    
    89,665Prepaid expenses
    
    
    13,394
    
    
    
    10,801Other current assets
    
    
    3,009
    
    
    
    5,365Total current assets
    
    
    216,234
    
    
    
    198,922PROPERTY AND EQUIPMENT, NET:Gross property and equipment
    
    
    635,182
    
    
    
    641,127Less accumulated depreciation and amortization
    
    
    (410,361
    )
    
    
    (392,127
    )Total property and equipment, net
    
    
    224,821
    
    
    
    249,000Deferred income taxes
    
    
    4,024
    
    
    
    4,024Other assets
    
    
    25,468
    
    
    
    25,272TOTAL ASSETS
    
    $
    470,547
    
    
    $
    477,218LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable
    
    $
    88,193
    
    
    $
    38,481Other current liabilities
    
    
    46,089
    
    
    
    43,742Total current liabilities
    
    
    134,282
    
    
    
    82,223LONG-TERM LIABILITIES:Deferred lease incentives
    
    
    34,090
    
    
    
    39,207Deferred rent
    
    
    20,635
    
    
    
    21,396Other long-term liabilities
    
    
    27,087
    
    
    
    27,714Total long-term liabilities
    
    
    81,812
    
    
    
    88,317Commitments and contingencies (Note 9)SHAREHOLDERS EQUITY:Preferred stock, $.01 par value; 5,000,000 shares authorized; none issued
    
    
    
    
    
    
    Common stock, $.01 par value; 170,859,375 shares authorized; 66,035,917
and 65,748,069 shares issued and outstanding, respectively
    
    
    660
    
    
    
    657Additional paid-in capital
    
    
    9,559
    
    
    
    7,294Retained earnings
    
    
    244,234
    
    
    
    298,727Total shareholders equity
    
    
    254,453
    
    
    
    306,678TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    470,547
    
    
    $
    477,218
  3




---



##### Table of Contents



PACIFIC SUNWEAR OF CALIFORNIA, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 AND COMPREHENSIVE OPERATIONS
 (unaudited, in thousands except share and per share amounts)
 For the Second Quarter Ended
    
    
    For the First Half EndedJuly 31, 2010
    
    
    August 1, 2009
    
    
    July 31, 2010
    
    
    August 1, 2009Net sales
    
    $
    218,336
    
    
    $
    242,794
    
    
    $
    408,644
    
    
    $
    466,260Cost of goods sold, including
buying, distribution and occupancy
costs
    
    
    167,578
    
    
    
    185,086
    
    
    
    315,421
    
    
    
    347,278Gross margin
    
    
    50,758
    
    
    
    57,708
    
    
    
    93,223
    
    
    
    118,982Selling, general and administrative
expenses
    
    
    73,945
    
    
    
    79,343
    
    
    
    147,099
    
    
    
    156,112Operating loss
    
    
    (23,187
    )
    
    
    (21,635
    )
    
    
    (53,876
    )
    
    
    (37,130
    )Other expense (income), net
    
    
    76
    
    
    
    (66
    )
    
    
    77
    
    
    
    163Loss before income taxes
    
    
    (23,263
    )
    
    
    (21,569
    )
    
    
    (53,953
    )
    
    
    (37,293
    )Income tax provision (benefit)
    
    
    202
    
    
    
    (7,414
    )
    
    
    540
    
    
    
    (14,395
    )Net loss
    
    $
    (23,465
    )
    
    $
    (14,155
    )
    
    $
    (54,493
    )
    
    $
    (22,898
    )Comprehensive loss
    
    $
    (23,465
    )
    
    $
    (14,155
    )
    
    $
    (54,493
    )
    
    $
    (22,898
    )Net loss per share:Basic
    
    $
    (0.36
    )
    
    $
    (0.22
    )
    
    $
    (0.83
    )
    
    $
    (0.35
    )Diluted
    
    $
    (0.36
    )
    
    $
    (0.22
    )
    
    $
    (0.83
    )
    
    $
    (0.35
    )Weighted average shares outstanding:Basic
    
    
    65,950,825
    
    
    
    65,370,465
    
    
    
    65,894,376
    
    
    
    65,241,888Diluted
    
    
    65,950,825
    
    
    
    65,370,465
    
    
    
    65,894,376
    
    
    
    65,241,888
  4




---



##### Table of Contents



PACIFIC SUNWEAR OF CALIFORNIA, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (unaudited, in thousands)
 For the First Half EndedJuly 31, 2010
    
    
    August 1, 2009CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (54,493
    )
    
    $
    (22,898
    )Adjustments to reconcile net loss to net cash from operating activities:Depreciation and amortization
    
    
    28,105
    
    
    
    34,529Asset impairment
    
    
    6,307
    
    
    
    7,526Loss on disposal of property and equipment
    
    
    632
    
    
    
    30Non-cash stock based compensation
    
    
    2,112
    
    
    
    2,426Tax benefit deficiencies related to stock-based compensation
    
    
    
    
    
    
    (1,599
    )Change in operating assets and liabilities:Merchandise inventories
    
    
    (85,125
    )
    
    
    (67,790
    )Other current assets
    
    
    (237
    )
    
    
    44,237Other assets
    
    
    (196
    )
    
    
    (8,025
    )Accounts payable
    
    
    49,712
    
    
    
    36,928Other current liabilities
    
    
    2,356
    
    
    
    (4,061
    )Deferred lease incentives
    
    
    (5,117
    )
    
    
    (6,678
    )Deferred rent
    
    
    (761
    )
    
    
    (671
    )Other long-term liabilities
    
    
    (571
    )
    
    
    (872
    )Net cash (used in)/provided by operating activities
    
    
    (57,276
    )
    
    
    13,082CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment
    
    
    (10,917
    )
    
    
    (15,784
    )Proceeds from sale of land
    
    
    
    
    
    
    3,705Proceeds from sale of property and equipment
    
    
    
    
    
    
    28Net cash used in investing activities
    
    
    (10,917
    )
    
    
    (12,051
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from exercise of stock options
    
    
    303
    
    
    
    373Principal payments under capital leases
    
    
    (160
    )
    
    
    (4
    )Net cash provided by financing activities
    
    
    143
    
    
    
    369NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    (68,050
    )
    
    
    1,400CASH AND CASH EQUIVALENTS, beginning of period
    
    
    93,091
    
    
    
    24,776CASH AND CASH EQUIVALENTS, end of period
    
    $
    25,041
    
    
    $
    26,176SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:Cash paid for interest
    
    $
    16
    
    
    $
    Cash refunded for income taxes
    
    $
    272
    
    
    $
    28,101SUPPLEMENTAL DISCLOSURES OF NON-CASH TRANSACTIONS:Property and equipment accruals
    
    $
    (188
    )
    
    $
    (939
    )Capital lease transactions for property and equipment
    
    $
    136
    
    
    $
    
  5




---



##### Table of Contents



PACIFIC SUNWEAR OF CALIFORNIA, INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (unaudited)
 1. NATURE OF BUSINESS
  2. BASIS OF PRESENTATION
   3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Income Taxes
  6




---



##### Table of Contents



Recent Accounting Pronouncements
  4. FAIR VALUE OF LONG LIVED ASSETS
  
    
    Level 1: Quoted market prices in active markets for identical assets or liabilities
    
    Level 2: Observable market based inputs that are corroborated by market data
    
    Level 3: Unobservable inputs that are not corroborated by market data
  July 31, 2010
    
    
    January 30, 2010Significant
    
    
    
    
    
    
    SignificantUnobservable Inputs
    
    
    
    
    
    
    Unobservable InputsTotal
    
    
    (Level 3)
    
    
    Total
    
    
    (Level 3)Long-lived assets held and used
    
    $
    225
    
    
    $
    225
    
    
    $
    249
    
    
    $
    249
  5. CREDIT FACILITY
  7




---



##### Table of Contents



6. OTHER CURRENT LIABILITIES
  July 31,
    
    
    January 30,2010
    
    
    2010Accrued compensation and benefits
    
    $
    13,883
    
    
    $
    12,362Accrued gift cards
    
    
    8,388
    
    
    
    12,617Sales taxes payable
    
    
    4,589
    
    
    
    4,444Accrued capital expenditures
    
    
    1,614
    
    
    
    1,802Other
    
    
    17,615
    
    
    
    12,517Total other current liabilities
    
    $
    46,089
    
    
    $
    43,742
 7. INCOME TAXES
  8. STOCK-BASED COMPENSATION
  8




---



##### Table of Contents



Stock Options
  For the First Half EndedJuly 31, 2010
    
    August 1, 2009Expected life
    
    4 years
    
    4 yearsExpected volatility
    
    
    79.4%  80.0
    %
    
    
    69.4%  73.6
    %Risk-free interest rate
    
    
    1.75%  2.0
    %
    
    
    1.5%  2.0
    %Dividend yield
    
    
    
    
    
    
    
 Non-vested Stock Awards
   9. COMMITMENTS AND CONTINGENCIES
 Litigation
 Ned Nelson, as an individual and on behalf of others similarly situated, vs. Pacific Sunwear of
California, Inc., Los Angeles Superior Court Case No. BC 436947
  Letters of Credit
  9




---



##### Table of Contents



10. SEGMENT REPORTING
  11. EARNINGS PER SHARE
  12. SUBSEQUENT EVENTS
    10




---



##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
  Cautionary Note Regarding Forward-Looking Statements
 This Quarterly Report on Form 10-Q contains 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 (the Exchange Act), and we intend that such forward-looking statements be
subject to the safe harbors created thereby. In Item 1A, Risk Factors, in our Annual Report on Form
10-K for the year ended January 30, 2010, we provide cautionary statements identifying important
factors that could cause our actual results to differ materially from those projected in the
forward-looking statements contained herein. Any statements that express, or involve discussions as
to, expectations, beliefs, plans, objectives, assumptions, future events or performance (often, but
not always, identifiable by the use of words or phrases such as will result, expects to, will
continue, believes, can, continue, could, anticipates, plans, intends, estimated,
projects and outlook) are not historical facts and may be forward-looking and, accordingly,
such statements involve estimates, assumptions and uncertainties which could cause actual results
to differ materially from those expressed in the forward-looking statements. Statements concerning
current conditions may also be forward-looking if they imply a continuation of current conditions.
Examples of forward-looking statements in this report include, but are not limited to, the
following categories of expectations about:
  the sufficiency of operating cash flows, working capital and available credit to meet our
operating and capital expenditure requirements
  our capital expenditure plans for fiscal 2010
  forecasts of future store closures for fiscal 2010
  future changes in occupancy expenses, and
  sales trends in our Juniors business
 All forward-looking statements included in this report are based on information available to us as
of the date hereof, and are subject to risks and uncertainties that could cause actual results to
differ materially from those expressed in the forward-looking statements. See Item 1A, Risk
Factors, in our Annual Report on Form 10-K for the year ended January 30, 2010, which are hereby
incorporated by reference in this Quarterly Report on Form 10-Q, for a discussion of these risks
and uncertainties. You are cautioned, therefore, not to place undue reliance on these
forward-looking statements, which are made only as of the date of this report. We assume no
obligation to update or revise any such forward-looking statements to reflect events or
circumstances that occur after such statements are made.
 Executive Overview
  Comparable (or same store) sales
 11




---



##### Table of Contents



Net merchandise margins
 Operating margin.
 Store sales trends.
 Cash flow and liquidity (working capital).
 Critical Accounting Policies
  Results of Operations
  Second Quarter Ended
    
    
    First Half EndedJuly 31, 2010
    
    
    August 1, 2009
    
    
    July 31, 2010
    
    
    August 1, 2009Net sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of goods sold, including buying,
distribution and occupancy costs
    
    
    76.8
    
    
    
    76.2
    
    
    
    77.2
    
    
    
    74.5Gross margin
    
    
    23.2
    
    
    
    23.8
    
    
    
    22.8
    
    
    
    25.5Selling, general and administrative expenses
    
    
    33.9
    
    
    
    32.7
    
    
    
    36.0
    
    
    
    33.5Operating loss
    
    
    (10.7
    )
    
    
    (8.9
    )
    
    
    (13.2
    )
    
    
    (8.0
    )Other expense (income), net
    
    
    0.0
    
    
    
    0.0
    
    
    
    0.0
    
    
    
    0.0Loss before income taxes
    
    
    (10.7
    )
    
    
    (8.9
    )
    
    
    (13.2
    )
    
    
    (8.0
    )Income tax provision (benefit)
    
    
    0.0
    
    
    
    (3.1
    )
    
    
    0.1
    
    
    
    (3.1
    )Net loss
    
    
    (10.7
    )%
    
    
    (5.8
    )%
    
    
    (13.3
    )%
    
    
    (4.9
    )%Number of stores open at end of period
    
    
    880
    
    
    
    916Total square footage (in 000s)
    
    
    3,411
    
    
    
    3,536
 12




---



##### Table of Contents



The second quarter (thirteen weeks) ended July 31, 2010 as compared to the second quarter
(thirteen weeks) ended August 1, 2009
 Net Sales
  $ millions
    
    
    Attributable to$
    (23
    )
    
    10% decline in comparable store net sales in the second quarter of fiscal
2010 compared to the second quarter of fiscal 2009 due to a mid-teens
percentage decline in total transactions, partially offset by a high-single
digit percentage improvement in the average sale transaction. The
improvement in the average sale transaction was driven by a low-double digit
percentage increase in average unit retail prices as a result of improved
full-price selling.(6
    )
    
     Decrease in sales due to store closures.4
    
    
     Other non-comparable sales including sales from new, expanded or relocated
stores not yet included in the comparable store base and e-commerce sales.$
    (25
    )
    
     Total
   Gross Margin
  %
    
    
    Attributable to(2.3
    )
    
     Deleverage of occupancy costs as a result of the negative 10% same-store
sales results for the second quarter of fiscal 2010. Occupancy costs were
$49 million in the second quarter of each of fiscal 2010 and 2009.2.1
    
    
     Increase in merchandise margin as a percentage of sales primarily due to a
decrease in markdowns.(0.4
    )
    
     Deleverage of buying and distribution costs as a result of the negative 10%
same-store sales results for the second quarter of fiscal 2010. Buying and
distribution costs were $9 million in the second quarter of each of fiscal
2010 and 2009.(0.6
    )
    
     Total
 Selling, General and Administrative Expenses
  13




---



##### Table of Contents



%
    
    
    Attributable to1.9
    
    
     Increase in payroll and payroll-related expenses as a percentage of sales
due to deleveraging these expenses against the negative 10% same-store sales
result. Payroll and payroll-related expenses were $43 million in the second
quarter of each of fiscal 2010 and 2009.(1.6
    )
    
     Decrease in non-cash asset impairment charges to $1 million in the second
quarter of fiscal 2010 from $5 million in the second quarter of fiscal 2009.0.9
    
    
     Increase in all other SG&A expenses as a percentage of sales due to
deleveraging these expenses against the negative 10% same-store sales
result. In dollars, all other SG&A expenses were $30 million in the second
quarter of fiscal 2010 compared to $31 million in the second quarter of
fiscal 2009, primarily due to lower depreciation.1.2
    
    
     Total
  Income Taxes
  Net Loss and Net Loss Per Share
  About Non-GAAP Financial Measures
   14




---



##### Table of Contents



The first half (26 weeks) ended July 31, 2010 as compared to the first half (26 weeks) ended
August 1, 2009
 Net Sales
  $ millions
    
    
    Attributable to$
    (53
    )
    
     12% decline in comparable store net sales in the first half of fiscal 2010
compared to the first half of fiscal 2009 due to a mid-teens percentage
decline in total transactions, partially offset by a mid-single digit
percentage improvement in the average sale transaction. The improvement in
the average sale was driven by a mid-single digit percentage increase in
average unit retail prices as a result of improved full-price selling.(11
    )
    
     Decrease in sales due to store closures.7
    
    
     Other non-comparable sales including sales from new, expanded or relocated
stores not yet included in the comparable store base and e-commerce sales.$
    (57
    )
    
     Total
   Gross Margin
  %
    
    
    Attributable to(2.9
    )
    
     Deleverage of occupancy costs as a result of the negative 12% same-store sales
results for the first half of fiscal 2010. Occupancy costs were $96 million in the
first half of each of fiscal 2010 and 2009.(0.3
    )
    
     Decrease in buying and distribution costs to $18 million in the first half of
fiscal 2010 compared to $19 million in the first half of fiscal 2009.0.5
    
    
     Increase in merchandise margins as a percentage of sales due to decreased markdowns.(2.7
    )
    
     Total
 Selling, General and Administrative Expenses
  15




---



##### Table of Contents



%
    
    
    Attributable to1.8
    
    
     Increase in payroll and payroll-related expenses as a percentage of sales
due to deleveraging these expenses against the negative 12% same-store sales
result. In dollars, payroll and payroll-related expenses were $84 million in
the first half of fiscal 2010 compared to $87 million in the first half of
fiscal 2009.0.1
    
    
     Decrease in non-cash asset impairment charges to $7 million in the first
half of fiscal 2010 compared to $8 million in the first half of fiscal 2009.0.6
    
    
     Increase in all other SG&A expenses as a percentage of sales due to
deleveraging these expenses against the negative 12% same-store sales
result. In dollars, all other SG&A expenses declined to $56 million in the
first half of fiscal 2010 from $61 million in the first half of fiscal 2009,
primarily due to lower depreciation.2.5
    
    
     Total
  Income Taxes
  Net Loss and Net Loss Per Share
  About Non-GAAP Financial Measures
   16




---



##### Table of Contents



Liquidity and Capital Resources
  (In thousands)
    
    July 31,
    
    
    August 1,FIRST HALF ENDED
    
    2010
    
    
    2009Net cash (used in)/provided by operating activities
    
    $
    (57,276
    )
    
    $
    13,082Net cash used in investing activities
    
    
    (10,917
    )
    
    
    (12,051
    )Net cash provided by financing activities
    
    
    143
    
    
    
    369Net (decrease)/increase in cash and cash equivalents
    
    $
    (68,050
    )
    
    $
    1,400
 Operating Cash Flows
   Working Capital
  $ millions
    
    
    Description$
    117
    
    
     Working capital at January 30, 2010(68
    )
    
     Decrease in cash and cash equivalents (see Condensed Consolidated Statements of Cash Flows).35
    
    
     Increase in merchandise inventories, net of accounts payable, from fiscal year end due to
planned receipt flows.(2
    )
    
     Increase in other current liabilities, primarily accrued liabilities.$
    82
    
    
     Working capital at July 31, 2010
 17




---



##### Table of Contents



Investing Cash Flows
  Credit Facility
  Mortgage Transactions
    Contractual Obligations
  18




---



##### Table of Contents



Payments Due by Period (in $ millions)Less
    
    
    
    
    
    
    
    
    
    
    Morethan 1
    
    
    1-3
    
    
    3-5
    
    
    than 5Contractual Obligations
    
    Total
    
    
    year
    
    
    years
    
    
    years
    
    
    yearsOperating lease obligations
    
    $
    465
    
    
    $
    91
    
    
    $
    152
    
    
    $
    112
    
    
    $
    110Letters of credit
    
    
    23
    
    
    
    23
    
    
    
    
    
    
    
    
    
    
    
    Guaranteed minimum royalties
    
    
    <4.0
    
    
    
    <1.0
    
    
    
    <2.0
    
    
    
    <2.0
    
    
    
    Capital lease obligations
    
    
    <1.0
    
    
    
    <1.0
    
    
    
    <1.0
    
    
    
    
    
    
    
    Uncertain tax contingencies ASC 740 (FIN 48)
    
    
    <1.0
    
    
    
    
    
    
    
    <1.0
    
    
    
    
    
    
    
    Total
    
    $
    494
    
    
    $
    115
    
    
    $
    155
    
    
    $
    114
    
    
    $
    110
       Indemnifications
  19




---



##### Table of Contents



Off-Balance Sheet Arrangements
  Recent Accounting Pronouncements
  Inflation
  Seasonality and Quarterly Results
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
   
 ITEM 4. CONTROLS AND PROCEDURES.
  20




---



##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors.
  Our current or prospective vendors may be unable or
unwilling to supply us with adequate quantities of their merchandise in a timely manner or at acceptable prices,
which could have a material adverse impact on our business.
 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Item 3. Defaults Upon Senior Securities.
  
 Item 4. Reserved.
 
 Item 5. Other Information.
  21




---



##### Table of Contents



Item 6. Exhibits.
 Incorporated byReferenceExhibit #
    
    Exhibit Description
    
    Form
    
    Filing Date3.1
    
    Third Amended and Restated Articles of Incorporation of the Company
    
    10-Q
    
    8/31/043.2
    
    Certificate of Determination of Preferences of Series A Junior
Participating Preferred Stock of the Company
    
    8-K
    
    12/24/983.3
    
    Fifth Amended and Restated Bylaws of the Company
    
    8-K
    
    4/3/0910.1
    
    Promissory Note Secured by a Deed of Trust, dated August 20, 2010,
executed by Miraloma in favor of Anico
    
    8-K
    
    8/24/1010.2
    
    Deed of Trust, Assignment of Rents and Security Agreement, dated
August 20, 2010, executed by Miraloma in favor of Anico
    
    8-K
    
    8/24/1010.3
    
    Promissory Note, dated August 20, 2010, executed by PacSun Stores
in favor of Anico
    
    8-K
    
    8/24/1010.4
    
    Mortgage Security Agreement, Financing Statement and Fixture
Filing, dated August 20, 2010, executed by PacSun Stores in favor
of Anico
    
    8-K
    
    8/24/1010.5
    
    Absolute, Unconditional Guaranty, dated August 20, 2010, executed
by the Company in favor of Anico
    
    8-K
    
    8/24/1031.1+
    
    Written statements of Gary H. Schoenfeld and Michael L. Henry
pursuant to section 302 of the Sarbanes-Oxley Act of 200232.1+
    
    Written statement of Gary H. Schoenfeld and Michael L. Henry
pursuant to section 906 of the Sarbanes-Oxley Act of 2002
 
 +
    
    Filed herewith 22




---



##### Table of Contents



SIGNATURES
  PACIFIC SUNWEAR OF CALIFORNIA, INC.
(Registrant)Date: August 27, 2010
    By:
    /s/ GARY H. SCHOENFELDGary H. SchoenfeldPresident, Chief Executive Officer and Director
(Principal Executive Officer)Date: August 27, 2010
    By:
    /s/ MICHAEL L. HENRYMichael L. HenrySr. Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer) 23