##### 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: August 1, 2009
 OR
 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
(State of incorporation)
    
    95-3759463
(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 definitions of large
accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act. (Check one):
 Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if smaller reporting company)
 
    
    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




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##### 



PACIFIC SUNWEAR OF CALIFORNIA, INC.
FORM 10-Q
For the Quarter Ended August 1, 2009
 Index
 Page #PART I. FINANCIAL INFORMATIONItem 1. Condensed Consolidated Financial Statements (unaudited):Condensed Consolidated Balance SheetsAugust 1, 2009 and January 31, 2009
    
    
    3Condensed Consolidated Statements of Operations and Comprehensive OperationsSecond
quarter (13 weeks) and first half (26 weeks) ended August 1, 2009 and August 2, 2008
    
    
    4Condensed Consolidated Statements of Cash FlowsFirst half (26 weeks) ended August
1, 2009 and August 2, 2008
    
    
    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. Submission of Matters to a Vote of Security Holders
    
    
    21Item 5. Other Information
    
    
    22Item 6. Exhibits
    
    
    22SIGNATURE PAGE
    
    
    23EX-31.1EX-32.1
  2




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PART I  FINANCIAL INFORMATION
 
 ITEM 1
    
     Condensed Consolidated Financial Statements (unaudited)
 PACIFIC SUNWEAR OF CALIFORNIA, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, all amounts in thousands except share and per share amounts)
 August 1, 2009
    
    
    January 31, 2009ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    26,176
    
    
    $
    24,776Merchandise inventories
    
    
    174,995
    
    
    
    107,205Other current assets
    
    
    14,706
    
    
    
    58,943Total current assets
    
    
    215,877
    
    
    
    190,924PROPERTY AND EQUIPMENT, NET:Gross property and equipment
    
    
    661,462
    
    
    
    665,236Less accumulated depreciation and amortization
    
    
    (365,409
    )
    
    
    (341,892
    )Total property and equipment, net
    
    
    296,053
    
    
    
    323,344Assets held for sale
    
    
    
    
    
    
    3,682Deferred income taxes
    
    
    34,779
    
    
    
    21,984Other assets
    
    
    24,805
    
    
    
    29,575TOTAL ASSETS
    
    $
    571,514
    
    
    $
    569,509LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable
    
    $
    82,191
    
    
    $
    45,263Other current liabilities
    
    
    42,573
    
    
    
    47,564Total current liabilities
    
    
    124,764
    
    
    
    92,827LONG-TERM LIABILITIES:Deferred lease incentives
    
    
    45,635
    
    
    
    52,313Deferred rent
    
    
    22,337
    
    
    
    23,008Other long-term liabilities
    
    
    28,498
    
    
    
    29,374Total long-term liabilities
    
    
    96,470
    
    
    
    104,695Commitments and contingencies (Note 11)SHAREHOLDERS EQUITY:Preferred stock, $.01 par value; 5,000,000 shares authorized; none issued
    
    
    
    
    
    
    Common stock, $.01 par value; 170,859,375 shares authorized; 65,549,597
and 65,174,144 shares issued and outstanding, respectively
    
    
    655
    
    
    
    652Additional paid-in capital
    
    
    3,494
    
    
    
    2,306Retained earnings
    
    
    346,131
    
    
    
    369,029Total shareholders equity
    
    
    350,280
    
    
    
    371,987TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    571,514
    
    
    $
    569,509
  3




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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 EndedAugust 1, 2009
    
    
    August 2, 2008
    
    
    August 1, 2009
    
    
    August 2, 2008Net sales
    
    $
    242,794
    
    
    $
    312,726
    
    
    $
    466,260
    
    
    $
    579,592Cost of goods sold, including
buying, distribution and occupancy
costs
    
    
    185,086
    
    
    
    217,468
    
    
    
    347,278
    
    
    
    408,869Gross margin
    
    
    57,708
    
    
    
    95,258
    
    
    
    118,982
    
    
    
    170,723Selling, general and administrative
expenses
    
    
    79,343
    
    
    
    90,173
    
    
    
    156,112
    
    
    
    185,985Operating (loss) income from
continuing operations
    
    
    (21,635
    )
    
    
    5,085
    
    
    
    (37,130
    )
    
    
    (15,262
    )Other income (expense), net
    
    
    66
    
    
    
    11
    
    
    
    (163
    )
    
    
    769(Loss) income from continuing
operations before income taxes
    
    
    (21,569
    )
    
    
    5,096
    
    
    
    (37,293
    )
    
    
    (14,493
    )Income tax (benefit) expense
    
    
    (7,414
    )
    
    
    1,388
    
    
    
    (14,395
    )
    
    
    (6,232
    )(Loss) income from continuing
operations
    
    
    (14,155
    )
    
    
    3,708
    
    
    
    (22,898
    )
    
    
    (8,261
    )Loss from discontinued operations,
net of tax
    
    
    
    
    
    
    (912
    )
    
    
    
    
    
    
    (26,045
    )Net (loss) income
    
    $
    (14,155
    )
    
    $
    2,796
    
    
    $
    (22,898
    )
    
    $
    (34,306
    )Comprehensive (loss) income
    
    $
    (14,155
    )
    
    $
    2,796
    
    
    $
    (22,898
    )
    
    $
    (34,306
    )(Loss) income from continuing
operations per share:Basic
    
    $
    (0.22
    )
    
    $
    0.06
    
    
    $
    (0.35
    )
    
    $
    (0.12
    )Diluted
    
    $
    (0.22
    )
    
    $
    0.06
    
    
    $
    (0.35
    )
    
    $
    (0.12
    )Net (loss) income per share:Basic
    
    $
    (0.22
    )
    
    $
    0.04
    
    
    $
    (0.35
    )
    
    $
    (0.50
    )Diluted
    
    $
    (0.22
    )
    
    $
    0.04
    
    
    $
    (0.35
    )
    
    $
    (0.50
    )Weighted average shares outstanding:Basic
    
    
    65,370,465
    
    
    
    66,664,245
    
    
    
    65,241,888
    
    
    
    68,290,024Diluted
    
    
    65,370,465
    
    
    
    66,704,159
    
    
    
    65,241,888
    
    
    
    68,290,024
  4




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PACIFIC SUNWEAR OF CALIFORNIA, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(unaudited, in thousands)
 For the First Half EndedAugust 1, 2009
    
    
    August 2, 2008CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (22,898
    )
    
    $
    (34,306
    )Adjustments to reconcile net loss to net cash from operating activities:Depreciation and amortization
    
    
    34,529
    
    
    
    40,685Asset impairment
    
    
    7,526
    
    
    
    11,705Loss on disposal of property and equipment
    
    
    30
    
    
    
    1,649Non-cash stock based compensation
    
    
    2,426
    
    
    
    2,463Tax benefit deficiencies related to stock-based compensation
    
    
    (1,599
    )
    
    
    (968
    )Change in operating assets and liabilities:Merchandise inventories
    
    
    (67,790
    )
    
    
    (59,556
    )Other current assets
    
    
    44,237
    
    
    
    (30,470
    )Other assets
    
    
    (8,025
    )
    
    
    15,990Accounts payable
    
    
    36,928
    
    
    
    69,641Other current liabilities
    
    
    (4,061
    )
    
    
    (4,296
    )Deferred lease incentives
    
    
    (6,678
    )
    
    
    (16,177
    )Deferred rent
    
    
    (671
    )
    
    
    (3,845
    )Other long-term liabilities
    
    
    (872
    )
    
    
    818Net cash provided by/(used in) operating activities
    
    
    13,082
    
    
    
    (6,667
    )CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment
    
    
    (15,784
    )
    
    
    (48,836
    )Proceeds for sale of land
    
    
    3,705
    
    
    
    Proceeds from sale of property and equipment
    
    
    28
    
    
    
    Net cash used in investing activities
    
    
    (12,051
    )
    
    
    (48,836
    )CASH FLOWS FROM FINANCING ACTIVITIES:Repurchase and retirement of common stock
    
    
    
    
    
    
    (52,911
    )Borrowings under credit facility
    
    
    
    
    
    
    43,099Principal payments under credit facility
    
    
    
    
    
    
    (32,319
    )Proceeds from exercise of stock options
    
    
    373
    
    
    
    1,614Principal payments under capital lease and long-term debt obligations
    
    
    (4
    )
    
    
    (7
    )Net cash provided by/(used in) financing activities
    
    
    369
    
    
    
    (40,524
    )NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    1,400
    
    
    
    (96,027
    )CASH AND CASH EQUIVALENTS, beginning of period
    
    
    24,776
    
    
    
    97,587CASH AND CASH EQUIVALENTS, end of period
    
    $
    26,176
    
    
    $
    1,560SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:Cash paid for interest
    
    $
    
    
    
    $
    1Cash (refunded)/paid for income taxes
    
    $
    (28,101
    )
    
    $
    311SUPPLEMENTAL DISCLOSURES OF NON-CASH TRANSACTIONS:(Decrease)/increase in non-cash property and equipment accruals
    
    $
    (939
    )
    
    $
    1,985Capital lease transactions for property and equipment
    
    $
    
    
    
    $
    20
  5




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PACIFIC SUNWEAR OF CALIFORNIA, INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the quarterly period ended August 1, 2009
(unaudited, all amounts in thousands except share and per share
amounts unless otherwise indicated)
 1. NATURE OF BUSINESS
 www.pacsun.com
 2. BASIS OF PRESENTATION
   3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Recent Accounting Pronouncements
 6




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4. DISCONTINUED OPERATIONS
  Second Quarter Ended
    
    First Half EndedAug. 2, 2008
    
    Aug. 2, 2008Net sales
    
    $
    
    
    
    $
    27,051Income (loss) before income tax benefit
    
    
    312
    
    
    
    (40,135
    )Income tax expense (benefit)
    
    
    1,224
    
    
    
    (14,090
    )Net loss
    
    
    (912
    )
    
    
    (26,045
    )Net loss per share, diluted
    
    $
    (0.02
    )
    
    $
    (0.38
    )
 5. SEGMENT REPORTING
  6. STOCK-BASED COMPENSATION
  7




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Stock Options
  For the First Half EndedAug. 1, 2009
    
    Aug. 2, 2008 _Expected life
    
    4 years
    
    4 yearsExpected volatility
    
    69.4% - 73.6%
    
    40.3% - 41.4%Risk-free interest rate
    
    1.5% - 2.0%
    
    2.3% - 3.0%Dividend yield
    
    
    
    
 Non-vested Stock Awards
   7. EARNINGS PER SHARE
  8. OTHER CURRENT ASSETS
  Aug. 1,
    
    
    Jan. 31,2009
    
    
    2009Prepaid expenses
    
    $
    10,956
    
    
    $
    25,573Income taxes receivable
    
    
    2,151
    
    
    
    30,251Non-trade accounts receivable
    
    
    1,599
    
    
    
    3,119Total other current assets
    
    $
    14,706
    
    
    $
    58,943
 9. OTHER CURRENT LIABILITIES
  Aug. 1,
    
    
    Jan. 31,2009
    
    
    2009Accrued compensation and benefits
    
    $
    10,694
    
    
    $
    13,584Accrued gift cards
    
    
    8,276
    
    
    
    12,134Sales taxes payable
    
    
    3,724
    
    
    
    5,177Deferred taxes
    
    
    1,218
    
    
    
    1,218Accrued capital expenditures
    
    
    798
    
    
    
    1,737Other
    
    
    17,863
    
    
    
    13,714Total other current liabilities
    
    $
    42,573
    
    
    $
    47,564
 8




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##### Table of Contents



10. CREDIT FACILITY
   11. COMMITMENTS AND CONTINGENCIES
 Litigation
 Letters of Credit
 12. INCOME TAXES
  9




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13. FAIR VALUE MEASUREMENTS
  
    
    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
  Fair Value Measurements at August 1, 2009Quoted Prices
    
    Significantin Active
    
    Other
    
    SignificantMarkets for
    
    Observable
    
    UnobservableIdentical Assets
    
    Inputs
    
    InputsTotal
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Long-lived assets held and used
    
    $
    296
    
    
    $
    
    
    
    $
    
    
    
    $
    296
  10




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ITEM 2   MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
  Cautionary Note Regarding Forward-Looking Statements
  
    
    forecasts of future store closures
 
    
    forecasts of future comparable store net sales, gross margins, inventory levels and
selling, general and administrative expenses
 
    
    the sufficiency of working capital, operating cash flows and available credit to meet
our operating and capital expenditure requirements
 
    
    future asset impairment charges
 
    
    our capital expenditure plans
 
    
    future borrowings and repayments under our credit facility
 
    
    future changes in common area maintenance (CAM) expenses
 
    
    the outcome and expense of litigation
  Executive Overview
  Comparable (or same store) sales
 Net merchandise margins
 11




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##### Table of Contents



Operating margin
 Store sales trends
 Cash flow and liquidity (working capital)
 Critical Accounting Policies
  Results of Operations
  Second Quarter Ended
    
    
    First Half EndedAug. 1,
    
    
    Aug. 2,
    
    
    Aug. 1,
    
    
    Aug. 2,2009
    
    
    2008
    
    
    2009
    
    
    2008Net sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of goods sold, including buying,
distribution and occupancy costs
    
    
    76.2
    
    
    
    69.5
    
    
    
    74.5
    
    
    
    70.5Gross margin
    
    
    23.8
    
    
    
    30.5
    
    
    
    25.5
    
    
    
    29.5Selling, general and administrative expenses
    
    
    32.7
    
    
    
    28.9
    
    
    
    33.5
    
    
    
    32.1Operating (loss) income from continuing operations
    
    
    (8.9
    )
    
    
    1.6
    
    
    
    (8.0
    )
    
    
    (2.6
    )Other income (expense), net
    
    
    0.0
    
    
    
    0.0
    
    
    
    0.0
    
    
    
    0.1(Loss) income from continuing operations before
income taxes
    
    
    (8.9
    )
    
    
    1.6
    
    
    
    (8.0
    )
    
    
    (2.5
    )Income tax (benefit) expense
    
    
    (3.1
    )
    
    
    0.4
    
    
    
    (3.1
    )
    
    
    (1.1
    )(Loss) income from continuing operations
    
    
    (5.8
    )%
    
    
    1.2
    %
    
    
    (4.9
    )%
    
    
    (1.4
    )%PacSun Core stores
    
    
    522
    
    
    
    535PacSun Value stores
    
    
    394
    
    
    
    403Total stores
    
    
    916
    
    
    
    938Total square footage (in 000s)
    
    
    3,536
    
    
    
    3,596
 12




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The second quarter (thirteen weeks) ended August 1, 2009 as compared to the second quarter
(thirteen weeks) ended August 2, 2008
 Net Sales
  $ millions
    
    Attributable to$(71
    )
    
    24% decline in comparable store net sales in the second quarter of fiscal 2009
compared to the second quarter of fiscal 2008 driven by a 12% decrease in average
unit retail and a 12% decline in total transactions.(1
    )
    
    Decrease in sales due to store closures, store relocations, and temporary locations.2
    
    
    Non-comparable sales from new stores not yet included in the comparable store base and e-commerce net sales.$(70
    )
    
    Total
  Gross Margin
  %
    
    Attributable to(4.7
    )
    
    Deleverage of occupancy costs as a result of the negative 24% same-store
sales results for the second quarter of fiscal 2009.(2.1
    )
    
    Decrease in merchandise margin due to increased markdowns that more than
offset improved initial markups.0.1
    
    
    Decrease in freight and distribution costs of $2 million primarily due to the impact of cost saving initiatives.(6.7
    )
    
    Total
  13




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Selling, General and Administrative Expenses
  %
    
    Attributable to1.5
    
    
    Increase in payroll and payroll-related expenses as a percentage of net
sales to 17.7% ($43 million) in the second quarter of fiscal 2009 from 16.2%
($51 million) for the second quarter of fiscal 2008 due to deleveraging
these expenses against the negative 24% same-store sales result.1.3
    
    
    Increase in other SG&A expenses as a percentage of net sales to 12.7% ($31
million) in the second quarter of fiscal 2009 from 11.4% ($35 million) for
the second quarter of fiscal 2008 due to deleveraging these expenses against
the negative 24% same-store sales result. In dollars, other SG&A expenses
decreased $4 million (primarily due to declines in depreciation, advertising
and credit authorization expenses).1.0
    
    
    Non-cash asset impairment charges increased $1 million to $5 million for the
second quarter of fiscal 2009 from $4 million for the second quarter of
fiscal 2008.3.8
    
    
    Total
  Income Taxes
  14




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The first half (26 weeks) ended August 1, 2009 as compared to the first half (26 weeks)
ended August 2, 2008
 Net Sales
  $ millions
    
    
    Attributable to$
    (116
    )
    
    21% decline in comparable store net sales in the first half of fiscal 2009 compared
to the first half of fiscal 2008 driven primarily by a 15% decrease in average unit
retail and an 8% decline in total transactions.5
    
    
    Non-comparable sales from new stores not yet included in the comparable store base
and e-commerce net sales.(3
    )
    
    Decrease in sales due to store closures, store relocations, and temporary locations.$
    (114
    )
    
    Total
  Gross Margin
  %
    
    Attributable to(4.0
    )
    
    Deleverage of occupancy costs as a result of the negative 21% same-store
sales results for the first half of fiscal 2009.(0.5
    )
    
    Decrease in merchandise margin due to increased markdowns that more than
offset improved initial markups.0.5
    
    
    Decrease in freight and distribution costs of $6 million primarily due to
the consolidation of our distribution function in the first quarter of
fiscal 2008 and the impact of cost saving initiatives.(4.0
    )
    
    Total
  15




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##### Table of Contents



Selling, General and Administrative Expenses
  %
    
    Attributable to1.2
    
    
    Increase in payroll and payroll-related expenses as a percentage of net
sales to 18.7% ($87 million) in the second half of fiscal 2009 from 17.5%
($101 million) for the second half of fiscal 2008 due to deleveraging these
expenses against the negative 21% same-store sales result.0.8
    
    
    Increase in other SG&A expenses as a percentage of net sales to 13.2% ($61
million) in the second half of fiscal 2009 from 12.4% ($72 million) for the
second half of fiscal 2008 due to deleveraging these expenses against the
negative 21% same-store sales result. In dollars, other SG&A expenses
decreased $11 million (primarily due to declines in depreciation, consulting
and legal expenses).(0.6
    )
    
    Non-cash asset impairment charges and loss on disposals decreased $5 million
to $8 million for the second half of fiscal 2009 from $13 million for the
second half of fiscal 2008.1.4
    
    
    Total
  Other income (expense), net
  Income Taxes
  Liquidity and Capital Resources
  16




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Working Capital
  $ millions
    
    
    Description$
    98
    
    
    Working capital at January 31, 200931
    
    
    Increase in merchandise inventories, net of accounts payable, from fiscal year end due
to planned receipt flows.5
    
    
    Decrease in other current liabilities, primarily accrued salaries and benefits based
on timing of payments.1
    
    
    Increase in cash and cash equivalents (see condensed consolidated cash flow statement).(44
    )
    
    Decrease in other current assets, primarily due to receipt of a $29 million federal
tax refund and a decrease in prepaid rent due to timing of rent payments.$
    91
    
    
    Working capital at August 1, 2009
 Operating Cash Flows
  $ millions
    
    
    Attributable to$
    37
    
    
    Change in income tax receivable and deferred tax assets from prior year as a result of
operating losses and the closing of the discontinued demo concept in the first quarter of
fiscal 2008.13
    
    
    Decrease in other current assets primarily due to timing of rent payments.11
    
    
    Lower operating losses in the current year as a result of the closing of the discontinued
demo concept in 2008.9
    
    
    Decrease in deferred lease incentive amortization due to discontinued demo concept in the
first quarter of fiscal 2008.(41
    )
    
    Increase in merchandise inventories versus the end of fiscal 2008, net of accounts payable.(6
    )
    
    Decrease in non-cash depreciation and amortization as a result of the closing of the
Anaheim distribution center and impairment of store assets in fiscal 2009 and 2008.(5
    )
    
    Decrease in non-cash asset impairments.2
    
    
    Other changes in working capital items.$
    20
    
    
    Total
 Investing Cash Flows
  Financing Cash Flows
  17




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##### Table of Contents



Credit Facility
  Contractual Obligations
  Payments Due by Period (in $ millions)Less
    
    
    
    
    
    
    
    
    
    
    Morethan 1
    
    
    1-3
    
    
    3-5
    
    
    than 5Contractual Obligations
    
    Total
    
    
    year
    
    
    years
    
    
    years
    
    
    yearsOperating lease obligations
    
    $
    453
    
    
    $
    92
    
    
    $
    149
    
    
    $
    109
    
    
    $
    103Capital lease obligations
    
    
    <0.1
    
    
    
    <0.1
    
    
    
    <0.1
    
    
    
    
    
    
    
    FIN 48 obligations including interest and penalties
    
    
    1
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    Letters of credit
    
    
    16
    
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    470
    
    
    $
    108
    
    
    $
    150
    
    
    $
    109
    
    
    $
    103
   Operating Leases
    18




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##### Table of Contents



Indemnifications
   Off-Balance Sheet Arrangements
  Recent Accounting Pronouncements
  Inflation
  Seasonality and Quarterly Results
  19




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##### Table of Contents



ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4  CONTROLS AND PROCEDURES
   20




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1  Legal Proceedings
  
 Item 1A  Risk Factors
  We previously stated our intention to place a greater emphasis on apparel, Juniors merchandise, and
the proprietary brand penetration within our merchandising assortments than
we have in the past. We may modify this strategy going forward and we cannot be certain that the
existing strategy or any modified strategy will be successful in improving our store productivity
or profitability.
 Our comparable store net sales results fluctuate significantly, which can cause volatility in
our operating performance and stock price.
 
 Item 2  Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3  Defaults upon Senior Securities
  
 Item 4  Submission of Matters to a Vote of Security Holders
   21




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##### Table of Contents



DIRECTOR
    
    VOTES
    
    VOTES
    
    VOTESDIRECTOR NAME
    
    CLASS
    
    CAST FOR
    
    CAST AGAINST
    
    ABSTAINEDPearson C. Cummin III
    
    
    I
    
    
    
    56,984,295
    
    
    
    2,716,816
    
    
    
    59,024George R. Mrkonic
    
    III
    
    
    57,901,967
    
    
    
    1,799,799
    
    
    
    58,369Michael Goldstein
    
    III
    
    
    53,358,418
    
    
    
    6,332,419
    
    
    
    69,298William Cobb
    
    III
    
    
    57,925,506
    
    
    
    1,776,393
    
    
    
    58,236
   
 Item 5  Other Information
  
 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*
    
    Employment Agreement, dated June 17, 2009 between Gary H.
Schoenfeld and Pacific Sunwear of California, Inc.
    
    8-K
    
    6/17/0910.2*
    
    Letter Agreement, dated June 17, 2009 between Sally Frame Kasaks
and Pacific Sunwear of California, Inc.
    
    8-K
    
    6/17/0931.1+
    
    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
 
 *
    
    Management contract or compensatory plan or arrangement+
    
    Filed herewith 22




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##### Table of Contents



SIGNATURES
  PACIFIC SUNWEAR OF CALIFORNIA, INC.
(Registrant)Date: September 2, 2009
    /s/ GARY H. SCHOENFELDGary H. SchoenfeldPresident and Chief Executive Officer
(Principal Executive Officer)Date: September 2, 2009
    /s/ MICHAEL L. HENRYMichael L. HenrySenior Vice President,
Chief Financial Officer and Secretary
(Principal Financial and Accounting Officer) 23