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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: October 31, 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
    
    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 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 October 31, 2009
 Index
 Page #PART I. FINANCIAL INFORMATIONItem 1. Condensed Consolidated Financial Statements (unaudited):Condensed Consolidated Balance SheetsOctober 31, 2009 and January 31, 2009
    
    
    3Condensed Consolidated Statements of Operations and Comprehensive OperationsThird
quarter (13 weeks) and three quarters (39 weeks) ended October 31, 2009 and November
1, 2008
    
    
    4Condensed Consolidated Statements of Cash FlowsThree quarters (39 weeks) ended
October 31, 2009 and November 1, 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
    
    
    22Item 3. Defaults upon Senior Securities
    
    
    22Item 4. Submission of Matters to a Vote of Security Holders
    
    
    22Item 5. Other Information
    
    
    22Item 6. Exhibits
    
    
    23SIGNATURE PAGE
    
    
    24EX-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, amounts in thousands except share and per share amounts)
 October 31, 2009
    
    
    January 31, 2009ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    15,564
    
    
    $
    24,776Merchandise inventories
    
    
    168,417
    
    
    
    107,205Other current assets
    
    
    15,774
    
    
    
    58,943Total current assets
    
    
    199,755
    
    
    
    190,924PROPERTY AND EQUIPMENT, NET:Gross property and equipment
    
    
    653,316
    
    
    
    665,236Less accumulated depreciation and amortization
    
    
    (380,720
    )
    
    
    (341,892
    )Total property and equipment, net
    
    
    272,596
    
    
    
    323,344Assets held for sale
    
    
    
    
    
    
    3,682Deferred income taxes
    
    
    39,713
    
    
    
    21,984Other assets
    
    
    25,231
    
    
    
    29,575TOTAL ASSETS
    
    $
    537,295
    
    
    $
    569,509LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable
    
    $
    63,298
    
    
    $
    45,263Other current liabilities
    
    
    40,159
    
    
    
    47,564Total current liabilities
    
    
    103,457
    
    
    
    92,827LONG-TERM LIABILITIES:Deferred lease incentives
    
    
    42,229
    
    
    
    52,313Deferred rent
    
    
    21,872
    
    
    
    23,008Other long-term liabilities
    
    
    27,863
    
    
    
    29,374Total long-term liabilities
    
    
    91,964
    
    
    
    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; 65,583,370
and 65,174,144 shares issued and outstanding, respectively
    
    
    656
    
    
    
    652Additional paid-in capital
    
    
    5,993
    
    
    
    2,306Retained earnings
    
    
    335,225
    
    
    
    369,029Total shareholders equity
    
    
    341,874
    
    
    
    371,987TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    537,295
    
    
    $
    569,509
  3




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PACIFIC SUNWEAR OF CALIFORNIA, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 AND COMPREHENSIVE INCOME (LOSS)
 (unaudited, amounts in thousands except share and per share amounts)
 For the Third Quarter Ended
    
    
    For the Three Quarters EndedOctober 31, 2009
    
    
    November 1, 2008
    
    
    October 31, 2009
    
    
    November 1, 2008Net sales
    
    $
    268,280
    
    
    $
    323,612
    
    
    $
    734,539
    
    
    $
    903,204Cost of goods sold, including
buying, distribution and occupancy
costs
    
    
    194,839
    
    
    
    230,836
    
    
    
    542,116
    
    
    
    639,705Gross margin
    
    
    73,441
    
    
    
    92,776
    
    
    
    192,423
    
    
    
    263,499Selling, general and administrative
expenses
    
    
    89,365
    
    
    
    95,308
    
    
    
    245,477
    
    
    
    281,163Operating loss from continuing
operations
    
    
    (15,924
    )
    
    
    (2,532
    )
    
    
    (53,054
    )
    
    
    (17,664
    )Other expense, net
    
    
    17
    
    
    
    1,100
    
    
    
    180
    
    
    
    461Loss from continuing operations
before income taxes
    
    
    (15,941
    )
    
    
    (3,632
    )
    
    
    (53,234
    )
    
    
    (18,125
    )Income tax benefit
    
    
    (5,036
    )
    
    
    (112
    )
    
    
    (19,431
    )
    
    
    (6,344
    )Loss income from continuing
operations
    
    
    (10,905
    )
    
    
    (3,520
    )
    
    
    (33,803
    )
    
    
    (11,781
    )Income (loss) from discontinued
operations, net of tax
    
    
    
    
    
    
    1,046
    
    
    
    
    
    
    
    (24,999
    )Net loss
    
    $
    (10,905
    )
    
    $
    (2,474
    )
    
    $
    (33,803
    )
    
    $
    (36,780
    )Comprehensive loss
    
    $
    (10,905
    )
    
    $
    (2,474
    )
    
    $
    (33,803
    )
    
    $
    (36,780
    )Loss from continuing operations per
share:Basic
    
    $
    (0.17
    )
    
    $
    (0.05
    )
    
    $
    (0.52
    )
    
    $
    (0.18
    )Diluted
    
    $
    (0.17
    )
    
    $
    (0.05
    )
    
    $
    (0.52
    )
    
    $
    (0.18
    )Net loss per share:Basic
    
    $
    (0.17
    )
    
    $
    (0.04
    )
    
    $
    (0.52
    )
    
    $
    (0.55
    )Diluted
    
    $
    (0.17
    )
    
    $
    (0.04
    )
    
    $
    (0.52
    )
    
    $
    (0.55
    )Weighted average shares outstanding:Basic
    
    
    65,563,721
    
    
    
    64,968,707
    
    
    
    65,380,726
    
    
    
    67,182,918Diluted
    
    
    65,563,721
    
    
    
    64,968,707
    
    
    
    65,380,726
    
    
    
    67,182,918
  4




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PACIFIC SUNWEAR OF CALIFORNIA, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (unaudited, amounts in thousands)
 Three Quarters EndedOct. 31, 2009
    
    
    Nov. 1, 2008CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (33,803
    )
    
    $
    (36,780
    )Adjustments to reconcile net loss to net cash from operating activities:Depreciation and amortization
    
    
    53,326
    
    
    
    58,743Asset impairment
    
    
    16,538
    
    
    
    14,821Goodwill impairment
    
    
    
    
    
    
    6,492Loss on disposal of property and equipment
    
    
    555
    
    
    
    2,368Non-cash stock based compensation
    
    
    5,030
    
    
    
    4,442Tax benefit deficiencies related to stock-based compensation
    
    
    (1,702
    )
    
    
    (1,408
    )Excess tax benefits related to stock-based compensation
    
    
    
    
    
    
    (5
    )Change in operating assets and liabilities:Merchandise inventories
    
    
    (61,212
    )
    
    
    (63,632
    )Other current assets
    
    
    43,428
    
    
    
    (20,817
    )Other assets
    
    
    (12,968
    )
    
    
    17,398Accounts payable
    
    
    18,035
    
    
    
    51,450Other current liabilities
    
    
    (8,049
    )
    
    
    (21,776
    )Deferred lease incentives
    
    
    (10,084
    )
    
    
    (18,958
    )Deferred rent
    
    
    (1,136
    )
    
    
    (4,199
    )Other long-term liabilities
    
    
    (1,730
    )
    
    
    (1,454
    )Net cash provided by/(used in) operating activities
    
    
    6,228
    
    
    
    (13,315
    )CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment
    
    
    (19,540
    )
    
    
    (71,528
    )Proceeds from sale of land
    
    
    3,705
    
    
    
    Proceeds from sale of property and equipment
    
    
    28
    
    
    
    275Net cash used in investing activities
    
    
    (15,807
    )
    
    
    (71,253
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from exercise of stock options
    
    
    373
    
    
    
    1,613Principal payments under capital lease obligations
    
    
    (6
    )
    
    
    (9
    )Repurchases of common stock
    
    
    
    
    
    
    (52,911
    )Borrowings under credit facility
    
    
    
    
    
    
    168,739Principal payments under credit facility
    
    
    
    
    
    
    (125,639
    )Excess tax benefits related to stock-based compensation
    
    
    
    
    
    
    5Net cash provided by/(used in) financing activities
    
    
    367
    
    
    
    (8,202
    )NET DECREASE IN CASH AND CASH EQUIVALENTS:
    
    
    (9,212
    )
    
    
    (92,770
    )CASH AND CASH EQUIVALENTS, beginning of period
    
    
    24,776
    
    
    
    97,587CASH AND CASH EQUIVALENTS, end of period
    
    $
    15,564
    
    
    $
    4,817SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:Cash paid for interest
    
    $
    
    
    
    $
    174Cash (refunded)/paid for income taxes
    
    $
    (28,061
    )
    
    $
    539SUPPLEMENTAL DISCLOSURES OF NON-CASH TRANSACTIONS:Increase/(decrease) in non-cash property and equipment accruals
    
    $
    408
    
    
    $
    (2,013
    )Capital lease transaction 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 October 31, 2009
 (unaudited)
 1. NATURE OF BUSINESS
 www.pacsun.com
 2. BASIS OF PRESENTATION
   3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Recently Adopted Accounting Pronouncements
 6




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4. DISCONTINUED OPERATIONS
  Third Quarter Ended
    
    Three Quarters EndedNov. 1, 2008
    
    Nov. 1, 2008Net sales
    
    $
    
    
    
    $
    27,051Loss before income tax benefit
    
    
    (683
    )
    
    
    (40,818
    )Income tax benefit
    
    
    (1,729
    )
    
    
    (15,819
    )Net income (loss)
    
    
    1,046
    
    
    
    (24,999
    )Net income (loss) per diluted share
    
    $
    0.02
    
    
    $
    (0.37
    )
 5. SEGMENT REPORTING
  6. STOCK-BASED COMPENSATION
  Stock Options
  For the First Three Quarters EndedOct. 31, 2009
    
    Nov. 1, 2008Expected life
    
    4 years
    
    4 yearsExpected volatility
    
    
    69.4%  75.6
    %
    
    
    40.3%  42.8
    %Risk-free interest rate
    
    
    1.5%  2.0
    %
    
    
    2.3%  3.0
    %Dividend yield
    
    
    
    
    
    
    
 Non-vested Stock Awards
   7




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7. EARNINGS PER SHARE
  8. OTHER CURRENT ASSETS
  Oct. 31,
    
    
    Jan. 31,2009
    
    
    2009Prepaid expenses
    
    $
    11,662
    
    
    $
    25,573Income taxes receivable
    
    
    2,191
    
    
    
    30,251Non-trade accounts receivable
    
    
    1,921
    
    
    
    3,119Total other current assets
    
    $
    15,774
    
    
    $
    58,943
 9. OTHER CURRENT LIABILITIES
  Oct. 31,
    
    
    Jan. 31,2009
    
    
    2009Accrued compensation and benefits
    
    $
    8,276
    
    
    $
    13,584Accrued gift cards
    
    
    7,876
    
    
    
    12,134Sales taxes payable
    
    
    3,893
    
    
    
    5,177Accrued capital expenditures
    
    
    2,145
    
    
    
    1,737Deferred taxes
    
    
    1,218
    
    
    
    1,218Other
    
    
    16,751
    
    
    
    13,714Total other current liabilities
    
    $
    40,159
    
    
    $
    47,564
 10. CREDIT FACILITY
  8




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11. COMMITMENTS AND CONTINGENCIES
 Litigation
 Letters of Credit
 12. INCOME TAXES
   13. FAIR VALUE MEASUREMENTS
  9




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
    
    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 October 31, 2009Quoted Prices
    
    Significantin Active
    
    Other
    
    SignificantMarkets for
    
    Observable
    
    UnobservableIdentical Assets
    
    Inputs
    
    InputsTotal
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Long-lived assets held and used
    
    $
    273
    
    
    $
    
    
    
    $
    
    
    
    $
    273
  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
    
    changes in merchandising and other business strategies
    
    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
 11




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Net merchandise margins
 Operating margin
 Store sales trends
 Cash flow and liquidity (working capital)
 Critical Accounting Policies
  Results of Operations
  Third Quarter Ended
    
    
    First Three Quarters EndedOct. 31,
    
    
    Nov. 1,
    
    
    Oct. 31,
    
    
    Nov. 1,2009
    
    
    2008
    
    
    2009
    
    
    2008Net sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of goods sold, including buying, distribution
and occupancy costs
    
    
    72.6
    
    
    
    71.3
    
    
    
    73.8
    
    
    
    70.8Gross margin
    
    
    27.4
    
    
    
    28.7
    
    
    
    26.2
    
    
    
    29.2Selling, general and administrative expenses
    
    
    33.4
    
    
    
    29.5
    
    
    
    33.4
    
    
    
    31.1Operating loss from continuing operations
    
    
    (6.0
    )
    
    
    (0.8
    )
    
    
    (7.2
    )
    
    
    (1.9
    )Other expense, net
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    0.1Loss from continuing operations before income taxes
    
    
    (6.0
    )
    
    
    (1.1
    )
    
    
    (7.2
    )
    
    
    (2.0
    )Income tax benefit
    
    
    (1.9
    )
    
    
    
    
    
    
    (2.6
    )
    
    
    (0.7
    )Loss from continuing operations
    
    
    (4.1
    )%
    
    
    (1.1
    )%
    
    
    (4.6
    )%
    
    
    (1.3
    )%Total stores
    
    
    904
    
    
    
    940Total square footage (in 000s)
    
    
    3,494
    
    
    
    3,608
 12




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The third quarter (thirteen weeks) ended October 31, 2009 as compared to the third quarter
(thirteen weeks) ended November 1, 2008
 Net Sales
  $ millions
    
    Attributable to$(55)
    
    18% decline in comparable store net sales in the third quarter of fiscal
2009 compared to the third quarter of fiscal 2008 driven primarily by a
decline in total transactions.(3)
    
    Net decrease in sales due to store closures2
    
    Increase due to non-comparable sales from new, expanded or relocated stores
not yet included in the comparable store base and internet net sales$(56)
    
    Total
  Gross Margin
  %
    
    Attributable to(3.0)
    
    Deleverage of occupancy costs as a result of the 18% same-store sales
decline for the third quarter of fiscal 2009.1.7
    
    Increase in merchandise margins.(1.3)
    
    Total
  13




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Selling, General and Administrative Expenses
  %
    
    Attributable to1.7
    
    Increase in payroll and payroll-related expenses as a percentage of net
sales to 17.2% ($46 million) in the third quarter of fiscal 2009 from 15.5%
($50 million) for the third quarter of fiscal 2008 due to deleveraging these
expenses against the 18% same-store sales decline. In dollars, payroll and
payroll-related expenses decreased $4 million.1.8
    
    Increase in other SG&A expenses as a percentage of net sales to 12.6% ($34
million) in the third quarter of fiscal 2009 from 10.7% ($35 million) for
the third quarter of fiscal 2008 due to deleveraging these expenses against
the 18% same-store sales decline. In dollars, other SG&A expenses decreased
$1 million.0.4
    
    Non-cash asset impairment charges decreased to $9 million for the third
quarter of fiscal 2009 from $10 million for the third quarter of fiscal
2008.3.9
    
    Total
  Income Taxes
  The three quarters (39 weeks) ended October 31, 2009 as compared to the three quarters (39
weeks) ended November 1, 2008
 Net Sales
  $ millions
    
    Attributable to$(170)
    
    20% decline in comparable store net sales in the first three quarters of fiscal
2009 compared to the first three quarters of fiscal 2008 driven by both a decrease
in average unit retail and a decline in total transactions.(5)
    
    Decrease in sales due to store closures, store relocations, and temporary locations.7
    
    Non-comparable sales from new stores not yet included in the comparable store base
and internet net sales.$(168)
    
    Total
  14




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Gross Margin
  %
    
    Attributable to(3.6)
    
    Deleverage of occupancy costs as a result of the 20% same-store
sales decline for the first three quarters of fiscal 2009.0.3
    
    Increase in merchandise margins.0.3
    
    Decrease in freight and distribution costs of $8 million
primarily due to the consolidation of our distribution function
in the first quarter of fiscal 2008 and the impact of cost
saving initiatives.(3.0)
    
    Total
  Selling, General and Administrative Expenses
  %
    
    Attributable to1.4
    
    Increase in payroll and payroll-related expenses as a
percentage of net sales to 18.1% ($133 million) in the first
three quarters of fiscal 2009 from 16.7% ($151 million) for the
first three quarters of fiscal 2008 due to deleveraging these
expenses against the 20% same-store sales decline. In dollars,
payroll and payroll-related expenses decreased by $18 million.1.2
    
    Increase in other SG&A expenses as a percentage of net sales to
13.0% ($95 million) in the first three quarters of fiscal 2009
from 11.8% ($107 million) for the first three quarters of
fiscal 2008 due to deleveraging these expenses against the 20%
same-store sales decline. In dollars, other SG&A expenses
decreased by $12 million (primarily due to declines in
depreciation, legal and advertising expenses).(0.3)
    
    Non-cash asset impairment charges and loss on disposals
decreased to $17 million for the first three quarters of fiscal
2009 from $23 million for the first three quarters of fiscal
2008.2.3
    
    Total
  15




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Other expense, net
  Income Taxes
  Liquidity and Capital Resources
   Working Capital
  $ millions
    
    Description$98
    
    Working capital at January 31, 200943
    
    Increase in merchandise inventories, net of accounts payable,
from fiscal year end due to planned receipt flows and buildup
of inventory in advance of the peak holiday selling season.7
    
    Decrease in other current liabilities, primarily accrued
salaries and benefits based on timing of payments.(9)
    
    Decrease in cash and cash equivalents (see condensed
consolidated cash flow statement included in this Quarterly
Report on Form 10-Q).(43)
    
    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.$96
    
    Working capital at October 31, 2009
 16




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Operating Cash Flows
  $ millions
    
    Attributable to$33
    
    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 2008.14
    
    Decrease in payments related to severance and lease termination accruals as
a result of the closing of the discontinued demo concept in the first
quarter of fiscal 2008.12
    
    Decrease in deferred lease incentive and deferred rent amortization due to
discontinued demo concept in the first quarter of fiscal 2008.3
    
    Lower net losses in the current year as a result of the closing of the
discontinued demo concept in 2008.(31)
    
    Increase in merchandise inventories, net of accounts payable.(6)
    
    Decrease in non-cash goodwill impairment charges.(5)
    
    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.$20
    
    Total
 Investing Cash Flows
  Financing Cash Flows
  Credit Facility
  Contractual Obligations
  17




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##### 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
    
    $
    457
    
    
    $
    92
    
    
    $
    150
    
    
    $
    109
    
    
    $
    106Capital lease obligations
    
    
    <0.1
    
    
    
    <0.1
    
    
    
    <0.1
    
    
    
    
    
    
    
    FIN 48 obligations including interest and penalties
    
    
    1
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    Letters of credit
    
    
    17
    
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    475
    
    
    $
    109
    
    
    $
    151
    
    
    $
    109
    
    
    $
    106
   Operating Leases
    Indemnifications
  18




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




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




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PART II  OTHER INFORMATION
 
 Item 1  Legal Proceedings
  
 Item 1A  Risk Factors
  We have previously stated our intention to change certain merchandising and real estate strategies
with the goal of improving our operating results. We may continue to modify our strategies going
forward and we cannot be certain that our existing or modified strategies will be successful in
improving our store productivity or profitability.
 We operate our business from one corporate headquarters facility and one distribution facility
which exposes us to significant operational risks.
 21




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We caution that the risk factors described above could cause actual results or outcomes to differ
materially from those expressed in any forward-looking statements made by us or on behalf of the
Company. Further, we cannot assess the impact of each such factor on our business or the extent to
which any factor, or combination of factors, may cause actual results to differ materially from
those contained in any forward-looking statements.
 
 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
  
 Item 5  Other Information
  22




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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
    
    4/3/0931.1+
    
    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
 
 +
    
    Filed herewith 23




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##### Table of Contents



SIGNATURES
  PACIFIC SUNWEAR OF CALIFORNIA, INC.
(Registrant)Date: December 4, 2009
    /s/ GARY H. SCHOENFELDGary H. SchoenfeldPresident and Chief Executive Officer
(Principal Executive Officer)Date: December 4, 2009
    /s/ MICHAEL L. HENRYMichael L. HenrySenior Vice President,
Chief Financial Officer and Secretary
(Principal Financial and Accounting Officer) 24