##### Table of Contents



United States






FORM 10-K

















PACIFIC SUNWEAR OF CALIFORNIA, INC.




|                                                                                          |  |                                                    
|----------------------------------------------------------------------------------------- |  | ---------------------------------------------------
|CALIFORNIA
    (State or other jurisdiction of
    incorporation or organization)         |  | 95-3759463
    (I.R.S. Employer Identification No.)
|3450 E. Miraloma Avenue, Anaheim, California
    (Address of principal executive offices) |  | 92806
    (Zip code)                               

































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02 /


TABLE OF CONTENTS




|                                                        |                                                                                                |  |  |  |  |  |  | 
|------------------------------------------------------- | ---------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|Part I                                                 
|                                                        | Item 1. Business                                                                              
|                                                        | Item 2. Properties                                                                            
|                                                        | Item 3. Legal Proceedings                                                                     
|                                                        | Item 4. Submission of Matters to a Vote of Security Holders                                   
|Part II                                                
|                                                        | Item 5. Market for Registrants Common Equity and Related Stockholder Matters                 
|                                                        | Item 6. Selected Financial Data                                                               
|                                                        | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations 
|                                                        | Item 7A. Quantitative and Qualitative Disclosures About Market Risk                           
|                                                        | Item 8. Financial Statements and Supplementary Data                                           
|                                                        | Item 9. Changes in, and Disagreements with, Accountants on Accounting and Financial Disclosure
|                                                        | Item 9A. Controls and Procedures                                                              
|Report of Independent Registered Public Accounting Firm
|                                                        | Item 9B. Other Information                                                                    
|Part III                                               
|                                                        | Item 10. Directors and Executive Officers of the Registrant                                   
|                                                        | Item 11. Executive Compensation                                                               
|                                                        | Item 12. Security Ownership of Certain Beneficial Owners and Management                       
|                                                        | Item 13. Certain Relationships and Related Transactions                                       
|                                                        | Item 14. Principal Accountant Fees and Services                                               
|Part IV                                                
|                                                        | Item 15. Exhibits and Financial Statement Schedules                                           
|Signatures                                             
|Index to Consolidated Financial Statements             
|Exhibit 3.3                                            
|Exhibit 10.17                                          
|Exhibit 10.18                                          
|Exhibit 10.20                                          
|Exhibit 21                                             
|Exhibit 23.1                                           
|Exhibit 31                                             
|Exhibit 32                                             



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Part I







|        |         
|------- | --------
|Item 1. | Business







www.pacsun.com










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/ 03






Offer Popular Name Brands Supplemented by Private Brands.


Promote the PacSun and d.e.m.o. Brand Images.


Actively Manage Merchandise Trends.


Maintain Strong Vendor Relationships.


Provide Attentive Customer Service.


Continue to Expand the Number of Stores.


Offer Merchandise for Sale Over the Internet. www.pacsun.com.




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04 /






Merchandise.


|              |  |                   |     |   |               |  |     |              |  |  |     |  
|------------- |  | ----------------- | --- | - | ------------- |  | --- | ------------ |  |  | --- | -
|              |  | FISCAL YEAR ENDED |    
|              |  |                   |    
|              |  | Jan. 29, 2005     |     |   | Jan. 31, 2004 |  |     | Feb. 1, 2003 | 
|              |  |                   |    
|Guys apparel  |  |                   | 37  | % |               |  | 38  | %            |  |  | 41  | %
|Girls apparel |  |                   | 30  |   |               |  | 31  |              |  |  | 31  |  
|Accessories   |  |                   | 19  |   |               |  | 19  |              |  |  | 18  |  
|Footwear      |  |                   | 14  |   |               |  | 12  |              |  |  | 10  |  
|             
|Total         |  |                   | 100 | % |               |  | 100 | %            |  |  | 100 | %
|             
|             





Vendor and Contract Manufacturer Relationships.








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/ 05


Purchasing, Allocation and Distribution.






Locations.


|               |  |        |     |  |         |  |    |          |  |  |       |  |  |  |     | 
|-------------- |  | ------ | --- |  | ------- |  | -- | -------- |  |  | ----- |  |  |  | --- | 
|               | 
|               |  | PacSun |     |  |        
|State          |  | PacSun |     |  | Outlets |  |    | d.e.m.o. |  |  | Total | 
|               | 
|Alabama        |  |        | 11  |  |         |  | 2  |          |  |  |       |  |  |  | 13  | 
|              
|Alaska         |  |        | 3   |  |         |  |    |          |  |  | 3     |  |  |  | 6   | 
|              
|Arizona        |  |        | 15  |  |         |  | 2  |          |  |  | 3     |  |  |  | 20  | 
|              
|Arkansas       |  |        | 2   |  |         |  |    |          |  |  |       |  |  |  | 2   | 
|              
|California     |  |        | 83  |  |         |  | 16 |          |  |  | 35    |  |  |  | 134 | 
|              
|Colorado       |  |        | 15  |  |         |  | 3  |          |  |  | 2     |  |  |  | 20  | 
|              
|Connecticut    |  |        | 10  |  |         |  |    |          |  |  | 4     |  |  |  | 14  | 
|              
|Delaware       |  |        | 3   |  |         |  | 1  |          |  |  | 1     |  |  |  | 5   | 
|              
|Florida        |  |        | 55  |  |         |  | 6  |          |  |  | 15    |  |  |  | 76  | 
|              
|Georgia        |  |        | 21  |  |         |  | 1  |          |  |  | 6     |  |  |  | 28  | 
|              
|Hawaii         |  |        | 7   |  |         |  |    |          |  |  | 1     |  |  |  | 8   | 
|              
|Idaho          |  |        | 4   |  |         |  |    |          |  |  |       |  |  |  | 4   | 
|              
|Illinois       |  |        | 23  |  |         |  | 2  |          |  |  | 8     |  |  |  | 33  | 
|              
|Indiana        |  |        | 15  |  |         |  | 2  |          |  |  | 3     |  |  |  | 20  | 
|              
|Iowa           |  |        | 9   |  |         |  |    |          |  |  |       |  |  |  | 9   | 
|              
|Kansas         |  |        | 7   |  |         |  |    |          |  |  |       |  |  |  | 7   | 
|              
|Kentucky       |  |        | 8   |  |         |  |    |          |  |  | 1     |  |  |  | 9   | 
|              
|Louisiana      |  |        | 10  |  |         |  |    |          |  |  | 4     |  |  |  | 14  | 
|              
|Maine          |  |        | 2   |  |         |  | 2  |          |  |  | 1     |  |  |  | 5   | 
|              
|Maryland       |  |        | 14  |  |         |  | 2  |          |  |  | 4     |  |  |  | 20  | 
|              
|Massachusetts  |  |        | 20  |  |         |  | 1  |          |  |  | 4     |  |  |  | 25  | 
|              
|Michigan       |  |        | 24  |  |         |  | 3  |          |  |  | 7     |  |  |  | 34  | 
|              
|Minnesota      |  |        | 14  |  |         |  | 1  |          |  |  | 3     |  |  |  | 18  | 
|              
|Mississippi    |  |        | 3   |  |         |  |    |          |  |  |       |  |  |  | 3   | 
|              
|Missouri       |  |        | 11  |  |         |  | 3  |          |  |  | 1     |  |  |  | 15  | 
|              
|Montana        |  |        | 4   |  |         |  |    |          |  |  |       |  |  |  | 4   | 
|              
|Nebraska       |  |        | 4   |  |         |  |    |          |  |  |       |  |  |  | 4   | 
|              
|Nevada         |  |        | 5   |  |         |  | 2  |          |  |  | 2     |  |  |  | 9   | 
|              
|New Hampshire  |  |        | 5   |  |         |  | 1  |          |  |  | 1     |  |  |  | 7   | 
|              
|New Jersey     |  |        | 21  |  |         |  | 3  |          |  |  | 7     |  |  |  | 31  | 
|              
|New Mexico     |  |        | 7   |  |         |  |    |          |  |  | 1     |  |  |  | 8   | 
|              
|New York       |  |        | 35  |  |         |  | 6  |          |  |  | 9     |  |  |  | 50  | 
|              
|North Carolina |  |        | 20  |  |         |  | 2  |          |  |  | 3     |  |  |  | 25  | 
|              
|North Dakota   |  |        | 4   |  |         |  |    |          |  |  |       |  |  |  | 4   | 
|              
|Ohio           |  |        | 33  |  |         |  | 2  |          |  |  | 5     |  |  |  | 40  | 
|              
|Oklahoma       |  |        | 5   |  |         |  |    |          |  |  |       |  |  |  | 5   | 
|              
|Oregon         |  |        | 8   |  |         |  | 2  |          |  |  | 2     |  |  |  | 12  | 
|              
|Pennsylvania   |  |        | 42  |  |         |  | 4  |          |  |  | 7     |  |  |  | 53  | 
|              
|Rhode Island   |  |        | 2   |  |         |  |    |          |  |  |       |  |  |  | 2   | 
|              
|South Carolina |  |        | 12  |  |         |  | 2  |          |  |  | 4     |  |  |  | 18  | 
|              
|South Dakota   |  |        | 2   |  |         |  |    |          |  |  |       |  |  |  | 2   | 
|              
|Tennessee      |  |        | 10  |  |         |  | 2  |          |  |  | 1     |  |  |  | 13  | 
|              
|Texas          |  |        | 50  |  |         |  | 4  |          |  |  | 6     |  |  |  | 60  | 
|              
|Utah           |  |        | 10  |  |         |  | 1  |          |  |  |       |  |  |  | 11  | 
|              
|Vermont        |  |        | 3   |  |         |  | 1  |          |  |  |       |  |  |  | 4   | 
|              
|Virginia       |  |        | 20  |  |         |  | 2  |          |  |  | 5     |  |  |  | 27  | 
|              
|Washington     |  |        | 20  |  |         |  | 1  |          |  |  |       |  |  |  | 21  | 
|              
|West Virginia  |  |        | 7   |  |         |  |    |          |  |  |       |  |  |  | 7   | 
|              
|Wisconsin      |  |        | 14  |  |         |  |    |          |  |  |       |  |  |  | 14  | 
|              
|Wyoming        |  |        | 2   |  |         |  |    |          |  |  |       |  |  |  | 2   | 
|              
|Puerto Rico    |  |        | 10  |  |         |  | 2  |          |  |  | 3     |  |  |  | 15  | 
|              
|Total          |  |        | 744 |  |         |  | 84 |          |  |  | 162   |  |  |  | 990 | 
|              

Store Expansion.




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06 /








Store Operations.














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/ 07
























|                  |  |     |    |  |       |                                               
|----------------- |  | --- | -- |  | ----- | ----------------------------------------------
|                 
|Executive Officer |  | Age |    |  | Title
|                 
|Greg H. Weaver    |  |     | 51 |  |       | Executive Chairman of the Board               
|Seth R. Johnson   |  |     | 51 |  |       | Chief Executive Officer                       
|Timothy M. Harmon |  |     | 53 |  |       | President, Chief Merchandising Officer        
|Gerald M. Chaney  |  |     | 58 |  |       | Senior Vice President, Chief Financial Officer
|Thomas M. Kennedy |  |     | 43 |  |       | Division President of PacSun                  







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08 /













|        |           
|------- | ----------
|Item 2. | Properties










|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings










|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders





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/ 09





Part II







|        |                                                                          
|------- | -------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity and Related
    Stockholder Matters



|            |  |      |       |  |     |   |       |             |  |             |  |   |       |  |  |   |       | 
|----------- |  | ---- | ----- |  | --- | - | ----- | ----------- |  | ----------- |  | - | ----- |  |  | - | ----- | 
|            |  |      |       | 
|Fiscal 2004 |  | High |       |  | Low |   |       | Fiscal 2003 |  | High        |  |   | Low   | 
|            |  |      |       | 
|1st Quarter |  | $    | 25.78 |  |     | $ | 21.24 |             |  | 1st Quarter |  | $ | 15.67 |  |  | $ | 10.74 | 
|2nd Quarter |  |      | 22.48 |  |     |   | 17.25 |             |  | 2nd Quarter |  |   | 20.43 |  |  |   | 13.07 | 
|3rd Quarter |  |      | 23.63 |  |     |   | 17.64 |             |  | 3rd Quarter |  |   | 24.22 |  |  |   | 19.00 | 
|4th Quarter |  |      | 25.46 |  |     |   | 21.00 |             |  | 4th Quarter |  |   | 24.56 |  |  |   | 19.49 | 










|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data





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10 /


|                                                                            |  |                       |           |          |               |   |           |               |  |         |               |   |         |               |           |    |  |   |           |  
|--------------------------------------------------------------------------- |  | --------------------- | --------- | -------- | ------------- | - | --------- | ------------- |  | ------- | ------------- | - | ------- | ------------- | --------- | -- |  | - | --------- | -
|                                                                            |  | FISCAL YEAR ENDED (1) |          
|                                                                            |  |                       |          
|                                                                            |  |                       |           | Jan. 31, |               |   | Feb. 1,   |               |  | Feb. 2, |               |   | Feb. 4, |              
|                                                                            |  | Jan. 29,              |           |          | 2004          |   |           | 2003          |  |         | 2002          |   |         | 2001          |          
|(In thousands, except per share and selected operating data)                |  | 2005                  |           |          | (as restated) |   |           | (as restated) |  |         | (as restated) |   |         | (as restated) |          
|                                                                            | 
|CONSOLIDATED INCOME STATEMENT DATA:                                         |  |                       |           |          |               |   |           |               |  |         |               |   |         |               |           |    |  |   |           |  
|Net sales                                                                   |  | $                     | 1,229,762 |          |               | $ | 1,041,456 |               |  | $       | 847,150       |   |         | $             | 685,352   |    |  | $ | 589,707   |  
|Cost of goods sold (including buying, distribution and occupancy
    costs) |  |                       | 781,828   |          |               |   | 668,807   |               |  |         | 554,829       |   |         |               | 459,364   |    |  |   | 388,317   |  
|                                                                           
|Gross margin                                                                |  |                       | 447,934   |          |               |   | 372,649   |               |  |         | 292,321       |   |         |               | 225,988   |    |  |   | 201,390   |  
|Selling, general and administrative expenses                                |  |                       | 277,921   |          |               |   | 244,422   |               |  |         | 211,101       |   |         |               | 181,717   |    |  |   | 137,767   |  
|                                                                           
|Operating income                                                            |  |                       | 170,013   |          |               |   | 128,227   |               |  |         | 81,220        |   |         |               | 44,271    |    |  |   | 63,623    |  
|Net interest income/(expense)                                               |  |                       | 1,889     |          |               |   | 732       |               |  |         | (594          | ) |         |               | 470       |    |  |   | 1,344     |  
|                                                                           
|Income before income tax expense                                            |  |                       | 171,902   |          |               |   | 128,959   |               |  |         | 80,626        |   |         |               | 44,741    |    |  |   | 64,967    |  
|Income tax expense                                                          |  |                       | 64,998    |          |               |   | 48,759    |               |  |         | 30,960        |   |         |               | 17,182    |    |  |   | 25,213    |  
|                                                                           
|Net income                                                                  |  | $                     | 106,904   |          |               | $ | 80,200    |               |  | $       | 49,666        |   |         | $             | 27,559    |    |  | $ | 39,754    |  
|                                                                           
|                                                                           
|Net income per share, diluted                                               |  | $                     | 1.38      |          |               | $ | 1.02      |               |  | $       | 0.66          |   |         | $             | 0.37      |    |  | $ | 0.54      |  
|                                                                           
|                                                                           
|Weighted average shares outstanding, diluted                                |  |                       | 77,464    |          |               |   | 78,850    |               |  |         | 75,147        |   |         |               | 74,488    |    |  |   | 73,234    |  
|SELECTED CONSOLIDATED OPERATING DATA:                                       |  |                       |           |          |               |   |           |               |  |         |               |   |         |               |           |    |  |   |           |  
|Stores open at end of period                                                |  |                       | 990       |          |               |   | 877       |               |  |         | 791           |   |         |               | 718       |    |  |   | 589       |  
|Stores opened during period                                                 |  |                       | 118       |          |               |   | 90        |               |  |         | 85            |   |         |               | 135       |    |  |   | 142       |  
|Stores closed during period                                                 |  |                       | 5         |          |               |   | 4         |               |  |         | 12            |   |         |               | 6         |    |  |   | 3         |  
|Capital expenditures (000s)                                                |  | $                     | 81,992    |          |               | $ | 49,568    |               |  | $       | 53,288        |   |         | $             | 108,065   |    |  | $ | 77,398    |  
|Average net sales per gross square
    foot (2)(3)                          |  | $                     | 374       |          |               | $ | 363       |               |  | $       | 330           |   |         | $             | 321       |    |  | $ | 368       |  
|Average net sales per store
    (000s)(2)(3)                               |  | $                     | 1,290     |          |               | $ | 1,229     |               |  | $       | 1,102         |   |         | $             | 1,031     |    |  | $ | 1,082     |  
|Square footage of gross store space                                         |  |                       | 3,447,850 |          |               |   | 2,996,635 |               |  |         | 2,647,343     |   |         |               | 2,319,149 |    |  |   | 1,764,123 |  
|Comparable store net sales increase/
    (decrease)(3)(4)                   |  |                       | 7.3       | %        |               |   | 13.1      | %             |  |         | 9.7           | % |         |               | (2.5      | )% |  |   | 3.5       | %
|CONSOLIDATED BALANCE SHEET DATA:                                            |  |                       |           |          |               |   |           |               |  |         |               |   |         |               |           |    |  |   |           |  
|Working capital                                                             |  | $                     | 257,508   |          |               | $ | 242,998   |               |  | $       | 109,305       |   |         | $             | 78,899    |    |  | $ | 79,799    |  
|Total assets                                                                |  |                       | 677,778   |          |               |   | 644,487   |               |  |         | 463,993       |   |         |               | 413,173   |    |  |   | 318,629   |  
|Long-term debt                                                              |  |                       |          |          |               |   | 228       |               |  |         | 1,102         |   |         |               | 24,597    |    |  |   |          |  
|Shareholders equity                                                        |  | $                     | 458,034   |          |               | $ | 428,732   |               |  | $       | 302,373       |   |         | $             | 247,949   |    |  | $ | 213,131   |  











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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations

















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12 /








Comparable (or same store) sales


Net merchandise margins


Operating margin


Store sales trends


Cash flow and liquidity (working capital)






Revenue Recognition


Inventory Valuation




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/ 13




Store Operating Lease Accounting


Evaluation of Long-Lived Assets


Evaluation of Insurance Reserves


Evaluation of Sublease Loss Charges


Income Taxes




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14 /


Litigation






|                                                                            |  |                               |       |   |               |  |       |              |  |  |       |  
|--------------------------------------------------------------------------- |  | ----------------------------- | ----- | - | ------------- |  | ----- | ------------ |  |  | ----- | -
|                                                                            |  | AS A PERCENTAGE OF NET SALES, |      
|                                                                            |  | FISCAL YEAR ENDED             |      
|                                                                            |  |                               |      
|                                                                            |  | Jan. 29, 2005                 |       |   | Jan. 31, 2004 |  |       | Feb. 1, 2003 | 
|                                                                            |  |                               |      
|Net sales                                                                   |  |                               | 100.0 | % |               |  | 100.0 | %            |  |  | 100.0 | %
|Cost of goods sold (including buying, distribution and occupancy
    costs) |  |                               | 63.6  |   |               |  | 64.2  |              |  |  | 65.5  |  
|                                                                           
|Gross margin                                                                |  |                               | 36.4  |   |               |  | 35.8  |              |  |  | 34.5  |  
|Selling, general and administrative expenses                                |  |                               | 22.6  |   |               |  | 23.5  |              |  |  | 24.9  |  
|                                                                           
|Operating income                                                            |  |                               | 13.8  |   |               |  | 12.3  |              |  |  | 9.6   |  
|Interest income/(expense), net                                              |  |                               | 0.2   |   |               |  | 0.1   |              |  |  | (0.1  | )
|                                                                           
|Income before income tax expense                                            |  |                               | 14.0  |   |               |  | 12.4  |              |  |  | 9.5   |  
|Income tax expense                                                          |  |                               | 5.3   |   |               |  | 4.7   |              |  |  | 3.6   |  
|                                                                           
|Net income                                                                  |  |                               | 8.7   | % |               |  | 7.7   | %            |  |  | 5.9   | %
|                                                                           
|                                                                           
|Number of stores open at end of period                                      |  |                               | 990   |   |               |  | 877   |              |  |  | 791   |  



|                                |  |                  |       |  |                  |  |       | 
|------------------------------- |  | ---------------- | ----- |  | ---------------- |  | ----- | 
|                                |  | January 29, 2005 |       |  | January 31, 2004 | 
|                                |  |                  |      
|PacSun stores                   |  |                  | 744   |  |                  |  | 677   | 
|Outlet stores                   |  |                  | 84    |  |                  |  | 79    | 
|d.e.m.o. stores                 |  |                  | 162   |  |                  |  | 121   | 
|                               
|Total stores                    |  |                  | 990   |  |                  |  | 877   | 
|                               
|                               
|Total square footage (in 000s) |  |                  | 3,448 |  |                  |  | 2,997 | 



| |                                        
| | ---------------------------------------
| | Fiscal 2004 Compared to Fiscal
    2003



| |          
| | ---------
| | Net Sales



|           |       |   |                 |                                                                                                                                                       
|---------- | ----- | - | --------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------
|          
|Amount    
|($million) |       |   | Attributable to
|          
|$          | 70.5  |   |                 | 7.3% increase in comparable store net sales in fiscal 2004
    compared to fiscal 2003.                                                               
|           | 67.0  |   |                 | 118 new stores opened in fiscal 2004 not yet included in the
    comparable store base.                                                               
|           | 37.3  |   |                 | Net sales from stores opened in fiscal 2003 while not yet
    included in the comparable store base                                                   
|           | 16.3  |   |                 | Other non-comparable sales (net sales from expanded or relocated
    stores not yet included in the comparable store base and
    internet net sales).
|           | (2.8  | ) |                 | 5 closed stores in fiscal 2004 and 4 closed stores in fiscal
    2003.                                                                                
|$          | 188.3 |   |                 | Total                                                                                                                                                 





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/ 15










| |             
| | ------------
| | Gross Margin





| |                                                 
| | ------------------------------------------------
| | Selling, General and
    Administrative Expenses



|  |      |    |                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|- | ---- | -- | --------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
|% |      |    | Attributable to
| 
|  | (0.6 | )% |                 | Decrease in general and administrative expenses as a percentage
    of net sales to 5.1% ($62.7 million) for fiscal 2004 from
    5.7% ($58.8 million) for fiscal 2003, primarily due to a
    0.4% reduction in each of restricted stock expenses and general
    and administrative salaries and bonuses as a percentage of net
    sales, partially offset by an increase in other general and
    administrative expenses of 0.2% as a percentage of net sales.
    Restricted stock expenses were $1.3 million in fiscal 2004
    as compared to $5.1 million in fiscal 2003 (see Note 9
    to the consolidated financial statements). General and
    administrative salaries and bonuses, while increased in absolute
    dollars, were lower as a percentage of net sales in fiscal 2004
    due to leveraging these costs over higher total sales.
|  | (0.3 | )% |                 | Decrease in store closing expenses to $3.0 million for
    fiscal 2004 as compared to $6.2 million for fiscal 2003,
    primarily due to the execution of two subleases related to our
    former Manhattan store location and the execution of a lease
    termination agreement during the first half of fiscal 2004
    related to our former corporate offices (see Note 7 to the
    consolidated financial statements).                                                                                                                                                                                                                                                                                                                                                                                                                               
|  | 0.0  | %  |                 | Other store expenses, including store payroll, depreciation and
    selling expenses, were flat as a percentage of net sales between
    fiscal 2004 and fiscal 2003. Total store expenses were
    $212.2 million for fiscal 2004 versus $179.4 million
    for fiscal 2003, an increase of $32.8 million. The increase
    in absolute dollars was primarily due to the addition of
    113 net new stores in fiscal 2004. These expenses remained
    steady as a percentage of net sales in fiscal 2004 due to
    leveraging these costs over higher total sales.                                                                                                                                                                                                                                                                                      
|  | (0.9 | )% |                 | Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       



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16 /




| |                    
| | -------------------
| | Net Interest Income





| |                   
| | ------------------
| | Income Tax Expense





| |                                        
| | ---------------------------------------
| | Fiscal 2003 Compared to Fiscal
    2002



| |          
| | ---------
| | Net Sales



|           |       |   |                 |                                                                                                                                                       
|---------- | ----- | - | --------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------
|          
|Amount    
|($million) |       |   | Attributable to
|          
|$          | 104.3 |   |                 | 13.1% increase in comparable store net sales in fiscal 2003
    compared to fiscal 2002.                                                              
|           | 49.2  |   |                 | 90 new stores opened in fiscal 2003 not yet included in the
    comparable store base.                                                                
|           | 25.1  |   |                 | Net sales from stores opened in fiscal 2002 while not yet
    included in the comparable store base.                                                  
|           | 20.4  |   |                 | Other non-comparable sales (net sales from expanded or relocated
    stores not yet included in the comparable store base and
    internet net sales).
|           | (4.7  | ) |                 | 4 closed stores in fiscal 2003 and 12 closed stores in fiscal
    2002.                                                                               
|$          | 194.3 |   |                 | Total                                                                                                                                                 







| |             
| | ------------
| | Gross Margin





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/ 17




| |                                                 
| | ------------------------------------------------
| | Selling, General and
    Administrative Expenses



|  |      |    |                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|- | ---- | -- | --------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
|% |      |    | Attributable to
| 
|  | (1.1 | )% |                 | Decrease in store payroll as a percentage of net sales to 11.3%
    ($117.8 million) for fiscal 2003 from 12.4%
    ($105.0 million) for fiscal 2002, primarily due to
    leveraging these costs over higher total sales. Store payroll
    increased in absolute dollars primarily due to the addition of
    90 new stores in fiscal 2003.                                                                                                                                                                     
|  | (0.7 | )% |                 | Decrease in other store expenses as a percentage of net sales to
    5.0% ($53.9 million) for fiscal 2003 from 5.7%
    ($49.9 million) for fiscal 2002, primarily due to
    leveraging these costs over higher total sales. The
    $4.0 million increase in other store expenses in absolute
    dollars was primarily due to increased depreciation expense as a
    result of the addition of 90 new stores during fiscal 2003.                                                                              
|  | (0.2 | )% |                 | Decrease in store closing, expansion and relocation expenses to
    $6.2 million for fiscal 2003 as compared to
    $6.5 million for fiscal 2002, primarily due to closing
    fewer store in fiscal 2003 (4) than in fiscal 2002 (12),
    partially offset by increased sublease loss charges related to
    our former corporate offices and former Manhattan store location.                                                                                                                                  
|  | 0.6  | %  |                 | Increase in general and administrative expenses to
    $58.8 million for fiscal 2003 from $42.4 million for
    fiscal 2002, primarily due to an $11.3 million increase in
    general and administrative salaries and bonuses due to increased
    headcount and improved earnings in fiscal 2003 as compared to
    fiscal 2002, as well as the $5.1 million in restricted
    stock expense related to two grants to the Chief Executive
    Officer (see Note 9 to the consolidated financial
    statements).
|  | (1.4 | )% |                 | Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             



| |                                 
| | --------------------------------
| | Net Interest Income/
    Expense





| |                   
| | ------------------
| | Income Tax Expense









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18 /




| |                     
| | --------------------
| | Operating Cash Flows



|           |       |   |                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|---------- | ----- | - | --------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|          
|Amount    
|($million) |       |   | Attributable to
|          
|$          | (18.2 | ) |                 | Decrease in cash flows from accrued liabilities, primarily due
    to reduced accruals for payroll ($4.3 million), restricted
    stock ($4.2 million), and sublease loss accruals
    ($3.5 million) in fiscal 2004 as compared to fiscal 2003.
    Payroll accruals were lower as a result of the payment of the
    $4.0 million Auden settlement (see Note 7 to the
    consolidated financial statements). Restricted stock accruals
    were lower due to the Chief Executive Officer receiving 100% of
    one restricted stock grant and 75% of another restricted stock
    grant during fiscal 2004 (see Note 9 to the consolidated
    financial statements). Sublease loss accruals were lower due the
    execution of certain agreements with former landlords (see
    Note 7 to the consolidated financial statements).
|           | (14.6 | ) |                 | Decrease in income taxes and deferred income taxes, primarily
    due to the timing of fiscal 2004 estimated income tax payments
    in relation to the actual income tax liability as compared to
    the same items for fiscal 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|           | (13.1 | ) |                 | Decrease in accounts payable leverage. Accounts payable as a
    percentage of inventories decreased to 22.1% at January 29,
    2005, as compared to 26.2% at January 31, 2004, primarily
    due to timing of payments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|           | (7.6  | ) |                 | Decrease in tax benefits related to employee exercises of stock
    options due to fewer exercises in fiscal 2004 as compared to
    fiscal 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|           | (4.1  | ) |                 | Other items netting to a decrease in cash provided by operating
    activities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|           | 26.7  |   |                 | Increase in net income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|           | 6.4   |   |                 | Increase in deferred lease incentives, primarily due to
    increased landlord allowances on the 113 net new stores and
    35 relocated/expanded stores opened in fiscal 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|           | 6.5   |   |                 | Increase in depreciation expense, primarily due to the addition
    of 113 net new stores during fiscal 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|$          | (18.0 | ) |                 | Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  



| |                
| | ---------------
| | Working Capital



|           |       |   |                 |                                                                                                                                                                                           
|---------- | ----- | - | --------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|          
|Amount    
|($million) |       |   | Attributable to
|          
|$          | 27.2  |   |                 | Increase in inventories, net of accounts payable, primarily due
    to square footage growth of 15%.                                                                                      
|           | 9.0   |   |                 | Decrease in income taxes payable due to the amount and timing of
    fiscal 2004 estimated income tax payments as compared to the
    same items for fiscal 2003.                         
|           | 5.9   |   |                 | Decrease in accrued liabilities, primarily due to decreased
    accruals for payroll, restricted stock expenses, and sublease
    loss charges in fiscal 2004 as compared to fiscal 2003. 
|           | 4.7   |   |                 | Other items netting to a working capital increase.                                                                                                                                        
|           | (32.3 | ) |                 | Decrease in cash and short-term investments, primarily due to
    the $109.5 million in stock repurchases during fiscal 2004,
    offset by other cash activity (see cash flow statement).
|$          | 14.5  |   |                 | Total                                                                                                                                                                                     



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/ 19




| |                     
| | --------------------
| | Investing Cash Flows



|           |          |   |                 |                                                                                                
|---------- | -------- | - | --------------- | -----------------------------------------------------------------------------------------------
|          
|Amount    
|($million) |          |   | Attributable to
|          
|$          | (1,200.1 | ) |                 | Purchases of short-term investments (see Note 1 to the
    consolidated financial statements). 
|           | 1,187.1  |   |                 | Maturities of short-term investments (see Note 1 to the
    consolidated financial statements).
|           | (60.1    | ) |                 | Capital expenditures for 118 new stores and 35
    expansions/relocations in fiscal 2004.      
|           | (13.4    | ) |                 | Maintenance capital expenditures on existing stores.                                           
|           | (5.3     | ) |                 | Construction costs of new, expanded and relocated stores to open
    in fiscal 2005.           
|           | (3.2     | ) |                 | Other capital expenditures, including computer hardware and
    software.                      
|$          | (95.0    | ) |                 | Total                                                                                          



| |                                
| | -------------------------------
| | Fiscal 2004 New Store
    Costs





| |                                
| | -------------------------------
| | Future Capital
    Expenditures







|                                          |  |      |        |  |      |   |        |      |  |   |         |  |  |   |         | 
|----------------------------------------- |  | ---- | ------ |  | ---- | - | ------ | ---- |  | - | ------- |  |  | - | ------- | 
|                                          |  |      |       
|                                          |  | 2005 |        |  | 2006 |   |        | 2007 |  |   | Total   | 
|                                          |  |      |       
|Gross new and relocated stores            |  |      | 155    |  |      |   | 160    |      |  |   | 185     |  |  |   | 500     | 
|Estimated capital expenditures (in 000s) |  | $    | 89,000 |  |      | $ | 98,000 |      |  | $ | 134,000 |  |  | $ | 321,000 | 







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20 /




| |                     
| | --------------------
| | Financing Cash Flows



Common Stock Repurchase and Retirement






| |                
| | ---------------
| | Credit Facility







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/ 21




| |                            
| | ---------------------------
| | Contractual
    Obligations



|                            |  |                        |       |           |        |   |       |           |           |   |           |  |  |         |       |  |  |   |       | 
|--------------------------- |  | ---------------------- | ----- | --------- | ------ | - | ----- | --------- | --------- | - | --------- |  |  | ------- | ----- |  |  | - | ----- | 
|                            |  | PAYMENTS DUE BY PERIOD |      
|                            |  |                        |      
|                            |  |                        |       | Less than |        |   |       |           | More than |  
|(in millions)               |  | Total                  |       |           | 1 Year |   |       | 1-3 Years |           |   | 3-5 Years |  |  | 5 Years |      
|                            | 
|Contractual Obligations     |  |                        |       |           |        |   |       |           |           |   |           |  |  |         |       |  |  |   |       | 
|Operating lease obligations |  | $                      | 678.7 |           |        | $ | 92.9  |           |           | $ | 186.1     |  |  | $       | 170.4 |  |  | $ | 229.3 | 
|Capital lease obligations   |  |                        | 1.8   |           |        |   | 1.4   |           |           |   | 0.4       |  |  |         |      |  |  |   |      | 
|Long-term debt obligations  |  |                        | 0.2   |           |        |   | 0.2   |           |           |   |          |  |  |         |      |  |  |   |      | 
|Letters of credit           |  |                        | 13.1  |           |        |   | 13.1  |           |           |   |          |  |  |         |      |  |  |   |      | 
|                            |  |                       
|Total                       |  | $                      | 693.8 |           |        | $ | 107.6 |           |           | $ | 186.5     |  |  | $       | 170.4 |  |  | $ | 229.3 | 
|                            |  |                       
|                            |  |                       



Operating Leases






| |                              
| | -----------------------------
| | NEW ACCOUNTING PRONOUNCEMENTS





| |          
| | ---------
| | INFLATION





| |                                  
| | ---------------------------------
| | SEASONALITY AND QUARTERLY RESULTS





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22 /






| |             
| | ------------
| | RISK FACTORS

The products we sell are subject to significant
merchandising/fashion sensitivity.


We may not be able to manage our planned expansion
effectively.


Our customers may not accept our proprietary brand
merchandise.


Our comparable store net sales results can fluctuate
significantly.


We could lose key personnel at any time.




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/ 23




Our dependence on a single distribution facility exposes us
to significant operational risks.


Selling merchandise over the internet carries particular
risks that can distract attention from our core businesses.


Any terrorist attacks or war/threat of war could
significantly affect consumer spending.


Our foreign sources of production may not always be
reliable.


Any failure by us to maintain credit facility financial
covenants could have a material adverse impact on our
business.




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24 /




The expensing of stock options will reduce our future
reported earnings.


Adverse outcomes of litigation matters could significantly
affect our operational results.


Our stock price can fluctuate significantly.









|         |                                                           
|-------- | ----------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures About Market Risk







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/ 25







|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data








|        |                                                                                           
|------- | ------------------------------------------------------------------------------------------
|Item 9. | Changes in, and Disagreements with, Accountants on Accounting
    and Financial Disclosure








|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures









Internal Control 
Integrated Framework Internal
Control  Integrated Framework,










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26 /






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/ 27





Report of Independent Registered Public Accounting Firm








Managements Report on Internal Control
over Financial Reporting Internal Control  Integrated Framework








Internal
Control  Integrated Framework Internal Control  Integrated
Framework












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28 /







|         |                  
|-------- | -----------------
|Item 9B. | Other Information








Part III







|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant








|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation








|         |                                                                   
|-------- | ------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management








|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions





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/ 29







|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services






Part IV







|         |                                           
|-------- | ------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules



|        |                                                                                                                                                                     
|------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a)  1. | The financial statements listed in the Index to
    Consolidated Financial Statements at page F-1 are filed as
    a part of this report.                         
|       
|2.      | Financial statement schedules are omitted because they are not
    applicable or the required information is shown in the financial
    statements or notes thereto.
|       
|3.      | Exhibits included or incorporated herein:                                                                                                                           





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30 /





Signatures






| |                                    
| | -----------------------------------
| | PACIFIC SUNWEAR OF CALIFORNIA, INC.



| |     |                    
| | --- | -------------------
| | By: | /s/ Seth R. Johnson

| |                        
| | -----------------------
| |                        
| | Seth R. Johnson        
| | Chief Executive Officer





|                                                       |  |                                                                                                    |  |               |  | 
|------------------------------------------------------ |  | -------------------------------------------------------------------------------------------------- |  | ------------- |  | 
|                                                       |  | Title                                                                                              |  | Date         
|Signature                                              |  |                                                                                                    |  |              
|                                                       |  |                                                                                                    |  |              
|                                                      
|/s/ Seth R. JohnsonSeth
    R. Johnson                 |  | Director and Chief Executive Officer (Principal Executive
    Officer)                             |  | April 8, 2005
|                                                      
|                                                      
|/s/ Greg H. WeaverGreg
    H. Weaver                   |  | Executive Chairman of the Board                                                                    |  | April 8, 2005
|                                                      
|/s/ Gerald M. ChaneyGerald
    M. Chaney               |  | Senior Vice President and Chief Financial Officer (Principal
    Financial and Accounting Officer) |  | April 8, 2005
|                                                      
|/s/ Julius
    Jensen IIIJulius
    Jensen III         |  | Director                                                                                           |  | April 8, 2005
|                                                      
|/s/ Pearson C.
    Cummin IIIPearson
    C. Cummin III |  | Director                                                                                           |  | April 8, 2005
|                                                      
|/s/ Sally Frame KasaksSally
    Frame Kasaks           |  | Director                                                                                           |  | April 8, 2005
|                                                      
|/s/ Peter StarrettPeter
    Starrett                   |  | Director                                                                                           |  | April 8, 2005
|                                                      
|/s/ Thomas M. MurnaneThomas
    M. Murnane             |  | Director                                                                                           |  | April 8, 2005
|                                                      
|/s/ Michael GoldsteinMichael
    Goldstein             |  | Director                                                                                           |  | April 8, 2005



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##### Table of Contents



F-1 /


Pacific Sunwear of California, Inc.







Index to Consolidated Financial Statements


YEARS ENDED JANUARY 29, 2005, JANUARY 31, 2004, AND
FEBRUARY 1, 2003:


CONSOLIDATED FINANCIAL STATEMENTS:


|                                                                                                                                                         |  |    
|-------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---
|Report of Independent Registered Public Accounting Firm                                                                                                  |  | F-2
|                                                                                                                                                        
|Consolidated Balance Sheets as of January 29, 2005 and
    January 31, 2004 (as restated)                                                                |  | F-3
|                                                                                                                                                        
|Consolidated Statements of Income and Comprehensive Income for
    each of the three fiscal years in the period ended
    January 29, 2005 (as restated) |  | F-4
|                                                                                                                                                        
|Consolidated Statements of Shareholders Equity for each of
    the three fiscal years in the period ended January 29, 2005
    (as restated)            |  | F-5
|                                                                                                                                                        
|Consolidated Statements of Cash Flows for each of the three
    fiscal years in the period ended
    January 29, 2005 (as restated)                      |  | F-6
|                                                                                                                                                        
|Notes to Consolidated Financial Statements                                                                                                               |  | F-7



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/ F-2


Report of Independent Registered Public Accounting Firm














Internal Control 
Integrated Framework












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##### Table of Contents



F-3 /


Pacific Sunwear of California, Inc.


Consolidated Balance Sheets


|                                                                                                                                           |                             |                  |          |         |                  |   |          |         | 
|------------------------------------------------------------------------------------------------------------------------------------------ | --------------------------- | ---------------- | -------- | ------- | ---------------- | - | -------- | ------- | 
|                                                                                                                                           |                             |                  |         
|(in thousands, except per share amounts)                                                                                                   |                             | January 29, 2005 |          |         | January 31, 2004 |  
|                                                                                                                                           |                             | (as restated,    |         
|                                                                                                                                           |                             |                  |          |        
|                                                                                                                                           |                             | see Note 2)      |         
|ASSETS                                                                                                                                    
|CURRENT ASSETS:                                                                                                                            |                             |                  |          |         |                  |   |          |        
|Cash and cash equivalents                                                                                                                  |                             | $                | 64,308   |         |                  | $ | 109,640  |        
|Short-term investments                                                                                                                     |                             |                  | 79,223   |         |                  |   | 66,235   |        
|Accounts receivable                                                                                                                        |                             |                  | 8,129    |         |                  |   | 5,194    |        
|Merchandise inventories                                                                                                                    |                             |                  | 175,081  |         |                  |   | 147,751  |        
|Prepaid expenses, includes $12,476 and $10,711 of prepaid rent,
    respectively                                                           |                             |                  | 19,943   |         |                  |   | 16,492   |        
|Deferred income taxes                                                                                                                      |                             |                  | 6,134    |         |                  |   | 8,225    |        
|                                                                                                                                           |                             |                 
|                                                                                                                                           | Total current assets        |                  |          | 352,818 |                  |   |          | 353,537 | 
|PROPERTY AND EQUIPMENT:                                                                                                                    |                             |                  |          |         |                  |   |          |        
|Land                                                                                                                                       |                             |                  | 12,156   |         |                  |   | 12,156   |        
|Buildings and building improvements                                                                                                        |                             |                  | 26,707   |         |                  |   | 26,686   |        
|Leasehold improvements                                                                                                                     |                             |                  | 258,739  |         |                  |   | 217,251  |        
|Furniture, fixtures and equipment                                                                                                          |                             |                  | 206,143  |         |                  |   | 173,550  |        
|                                                                                                                                           |                             |                 
|Total property and equipment                                                                                                               |                             |                  | 503,745  |         |                  |   | 429,643  |        
|Less accumulated depreciation and amortization                                                                                             |                             |                  | (199,523 | )       |                  |   | (156,774 | )      
|                                                                                                                                           |                             |                 
|                                                                                                                                           | Net property and equipment  |                  |          | 304,222 |                  |   |          | 272,869 | 
|OTHER ASSETS:                                                                                                                              |                             |                  |          |         |                  |   |          |        
|Goodwill                                                                                                                                   |                             |                  | 6,492    |         |                  |   | 6,492    |        
|Deferred compensation and other assets                                                                                                     |                             |                  | 14,246   |         |                  |   | 11,589   |        
|                                                                                                                                           |                             |                 
|                                                                                                                                           | Total other assets          |                  |          | 20,738  |                  |   |          | 18,081  | 
|                                                                                                                                           |                             |                 
|TOTAL ASSETS                                                                                                                               |                             | $                | 677,778  |         |                  | $ | 644,487  |        
|                                                                                                                                           |                             |                 
|                                                                                                                                           |                             |                 
|                                                                                                                                          
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                      
|CURRENT LIABILITIES:                                                                                                                       |                             |                  |          |         |                  |   |          |        
|Accounts payable                                                                                                                           |                             | $                | 38,753   |         |                  | $ | 38,668   |        
|Accrued liabilities                                                                                                                        |                             |                  | 49,028   |         |                  |   | 54,966   |        
|Current portion of capital lease obligations                                                                                               |                             |                  | 1,308    |         |                  |   | 1,008    |        
|Current portion of long-term debt                                                                                                          |                             |                  | 228      |         |                  |   | 878      |        
|Income taxes payable                                                                                                                       |                             |                  | 5,993    |         |                  |   | 15,019   |        
|                                                                                                                                           |                             |                 
|                                                                                                                                           | Total current liabilities   |                  |          | 95,310  |                  |   |          | 110,539 | 
|LONG-TERM LIABILITIES:                                                                                                                     |                             |                  |          |         |                  |   |          |        
|Long-term debt, net of current portion                                                                                                     |                             |                  |         |         |                  |   | 228      |        
|Long-term capital lease obligations, net of current portion                                                                                |                             |                  | 403      |         |                  |   | 1,227    |        
|Deferred lease incentives                                                                                                                  |                             |                  | 67,683   |         |                  |   | 56,996   |        
|Deferred rent                                                                                                                              |                             |                  | 26,826   |         |                  |   | 24,325   |        
|Deferred compensation                                                                                                                      |                             |                  | 13,298   |         |                  |   | 10,925   |        
|Deferred income taxes                                                                                                                      |                             |                  | 16,132   |         |                  |   | 11,515   |        
|Other long-term liabilities                                                                                                                |                             |                  | 92       |         |                  |   |         |        
|                                                                                                                                           |                             |                 
|                                                                                                                                           | Total long-term liabilities |                  |          | 124,434 |                  |   |          | 105,216 | 
|Commitments and contingencies (Note 7)                                                                                                     |                             |                  |          |         |                  |   |          |        
|SHAREHOLDERS EQUITY:                                                                                                                      |                             |                  |          |         |                  |   |          |        
|Preferred stock, $.01 par value; 5,000,000 shares
    authorized; none issued                                                              |                             |                  |         |         |                  |   |         |        
|Common stock, $.01 par value; 170,859,375 shares
    authorized; 74,916,773 and 78,351,302 shares issued and
    outstanding, respectively |                             |                  | 749      |         |                  |   | 784      |        
|Additional paid-in capital                                                                                                                 |                             |                  | 61,310   |         |                  |   | 138,877  |        
|Retained earnings                                                                                                                          |                             |                  | 395,975  |         |                  |   | 289,071  |        
|                                                                                                                                           |                             |                 
|                                                                                                                                           | Total shareholders equity  |                  |          | 458,034 |                  |   |          | 428,732 | 
|                                                                                                                                           |                             |                 
|TOTAL LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                 |                             | $                | 677,778  |         |                  | $ | 644,487  |        
|                                                                                                                                           |                             |                 
|                                                                                                                                           |                             |                 





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##### Table of Contents



/ F-4


Pacific Sunwear of California, Inc.


Consolidated Statements of Income and Comprehensive Income


|                                                                           |  |                   |            |  |                  |   |            |                  |  |   |            |  
|-------------------------------------------------------------------------- |  | ----------------- | ---------- |  | ---------------- | - | ---------- | ---------------- |  | - | ---------- | -
|                                                                           |  | FISCAL YEAR ENDED |           
|                                                                           |  |                   |           
|                                                                           |  |                   |           
|(in thousands, except per share amounts)                                   |  | January 29, 2005  |            |  | January 31, 2004 |   |            | February 1, 2003 | 
|                                                                           |  | (as restated,     |            |  | (as restated,    |  
|                                                                           |  |                   |            |  |                  |   |           
|                                                                           |  | see Note 2)       |            |  | see Note 2)      |  
|Net sales                                                                  |  | $                 | 1,229,762  |  |                  | $ | 1,041,456  |                  |  | $ | 847,150    |  
|Cost of goods sold, including buying, distribution and occupancy
    costs |  |                   | 781,828    |  |                  |   | 668,807    |                  |  |   | 554,829    |  
|                                                                           |  |                  
|Gross margin                                                               |  |                   | 447,934    |  |                  |   | 372,649    |                  |  |   | 292,321    |  
|Selling, general and administrative expenses                               |  |                   | 277,921    |  |                  |   | 244,422    |                  |  |   | 211,101    |  
|                                                                           |  |                  
|Operating income                                                           |  |                   | 170,013    |  |                  |   | 128,227    |                  |  |   | 81,220     |  
|Interest income/(expense), net                                             |  |                   | 1,889      |  |                  |   | 732        |                  |  |   | (594       | )
|                                                                           |  |                  
|Income before income tax expense                                           |  |                   | 171,902    |  |                  |   | 128,959    |                  |  |   | 80,626     |  
|Income tax expense                                                         |  |                   | 64,998     |  |                  |   | 48,759     |                  |  |   | 30,960     |  
|                                                                           |  |                  
|Net income                                                                 |  | $                 | 106,904    |  |                  | $ | 80,200     |                  |  | $ | 49,666     |  
|                                                                           |  |                  
|                                                                           |  |                  
|Comprehensive income                                                       |  | $                 | 106,904    |  |                  | $ | 80,200     |                  |  | $ | 49,666     |  
|                                                                           |  |                  
|                                                                           |  |                  
|Net income per share, basic                                                |  | $                 | 1.41       |  |                  | $ | 1.05       |                  |  | $ | 0.67       |  
|                                                                           |  |                  
|                                                                           |  |                  
|Net income per share, diluted                                              |  | $                 | 1.38       |  |                  | $ | 1.02       |                  |  | $ | 0.66       |  
|                                                                           |  |                  
|                                                                           |  |                  
|Weighted average shares outstanding, basic                                 |  |                   | 75,825,897 |  |                  |   | 76,595,758 |                  |  |   | 73,931,520 |  
|Weighted average shares outstanding, diluted                               |  |                   | 77,464,115 |  |                  |   | 78,849,651 |                  |  |   | 75,146,991 |  





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##### Table of Contents



F-5 /


Pacific Sunwear of California, Inc.


Consolidated Statements of Shareholders Equity


|                                                                                                            |  |        |            |   |        |   |     |            |  |   |          |   |  |       |         |   |  |   |          |  
|----------------------------------------------------------------------------------------------------------- |  | ------ | ---------- | - | ------ | - | --- | ---------- |  | - | -------- | - |  | ----- | ------- | - |  | - | -------- | -
|                                                                                                            |  |        |           
|                                                                                                            |  | Common |            |   | Common |   |     | Additional |  |   |         
|                                                                                                            |  | Stock  |            |   | Stock  |   |     | Paid-In    |  |   | Retained |   |  |      
|(in thousands, except share amounts)                                                                        |  | Shares |            |   | Amount |   |     | Capital    |  |   | Earnings |   |  | Total |        
|                                                                                                            | 
|BALANCE, February 2, 2002 (as previously reported)                                                          |  |        | 73,733,630 |   |        | $ | 737 |            |  | $ | 88,007   |   |  | $     | 159,211 |   |  | $ | 247,955  |  
|Prior period adjustment (Note 2)                                                                            |  |        |           |   |        |   |    |            |  |   |         |   |  |       | (6      | ) |  |   | (6       | )
|                                                                                                           
|BALANCE, February 2, 2002 (as restated)                                                                     |  |        | 73,733,630 |   |        |   | 737 |            |  |   | 88,007   |   |  |       | 159,205 |   |  |   | 247,949  |  
|Exercise of stock options and shares sold under employee stock
    purchase plan and restricted stock grant |  |        | 500,704    |   |        |   | 5   |            |  |   | 3,439    |   |  |       |        |   |  |   | 3,444    |  
|Cancellation of fractional shares due to 3-for-2 stock split                                                |  |        | (1,188     | ) |        |   |    |            |  |   | (14      | ) |  |       |        |   |  |   | (14      | )
|Restricted stock award, vesting of shares                                                                   |  |        |           |   |        |   |    |            |  |   | 291      |   |  |       |        |   |  |   | 291      |  
|Tax benefits related to exercise of stock options                                                           |  |        |           |   |        |   |    |            |  |   | 1,038    |   |  |       |        |   |  |   | 1,038    |  
|Net income (as restated, see Note 2)                                                                        |  |        |           |   |        |   |    |            |  |   |         |   |  |       | 49,666  |   |  |   | 49,666   |  
|                                                                                                           
|BALANCE, February 1, 2003 (as restated, see Note 2)                                                         |  |        | 74,233,146 |   |        |   | 742 |            |  |   | 92,761   |   |  |       | 208,871 |   |  |   | 302,374  |  
|Exercise of stock options and shares sold under employee stock
    purchase plan                            |  |        | 4,119,753  |   |        |   | 42  |            |  |   | 30,339   |   |  |       |        |   |  |   | 30,381   |  
|Cancellation of fractional shares due to 3-for-2 stock split                                                |  |        | (1,597     | ) |        |   |    |            |  |   | (33      | ) |  |       |        |   |  |   | (33      | )
|Tax benefits related to exercise of stock options                                                           |  |        |           |   |        |   |    |            |  |   | 15,810   |   |  |       |        |   |  |   | 15,810   |  
|Net income (as restated, see Note 2)                                                                        |  |        |           |   |        |   |    |            |  |   |         |   |  |       | 80,200  |   |  |   | 80,200   |  
|                                                                                                           
|BALANCE, January 31, 2004 (as restated, see Note 2)                                                         |  |        | 78,351,302 |   |        |   | 784 |            |  |   | 138,877  |   |  |       | 289,071 |   |  |   | 428,732  |  
|Exercise of stock options and shares sold under employee stock
    purchase plan                            |  |        | 1,829,671  |   |        |   | 18  |            |  |   | 18,176   |   |  |       |        |   |  |   | 18,194   |  
|Repurchase and retirement of common stock                                                                   |  |        | (5,264,200 | ) |        |   | (53 | )          |  |   | (109,449 | ) |  |       |        |   |  |   | (109,502 | )
|Restricted stock award, vesting of shares                                                                   |  |        |           |   |        |   |    |            |  |   | 5,471    |   |  |       |        |   |  |   | 5,471    |  
|Tax benefits related to exercise of stock options                                                           |  |        |           |   |        |   |    |            |  |   | 8,235    |   |  |       |        |   |  |   | 8,235    |  
|Net income                                                                                                  |  |        |           |   |        |   |    |            |  |   |         |   |  |       | 106,904 |   |  |   | 106,904  |  
|                                                                                                           
|BALANCE, January 29, 2005                                                                                   |  |        | 74,916,773 |   |        | $ | 749 |            |  | $ | 61,310   |   |  | $     | 395,975 |   |  | $ | 458,034  |  
|                                                                                                           
|                                                                                                           





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##### Table of Contents



/ F-6


Pacific Sunwear of California, Inc.


Consolidated Statements of Cash Flows


|                                                                                                                                 |                                                   |                   |            |                  |               |   |                  |               |   |   |         |         |  
|-------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------- | ----------------- | ---------- | ---------------- | ------------- | - | ---------------- | ------------- | - | - | ------- | ------- | -
|                                                                                                                                 |                                                   | FISCAL YEAR ENDED |           
|                                                                                                                                 |                                                   |                   |           
|                                                                                                                                 |                                                   |                   |            | January 31, 2004 |               |   | February 1, 2003 |              
|                                                                                                                                 |                                                   | January 29,       |            |                  | (as restated, |   |                  | (as restated, |  
|(in thousands                                                                                                                    |                                                   | 2005              |            |                  | see Note 2)   |   |                  | see Note 2)   |  
|                                                                                                                                 |                                                  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                                                            |                                                   |                   |            |                  |               |   |                  |               |   |   |         |        
|Net income                                                                                                                       |                                                   | $                 | 106,904    |                  |               | $ | 80,200           |               |   | $ | 49,666  |        
|Adjustments to reconcile net income to net cash provided by
    operating activities:                                            |                                                   |                   |            |                  |               |   |                  |               |   |   |         |        
|                                                                                                                                 | Depreciation and amortization                     |                   |            | 51,685           |               |   |                  | 45,149        |   |   |         | 40,254  |  
|                                                                                                                                 | Loss on disposal of equipment                     |                   |            | 3,692            |               |   |                  | 2,753         |   |   |         | 5,184   |  
|                                                                                                                                 | Tax benefits related to exercise of stock options |                   |            | 8,235            |               |   |                  | 15,810        |   |   |         | 1,038   |  
|                                                                                                                                 | Change in operating assets and liabilities:       |                   |            |                  |               |   |                  |               |   |   |         |         |  
|                                                                                                                                 | Accounts receivable                               |                   |            | (2,935           | )             |   |                  | (2,278        | ) |   |         | 128     |  
|                                                                                                                                 | Merchandise inventories                           |                   |            | (27,330          | )             |   |                  | (24,318       | ) |   |         | (20,921 | )
|                                                                                                                                 | Prepaid expenses                                  |                   |            | (3,451           | )             |   |                  | (1,621        | ) |   |         | (1,949  | )
|                                                                                                                                 | Deferred compensation and other assets            |                   |            | (284             | )             |   |                  | 1,344         |   |   |         | 231     |  
|                                                                                                                                 | Accounts payable                                  |                   |            | 85               |               |   |                  | 10,212        |   |   |         | (9,037  | )
|                                                                                                                                 | Accrued liabilities                               |                   |            | (851             | )             |   |                  | 17,313        |   |   |         | 16,773  |  
|                                                                                                                                 | Income taxes payable and deferred income taxes    |                   |            | (2,318           | )             |   |                  | 12,279        |   |   |         | 2,191   |  
|                                                                                                                                 | Deferred lease incentives                         |                   |            | 10,687           |               |   |                  | 4,273         |   |   |         | 5,522   |  
|                                                                                                                                 | Deferred rent                                     |                   |            | (1,199           | )             |   |                  | (112          | ) |   |         | 436     |  
|                                                                                                                                 | Other liabilities                                 |                   |            | 92               |               |   |                  |              |   |   |         | (28     | )
|                                                                                                                                
|Net cash provided by operating activities                                                                                        |                                                   |                   | 143,012    |                  |               |   | 161,004          |               |   |   | 89,488  |        
|                                                                                                                                
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                                                            |                                                   |                   |            |                  |               |   |                  |               |   |   |         |        
|Purchases of property and equipment                                                                                              |                                                   |                   | (81,992    | )                |               |   | (49,568          | )             |   |   | (53,288 | )      
|Purchases of available-for-sale short-term investments                                                                           |                                                   |                   | (1,159,375 | )                |               |   | (436,875         | )             |   |   |        |        
|Maturities of available-for-sale short-term investments                                                                          |                                                   |                   | 1,150,125  |                  |               |   | 403,675          |               |   |   |        |        
|Purchases of held-to-maturity short-term investments                                                                             |                                                   |                   | (40,695    | )                |               |   | (33,035          | )             |   |   |        |        
|Maturities of held-to-maturity short-term investments                                                                            |                                                   |                   | 36,957     |                  |               |   |                 |               |   |   |        |        
|                                                                                                                                
|Net cash used in investing activities                                                                                            |                                                   |                   | (94,980    | )                |               |   | (115,803         | )             |   |   | (53,288 | )      
|                                                                                                                                
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                                                            |                                                   |                   |            |                  |               |   |                  |               |   |   |         |        
|Repurchase and retirement of common stock                                                                                        |                                                   |                   | (109,502   | )                |               |   |                 |               |   |   |        |        
|Proceeds from exercise of stock options                                                                                          |                                                   |                   | 18,194     |                  |               |   | 30,381           |               |   |   | 3,444   |        
|Principal payments under capital lease obligations                                                                               |                                                   |                   | (1,178     | )                |               |   | (1,522           | )             |   |   | (824    | )      
|Repayments of long-term debt obligations                                                                                         |                                                   |                   | (878       | )                |               |   | (825             | )             |   |   | (25,504 | )      
|Cash paid in lieu of fractional shares due to 3-for-2 stock split                                                                |                                                   |                   |           |                  |               |   | (33              | )             |   |   | (14     | )      
|                                                                                                                                
|Net cash (used in)/provided by financing activities                                                                              |                                                   |                   | (93,364    | )                |               |   | 28,001           |               |   |   | (22,898 | )      
|                                                                                                                                
|                                                                                                                                
|NET (DECREASE)/ INCREASE IN CASH AND CASH EQUIVALENTS:                                                                           |                                                   |                   | (45,332    | )                |               |   | 73,202           |               |   |   | 13,302  |        
|CASH AND CASH EQUIVALENTS, beginning of fiscal year                                                                              |                                                   |                   | 109,640    |                  |               |   | 36,438           |               |   |   | 23,136  |        
|                                                                                                                                
|CASH AND CASH EQUIVALENTS, end of fiscal year                                                                                    |                                                   | $                 | 64,308     |                  |               | $ | 109,640          |               |   | $ | 36,438  |        
|                                                                                                                                
|                                                                                                                                
|                                                                                                                                
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                                                                               |                                                   |                   |            |                  |               |   |                  |               |   |   |         |        
|Cash paid for interest                                                                                                           |                                                   | $                 | 142        |                  |               | $ | 226              |               |   | $ | 944     |        
|Cash paid for income taxes                                                                                                       |                                                   | $                 | 59,081     |                  |               | $ | 20,670           |               |   | $ | 27,731  |        
|                                                                                                                                
|SUPPLEMENTAL DISCLOSURES OF NON-CASH TRANSACTIONS:                                                                               |                                                   |                   |            |                  |               |   |                  |               |   |   |         |        
|Increase to additional paid-in capital related to the issuance
    of stock to satisfy certain deferred compensation liabilities |                                                   | $                 | 5,471      |                  |               | $ |                 |               |   | $ | 291     |        
|Increase in accrued capital expenditures                                                                                         |                                                   | $                 | 4,084      |                  |               | $ | 5,440            |               |   | $ | 2,402   |        
|Purchases of property pursuant to capital lease obligations                                                                      |                                                   | $                 | 654        |                  |               | $ |                 |               |   | $ | 3,016   |        
|Purchase of maintenance agreement under long-term debt obligation                                                                |                                                   | $                 |           |                  |               | $ |                 |               |   | $ | 2,413   |        





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##### Table of Contents



F-7 /


Pacific Sunwear of California, Inc.


Notes to Consolidated Financial Statements


For the Fiscal Years Ended January 29, 2005,
January 31, 2004, and February 1, 2003


(all amounts in thousands, except share and per share
amounts, unless otherwise indicated)


1. Summary of Significant Accounting Policies and Nature
of Business


Nature of Business




Principles of Consolidation


Basis of Presentation


Use of Estimates


Fair Value of Financial Instruments


Cash and Cash Equivalents and Short-Term
Investments






---



##### Table of Contents



/ F-8






Merchandise Inventories


Property and Equipment


Goodwill and Other Intangible Assets


Other Long-Lived Assets


Insurance Reserves


Income Taxes




---



##### Table of Contents



F-9 /




Litigation


Deferred Lease Incentives


Revenue Recognition


|                  |  |             |         |   |             |   |         |             |  |   |         |  
|----------------- |  | ----------- | ------- | - | ----------- | - | ------- | ----------- |  | - | ------- | -
|                  |  |             |        
|                  |  | Fiscal 2004 |         |   | Fiscal 2003 |   |         | Fiscal 2002 | 
|                  |  |             |        
|Beginning balance |  | $           | 581     |   |             | $ | 460     |             |  | $ | 113     |  
|Provisions        |  |             | 23,812  |   |             |   | 20,629  |             |  |   | 17,363  |  
|Usage             |  |             | (23,630 | ) |             |   | (20,508 | )           |  |   | (17,016 | )
|                 
|Ending balance    |  | $           | 763     |   |             | $ | 581     |             |  | $ | 460     |  
|                 
|                 

E-commerce Shipping and Handling Revenues and
Expenses


Customer Loyalty Programs


Cost of Goods Sold, including Buying, Distribution and
Occupancy Costs


Straight-Line Rent




---



##### Table of Contents



/ F-10




Selling, General and Administrative Expenses


Advertising Costs


Stock-Based Compensation






---



##### Table of Contents



F-11 /




|                                                                                                                                                    |  |             |         |   |             |   |        |             |  |   |        |  
|--------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------- | ------- | - | ----------- | - | ------ | ----------- |  | - | ------ | -
|                                                                                                                                                    |  |             |        
|                                                                                                                                                    |  | Fiscal 2004 |         |   | Fiscal 2003 |   |        | Fiscal 2002 | 
|                                                                                                                                                    |  |             |        
|NET INCOME                                                                                                                                          |  |             |         |   |             |   |        |             |  |   |        |  
|As reported                                                                                                                                         |  | $           | 106,904 |   |             | $ | 80,200 |             |  | $ | 49,666 |  
|Deduct: Total stock-based employee compensation expense
    determined under fair value based method for all awards, net of
    related tax effects |  |             | (6,330  | ) |             |   | (5,785 | )           |  |   | (5,589 | )
|                                                                                                                                                   
|Pro forma                                                                                                                                           |  | $           | 100,574 |   |             | $ | 74,415 |             |  | $ | 44,077 |  
|                                                                                                                                                   
|                                                                                                                                                   
|NET INCOME PER SHARE, BASIC                                                                                                                         |  |             |         |   |             |   |        |             |  |   |        |  
|As reported                                                                                                                                         |  | $           | 1.41    |   |             | $ | 1.05   |             |  | $ | 0.67   |  
|Deduct: Total stock-based employee compensation expense
    determined under fair value based method for all awards, net of
    related tax effects |  |             | (0.09   | ) |             |   | (0.07  | )           |  |   | (0.07  | )
|                                                                                                                                                   
|Pro forma                                                                                                                                           |  | $           | 1.32    |   |             | $ | 0.98   |             |  | $ | 0.60   |  
|                                                                                                                                                   
|NET INCOME PER SHARE, DILUTED                                                                                                                       |  |             |         |   |             |   |        |             |  |   |        |  
|As reported                                                                                                                                         |  | $           | 1.38    |   |             | $ | 1.02   |             |  | $ | 0.66   |  
|Deduct: Total stock-based employee compensation expense
    determined under fair value based method for all awards, net of
    related tax effects |  |             | (0.08   | ) |             |   | (0.06  | )           |  |   | (0.06  | )
|                                                                                                                                                   
|Pro forma                                                                                                                                           |  | $           | 1.30    |   |             | $ | 0.96   |             |  | $ | 0.60   |  
|                                                                                                                                                   
|                                                                                                                                                   

Earnings per Share


Comprehensive Income


Vendor and Merchandise Concentrations


|                     |  |             |      |  |             |  |      |             |  |  |      | 
|-------------------- |  | ----------- | ---- |  | ----------- |  | ---- | ----------- |  |  | ---- | 
|                     |  |             |     
|Merchandise Category |  | Fiscal 2004 |      |  | Fiscal 2003 |  |      | Fiscal 2002 | 
|                     |  |             |     
|Guys apparel         |  |             | 37%  |  |             |  | 38%  |             |  |  | 41%  | 
|Girls apparel        |  |             | 30%  |  |             |  | 31%  |             |  |  | 31%  | 
|Accessories          |  |             | 19%  |  |             |  | 19%  |             |  |  | 18%  | 
|Footwear             |  |             | 14%  |  |             |  | 12%  |             |  |  | 10%  | 
|                    
|Total                |  |             | 100% |  |             |  | 100% |             |  |  | 100% | 
|                    
|                    



---



##### Table of Contents



/ F-12


Segment Reporting


New Accounting Pronouncements






Reclassifications




|   |                                                      
|-- | -----------------------------------------------------
|2. | Restatement of Previously Issued Financial Statements







---



##### Table of Contents



F-13 /








|                            |  |                  |          |   |             |   |         |          |  |   |          |  
|--------------------------- |  | ---------------- | -------- | - | ----------- | - | ------- | -------- |  | - | -------- | -
|                            |  | JANUARY 31, 2004 |         
|                            |  |                  |         
|                            |  | As               |          |   | Lease       |   |         |         
|                            |  | Previously       |          |   | Accounting  |   |         | As       | 
|(all amounts in thousands)  |  | Reported         |          |   | Adjustments |   |         | Restated | 
|                            | 
|CONSOLIDATED BALANCE SHEET  |  |                  |          |   |             |   |         |          |  |   |          |  
|Gross Property              |  | $                | 331,274  |   |             | $ | 98,369  |          |  | $ | 429,643  |  
|Accumulated Depreciation    |  |                  | (127,630 | ) |             |   | (29,144 | )        |  |   | (156,774 | )
|Net Property                |  |                  | 203,644  |   |             |   | 69,225  |          |  |   | 272,869  |  
|Deferred Income Taxes       |  |                  | 8,224    |   |             |   | 1       |          |  |   | 8,225    |  
|Total Assets                |  |                  | 575,261  |   |             |   | 69,226  |          |  |   | 644,487  |  
|Income Taxes Payable        |  |                  | 15,024   |   |             |   | (5      | )        |  |   | 15,019   |  
|Deferred Lease Incentives   |  |                  |         |   |             |   | 56,996  |          |  |   | 56,996   |  
|Deferred Rent               |  |                  | 12,046   |   |             |   | 12,279  |          |  |   | 24,325   |  
|Deferred Income Taxes       |  |                  | 11,529   |   |             |   | (14     | )        |  |   | 11,515   |  
|Total Long-term Liabilities |  |                  | 146,499  |   |             |   | 69,256  |          |  |   | 215,755  |  
|Shareholders Equity        |  |                  | 428,762  |   |             |   | (30     | )        |  |   | 428,732  |  

|                              |  |                                    |           |  |             |   |        |             |  |   |          |   |  |   |           | 
|----------------------------- |  | ---------------------------------- | --------- |  | ----------- | - | ------ | ----------- |  | - | -------- | - |  | - | --------- | 
|                              |  | FISCAL YEAR ENDED JANUARY 31, 2004 |          
|                              |  |                                    |          
|                              |  | As                                 |           |  | Lease       |   |        |            
|                              |  | Previously                         |           |  | Accounting  |   |        | E-commerce  |  |   | As       |  
|(all amounts in thousands)    |  | Reported                           |           |  | Adjustments |   |        | Adjustments |  |   | Restated |  
|                              | 
|CONSOLIDATED INCOME STATEMENT |  |                                    |           |  |             |   |        |             |  |   |          |   |  |   |           | 
|Net Sales                     |  | $                                  | 1,040,294 |  |             | $ |       |             |  | $ | 1,162    |   |  | $ | 1,041,456 | 
|Cost of Sales                 |  |                                    | 676,977   |  |             |   | (9,801 | )           |  |   | 1,631    |   |  |   | 668,807   | 
|                              |  |                                   
|Gross Margin                  |  |                                    | 363,317   |  |             |   | 9,801  |             |  |   | (469     | ) |  |   | 372,649   | 
|SG&A Expenses                 |  |                                    | 235,068   |  |             |   | 9,823  |             |  |   | (469     | ) |  |   | 244,422   | 
|                              |  |                                   
|Operating Income              |  |                                    | 128,249   |  |             |   | (22    | )           |  |   |         |   |  |   | 128,227   | 
|Income Tax Provision          |  |                                    | 48,768    |  |             |   | (9     | )           |  |   |         |   |  |   | 48,759    | 
|Net Income                    |  |                                    | 80,213    |  |             |   | (13    | )           |  |   |         |   |  |   | 80,200    | 
|Earnings Per Share, diluted   |  |                                    | 1.02      |  |             |   | (0.00  | )           |  |   | (0.00    | ) |  |   | 1.02      | 



---



##### Table of Contents



/ F-14


|                              |  |                                    |         |  |             |   |        |                  |  |   |          |   |  |   |         | 
|----------------------------- |  | ---------------------------------- | ------- |  | ----------- | - | ------ | ---------------- |  | - | -------- | - |  | - | ------- | 
|                              |  | FISCAL YEAR ENDED FEBRUARY 1, 2003 |        
|                              |  |                                    |        
|                              |  | As                                 |         |  | Lease       |   |        |                 
|                              |  | Previously                         |         |  | Accounting  |   |        | E-commerce       |  |   | As       |  
|(all amounts in thousands)    |  | Reported                           |         |  | Adjustments |   |        | Reclassification |  |   | Restated |  
|                              | 
|CONSOLIDATED INCOME STATEMENT |  |                                    |         |  |             |   |        |                  |  |   |          |   |  |   |         | 
|Net Sales                     |  | $                                  | 846,393 |  |             | $ |       |                  |  | $ | 757      |   |  | $ | 847,150 | 
|Cost of Sales                 |  |                                    | 562,710 |  |             |   | (8,728 | )                |  |   | 847      |   |  |   | 554,829 | 
|                              |  |                                   
|Gross Margin                  |  |                                    | 283,683 |  |             |   | 8,728  |                  |  |   | (90      | ) |  |   | 292,321 | 
|SG&A Expenses                 |  |                                    | 202,445 |  |             |   | 8,746  |                  |  |   | (90      | ) |  |   | 211,101 | 
|                              |  |                                   
|Operating Income              |  |                                    | 81,238  |  |             |   | (18    | )                |  |   |         |   |  |   | 81,220  | 
|Income Tax Provision          |  |                                    | 30,967  |  |             |   | (7     | )                |  |   |         |   |  |   | 30,960  | 
|Net Income                    |  |                                    | 49,677  |  |             |   | (11    | )                |  |   |         |   |  |   | 49,666  | 
|Earnings Per Share, diluted   |  |                                    | 0.66    |  |             |   | (0.00  | )                |  |   | (0.00    | ) |  |   | 0.66    | 



|                                            |  |            |         |   |             |   |         |                  |  |   |          |   |  |   |          |  
|------------------------------------------- |  | ---------- | ------- | - | ----------- | - | ------- | ---------------- |  | - | -------- | - |  | - | -------- | -
|                                            |  |            |        
|                                            |  | As         |         |   | Lease       |   |         | Reclassification |  |   |         
|                                            |  | Previously |         |   | Accounting  |   |         | of Auction Rate  |  |   | As       |  
|(all amounts in thousands)                  |  | Reported   |         |   | Adjustments |   |         | Securities       |  |   | Restated |  
|                                            | 
|CONSOLIDATED CASH FLOW STATEMENT            |  |            |         |   |             |   |         |                  |  |   |          |   |  |   |          |  
|For the fiscal year ended January 31, 2004: |  |            |         |   |             |   |         |                  |  |   |          |   |  |   |          |  
|Net Cash Provided by Operating Activities   |  | $          | 151,647 |   |             | $ | 9,357   |                  |  | $ |         |   |  | $ | 161,004  |  
|Net Cash Used in Investing Activities       |  |            | (73,246 | ) |             |   | (9,357  | )                |  |   | (33,200  | ) |  |   | (115,803 | )
|Net Increase in Cash and Cash Equivalents   |  |            | 106,402 |   |             |   |        |                  |  |   | (33,200  | ) |  |   | 73,202   |  
|For the fiscal year ended February 1, 2003: |  |            |         |   |             |   |         |                  |  |   |          |   |  |   |          |  
|Net Cash Provided by Operating Activities   |  |            | 76,623  |   |             |   | 12,865  |                  |  |   |         |   |  |   | 89,488   |  
|Net Cash Used in Investing Activities       |  |            | (40,423 | ) |             |   | (12,865 | )                |  |   |         |   |  |   | (53,288  | )
|Net Increase in Cash and Cash Equivalents   |  |            | 13,302  |   |             |   |        |                  |  |   |         |   |  |   | 13,302   |  



|   |                                       
|-- | --------------------------------------
|3. | Deferred Compensation and Other Assets





---



##### Table of Contents



F-15 /




|                                  |  |             |        |  |             |   |        | 
|--------------------------------- |  | ----------- | ------ |  | ----------- | - | ------ | 
|                                  |  |             |       
|                                  |  | January 29, |        |  | January 31, |  
|                                  |  | 2005        |        |  | 2004        |  
|                                  |  |             |       
|Deferred compensation investments |  | $           | 13,990 |  |             | $ | 10,919 | 
|Long-term maintenance contracts   |  |             | 124    |  |             |   | 502    | 
|Other assets                      |  |             | 132    |  |             |   | 168    | 
|                                  |  |            
|                                  |  | $           | 14,246 |  |             | $ | 11,589 | 
|                                  |  |            
|                                  |  |            



|   |                
|-- | ---------------
|4. | Credit Facility





|   |                    
|-- | -------------------
|5. | Accrued Liabilities



|                                                 |  |             |        |  |             |   |        | 
|------------------------------------------------ |  | ----------- | ------ |  | ----------- | - | ------ | 
|                                                 |  |             |       
|                                                 |  | January 29, |        |  | January 31, |  
|                                                 |  | 2005        |        |  | 2004        |  
|                                                 |  |             |       
|Accrued compensation and benefits                |  | $           | 13,284 |  |             | $ | 17,578 | 
|Accrued gift cards and store merchandise credits |  |             | 10,386 |  |             |   | 4,618  | 
|Accrued sales tax payable                        |  |             | 6,647  |  |             |   | 6,189  | 
|Accrued capital expenditures                     |  |             | 6,223  |  |             |   | 5,838  | 
|Accrued sublease loss charges (Note 7)           |  |             | 2,441  |  |             |   | 5,543  | 
|Accrued restricted stock compensation (Note 9)   |  |             | 904    |  |             |   | 5,118  | 
|Other                                            |  |             | 9,143  |  |             |   | 10,082 | 
|                                                 |  |            
|                                                 |  | $           | 49,028 |  |             | $ | 54,966 | 
|                                                 |  |            
|                                                 |  |            

6. Income Taxes




|                       |  |             |        |  |             |   |        |             |  |   |        | 
|---------------------- |  | ----------- | ------ |  | ----------- | - | ------ | ----------- |  | - | ------ | 
|                       |  |             |       
|                       |  | Fiscal 2004 |        |  | Fiscal 2003 |   |        | Fiscal 2002 | 
|                       |  |             |       
|Current income taxes:  |  |             |        |  |             |   |        |             |  |   |        | 
|Federal                |  | $           | 51,252 |  |             | $ | 38,129 |             |  | $ | 23,937 | 
|State                  |  |             | 7,038  |  |             |   | 5,369  |             |  |   | 3,397  | 
|                      
|                       |  |             | 58,290 |  |             |   | 43,498 |             |  |   | 27,334 | 
|Deferred income taxes: |  |             |        |  |             |   |        |             |  |   |        | 
|Federal                |  |             | 6,486  |  |             |   | 5,315  |             |  |   | 3,225  | 
|State                  |  |             | 222    |  |             |   | (54    | )           |  |   | 401    | 
|                      
|                       |  |             | 6,708  |  |             |   | 5,261  |             |  |   | 3,626  | 
|                      
|                       |  | $           | 64,998 |  |             | $ | 48,759 |             |  | $ | 30,960 | 
|                      
|                      



---



##### Table of Contents



/ F-16




|                                                      |  |             |        |  |             |   |        |             |  |   |        | 
|----------------------------------------------------- |  | ----------- | ------ |  | ----------- | - | ------ | ----------- |  | - | ------ | 
|                                                      |  |             |       
|                                                      |  | Fiscal 2004 |        |  | Fiscal 2003 |   |        | Fiscal 2002 | 
|                                                      |  |             |       
|Provision for income taxes at statutory rate          |  | $           | 60,166 |  |             | $ | 45,136 |             |  | $ | 28,219 | 
|State income taxes, net of federal income tax benefit |  |             | 4,719  |  |             |   | 3,455  |             |  |   | 2,469  | 
|Other                                                 |  |             | 113    |  |             |   | 168    |             |  |   | 272    | 
|                                                     
|                                                      |  | $           | 64,998 |  |             | $ | 48,759 |             |  | $ | 30,960 | 
|                                                     
|                                                     



|                                                         |  |             |         |   |             |   |         |  
|-------------------------------------------------------- |  | ----------- | ------- | - | ----------- | - | ------- | -
|                                                         |  |             |        
|                                                         |  | January 29, |         |   | January 31, |  
|                                                         |  | 2005        |         |   | 2004        |  
|                                                         |  |             |        
|Current net deferred tax asset                           |  | $           | 6,134   |   |             | $ | 8,225   |  
|Long-term net deferred tax liability                     |  |             | (16,132 | ) |             |   | (11,515 | )
|                                                        
|Overall net deferred tax liability                       |  | $           | (9,998  | ) |             | $ | (3,290  | )
|                                                        
|                                                        
|Components:                                              |  |             |         |   |             |   |         |  
|Depreciation and amortization                            |  | $           | (53,032 | ) |             | $ | (42,964 | )
|Deferred lease incentives                                |  |             | 26,543  |   |             |   | 22,293  |  
|State income taxes                                       |  |             | 1,176   |   |             |   | 548     |  
|Inventory cost capitalization                            |  |             | 2,431   |   |             |   | 1,992   |  
|Reserve for store expansion/relocation and closing costs |  |             | 957     |   |             |   | 2,866   |  
|Deferred rent                                            |  |             | 4,986   |   |             |   | 4,707   |  
|Deferred compensation                                    |  |             | 5,571   |   |             |   | 6,275   |  
|Other                                                    |  |             | 1,370   |   |             |   | 993     |  
|                                                        
|                                                         |  | $           | (9,998  | ) |             | $ | (3,290  | )
|                                                        
|                                                        

7. Commitments and Contingencies


Operating Leases




|                    |  |   |         | 
|------------------- |  | - | ------- | 
|FISCAL YEAR ENDING: |  |  
|                    |  |  
|January 28, 2006    |  | $ | 92,935  | 
|February 3, 2007    |  |   | 93,827  | 
|February 2, 2008    |  |   | 92,226  | 
|January 31, 2009    |  |   | 87,852  | 
|January 30, 2010    |  |   | 82,586  | 
|Thereafter          |  |   | 229,307 | 
|                    |  |   |        
|                    |  | $ | 678,733 | 
|                    |  |   |        
|                    |  |   |        



---



##### Table of Contents



F-17 /




Capital Leases


|                                                       |  |   |       |  
|------------------------------------------------------ |  | - | ----- | -
|FISCAL YEAR ENDING:                                    |  |  
|                                                       |  |  
|January 28, 2006                                       |  | $ | 1,370 |  
|February 3, 2007                                       |  |   | 355   |  
|February 2, 2008                                       |  |   | 43    |  
|                                                       |  |   |      
|Total payments, including interest                     |  |   | 1,768 |  
|Less interest portion                                  |  |   | (57   | )
|                                                       |  |   |      
|Total principal payments remaining at January 29, 2005 |  | $ | 1,711 |  
|                                                       |  |   |      
|                                                       |  |   |      

Other Long-Term Debt Obligations


|                                                       |  |   |     |  
|------------------------------------------------------ |  | - | --- | -
|FISCAL YEAR ENDING:                                    |  |  
|                                                       |  |  
|January 28, 2006                                       |  | $ | 232 |  
|Less interest portion                                  |  |   | (4  | )
|                                                       |  |   |    
|Total principal payments remaining at January 29, 2005 |  | $ | 228 |  
|                                                       |  |   |    
|                                                       |  |   |    

Litigation




Indemnities, Commitments, and Guarantees




---



##### Table of Contents



/ F-18






Sublease Loss Charges




8. Common Stock


Stock Split




---



##### Table of Contents



F-19 /


Common Stock Purchase and Retirement


|                    |  |             |         |             |          |   |            |           |             |          |           |            |           |           |           |  |  |   |          | 
|------------------- |  | ----------- | ------- | ----------- | -------- | - | ---------- | --------- | ----------- | -------- | --------- | ---------- | --------- | --------- | --------- |  |  | - | -------- | 
|                    |  |             |        
|                    |  |             |         | Maximum     |         
|                    |  |             |         | # of Shares |          |   |            |           | Value of    |         
|                    |  |             |         | Purchased   |          |   |            |           | Shares that |         
|                    |  |             |         | Average     |          |   | as Part of |           |             |          |           | May Yet be |          
|                    |  |             |         | Price       |          |   | Publicly   |           |             | Value of |           |            | Purchased |          
|                    |  | # of Shares |         |             | Paid Per |   |            | Announced |             |          | Shares    |            |           | Under the |          
|Period              |  | Purchased   |         |             | Share    |   |            | Plan      |             |          | Purchased |            |           | Plan      |          
|                    | 
|AUTHORIZATION #1(1) |  |             |         |             |          |   |            |           |             |          |           |            |           |           |           |  |  |   |          | 
|February 2004       |  |             | 75.0    |             |          | $ | 23.99      |           |             |          | 75.0      |            |           | $         | 1,799.3   |  |  |   |          | 
|April 2004          |  |             | 2,148.7 |             |          | $ | 22.43      |           |             |          | 2,148.7   |            |           | $         | 48,195.4  |  |  |   |          | 
|                   
|Total               |  |             | 2,223.7 |             |          | $ | 22.48      |           |             |          | 2,223.7   |            |           | $         | 49,994.7  |  |  | $ | 5.3      | 
|                   
|AUTHORIZATION #2(2) |  |             |         |             |          |   |            |           |             |          |           |            |           |           |           |  |  |   |          | 
|June 2004           |  |             | 482.1   |             |          | $ | 19.70      |           |             |          | 482.1     |            |           | $         | 9,495.3   |  |  |   |          | 
|July 2004           |  |             | 812.4   |             |          | $ | 19.01      |           |             |          | 812.4     |            |           | $         | 15,440.6  |  |  |   |          | 
|                   
|Total               |  |             | 1,294.5 |             |          | $ | 19.26      |           |             |          | 1,294.5   |            |           | $         | 24,935.9  |  |  | $ | 64.1     | 
|                   
|AUTHORIZATION #3(3) |  |             |         |             |          |   |            |           |             |          |           |            |           |           |           |  |  |   |          | 
|August 2004         |  |             | 1,746.0 |             |          | $ | 19.80      |           |             |          | 1,746.0   |            |           | $         | 34,570.8  |  |  | $ | 15,429.2 | 
|                   
|GRAND TOTAL         |  |             | 5,264.2 |             |          | $ | 20.80      |           |             |          | 5,264.2   |            |           | $         | 109,501.4 |  |  | $ | 15,498.6 | 
|                   
|                   







Shareholder Rights Plan 


9. Stock Option and Retirement Plans






---



##### Table of Contents



/ F-20








|                                                                          |                   |             |           |            |             |   |           |             |   |   |           |           |  
|------------------------------------------------------------------------- | ----------------- | ----------- | --------- | ---------- | ----------- | - | --------- | ----------- | - | - | --------- | --------- | -
|                                                                          |                   |             |          
|                                                                          |                   | Fiscal 2004 |           |            | Fiscal 2003 |   |           | Fiscal 2002 |  
|                                                                          |                   |             |          
|BEGINNING OPTIONS OUTSTANDING                                             |                   |             | 5,474,092 |            |             |   | 8,691,197 |             |   |   | 7,198,026 |          
|                                                                          | Options granted   |             |           | 1,613,700  |             |   |           | 1,101,351   |   |   |           | 2,289,238 |  
|                                                                          | Options canceled  |             |           | (425,290   | )           |   |           | (253,916    | ) |   |           | (354,282  | )
|                                                                          | Options exercised |             |           | (1,770,655 | )           |   |           | (4,064,540  | ) |   |           | (441,785  | )
|                                                                         
|Ending options outstanding                                                |                   |             | 4,891,847 |            |             |   | 5,474,092 |             |   |   | 8,691,197 |          
|                                                                         
|                                                                         
|Ending options exercisable                                                |                   |             | 2,040,723 |            |             |   | 2,272,058 |             |   |   | 4,576,850 |          
|                                                                         
|                                                                         
|BEGINNING WEIGHTED AVERAGE EXERCISE PRICE                                 |                   | $           | 10.47     |            |             | $ | 8.56      |             |   | $ | 7.98      |          
|                                                                          | Options granted   |             |           | 23.69      |             |   |           | 13.92       |   |   |           | 10.23     |  
|                                                                          | Options canceled  |             |           | 15.51      |             |   |           | 10.65       |   |   |           | 9.91      |  
|                                                                          | Options exercised |             |           | 9.69       |             |   |           | 7.31        |   |   |           | 6.68      |  
|Ending weighted average exercise price                                    |                   | $           | 14.68     |            |             | $ | 10.47     |             |   | $ | 8.56      |          
|Ending weighted average exercise price of exercisable options             |                   | $           | 10.40     |            |             | $ | 9.68      |             |   | $ | 7.59      |          
|Weighted average fair value of options granted during the fiscal
    year |                   | $           | 9.26      |            |             | $ | 5.27      |             |   | $ | 5.09      |          



|                |  |                     |             |  |                     |  |        |                |  |   |                |  |  |                |           |  |  |   |       | 
|--------------- |  | ------------------- | ----------- |  | ------------------- |  | ------ | -------------- |  | - | -------------- |  |  | -------------- | --------- |  |  | - | ----- | 
|                |  | Options Outstanding |             |  | Options Exercisable | 
|                |  |                     |             |  |                     | 
|                |  | Number              |             |  |                     |  | Number |                |  |  
|                |  | Outstanding         |             |  | Weighted Average    |  |        | Weighted       |  |   | Exercisable    |  |  | Weighted       |          
|Range of        |  | as of Jan. 29,      |             |  | Remaining           |  |        | Average        |  |   | as of Jan. 29, |  |  | Average        |          
|Exercise Prices |  | 2005                |             |  | Contractual Life    |  |        | Exercise Price |  |   | 2005           |  |  | Exercise Price |          
|                | 
|$ 0.68  $ 7.   |  |                     | 55 635,507  |  |                     |  | 5.60   |                |  | $ | 6.89           |  |  |                | 408,022   |  |  | $ | 6.57  | 
|7.60   9.36    |  |                     | 269,118     |  |                     |  | 3.67   |                |  |   | 8.87           |  |  |                | 228,015   |  |  |   | 8.94  | 
|9.44   9.49    |  |                     | 529,394     |  |                     |  | 7.01   |                |  |   | 9.49           |  |  |                | 259,967   |  |  |   | 9.49  | 
|9.51   11.4    |  |                     | 7 541,922   |  |                     |  | 5.14   |                |  |   | 10.84          |  |  |                | 512,224   |  |  |   | 10.88 | 
|11.67   12.    |  |                     | 11 514,349  |  |                     |  | 7.96   |                |  |   | 12.10          |  |  |                | 166,733   |  |  |   | 12.10 | 
|12.13   13.    |  |                     | 36 554,136  |  |                     |  | 7.46   |                |  |   | 12.65          |  |  |                | 298,684   |  |  |   | 12.80 | 
|13.56   21.    |  |                     | 22 491,402  |  |                     |  | 8.13   |                |  |   | 17.03          |  |  |                | 154,183   |  |  |   | 15.10 | 
|21.30   24.    |  |                     | 61 488,219  |  |                     |  | 9.59   |                |  |   | 22.64          |  |  |                | 12,895    |  |  |   | 22.53 | 
|24.75   24.    |  |                     | 75 855,800  |  |                     |  | 9.07   |                |  |   | 24.75          |  |  |                | 0         |  |  |   | N/A   | 
|24.82   25.    |  |                     | 50 12,000   |  |                     |  | 9.07   |                |  |   | 25.20          |  |  |                | 0         |  |  |   | N/A   | 
|                |  |                     |             |  |                     |  |        |                |  |   |                |  |  |                |          
|$ 0.68  $25.5  |  |                     | 0 4,891,847 |  |                     |  | 7.32   |                |  | $ | 14.68          |  |  |                | 2,040,723 |  |  | $ | 10.40 | 
|                |  |                     |             |  |                     |  |        |                |  |   |                |  |  |                |          





---



##### Table of Contents



F-21 /














---



##### Table of Contents



/ F-22


10. Quarterly Financial Data (Unaudited)




|                                                   |  |               |            |  |               |   |            |               |  |   |               |  |  |   |            | 
|-------------------------------------------------- |  | ------------- | ---------- |  | ------------- | - | ---------- | ------------- |  | - | ------------- |  |  | - | ---------- | 
|                                                   |  |               |           
|                                                   |  | First         |            |  | Second        |   |            | Third         |  |   | Fourth        | 
|                                                   |  | Quarter       |            |  | Quarter       |   |            | Quarter       |  |   | Quarter       | 
|                                                   |  | (as restated) |            |  | (as restated) |   |            | (as restated) |  |   | (as restated) | 
|(in thousands, except share and per share amounts) |  |               |            |  |               |   |            |              
|                                                   | 
|FISCAL YEAR ENDED JANUARY 29, 2005:                |  |               |            |  |               |   |            |               |  |   |               |  |  |   |            | 
|Net sales                                          |  | $             | 245,501    |  |               | $ | 275,139    |               |  | $ | 329,447       |  |  | $ | 379,675    | 
|Gross margin                                       |  |               | 86,205     |  |               |   | 97,614     |               |  |   | 121,559       |  |  |   | 142,556    | 
|Operating income                                   |  |               | 23,613     |  |               |   | 30,749     |               |  |   | 50,875        |  |  |   | 64,775     | 
|Net income                                         |  |               | 14,969     |  |               |   | 19,317     |               |  |   | 31,889        |  |  |   | 40,728     | 
|Net income per share, basic                        |  | $             | 0.19       |  |               | $ | 0.25       |               |  | $ | 0.43          |  |  | $ | 0.55       | 
|Net income per share, diluted                      |  | $             | 0.19       |  |               | $ | 0.25       |               |  | $ | 0.42          |  |  | $ | 0.54       | 
|Wtd. avg. shares outstanding, basic (Note 1)       |  |               | 78,157,771 |  |               |   | 76,322,161 |               |  |   | 74,415,403    |  |  |   | 74,408,255 | 
|Wtd. avg. shares outstanding, diluted (Note 1)     |  |               | 80,146,144 |  |               |   | 77,911,595 |               |  |   | 75,919,451    |  |  |   | 75,856,319 | 
|                                                  
|FISCAL YEAR ENDED JANUARY 31, 2004:                |  |               |            |  |               |   |            |               |  |   |               |  |  |   |            | 
|Net sales                                          |  | $             | 198,519    |  |               | $ | 234,612    |               |  | $ | 281,541       |  |  | $ | 326,784    | 
|Gross margin                                       |  |               | 65,975     |  |               |   | 82,239     |               |  |   | 103,074       |  |  |   | 121,362    | 
|Operating income                                   |  |               | 12,889     |  |               |   | 21,649     |               |  |   | 39,254        |  |  |   | 54,435     | 
|Net income                                         |  |               | 7,977      |  |               |   | 13,377     |               |  |   | 24,505        |  |  |   | 34,340     | 
|Net income per share, basic                        |  | $             | 0.11       |  |               | $ | 0.18       |               |  | $ | 0.32          |  |  | $ | 0.44       | 
|Net income per share, diluted                      |  | $             | 0.10       |  |               | $ | 0.17       |               |  | $ | 0.31          |  |  | $ | 0.43       | 
|Wtd. avg. shares outstanding, basic (Note 1)       |  |               | 74,524,548 |  |               |   | 75,885,641 |               |  |   | 77,685,516    |  |  |   | 78,287,219 | 
|Wtd. avg. shares outstanding, diluted (Note 1)     |  |               | 76,472,511 |  |               |   | 78,104,037 |               |  |   | 79,876,426    |  |  |   | 80,226,072 | 

|                                                   |  |                |            |  |                |   |            |                |  |   |                |  |  |   |            | 
|-------------------------------------------------- |  | -------------- | ---------- |  | -------------- | - | ---------- | -------------- |  | - | -------------- |  |  | - | ---------- | 
|                                                   |  |                |           
|                                                   |  | First          |            |  | Second         |   |            | Third          |  |   | Fourth         | 
|                                                   |  | Quarter        |            |  | Quarter        |   |            | Quarter        |  |   | Quarter        | 
|                                                   |  | (as previously |            |  | (as previously |   |            | (as previously |  |   | (as previously | 
|                                                   |  | reported)      |            |  | reported)      |   |            | reported)      |  |   | reported)      | 
|(in thousands, except share and per share amounts) |  |                |            |  |                |   |            |               
|                                                   | 
|FISCAL YEAR ENDED JANUARY 29, 2005:                |  |                |            |  |                |   |            |                |  |   |                |  |  |   |            | 
|Net sales                                          |  | $              | 245,131    |  |                | $ | 274,797    |                |  | $ | 329,447        |  |  | $ | 379,675    | 
|Gross margin                                       |  |                | 83,572     |  |                |   | 94,820     |                |  |   | 118,620        |  |  |   | 142,556    | 
|Operating income                                   |  |                | 23,621     |  |                |   | 30,759     |                |  |   | 50,887         |  |  |   | 64,775     | 
|Net income                                         |  |                | 14,974     |  |                |   | 19,325     |                |  |   | 31,897         |  |  |   | 40,728     | 
|Net income per share, basic                        |  | $              | 0.19       |  |                | $ | 0.25       |                |  | $ | 0.43           |  |  | $ | 0.55       | 
|Net income per share, diluted                      |  | $              | 0.19       |  |                | $ | 0.25       |                |  | $ | 0.42           |  |  | $ | 0.54       | 
|Wtd. avg. shares outstanding, basic (Note 1)       |  |                | 78,157,771 |  |                |   | 76,322,161 |                |  |   | 74,415,403     |  |  |   | 74,408,255 | 
|Wtd. avg. shares outstanding, diluted (Note 1)     |  |                | 80,146,144 |  |                |   | 77,911,595 |                |  |   | 75,919,451     |  |  |   | 75,856,319 | 
|                                                  
|FISCAL YEAR ENDED JANUARY 31, 2004:                |  |                |            |  |                |   |            |                |  |   |                |  |  |   |            | 
|Net sales                                          |  | $              | 198,331    |  |                | $ | 234,392    |                |  | $ | 281,541        |  |  | $ | 326,318    | 
|Gross margin                                       |  |                | 63,855     |  |                |   | 79,834     |                |  |   | 100,500        |  |  |   | 119,011    | 
|Operating income                                   |  |                | 12,893     |  |                |   | 21,654     |                |  |   | 39,259         |  |  |   | 54,442     | 
|Net income                                         |  |                | 7,979      |  |                |   | 13,380     |                |  |   | 24,509         |  |  |   | 34,346     | 
|Net income per share, basic                        |  | $              | 0.11       |  |                | $ | 0.18       |                |  | $ | 0.32           |  |  | $ | 0.44       | 
|Net income per share, diluted                      |  | $              | 0.10       |  |                | $ | 0.17       |                |  | $ | 0.31           |  |  | $ | 0.43       | 
|Wtd. avg. shares outstanding, basic (Note 1)       |  |                | 74,524,548 |  |                |   | 75,885,641 |                |  |   | 77,685,516     |  |  |   | 78,287,219 | 
|Wtd. avg. shares outstanding, diluted (Note 1)     |  |                | 76,472,511 |  |                |   | 78,104,037 |                |  |   | 79,876,426     |  |  |   | 80,226,072 | 





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##### Table of Contents



Index to Exhibits


|          |    |     |                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--------- | -- | --- | ---------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit # |    |     | Description of Exhibit
|          |    |     |                       
|          | 3  | .1  |                        | Third Amended and Restated Articles of Incorporation of the
    Company(10)                                                                                                                                                                                                                                                                                                                                                                                     
|          | 3  | .2  |                        | Certificate of Determination of Preferences of Series A
    Junior Participating Preferred Stock of the Company(4)                                                                                                                                                                                                                                                                                                                                              
|          | 3  | .3  |                        | Third Amended and Restated Bylaws of the Company, as amended                                                                                                                                                                                                                                                                                                                                                                                                    
|          | 4  | .1  |                        | Specimen stock certificate(1)                                                                                                                                                                                                                                                                                                                                                                                                                                   
|          | 10 | .1  |                        | Form of Indemnity Agreement between the Company and each of its
    executive officers and directors(1)*                                                                                                                                                                                                                                                                                                                                                        
|          | 10 | .2  |                        | 1986-87 Stock Option Plan dated as of December 11, 1986, as
    amended (the Option Plan)(1)*                                                                                                                                                                                                                                                                                                                                                                 
|          | 10 | .3  |                        | Amended and Restated 1992 Stock Award Plan dated June 8,
    1999 (the Award Plan)(7)*                                                                                                                                                                                                                                                                                                                                                                        
|          | 10 | .4  |                        | Amended and Restated Pacific Sunwear of California, Inc. 1999
    Stock Award Plan dated March 24, 2004(9)*                                                                                                                                                                                                                                                                                                                                                     
|          | 10 | .5  |                        | Pacific Sunwear of California, Inc. Executive Deferred
    Compensation Plan and Trust Agreement(2)*                                                                                                                                                                                                                                                                                                                                                            
|          | 10 | .6  |                        | Amended and Restated Pacific Sunwear of California, Inc.
    Employee Stock Purchase Plan dated November 17, 2004(13)*                                                                                                                                                                                                                                                                                                                                          
|          | 10 | .7  |                        | Restricted Stock Award Agreement dated September 18, 1996,
    by and between the Company and Greg H. Weaver(7)*                                                                                                                                                                                                                                                                                                                                                
|          | 10 | .8  |                        | Restricted Stock Award Agreement dated September 17, 1999,
    by and between the Company and Greg H. Weaver(6)*                                                                                                                                                                                                                                                                                                                                                
|          | 10 | .9  |                        | Restricted Stock Award Agreement dated January 3, 2001, by
    and between the Company and Greg H. Weaver(7)*                                                                                                                                                                                                                                                                                                                                                   
|          | 10 | .10 |                        | Amended and Restated Employment Agreement dated
    December 13, 2004, between the Company and Greg H.
    Weaver(14)*                                                                                                                                                                                                                                                                                                                                          
|          | 10 | .11 |                        | Severance Agreement, dated October 27, 1997, by and between
    Pacific Sunwear of California, Inc. and Timothy M. Harmon(3)*                                                                                                                                                                                                                                                                                                                                   
|          | 10 | .12 |                        | Employment Agreement dated October 11, 2004, between the
    Company and Seth R. Johnson(11)*                                                                                                                                                                                                                                                                                                                                                                   
|          | 10 | .13 |                        | Severance Agreement dated November 22, 2004, between the
    Company and Gerald M. Chaney(12)*                                                                                                                                                                                                                                                                                                                                                                  
|          | 10 | .14 |                        | Form of Performance-Based Bonus Award Agreement(13)*                                                                                                                                                                                                                                                                                                                                                                                                            
|          | 10 | .15 |                        | Description of fiscal 2004 cash bonus agreements(13)*                                                                                                                                                                                                                                                                                                                                                                                                           
|          | 10 | .16 |                        | Description of fiscal 2005 cash bonus agreements(15)*                                                                                                                                                                                                                                                                                                                                                                                                           
|          | 10 | .17 |                        | Summary of Compensation for Timothy M. Harmon*                                                                                                                                                                                                                                                                                                                                                                                                                  
|          | 10 | .18 |                        | Employment Agreement dated April 1, 2005 between the
    Company and Thomas M. Kennedy*                                                                                                                                                                                                                                                                                                                                                                         
|          | 10 | .19 |                        | Standard Industrial Lease  Net, dated
    September 30, 1997, between the Company and Bank of America
    National Trust and Savings Association, as amended, and Standard
    Industrial Lease  Net, dated January 12, 1998
    between the Company and The Realty Associates Fund IV,
    L.P., a Delaware limited partnership, as amended for the
    Companys former corporate headquarters and distribution
    center located in Anaheim, California(3)
|          | 10 | .20 |                        | Lease Termination Agreement, dated June 15, 2004, between
    the Company and LBA Industrial Fund-Canyon, Inc.                                                                                                                                                                                                                                                                                                                                                  
|          | 10 | .21 |                        | Rights Agreement, dated as of December 16, 1998, between
    the Company and U.S. Stock Transfer Corporation(5)                                                                                                                                                                                                                                                                                                                                                 
|          | 10 | .22 |                        | Amendment No. 1 to Rights Agreement dated June 18,
    2004(10)                                                                                                                                                                                                                                                                                                                                                                                                 
|          | 10 | .23 |                        | Master Continuing and Unconditional Guaranty to Bank of America
    N.A. from Pacific Sunwear Stores Corp. and ShopPacSun.com
    Corp.(8)                                                                                                                                                                                                                                                                                                                      
|          | 10 | .24 |                        | Business Loan Agreement, dated January 30, 2004 between the
    Company and Bank of America, N.A.(8)                                                                                                                                                                                                                                                                                                                                                            
|          | 10 | .25 |                        | First Amendment to Business Loan Agreement dated May 7,
    2004, between the Company and Bank of America, N.A.(9)                                                                                                                                                                                                                                                                                                                                              



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##### Table of Contents



|          |    |     |                        |                                                                                                                             
|--------- | -- | --- | ---------------------- | ----------------------------------------------------------------------------------------------------------------------------
|Exhibit # |    |     | Description of Exhibit
|          |    |     |                       
|          | 10 | .26 |                        | Second Amendment to Business Loan Agreement dated
    August 18, 2004, between the Company and Bank of America,
    N.A.(10)
|          | 21 |     |                        | Subsidiaries of the Registrant                                                                                              
|          | 23 | .1  |                        | Consent of Deloitte & Touche LLP                                                                                            
|          | 31 |     |                        | Written statements of Greg H. Weaver and Gerald M. Chaney
    pursuant to section 302 of the Sarbanes-Oxley Act of 2002     
|          | 32 |     |                        | Written statement of Greg H. Weaver and Gerald M. Chaney
    pursuant to section 906 of the Sarbanes-Oxley Act of 2002      

Note References