##### Table of Contents



FORM 10-K
 (Mark One)[ x ] Annual Report
    Pursuant to Section 13 or 15(d) of the Securities Exchange
    Act of 1934
    For the fiscal year ended: February 3, 2007
    or[  ] Transition
    Report Pursuant to Section 13 or 15(d) of the Securities
    Exchange Act of 1934
    For the transition period from
     to     PACIFIC SUNWEAR OF CALIFORNIA,
    INC.
   CALIFORNIA

95-3759463(State of incorporation)

(I.R.S. Employer Identification No.)3450 E. Miraloma Ave.,
    Anaheim, CA

92806(Address of principal executive
    offices)

(Zip Code)    (714) 414-4000
         
    Indicate by check mark if the registrant is a well-known
    seasoned issuer, as defined in Rule 405 of the Securities
    Act. Yes [X] No [ ]
    Indicate by check mark if the registrant is not required to file
    reports pursuant to Section 13 or 15(d) of the Act.
    Yes [ ] No [X]
    Indicate by check mark whether the registrant (1) has filed
    all reports required to be filed by Section 13 or 15(d) of
    the Securities Exchange Act of 1934 during the preceding
    12 months (or for such shorter period that the registrant
    was required to file such reports), and (2) has been
    subject to such filing requirements for the past 90 days.
    Yes [X] No [ ]
    Indicate by check mark if disclosure of delinquent filers
    pursuant to Item 405 of
    Regulation S-K
    is not contained herein, and will not be contained, to the best
    of the registrants knowledge, in definitive proxy or
    information statements incorporated by reference in
    Part III of this
    Form 10-K
    or any amendment to this
    Form 10-K. [X]
    Indicate by check mark whether the registrant is a large
    accelerated filer, an accelerated filer, or a non-accelerated
    filer. See definition of accelerated filer and large
    accelerated filer in
    Rule 12b-2
    of the Exchange Act. (Check one):   
    Indicate by check mark whether the registrant is a shell company
    (as defined in
    Rule 12b-2
    of the Exchange Act). Yes [ ] No [X]  non-affiliates.
       Form 10-K.




---



PART I
 TABLE OF CONTENTS  PART IITEM 1. BUSINESSITEM 1A. RISK FACTORSITEM 1B. UNRESOLVED STAFF COMMENTSITEM 2. PROPERTIESITEM 3. LEGAL PROCEEDINGSITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSPART IIITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIESITEM 6. SELECTED FINANCIAL DATAITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAITEM 9. CHANGES IN, AND DISAGREEMENTS WITH, ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREITEM 9A. CONTROLS AND PROCEDURESITEM 9B. OTHER INFORMATIONPART IIIITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTITEM 11. EXECUTIVE COMPENSATIONITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICESPART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULESSIGNATURESEXHIBIT 21EXHIBIT 23.1EXHIBIT 31EXHIBIT 32    Table of Contents  
 
  ITEM 1. BUSINESS
       February 3,
    2007

March 28,
    2007# of
    Stores

Square
    Footage

# of
    Stores

Square
    FootagePacSun

849

3,194,286

843

3,170,805Outlet

116

470,138

116

470,138demo

225

636,137

223

629,912One Thousand Steps

9

23,691

9

23,691Total

1,199

4,324,252

1,191

4,294,546       (714) 414-4000; www.pacsun.com www.demostores.com  www.onethousandsteps.com. www.pacsun.com Form 10-K, Form 10-Q, Form 8-K,
  53-week
  Fiscal
    Year

Year-End
    Date

# of
    Weeks2007

February 2, 2008

522006

February 3, 2007

532005

January 28, 2006

522004

January 29, 2005

522003

January 31, 2004

522002

February 1, 2003

52    2Pacific
    Sunwear of California, Inc. Annual Report 2006




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##### Table of Contents



Our Mission and
    Strategies
   Offer Popular Name Brands Supplemented by Proprietary
    Brands.
  Promote the Brand Images of Our Store Concepts.
  Actively Manage Merchandise Trends.
  Maintain Strong Vendor Relationships.
  Provide Attentive Customer Service.
  Continually Assess Existing Store Performance while Seeking
    Strategic Real Estate Opportunities to Improve Overall
    Operational Performance.
   Pacific
    Sunwear of California, Inc. Annual Report
    2006     3




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##### Table of Contents



Offer Merchandise for Sale Online. www.pacsun.com www.demostores.com e-mail
  Merchandising
 Merchandise.
  Total
    Company2006

2005

2004Guys apparel

38%

36%

37%Girls apparel

30%

31%

30%Accessories

19%

19%

19%Footwear

13%

14%

14%Total

100%

100%

100%   PacSun and
    Outlet

demo2006

2005

2004

2006

2005

2004Guys apparel

37%

35%

35%

43%

45%

51%Girls apparel

29%

29%

29%

37%

38%

35%Accessories

20%

20%

20%

15%

13%

12%Footwear

14%

16%

16%

5%

4%

2%Total

100%

100%

100%

100%

100%

100%   One Thousand
    Steps2006

2005

2004Girls footwear

56%

n/a

n/aGuys footwear

26%

n/a

n/aGirls accessories

12%

n/a

n/aGuys accessories

6%

n/a

n/aTotal

100%

n/a

n/a   up-and-coming
     4Pacific
    Sunwear of California, Inc. Annual Report 2006




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##### Table of Contents



Vendor and Contract Manufacturer Relationships.
      Purchasing, Allocation and Distribution.
    Stores
 Locations.
  Store Expansion. 20-25
   Pacific
    Sunwear of California, Inc. Annual Report
    2006     5




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##### Table of Contents



Store Closures. Form 8-K
  Store Operations.
  Information
    Systems
 open-to-buy,
  point-of-sale look-up,
   6Pacific
    Sunwear of California, Inc. Annual Report 2006




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##### Table of Contents



Competition
   Trademarks and
    Service Marks
   Seasonality
   Working Capital
    Concentration
   Employees
   Executive Officers.
  Executive
    Officer

Age

TitleSally Frame Kasaks


62


Interim Chief Executive Officer,
    Board memberThomas M. Kennedy


45


Division President of PacSunLou Ann Bett


45


Division President of demoGerald M. Chaney


60


Senior Vice President, Chief
    Financial Officer and SecretaryWendy E. Burden


53


Chief Operating Officer
      Pacific
    Sunwear of California, Inc. Annual Report
    2006     7




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##### Table of Contents



VP/General VP/General VP/Merchandise
    Pepsi-Cola
 
  ITEM 1A.
    RISK FACTORS
  Cautionary Note
    Regarding Forward-Looking Statements
 Form 10-K
  Our comparable store net sales results will fluctuate
    significantly, which can cause volatility in our operating
    performance and stock price.
   8Pacific
    Sunwear of California, Inc. Annual Report 2006




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##### Table of Contents



Our failure to identify and respond appropriately to changing
    consumer preferences and fashion trends in a timely manner could
    have a material adverse impact on our profitability.
  Our continued growth depends on our ability to develop new
    store concepts and to open, expand and remodel stores in our
    existing concepts on a profitable basis. Any failure to do so
    may negatively impact our stock price and operational
    performance.
  We launched operations of a new retail concept, One Thousand
    Steps, in fiscal 2006, which could divert attention from
    existing operations.
   Pacific
    Sunwear of California, Inc. Annual Report
    2006     9




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##### Table of Contents



We face significant competition from both
    vertically-integrated and brand-based competitors that are
    growing rapidly, which could have a material adverse effect on
    our business.
  Our customers may not prefer our proprietary brand
    merchandise, which may negatively impact our profitability.
  Our current or prospective vendors may be unable or unwilling
    to supply us with adequate quantities of their merchandise in a
    timely manner or at acceptable prices, which could have a
    material adverse impact on our business.
  Our foreign sources of production may not always be reliable,
    which may result in a disruption in the flow of new merchandise
    to our stores.
   10Pacific
    Sunwear of California, Inc. Annual Report 2006




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##### Table of Contents



We are currently evaluating store design alternatives for all
    of our retail concepts, which may not result in improved
    operational performance.
  The loss of key personnel could have a material adverse
    effect on our business at any time.
    Our information systems may not be adequate to support future
    growth, which could disrupt business operations. and/or and/or
  Adverse outcomes of litigation matters could significantly
    affect our operational results.
  Our dependence on a single distribution facility exposes us
    to significant business disruption risks.
  Our stock price can fluctuate significantly due to a variety
    of factors, which can negatively impact our total market
    value.
   Pacific
    Sunwear of California, Inc. Annual Report
    2006     11




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##### Table of Contents



Selling merchandise over the internet carries particular
    risks that can have a negative impact on our business. and/or
  Any failure by us to maintain credit facility financial
    covenants could have a material adverse impact on our
    business.
  The effects of terrorism or war could significantly impact
    consumer spending and our operational performance.
     
  ITEM 1B.
    UNRESOLVED STAFF
    COMMENTS     12Pacific
    Sunwear of California, Inc. Annual Report 2006




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##### Table of Contents



ITEM 2.
    PROPERTIES    OnePacSun



ThousandState

PacSun

Outlets

demo

Steps

TotalAlabama

14

2





16Alaska

3



3



6Arizona

15

5

4



24Arkansas

5







5California

101

18

53

4

176Colorado

19

3

3



25Connecticut

10



5



15Delaware

3

1

1



5Florida

59

8

20

1

88Georgia

22

3

6



31Hawaii

8



2



10Idaho

6







6Illinois

28

2

11



41Indiana

16

2

4



22Iowa

11

1





12Kansas

8







8Kentucky

10



1



11Louisiana

12



4



16Maine

3

2

1



6Maryland

15

4

4



23Massachusetts

21

2

4



27Michigan

27

3

10



40Minnesota

15

2

4

1

22Mississippi

6

1





7Missouri

15

3

1



19Montana

4







4Nebraska

4



1



5Nevada

6

3

3



12New Hampshire

5

2

1



8New Jersey

22

3

8

1

34New Mexico

7



1



8New York

35

6

9

1

51North Carolina

23

3

9



35North Dakota

4







4Ohio

36

2

10



48Oklahoma

9







9Oregon

11

2

2



15Pennsylvania

46

5

8



59Rhode Island

2





1

3South Carolina

14

3

4



21South Dakota

2







2Tennessee

14

3

2



19Texas

59

9

12



80Utah

10

1





11Vermont

3

1





4Virginia

23

2

6



31Washington

22

3

3



28West Virginia

8







8Wisconsin

14

4

1



19Wyoming

2







2Puerto Rico

12

2

4



18Total

849

116

225

9

1,199      
  ITEM 3.
    LEGAL
    PROCEEDINGS     Pacific
    Sunwear of California, Inc. Annual Report
    2006     13




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##### Table of Contents



$8-12 million
 
  ITEM 4.
    SUBMISSION OF
    MATTERS TO A VOTE OF SECURITY HOLDERS    
 PART II
  
 ITEM 5.
    MARKET FOR
    REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
    ISSUER PURCHASES OF EQUITY SECURITIES    Fiscal
    2006


Fiscal
    2005High


Low


High


Low1st Quarter

$
25.19


$
21.32


$
29.05


$
22.092nd Quarter

$
25.26


$
16.67


$
25.28


$
20.333rd Quarter

$
17.77


$
13.12


$
24.83


$
20.704th Quarter

$
21.68


$
16.42


$
27.99


$
22.68        14Pacific
    Sunwear of California, Inc. Annual Report 2006




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##### Table of Contents



PERFORMANCE
    GRAPH
    Comparison of
    Cumulative Total Return from February 2, 2002 through
    February 3, 2007(1)
  
  Calculated
    Returns(1)

02/02/02

02/01/03

01/31/04

01/29/05

01/28/06

02/03/07Pacific Sunwear

100

121

229

240

241

199Nasdaq Market Index

100

70

109

107

122

131Retail Index

100

81

119

143

155

168     Common Stock Repurchase and Retirement
   
  ITEM 6.
    SELECTED
    FINANCIAL DATA     Pacific
    Sunwear of California, Inc. Annual Report
    2006     15




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##### Table of Contents



Fiscal
    Year2006


2005


2004


2003


2002Consolidated
    Income Statement Data:Net sales

$
1,447


$
1,391


$
1,230


$
1,041


$
847Gross margin (after buying,
    distribution and occupancy
    costs)(1)


445



506



448



373



292Operating
    income(1)


60



197



170



128



81Net
    income(1)


40



126



107



80



50Net income per share, diluted

$
0.56


$
1.67


$
1.38


$
1.02


$
0.66Consolidated
    Operating Data:Comparable store net sales
    +/(−)(2)


(4.7
)%


3.2
%


7.3
%


13.1
%


9.7
%Average net sales($)/square
    foot(3)


346



371



374



363



330Average net sales($)/store
    (000s)(3)


1,242



1,309



1,290



1,229



1,102Stores open at end of period


1,199



1,105



990



877



791Capital expenditures
    ($ million)


158



109



82



50



53Consolidated
    Balance Sheet Data:Working capital

$
195


$
304


$
258


$
243


$
109Total assets


773



808



678



644



464Long-term debt


















1Shareholders
    Equity(4)


503



547



458



429



302          
  ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  Form 10-K.
  Executive
    Overview
   Comparable (or same store) sales
   16Pacific
    Sunwear of California, Inc. Annual Report 2006




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##### Table of Contents



Net merchandise margins
  Operating margin $10-15 million
  Store sales trends
  Cash flow and liquidity (working capital)
  Critical
    Accounting Policies
   Recognition of Revenue
  Valuation of Inventories
   Pacific
    Sunwear of California, Inc. Annual Report
    2006     17




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##### Table of Contents



Determination of Stock-Based Compensation
    Expense
    Store Operating Lease Accounting Bulletin 85-3, 13-1, Bulletin 88-1,
  Evaluation of Long-Lived Assets
   18Pacific
    Sunwear of California, Inc. Annual Report 2006




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##### Table of Contents



Evaluation of Insurance Reserves
  Evaluation of Income Taxes
  Evaluation of Litigation Matters
  Results of
    Operations
   Fiscal
    Year2006


2005


2004Net sales


100.0
%


100.0
%


100.0
%Cost of goods sold (including
    buying, distribution and occupancy costs)


69.2



63.6



63.6Gross margin


30.8



36.4



36.4Selling, general and administrative
    expenses


26.7



22.2



22.6Operating income


4.1



14.2



13.8Interest income/(expense), net


0.3



0.4



0.2Income before income tax expense


4.4



14.6



14.0Income tax expense


1.7



5.5



5.3Net income


2.7
%


9.1
%


8.7
%Number of stores open at end of
    period


1,199



1,105



990    Pacific
    Sunwear of California, Inc. Annual Report
    2006     19




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##### Table of Contents



February 3,

January 28,2007

2006PacSun stores


849


811Outlet stores


116


96demo stores


225


198One Thousand Steps stores


9


0Total stores


1,199


1,105Total square footage (in 000s)


4,324


3,931   Fiscal 2006
    Compared to Fiscal 2005
  Net
    Sales
   Amount($million)


Attributable
    to$
53


Net sales from stores opened in
    fiscal 2005 while not included in the comparable store base in
    200643


100 new stores opened in fiscal
    2006 not yet included in the comparable store base7


Other non-comparable sales (net
    sales from expanded or relocated stores not yet included in the
    comparable store base and internet net sales)(5
)

6 closed stores in fiscal 2006 and
    11 closed stores in fiscal 2005(42
)

(4.7)% decrease in comparable store
    net sales in fiscal 2006 compared to fiscal 2005$
56


Total         Gross
    Margin
    20Pacific
    Sunwear of California, Inc. Annual Report 2006




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##### Table of Contents



Selling, General
    and Administrative Expenses
   %

Attributable
    to1.7

Increased impairment charges of
    $24 million in fiscal 2006 (see Asset
    Impairment discussion below.)1.1

Increase in store payroll expenses
    as a percentage of net sales to 12.2% ($177 million) in
    fiscal 2006 from 11.1% ($154 million) for fiscal 2005. In
    absolute dollars, these expenses were up primarily due to the
    addition of 94 net new stores during fiscal 2006 and 115
    net new stores during fiscal 2005. As a percentage of net sales,
    these expenses were up primarily due to deleveraging them
    against the negative same-store sales results in fiscal 2006.1.0

Increase in direct store expenses
    as a percentage of net sales to 7.0% ($101 million) for
    fiscal 2006 from 6.0% ($84 million) for fiscal 2005,
    primarily due to increased depreciation expenses associated with
    new store openings and deleveraging these expenses over the
    negative same-store sales results in fiscal 2006.0.4

Expenses incurred during fiscal
    2006 that are non-comparable to fiscal 2005 include stock
    compensation expenses of $4 million (see Note 10,
    Stock Compensation Plans, in the notes to the
    consolidated financial statements), and a charge of
    $1 million related to the resignation of our former CEO.0.3

Increase in all other general and
    administrative expenses as a percentage of net sales to 5.3%
    ($76 million) for fiscal 2006 from 5.0% ($69 million)
    for fiscal 2005.4.5

Total   Asset
    Impairment
 Form 8-K,
    Net Interest
    Income
    Pacific
    Sunwear of California, Inc. Annual Report
    2006     21




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##### Table of Contents



Income Tax
    Expense
   Fiscal 2005
    Compared to Fiscal 2004
  Net
    Sales
   Amount($million)


Attributable
    to$
71


126 new stores opened in fiscal
    2005 not yet included in the comparable store base49


Net sales from stores opened in
    fiscal 2004 not included in the comparable store base in 200537


3.2% increase in comparable store
    net sales in fiscal 2005 compared to fiscal 200413


Other non-comparable sales (net
    sales from expanded or relocated stores not yet included in the
    comparable store base and internet net sales)(8
)

11 closed stores in fiscal 2005 and
    5 closed stores in fiscal 2004$
162


Total         Gross
    Margin
    22Pacific
    Sunwear of California, Inc. Annual Report 2006




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##### Table of Contents



Selling, General
    and Administrative Expenses
   %

Attributable
    to(0.2)%

Decrease in store payroll as a
    percentage of net sales to 11.1% of net sales
    ($154 million) for fiscal 2005 versus 11.3%
    ($138 million) for fiscal 2004, an increase of
    $16 million. Store payroll expenses were down as a
    percentage of net sales due to tighter payroll controls in
    fiscal 2005. The increase in absolute dollars was due to the
    addition of 115 net new stores in fiscal 2005.(0.1)%

Decrease in general and
    administrative expenses as a percentage of net sales to 4.9%
    ($69 million) for fiscal 2005 from 5.0% ($62 million)
    for fiscal 2004, primarily due to a decrease in corporate
    payroll expenses as a percentage of net sales attributable to
    planned unfilled positions and lower bonus expenses for fiscal
    2005. In absolute dollars, corporate payroll was
    $37 million for fiscal 2005 versus $34 million for
    fiscal 2004, primarily due to increased total headcount.(0.1)%

Decrease in store closing expenses
    to just under $3 million for fiscal 2005 as compared to
    $3 million for fiscal 2004, primarily due to subleasing
    100% of our former Manhattan store location and lower overall
    expenses associated with store closures and relocations.(0.4)%

Total   Net Interest
    Income
   Income Tax
    Expense
   Liquidity and
    Capital Resources
    Pacific
    Sunwear of California, Inc. Annual Report
    2006     23




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##### Table of Contents



Operating Cash
    Flows
   $millions


Attributable
    to$
(87
)

Decrease in net income.(32
)

Decrease in cash flows from income
    taxes due to a $52 million reduction in current year income
    tax accruals due to reduced taxable income and a $1 million
    reduction in tax benefits from stock option exercises, partially
    offset by $21 million in lower cash payments for income
    taxes.41


Increase in cash flows due to
    non-cash charges, including $25 million in asset impairment
    charges, $9 million in increased depreciation expense
    primarily due to the addition of 94 net new stores,
    $6 million in non-cash stock compensation and
    $1 million in increased losses on equipment disposals.61


Increase in cash flows from an
    increase in accounts payable, net of inventory, due to timing of
    payments and decreased inventory per square foot.(5
)

Decrease in net cash flows from all
    other assets and liabilities.$
(22
)

Total   Working
    Capital
   $millions


Description$
304


Working capital at
    January 28, 2006(86
)

Decrease in cash and marketable
    securities, net of accounts payable, primarily due to stock
    repurchases, capital expenditures and negative same store sales
    results for fiscal 2006, among other items (see cash flow
    statement).(19
)

Increase in accounts payable due to
    timing of payments.(10
)

Decrease in inventory, primarily
    due to the reduction of inventory per square foot during fiscal
    2006 to enhance the visual presentation of the stores.6


Reduction in income taxes payable
    due to lower net income.$
195


Working capital at
    February 3, 2007   Investing Cash
    Flows
   Fiscal 2006 New
    Store Costs
    24Pacific
    Sunwear of California, Inc. Annual Report 2006




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##### Table of Contents



Fiscal 2007 Store
    Opening Plans
 20-25
    Amount($million)


Attributable
    to$
69


Store capital expenditures20


Construction of a new, additional
    distribution center and a new, additional corporate office15


Corporate capital expenditures such
    as computer hardware and software$
104


Total       Financing Cash
    Flows
     Credit
    Facility
      Pacific
    Sunwear of California, Inc. Annual Report
    2006     25




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##### Table of Contents



Contractual
    Obligations
   Payments Due by
    PeriodContractual
    Obligations



Less
    than

1-3

3-5

More
    than(in
    millions)

Total

1 year

years

years

5 yearsOperating lease obligations

710.4

111.0

211.6

176.3

211.5Capital lease obligations

<0.1

<0.1





Letters of credit

17.1

17.1





Total

727.5

128.1

211.6

176.3

211.5     Operating Leases
  90-100
   26Pacific
    Sunwear of California, Inc. Annual Report 2006




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##### Table of Contents



Indemnifications
     New Accounting
    Pronouncements
   Inflation
   Seasonality and
    Quarterly Results
 back-to-school
 
  ITEM 7A.
    QUANTITATIVE AND
    QUALITATIVE DISCLOSURES ABOUT MARKET RISK  and/or
   
  ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA     27Pacific
    Sunwear of California, Inc. Annual Report 2006




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##### Table of Contents



ITEM 9.
    CHANGES IN, AND
    DISAGREEMENTS WITH, ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
    DISCLOSURE   
  ITEM 9A.
    CONTROLS AND
    PROCEDURES  Conclusion
    Regarding the Effectiveness of Disclosure Controls and
    Procedures
 Rule 13a-15(e) 15d-15(e)
    Managements
    Report on Internal Control Over Financial Reporting
 Rules 13a-15(f) 15d-15(f). Internal Control 
    Integrated Framework Internal
    Control  Integrated Framework
       Pacific
    Sunwear of California, Inc. Annual Report
    2006     28




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##### Table of Contents



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
  Share Based Payment
       Pacific
    Sunwear of California, Inc. Annual Report
    2006     29




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##### Table of Contents



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 AND
    RELATED STOCKHOLDER MATTERS   
  ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS   
  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
    consolidated financial statements or notes thereto.3.
    Exhibits included or incorporated herein: See Index to
    Exhibits at end of consolidated financial statements.   Pacific
    Sunwear of California, Inc. Annual Report
    2006     30




---



##### Table of Contents



SIGNATURES
      By:
    /s/  Sally
    Frame Kasaks       Signature

Title

Date/s/  Sally
    Frame KasaksSally
    Frame Kasaks

Interim Chief Executive Officer and
    Director (Principal Executive Officer)

March 28, 2007/s/  Gerald
    M. ChaneyGerald
    M. Chaney

Senior Vice President, Chief
    Financial Officer and Secretary (Principal Financial and
    Accounting Officer)

March 28, 2007/s/  Pearson
    C.
    Cummin IIIPearson
    C. Cummin III

Non-Employee Director

March 28, 2007/s/  Michael
    GoldsteinMichael
    Goldstein

Non-Employee Director

March 28, 2007/s/  Julius
    Jensen IIIJulius
    Jensen III

Non-Employee Director

March 28, 2007/s/  Thomas
    M. MurnaneThomas
    M. Murnane

Non-Employee Director

March 28, 2007/s/  Peter
    StarrettPeter
    Starrett

Non-Employee Director

March 28, 2007/s/  Michael
    WeissMichael
    Weiss

Non-Employee Director

March 28, 2007    31Pacific
    Sunwear of California, Inc. Annual Report 2006




---



##### Table of Contents



PACIFIC SUNWEAR
    OF CALIFORNIA, INC.
  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
  CONSOLIDATED FINANCIAL STATEMENTS FOR THE FISCAL Years
    Ended:
      Report of Independent Registered
    Public Accounting Firm


F-2Consolidated Balance Sheets as of
    February 3, 2007 and January 28, 2006


F-3Consolidated Statements of Income
    and Comprehensive Income for each of the three fiscal years in
    the period ended February 3, 2007


F-4Consolidated Statements of
    Shareholders Equity for each of the three fiscal years in
    the period ended February 3, 2007


F-5Consolidated Statements of Cash
    Flows for each of the three fiscal years in the period ended
    February 3, 2007


F-6Notes to Consolidated Financial
    Statements


F-7    Pacific
    Sunwear of California, Inc. Annual Report
    2006     F-1




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
            Share-Based Payment
  Internal Control 
    Integrated Framework
       Pacific
    Sunwear of California, Inc. Annual Report
    2006     F-2




---



##### Table of Contents



PACIFIC SUNWEAR
    OF CALIFORNIA, INC.
  CONSOLIDATED
    BALANCE SHEETS
  February 3,

January 28,(In thousands,
    except share amounts)

2007

2006ASSETSCURRENT ASSETS:Cash and cash equivalents

$
52,267

$
95,185Marketable securities


31,500


74,911Merchandise inventories


205,213


215,140Other current assets


46,255


41,485TOTAL
    CURRENT ASSETS


335,235


426,721PROPERTY
    AND EQUIPMENT, NET


420,886


355,822OTHER
    ASSETS


17,122


25,018TOTAL
    ASSETS

$
773,243

$
807,561LIABILITIES AND
    SHAREHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable

$
66,581

$
47,550Other current liabilities


73,952


74,921TOTAL
    CURRENT LIABILITIES


140,533


122,471LONG-TERM LIABILITIES:Deferred lease incentives


89,371


81,440Deferred rent


30,619


28,748Deferred income taxes


463


12,584Other long-term liabilities


8,904


15,528TOTAL
    LONG-TERM LIABILITIES


129,357


138,300Commitments and contingencies
    (Note 8)SHAREHOLDERS EQUITY:Preferred stock, $.01 par
    value; 5,000,000 shares authorized; none issued





Common stock, $.01 par value;
    170,859,375 shares authorized; 69,560,077 and
    73,751,249 shares issued and outstanding, respectively


696


737Additional paid-in capital


5,783


23,866Retained earnings


496,874


522,187TOTAL
    SHAREHOLDERS EQUITY


503,353


546,790TOTAL
    LIABILITIES AND SHAREHOLDERS EQUITY

$
773,243

$
807,561      F-3Pacific
    Sunwear of California, Inc. Annual Report 2006




---



##### Table of Contents



PACIFIC SUNWEAR
    OF CALIFORNIA, INC.
  CONSOLIDATED
    STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
  (In thousands,
    except share and per share amounts)

February 3,

January 28,

January 29,FISCAL YEAR ENDED

2007

2006

2005Net
    sales

$
1,447,204

$
1,391,473

$
1,229,762Cost of goods sold, including
    buying, distribution and occupancy costs


1,001,807


884,982


781,828Gross
    margin


445,397


506,491


447,934Selling, general and administrative
    expenses


385,802


309,218


277,921Operating
    income


59,595


197,273


170,013Interest income, net


4,620


5,673


1,889Income before income tax expense


64,215


202,946


171,902Income tax expense


24,594


76,734


64,998Net
    income

$
39,621

$
126,212

$
106,904Comprehensive income

$
39,621

$
126,212

$
106,904Net income per share, basic

$
0.56

$
1.69

$
1.41Net
    income per share, diluted

$
0.56

$
1.67

$
1.38Weighted average shares
    outstanding, basic


70,800,912


74,758,874


75,825,897Weighted average shares
    outstanding, diluted


71,170,181


75,713,793


77,464,115      Pacific
    Sunwear of California, Inc. Annual Report
    2006     F-4




---



##### Table of Contents



PACIFIC SUNWEAR
    OF CALIFORNIA, INC.
  CONSOLIDATED
    STATEMENTS OF SHAREHOLDERS EQUITY
  Common





AdditionalStock


Common


Paid-in


Retained(In thousands,
    except share amounts)

Shares


Stock


Capital


Earnings


TotalBALANCE,
    January 31, 2004


78,351,302


$
784


$
138,877


$
289,071


$
428,732Exercise of stock options and
    shares issued under employee stock purchase plan


1,829,671



18



18,176







18,194Repurchase and retirement of common
    stock


(5,264,200
)


(53
)


(109,449
)






(109,502
)Restricted stock award, vesting of
    shares










5,471







5,471Tax benefits related to exercise of
    stock options










8,235







8,235Net income














106,904



106,904BALANCE,
    January 29, 2005


74,916,773



749



61,310



395,975



458,034Exercise of stock options and
    shares issued under employee stock purchase plan


1,642,776



16



18,651







18,667Repurchase and retirement of common
    stock


(2,808,300
)


(28
)


(65,615
)






(65,643
)Restricted stock award, vesting of
    shares










1,142







1,142Tax benefits related to exercise of
    stock options










8,378







8,378Net income














126,212



126,212BALANCE,
    January 28, 2006


73,751,249



737



23,866



522,187



546,790Exercise of stock options and
    shares issued under employee stock purchase plan


724,828



8



8,562







8,570Repurchase and retirement of common
    stock


(4,916,000
)


(49
)


(99,297
)






(99,346
)Stock compensation










6,220







6,220Tax benefits related to exercise of
    stock options










1,498







1,498Reclassify negative additional
    paid-in capital to retained
    earnings(1)










64,934



(64,934
)


Net income














39,621



39,621BALANCE,
    February 3, 2007


69,560,077


$
696


$
5,783


$
496,874


$
503,353     See notes to consolidated
    financial statements
   F-5Pacific
    Sunwear of California, Inc. Annual Report 2006




---



##### Table of Contents



PACIFIC SUNWEAR
    OF CALIFORNIA, INC.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  (In thousands)

February 3,


January 28,


January 29,FISCAL YEAR ENDED

2007


2006


2005CASH FLOWS FROM OPERATING
    ACTIVITIES:Net income

$
39,621


$
126,212


$
106,904Adjustments to reconcile net income
    to net cash provided by operating activities:Depreciation and amortization


72,529



63,161



51,685Stock compensation


6,220







Asset impairment


24,409







Loss on disposal of equipment


1,127



300



3,692Tax benefits related to stock-based
    compensation


1,498



8,378



8,235Excess tax benefits related to
    stock-based compensation


(942
)






Change in operating assets and
    liabilities:Merchandise inventories


9,927



(40,380
)


(27,330
)Other current assets


(4,770
)


(6,608
)


(4,295
)Other assets


7,896



(4,280
)


(2,657
)Accounts payable


19,031



8,797



85Other current liabilities


(5,687
)


18,138



(9,877
)Deferred lease incentives


7,931



13,376



10,687Deferred rent


1,553



(1,377
)


(1,199
)Other long-term liabilities


(18,703
)


(1,452
)


7,082Net
    cash provided by operating activities


161,640



184,265



143,012CASH FLOWS FROM INVESTING
    ACTIVITIES:Purchases of property and equipment


(157,788
)


(109,174
)


(81,992
)Purchases of
    available-for-sale
    short-term investments


(296,031
)


(792,550
)


(1,159,375
)Maturities of
    available-for-sale
    short-term investments


324,831



774,700



1,150,125Purchases of
    held-to-maturity
    short-term investments






(20,988
)


(40,695
)Maturities of
    held-to-maturity
    short-term investments


14,611



43,150



36,957Net
    cash used in investing activities


(114,377
)


(104,862
)


(94,980
)CASH FLOWS FROM FINANCING
    ACTIVITIES:Repurchase and retirement of common
    stock


(99,346
)


(65,643
)


(109,502
)Proceeds from exercise of stock
    options


8,570



18,667



18,194Excess tax benefits related to
    stock-based compensation


942







Principal payments under capital
    lease and long-term debt obligations


(347
)


(1,550
)


(2,056
)Net
    cash used in financing activities


(90,181
)


(48,526
)


(93,364
)NET (DECREASE) INCREASE IN CASH AND
    CASH EQUIVALENTS:


(42,918
)


30,877



(45,332
)CASH AND CASH EQUIVALENTS,
    beginning of fiscal year


95,185



64,308



109,640CASH AND CASH EQUIVALENTS, end of
    fiscal year

$
52,267


$
95,185


$
64,308SUPPLEMENTAL DISCLOSURES OF CASH
    FLOW INFORMATION:Cash paid for interest

$
6


$
47


$
142Cash paid for income taxes

$
42,251


$
63,313


$
59,081SUPPLEMENTAL DISCLOSURES OF
    NON-CASH TRANSACTIONS:Increase to additional paid-in
    capital related to the issuance of stock to satisfy certain
    deferred compensation liabilities

$



$
1,142


$
5,471Increase in accrued property and
    equipment

$
5,023


$
5,856


$
4,084Purchases of property pursuant to
    capital lease obligations

$



$



$
654      Pacific
    Sunwear of California, Inc. Annual Report
    2006     F-6




---



##### Table of Contents



PACIFIC SUNWEAR
    OF CALIFORNIA, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    For the Fiscal Years Ended February 3, 2007,
    January 28, 2006 and January 29, 2005
    (all amounts in thousands, except share and per share amounts,
    unless otherwise indicated)
  1.
    NATURE OF
    BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
    POLICIES  Nature of Business e-commerce www.pacsun.com www.demostores.com www.onethousandsteps.com
  52- 53-week
  Fiscal
    Year

Year-End
    Date


#
    of Weeks2007


February 2, 2008



522006


February 3, 2007



532005


January 28, 2006



522004


January 29, 2005



52   Principles of Consolidation
  Basis of Presentation
  Use of Estimates
  Fair Value of Financial Instruments
   Pacific
    Sunwear of California, Inc. Annual Report
    2006     F-7




---



##### Table of Contents



Cash and Cash Equivalents
  Marketable Securities short-term held-to-maturity.
    Merchandise Inventories (first-in,
  Property and Equipment
  Property
    Category

Depreciation
    TermBuildings

39 yearsBuilding improvements

Lesser of remaining estimated
    useful life of the building or estimated useful life of the
    improvementLeasehold improvements

Lesser of remaining lease term (at
    inception, generally 10 years) or estimated useful life of
    the improvementFurniture, fixtures and equipment

Generally 5 years (ranging
    from 3 to 15 years), depending on the nature of the asset   Goodwill and Other Intangible Assets
  Other Long-Lived Assets
   F-8Pacific
    Sunwear of California, Inc. Annual Report 2006




---



##### Table of Contents



Insurance Reserves
  Income Taxes
  Litigation
  Deferred Lease Incentives 88-1,
  Revenue Recognition
  Fiscal
    2006


Fiscal
    2005


Fiscal
    2004Beginning balance

$
875


$
763


$
581Provisions


30,264



26,980



23,812Usage


(30,168
)


(26,868
)


(23,630
)Ending balance

$
971


$
875


$
763   E-commerce
    Shipping and Handling Revenues and Expenses 00-10,
   Pacific
    Sunwear of California, Inc. Annual Report
    2006     F-9




---



##### Table of Contents



Customer Loyalty Programs 00-22, dollar-for-dollar
  Cost of Goods Sold, including Buying, Distribution and
    Occupancy Costs
  Vendor Allowances 02-16,
  Straight-Line Rent 85-3, 13-1, 13-1,
  Selling, General and Administrative Expenses
  Advertising Costs
  Stock-Based Compensation
   Pacific
    Sunwear of California, Inc. Annual Report
    2006     F-10




---



##### Table of Contents



Fiscal
    2005


Fiscal
    2004Net income, as reported

$
126,212


$
106,904Deduct: Total stock-based employee
    compensation expense determined under fair value based method
    for all awards, net of related tax effects


(7,141
)


(6,330
)Pro forma net income

$
119,071


$
100,574Earnings Per ShareBasic, as reported

$
1.69


$
1.41Basic, pro forma

$
1.59


$
1.32Diluted, as reported

$
1.67


$
1.38Diluted, pro forma

$
1.58


$
1.30   Earnings per Share
  Fiscal
    Year2006

2005

2004Incremental shares


369,269


954,919


1,638,218Anti-dilutive options and
    non-vested shares


2,376,996


1,692,613


998,985     Comprehensive Income
  Vendor and Merchandise Concentrations
   F-11Pacific
    Sunwear of California, Inc. Annual Report 2006




---



##### Table of Contents



Merchandise
    Category

Fiscal
    2006

Fiscal
    2005

Fiscal
    2004Guys apparel


38%


36%


37%Girls apparel


30%


31%


30%Accessories


19%


19%


19%Footwear


13%


14%


14%Total


100%


100%


100%   New Accounting Pronouncements
  06-03, How Taxes Collected from Customers and Remitted to
    Governmental Authorities Should Be Presented in the Income
    Statement (that is, Gross versus Net
    Presentation). 06-03 06-03
      2.
    STORE CLOSURES
    AND IMPAIRMENT OF LONG-LIVED ASSETS  Form 8-K,
   Pacific
    Sunwear of California, Inc. Annual Report
    2006     F-12




---



##### Table of Contents



Fiscal
    2006PacSun

$
1,124demo


22,401One Thousand Steps


884Total

$
24,409   3.
    OTHER CURRENT
    ASSETS    February 3,

January 28,2007

2006Prepaid expenses

$
27,748

$
22,360Non-trade accounts receivable


11,216


12,679Deferred income taxes


7,291


6,446Total other current
    assets

$
46,255

$
41,485   4.
    PROPERTY AND
    EQUIPMENT, NET    February 3,


January 28,2007


2006Leasehold improvements

$
346,084


$
307,875Furniture, fixtures and equipment


310,063



256,189Buildings and building improvements


27,292



26,742Land


25,335



12,156Total gross property and equipment


708,774



602,962Less accumulated depreciation


(287,888
)


(247,140
)Property and equipment,
    net

$
420,886


$
355,822    F-13Pacific
    Sunwear of California, Inc. Annual Report 2006




---



##### Table of Contents



5.
    CREDIT
    FACILITY    6.
    OTHER CURRENT
    LIABILITIES    February 3,

January 28,2007

2006Accrued compensation and benefits

$
15,529

$
12,250Accrued gift cards


14,007


12,620Accrued capital expenditures


13,802


8,779Income taxes payable


8,706


14,896Sales taxes payable


4,771


7,895Other current liabilities


17,137


18,481$
73,952

$
74,921   7.
    INCOME
    TAXES    Fiscal
    2006


Fiscal
    2005


Fiscal
    2004Current income taxes:Federal

$
32,659


$
72,602


$
51,252State


4,901



7,992



7,03837,560



80,594



58,290Deferred income taxes:Federal


(10,502
)


(4,117
)


6,486State


(2,464
)


257



222(12,966
)


(3,860
)


6,708Total income tax
    expense

$
24,594


$
76,734


$
64,998     Fiscal
    2006

Fiscal
    2005

Fiscal
    2004Provision for income taxes at
    statutory rate

$
22,475

$
71,031

$
60,166State income taxes,net of
    federal income tax benefit


1,584


5,362


4,719Other


535


341


113Total income tax
    expense

$
24,594

$
76,734

$
64,998    Pacific
    Sunwear of California, Inc. Annual Report
    2006     F-14




---



##### Table of Contents



February 3,


January 28,2007


2006Current net deferred tax asset

$
7,291


$
6,446Long-term net deferred tax liability


(463
)


(12,584
)Overall net deferred tax
    liability

$
6,828


$
(6,138
)Components:Depreciation and amortization

$
(50,509
)

$
(55,709
)Deferred lease incentives


37,836



31,808State income taxes


(143
)


1,416Inventory cost capitalization


3,075



2,975Sublease loss reserves


543



592Deferred rent


8,023



5,407Deferred and stock-based
    compensation


4,591



5,664Other


3,412



1,709$
6,828


$
(6,138
)   8.
    COMMITMENTS AND
    CONTINGENCIES  Operating Leases
      Fiscal
    year ending:February 2, 2008

$
111,021January 31, 2009


107,823January 30, 2010


103,753January 29, 2011


95,349January 28, 2012


80,918Thereafter


211,493Total future operating lease
    commitments

$
710,357    F-15Pacific
    Sunwear of California, Inc. Annual Report 2006




---



##### Table of Contents



Litigation
  Indemnities, Commitments, and Guarantees
  Letters of Credit
  Accrued Sublease Loss Charges
  Lease Guarantee
  9.
    COMMON
    STOCK  Common Stock Repurchase and Retirement
   F-16Pacific
    Sunwear of California, Inc. Annual Report 2006




---



##### Table of Contents



Maximum# of Shares



Value ofPurchased



Shares thatAverage

as Part of



May YetPrice

Publicly

Value of

be Purchased# of Shares

Paid Per

Announced

Shares

UnderPeriod

Purchased

Share

Plan

Purchased

the
    Plan2005 Authorization:











$
49,856March 2006

1,100,000

$
22.33

1,100,000

$
24,563


25,293April 2006

600,000


22.67

600,000


13,600


11,693May 2006

400,000


22.54

400,000


9,016


2,677June 2006

131,255


20.40

131,255


2,677


Total

2,231,255


22.34

2,231,255


49,856


2006 Authorization:












100,000June 2006

468,745


20.05

468,745


9,397


90,603July 2006

2,216,000


18.09

2,216,000


40,093


50,510Total

2,684,745


18.43

2,684,745


49,490


50,510Grand Total

4,916,000

$
20.21

4,916,000

$
99,346

$
50,510   Shareholder Rights Plan
  10.
    STOCK
    COMPENSATION PLANS       Pacific
    Sunwear of California, Inc. Annual Report
    2006     F-17




---



##### Table of Contents



Fiscal
    Year2006

2005

2004Stock
    Awards

ESPPExpected Option Life

5 years

0.5 years

5 years

5 yearsStock Volatility

41.3% - 48.7%

31.9% - 35.4%

36.9% - 56.7%

37.0% - 37.9%Risk-free Interest Rates

4.6% - 5.1%

4.5% - 5.2%

3.9% - 4.5%

3.3% - 3.7%Expected Dividends

None

None

None

None           Weighted-Weighted-

Average

AggregateAverage

Remaining

IntrinsicExercise

Contractual

ValueStock
    Options

Shares


Price

Term
    (Yrs.)

($000s)Outstanding at January 29,
    2006


4,245,893


$19.18Granted


684,325


20.96Exercised


(658,939
)

11.39Forfeited or expired


(1,339,359
)

23.37Outstanding at February 3,
    2007


2,931,920


$19.43

5.43

$8,898Vested and expected to
    vest


2,481,152


$18.82

5.31

$8,823Exercisable at February 3,
    2007


1,704,164


$16.88

4.93

$8,613    F-18Pacific
    Sunwear of California, Inc. Annual Report 2006




---



##### Table of Contents



Options
    Outstanding

Options
    ExercisableNumber

Weighted



NumberOutstanding

Average

Weighted

Exercisable

Weightedas of
    Feb. 3,

Remaining

Average

as of
    Feb. 3,

AverageRange
    of Exercise Prices

2007

Contractual
    Life

Exercise
    Price

2007

Exercise
    Price$ 3.51  $ 9.36

326,805

2.13

$
7.87

326,805

$
7.869.49  12.50

406,273

4.58


11.07

396,451


11.0412.67  19.53

339,503

5.66


16.22

185,082


14.1919.65  21.30

319,149

6.84


20.52

136,255


20.7921.32  22.46

309,658

7.12


21.83

123,287


21.5922.49  23.27

294,004

5.93


22.81

60,666


22.9323.31  24.75

330,859

6.60


24.55

203,605


24.5924.77  26.51

198,288

5.36


26.26

92,692


26.2627.08  27.08

328,756

5.01


27.08

153,530


27.0827.28  28.90

78,625

5.52


27.44

25,791


27.56$ 3.51 
    $28.90

2,931,920

5.43

$
19.43

1,704,164

$
16.88     Weighted-AverageGrant-DateNon-vested
    Shares

Shares


Fair
    ValueOutstanding at January 29,
    2006





$
Granted


355,942



19.86Vested






Forfeited or expired


(28,555
)


19.93Outstanding at February 3,
    2007


327,387


$
19.85          Pacific
    Sunwear of California, Inc. Annual Report
    2006     F-19




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##### Table of Contents



11.
    RETIREMENT
    PLANS      12.
    SEGMENT
    REPORTING  E-commerce
  OneThousandFiscal
    2006

PacSun

demo

Steps

Corporate

TotalNet Sales

$
1,241,242

$
200,731

$
5,231


n/a

$
1,447,204% of Total Sales


86%


14%


0%


n/a


100%Comparable Store Sales %


(4.2)%


(7.9)%


n/a


n/a


(4.7)%Income before Income Taxes

$
226,398

$
(21,608)

$
(5,694)

$
(134,881)

$
64,215Total Assets

$
437,431

$
94,915

$
12,963

$
227,934

$
773,243Number of Stores


965


225


9


n/a


1,199Square Footage (in 000s)


3,664


636


24


n/a


4,324     Pacific
    Sunwear of California, Inc. Annual Report
    2006     F-20




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##### Table of Contents



OneThousandFiscal
    2005

PacSun

demo

Steps

Corporate


TotalNet Sales

$
1,205,937

$
185,536


n/a


n/a


$
1,391,473% of Total Sales


87%


13%


n/a


n/a



100%Comparable Store Sales %


3.5%


1.1%


n/a


n/a



3.2%Income before Income Taxes

$
293,952

$
18,765


n/a

$
(109,771
)

$
202,946Total Assets

$
413,863

$
96,515


n/a

$
297,183


$
807,561Number of Stores


907


198


n/a


n/a



1,105Square Footage (in 000s)


3,389


542


n/a


n/a



3,931   OneThousandFiscal
    2004

PacSun

demo

Steps

Corporate


TotalNet Sales

$
1,080,653

$
149,109


n/a


n/a


$
1,229,762% of Total Sales


88%


12%


n/a


n/a



100%Comparable Store Sales %


7.5%


5.7%


n/a


n/a



7.3%Income before Income Taxes

$
253,832

$
17,295


n/a

$
(99,225
)

$
171,902Total Assets

$
344,788

$
70,431


n/a

$
262,559


$
677,778Number of Stores


828


162


n/a


n/a



990Square Footage (in 000s)


3,023


425


n/a


n/a



3,448   e-commerce. e-commerce
    start-up
  F-21Pacific
    Sunwear of California, Inc. Annual Report 2006




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##### Table of Contents



13.
    QUARTERLY
    FINANCIAL DATA (UNAUDITED)    (in thousands,
    except share and per share amounts)

First

Second

Third

FourthFISCAL YEAR ENDED
    FEBRUARY 3, 2007:

Quarter

Quarter

Quarter

QuarterNet sales

$
299,888

$
313,682

$
375,427

$
458,236Gross margin


97,282


97,425


106,342


144,365Operating income


17,343


14,570


13,780


13,901Net income


11,865


9,710


8,983


9,063Net income per share, basic

$
0.16

$
0.14

$
0.13

$
0.13Net income per share, diluted

$
0.16

$
0.14

$
0.13

$
0.13Wtd. avg. shares outstanding, basic


73,144,277


71,335,467


69,344,402


69,481,032Wtd. avg. shares outstanding,
    diluted


73,711,710


71,866,482


69,561,420


69,815,699FISCAL YEAR ENDED JANUARY 28,
    2006:Net sales

$
279,985

$
309,064

$
377,491

$
424,944Gross margin


97,350


110,357


144,439


154,346Operating income


27,227


32,765


63,534


73,747Net income


17,607


21,112


40,484


47,009Net income per share, basic

$
0.23

$
0.28

$
0.54

$
0.63Net income per share, diluted

$
0.23

$
0.28

$
0.54

$
0.63Wtd. avg. shares outstanding, basic


75,292,587


75,125,782


74,531,489


74,085,637Wtd. avg. shares outstanding,
    diluted


76,579,259


76,118,501


75,337,910


74,846,162      Pacific
    Sunwear of California, Inc. Annual Report
    2006     F-22




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##### Table of Contents



INDEX TO
    EXHIBITS
  Exhibit
    #

Description
    of Exhibit3
.1

Third Amended and Restated Articles
    of Incorporation of the
    Company(8)3
.2

Certificate of Determination of
    Preferences of Series A Junior Participating Preferred
    Stock of the
    Company(3)3
.3

Third Amended and Restated Bylaws
    of the Company, as
    amended(28)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

Pacific Sunwear of California, Inc.
    Executive Deferred Compensation Plan and
    Trust Agreement(2)*10
.3

Amended and Restated 1992 Stock
    Award Plan dated June 8, 1999 (the Award
    Plan)(6)*10
.4

Amended and Restated Pacific
    Sunwear of California, Inc. 1999 Stock Award Plan dated
    March 24,
    2004(7)*10
.5

Pacific Sunwear of California, Inc.
    2005 Performance Incentive
    Plan(16)*10
.6

Amended and Restated Pacific
    Sunwear of California, Inc. Employee Stock Purchase Plan dated
    November 17,
    2004(11)*10
.7

Form of Performance-Based Bonus
    Award
    Agreement(11)*10
.8

Form of Notice of Director Stock
    Appreciation Right Award
    Agreement(23)*10
.9

Form of Notice of Employee Stock
    Appreciation Right Award
    Agreement(23)*10
.10

Form of Notice of Employee
    Restricted Stock Award
    Agreement(23)*10
.11

Restricted Stock Award Agreement
    dated September 17, 1999, by and between the Company and
    Greg H. Weaver(5)*10
.12

Restricted Stock Award Agreement
    dated January 3, 2001, by and between the Company and
    Greg H. Weaver(6)*10
.13

Amended and Restated Employment
    Agreement dated February 5, 2001 between the Company and
    Greg H. Weaver(12)*10
.14

Amendment No. 1 dated
    December 13, 2004, to the Amended and Restated Employment
    Agreement between the Company and
    Greg H. Weaver(12)*10
.15

Amendment No. 2 dated
    October 25, 2005, to the Amended and Restated Employment
    Agreement between the Company and
    Greg H. Weaver(19)*10
.16

Amendment No. 3 to Amended and
    Restated Employment Agreement, dated March 29, 2006,
    between the Company and
    Greg H. Weaver(22)*10
.17

Employment Agreement dated
    October 11, 2004, between the Company and
    Seth R. Johnson(9)*10
.18

Notice of Election to Extend
    Employment Agreement, dated July 28, 2006, between the
    Company and
    Seth R. Johnson(24)*10
.19

Amendment to Employment Agreement
    and Resignation, dated September 29, 2006, between the
    Company and
    Seth R. Johnson(26)*10
.20

Severance Agreement dated
    November 22, 2004, between the Company and
    Gerald M. Chaney(10)*10
.21

Employment Agreement dated
    April 1, 2005 between the Company and
    Thomas M. Kennedy(14)*10
.22

Amendment No. 1 dated
    December 14, 2006, to the Employment Agreement between the
    Company and Thomas M.
    Kennedy(29)*10
.23

Severance Agreement dated
    February 15, 2005, between the Company and Lou Ann
    Bett(15)*10
.24

Offer of Employment dated
    October 3, 2005 between the Company and Wendy E.
    Burden(18)*10
.25

Summary of Compensation
    Arrangements for Sally Frame Kasaks, Interim Chief Executive
    Officer(28)*10
.26

Description of fiscal 2005 cash
    bonus
    agreements(13)*10
.27

Description of fiscal 2006 cash
    bonus
    agreements(20)*10
.28

Summary of Named Executive Officers
    Annual Compensation for fiscal
    2006(21)*10
.29

Summary of Board of Directors
    Compensation, August
    2006(25)*10
.30

Rights Agreement, dated as of
    December 16, 1998, between the Company and U.S. Stock
    Transfer
    Corporation(4)10
.31

Amendment No. 1 to Rights
    Agreement dated June 18,
    2004(8)10
.32

Credit Agreement, dated
    September 14, 2005, between the Company and the lenders
    thereto(17)10
.33

Amendment No. 1 to Credit
    Agreement, dated October 12, 2006, with JPMorgan Chase
    Bank, N.A., as Administrative Agent, and a syndicate of other
    lenders(27)10
.34

Amendment No. 2 to Credit
    Agreement, dated February 2, 2007, with JPMorgan Chase
    Bank, N.A., as Administrative Agent, and a syndicate of other
    lenders(30)




---



##### Table of Contents



Exhibit
    #

Description
    of Exhibit21


Subsidiaries of the Registrant23
.1

Consent of Independent Registered
    Public Accounting Firm31


Written statements of Sally Frame
    Kasaks and Gerald M. Chaney pursuant to section 302 of the
    Sarbanes-Oxley Act of 200232


Written statement of Sally Frame
    Kasaks and Gerald M. Chaney pursuant to section 906 of the
    Sarbanes-Oxley Act of 2002   Note
    References
  Form S-1 (No. 33-57860)
  Form 10-K
  Form 8-K
  Form 8-A
  Form 10-K
  Form 10-K
  Form 10-Q
  Form 10-Q
  Form 8-K
  Form 8-K
  Form 10-Q
  Form 8-K
  Form 8-K
  Form 10-K
  Form 8-K
  Form 8-K
  Form 8-K
  Form 8-K
  Form 8-K
  Form 8-K
  Form 8-K
  Form 8-K
  Form 8-K
  Form 8-K
  Form 8-K
  Form 8-K
  Form 8-K
  Form 10-Q
  Form 8-K
  Form 8-K